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FinCEN Reminds Mortgage Companies and Brokers of New Regulatory Requirements
FinCEN Reminds Mortgage Companies and Brokers of New Regulatory Requirements
Source: Financial Crimes Enforcement Network
Financial Crimes Enforcement Network (FinCEN) Director James H. Freis, Jr. today announced the issuance of an advisory for non-bank residential mortgage lenders and originators (RMLOs) to help them identify and report suspicious activity related to potential mortgage fraud. In his remarks before the American Association of Residential Mortgage Regulators’ (AARMR’s) 23rd Annual Regulatory Conference, he also discussed FinCEN’s new anti-money laundering (AML) requirements for RMLOs. As of Monday, Aug. 13, RMLOs must comply with FinCEN’s final rule requiring the establishment of AML programs and the filing of suspicious activity reports (SARs).
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FinCEN’s Web site is a key source of information available to both regulators and RMLOs. FinCEN has created a page under the "Financial Institutions" link specifically for mortgage companies and brokers, which contains a variety of publications to assist RMLOs with compliance. Earlier this week, FinCEN issued a Notice to remind RMLOs of their compliance obligations under FinCEN’s regulations. In addition, FinCEN issued an administrative ruling, providing that RMLOs who are also subsidiaries of financial institutions that require the RMLOs to have AML programs and file SARs and are examined by a Federal functional regulator are deemed to comply with FinCEN’s regulations. FinCEN has also made available a Webinar for RMLOs that contains useful references, red flags for potential money laundering, and additional guidance based on inquiries that have been received through FinCEN’s Regulatory Helpline.
FinCEN Assesses Suspicious Activity Involving Title and Escrow Companies
FinCEN Assesses Suspicious Activity Involving Title and Escrow Companies
Source: Financial Crimes Enforcement Network
Pressing forward in its efforts to address a wide range of criminal risks, particularly in the residential real estate market, the Financial Crimes Enforcement Network (FinCEN) today released its first targeted study analyzing reports indicating suspicious activities involving the Real Estate Title and Escrow Industry.
The study identified thousands of instances where financial institutions, particularly banks and Money Services Businesses (MSBs), filed suspicious activity reports (SARs) involving title and escrow companies, often in connection with mortgage fraud. FinCEN does not currently require title and escrow companies themselves to file SARs, but many have reported suspicious activities by annotating the Report of Cash Payments Over $10,000 Received in a Trade or Business (FinCEN Form 8300) that they are required to file.
"This first baseline study will help inform our ongoing efforts to identify regulatory gaps that criminals look to take advantage of," said FinCEN Director James H. Freis, Jr. "We can now more efficiently and effectively address those gaps and mitigate those risks through public awareness, support to law enforcement, or appropriate regulatory action."
+ Full Report (PDF)
California, Nevada, Florida Top Mortgage Fraud SAR List Criminals Continuing Debt Elimination and Foreclosure Rescue Scams
Source: Financial Crimes Enforcement Network
The Financial Crimes Enforcement Network today released its First Quarter 2012 Update of mortgage loan fraud suspicious activity reports (MLF SARs) that shows California, Nevada, and Florida leading the nation in the number of MLF SAR subjects per capita. Of the 50 most populous Metropolitan Statistical Areas (MSAs) ranked by the number of MLF SAR subjects reported, the top nine are MSAs located in California, Nevada, and Florida, with the Los Angeles-Long Beach-Santa Ana area ranked first in the nation.
Nineteen percent of Q1 MLF SARs report activity that occurred within the past two years. Of this more recent activity, there were sharp increases in debt elimination schemes (14 percent of this reporting in Q1 2012 versus 9 percent in 2011) and other foreclosure rescue scams (8 percent of these Q1 filings versus less than 2 percent in 2011). Financial institutions filed 17,651 MLF SARs in the first quarter of 2012 down from 25,485 filed in the same quarter of 2011. Previous record levels were attributable to mortgage loan repurchase demands prompting reviews of dated mortgages. This trend continues, though diminished, as 72 percent of Q1 filings still report suspicious activity that occurred more than four years ago.
IRS: Statistics of Income Bulletin — Spring 2012
Statistics of Income Bulletin — Spring 2012 (PDF)
Source: Internal Revenue Service
The Statistics of Income (SOI) Bulletin is issued quarterly by the Statistics of Income Division of the Internal Revenue Service. The report provides the earliest published annual financial statistics obtained from the various types of tax and information returns filed, as well as information from periodic or special analytical studies of particular interest to students of the U.S. tax system, tax policymakers, and tax administrators. Selected historical and other data tables, previously published in every issue of the SOI Bulletin, now are published only in the spring issue of the Bulletin. These tables are also available on SOI’s pages of the IRS Web site (www.irs.gov/taxstats).
FinCEN — The SAR Activity Review – By the Numbers
The SAR Activity Review – By the Numbers (PDF)
Source: Financial Crimes Enforcement Network
This report covers total Suspicious Activity Report (SAR) filings by covered industries for 2011. This issue of By The Numbers, a staple of FinCEN’s analytical reports, features some significant changes that add value for FinCEN’s audience. Readers will see new pie charts, bar charts, and line graphs. As FinCEN transitions to a new integrated forms environment with improved technology it will continue to develop new, more informative models to illustrate the data. In this edition of BTN, readers will see new interactive tables with geographic summaries at the county level to enhance State graphical displays, or “ heat maps.” Similarly, FinCEN is providing metropolitan statistical area (MSA) summary tables of SAR data as well as spreadsheets illustrating filing rates and percentage changes for 2010 and 2011 in the “Characterizations of SARs” by State and Territories charts. Readers can access the data through hyperlinks embedded in the report.
See also: 21st SAR Activity Review: Trends, Tips, & Issues
Most Taxpayers Whose Identities Have Been Stolen to Commit Refund Fraud Do Not Receive Quality Customer Service
Most Taxpayers Whose Identities Have Been Stolen to Commit Refund Fraud Do Not Receive Quality Customer Service (PDF)
Source: Special Inspector General for Tax Administration
IMPACT ON TAXPAYERS
The Federal Trade Commission reported that identity theft was the number one complaint in Calendar Year 2011, and government documents/benefits fraud was the most common form of reported identity theft. As of December 31, 2011, the IRS’s Incident Tracking Statistics Report showed that 641,052 taxpayers have been affected by identity theft in Calendar Year 2011. The IRS is not effectively providing assistance to victims of identity theft, and current processes are not adequate to communicate identity theft procedures to taxpayers, resulting in increased burden for victims of identity theft.WHY TIGTA DID THE AUDIT
This audit was initiated because the number of identity theft cases in the IRS has grown significantly over the last few years, overwhelming IRS resources and burdening taxpayers. Taxpayers testifying before Congress stated that they had to talk to multiple IRS employees and were provided conflicting instructions.WHAT TIGTA FOUND
Identity theft cases are not worked timely and can take more than a year to resolve. Communications between the IRS and victims are limited and confusing, and victims are asked multiple times to substantiate their identity.When taxpayers call the IRS to advise it that their electronic tax return was rejected because it appears another individual has already filed a tax return using their identity, the IRS instructs them to mail in a paper tax return with the Form 14039, Identity Theft Affidavit, attaching supporting identity documents. However, the IRS has been processing these tax returns using standard processing procedures.
Identity theft guidelines and procedures are dispersed among 38 different Internal Revenue Manual sections. These guidelines are inconsistent and conflicting, and not all functions have guidelines on handling identity theft issues.
The IRS uses little of the data from the identity theft cases to identify any trends, etc., that could be used to detect or prevent future refund fraud.
WHAT TIGTA RECOMMENDED
TIGTA recommended that the IRS: 1) establish accountability for the Identity Theft Program; 2) implement a process to ensure that IRS notices and correspondence are not sent to the address listed on the identity thief’s tax return; 3) conduct an analysis of the letters sent to taxpayers regarding identity theft; 4) ensure taxpayers are notified when the IRS has received their identifying documents; 5) create a specialized unit in the Accounts Management function to exclusively work identity theft cases; 6) ensure all quality review systems used by IRS functions and offices working identity theft cases are revised to select a representative sample of identity theft cases; 7) revise procedures for the Correspondence Imaging System screening process; and 8) ensure programming is adjusted so that identity theft issues can be tracked and analyzed for trends and patterns.The IRS agreed with all our recommendations. It has established a governance structure to oversee the enterprise‑wide identity theft initiatives and plans to expand its identity theft indicator codes identifying claims of identity theft. It plans to review its suite of identity theft letters and to update its guidance instructing employees to notify taxpayers acknowledging receipt of documentation. The IRS currently has specialized units in the Accounts Management function working only identity theft cases. Finally, the IRS plans to create a specific quality review for identity theft cases and is currently evaluating options for enhancing its ability to track and analyze the fraudulent identity theft information removed from a taxpayer account.
A New Economic Analysis of Infrastructure Investment: A Report Prepared by the Department of the Treasury with the Council of Economic Advisors
Source: U.S. Department of the Treasury
Well-designed infrastructure investments have long-term economic benefits and create President Obama’s FY 2013 Budget proposes a bold plan to renew and expand America’s infrastructure. The plan includes a $50 billion up-front investment connected to a $476 billion six-year reauthorization of the surface transportation program and the creation of a National Infrastructure Bank. In support of this commitment, the Department of the Treasury, with the Council of Economic Advisers, has updated our analysis of the economic effects of infrastructure investment. The new data and analyses confirm and strengthen our finding that now is an ideal time to increase our investment in infrastructure for the following four key reasons:
- Well-designed infrastructure investments have long-term economic benefits and create jobs in the short run;
- This economic activity and job creation is especially timely as there is currently a high level of underutilized resources that can be used to improve and expand our infrastructure;
- Middle-class Americans would benefit disproportionately from this investment through both the creation of middle-class jobs and by lowering transportation costs for American households; and
- There is strong demand by the public and businesses for additional transportation infrastructure capacity.
2011 IRS Data Book
2011 IRS Data Book (PDF)
Source: Internal Revenue Service
The Internal Revenue Service (IRS) Data Book is published annually by the Internal Revenue Service and contains statistical tables and organizational information on a fiscal year basis. The report provides data on collecting the revenue, issuing refunds, enforcing the law, assisting the taxpayer, and the budget and workforce.
The IRS Data Book also presents lists of principal officers and the IRS organization chart, which are located at the back of this report.
IRS Creates Online Search Tool for Easier Check on Information About Exempt Organizations
The Internal Revenue Service has launched a new online search tool, Exempt Organizations Select Check, to help users more easily find key information about tax-exempt organizations, such as federal tax status and filings.Users can now go to one location on IRS.gov, select a tax-exempt organization, and check if the organization:Is eligible to receive tax-deductible charitable contributions (Publication 78 data, which is incorporated here). Users may rely on this list in determining deductibility of contributions (just as they did when Publication 78 was a separate electronic publication rather than part of EO Select Check).Has had its federal tax exemption automatically revoked under the law for not filing a Form 990-series return or notice for three consecutive years (known as the Auto-Revocation List).Has filed a Form 990-N (e-Postcard) annual electronic notice. (Most small organizations whose annual gross receipts are normally $50,000 or less are required to electronically submit Form 990-N, unless they choose instead to file a completed Form 990 or Form 990-EZ.)EO Select Check also offers improved search functions. For example, users can now look for organizations eligible to receive deductible contributions by Employer Identification Number (EIN), which was previously not a searchable or sortable field in the electronic Publication 78. And data about organizations eligible to receive deductible contributions are now updated monthly, rather than quarterly.In addition, organizations that have automatically lost their tax exemptions may now be searched by EIN, name, city, state, ZIP Code, country, exemption type, and revocation posting date, rather than only by state. EO Select Check also provides new pop-up help text to assist users in understanding the significance of auto-revocation search results, including the meaning of, and distinctions between, revocation dates and revocation posting dates.
Mortgage Loan Fraud Reports of Suspicious Activity Rose in Third Quarter 2011 Compared with Third Quarter 2010
Mortgage Loan Fraud Reports of Suspicious Activity Rose in Third Quarter 2011 Compared with Third Quarter 2010 (PDF)
Source: Financial Crimes Enforcement Network
The Financial Crimes Enforcement Network today released its Third Quarter 2011 Update of mortgage loan fraud suspicious activity reports (MLF SARs) that shows financial institutions filed 19,934 MLF SARs in the third quarter of 2011 up from 16,567 filed in the same quarter of 2010.
The report also found that 5,728 MLF SARs filed in the third quarter, 29 percent of the total, reported activity that occurred between October 2009 and September 2011. Some of the types of suspicious activity reported included: some form of loan workout or debt elimination attempt, questionable refinance or loan modification attempts by borrowers or others targeting distressed homeowners, and Social Security number discrepancies submitted in the original loan application and the workout request.
+ Full Report (PDF)
SOI Tax Stats – Corporation Source Book: U.S. Total and Sectors Listing
The Corporation Source Book presents balance sheet, income statement, tax, and other selected items by size of total assets for all returns with and without net income. Statistical tables are available by industrial sectors, major groups within a sector, and minor industries within a major group. Industry detail is based on the North American Industry Classification System (NAICS). The Corporation Source Book, which underlies the Statistics of Income–Corporation Income Tax Returns publication (i.e., the Complete Report), is part of an annual series.The listing below is shown by industrial sector.…Data are available for years 2000—2009.
Treasury: Joint fact sheet on strengthening U.S. – China economic relations
Forwarded From the White House: Joint fact sheet on strengthening U.S. – China economic relations
Source: U.S. Department of the Treasury
Building on the consensus reached by President Hu Jintao and President Barack Obama during President Hu’s January 2011 state visit to the United States, the United States and China affirm that our two countries are promoting the healthy and steady development of the U.S.-China cooperative partnership based on mutual respect and mutual benefit. Under the framework of the Economic Track of the U.S.-China Strategic and Economic Dialogue (S&ED), the United States and China recognize the following outcomes.
Treasury Issues Guidance Concerning National Defense Authorization Act Sanctions on Iran
Treasury Issues Guidance Concerning National Defense Authorization Act Sanctions on Iran
Source: U.S. Department of the Treasury
Today the U.S. Department of the Treasury issued guidance concerning the implementation of section 1245 of the National Defense Authorization Act (NDAA).
The guidance clarifies a number of issues related to the implementation of the NDAA provision as it relates to foreign governments, financial institutions, and other interested parties. Among other topics, the guidance addresses the scope of institutions that may be subject to sanctions under the NDAA, the nature of the transactions that are covered, and how the Administration will approach the determination of what qualifies as a “significant reduction” in a country’s purchases of crude oil from Iran.
Executive Order 13599 delegates to the Secretary of the Treasury, in consultation with the Secretary of State, authority to determine whether a foreign financial institution has engaged in significant transactions of the type that trigger sanctions under the Act. The Secretary of State, in consultation with the Secretary of the Treasury, the Secretary of Energy, and the Director of National Intelligence, is delegated authority to determine whether any country has significantly reduced the volume of its crude oil purchases from Iran.
Treasury Releases FY2013 Greenbook
Treasury Releases FY2013 GreenbookSource: U.S. Department of the Treasury
Treasury released the Treasury Greenbook, which provides an explanation of the Administration’s revenue proposals for Fiscal Year 2013. The Administration’s FY2013 budget proposes tax policy to boost growth, create jobs and improve opportunity for the middle class.
+ General Explanations of the Administration’s Fiscal Year 2013 Revenue Proposals (Green Book; PDF)
National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on IRS Funding and Taxpayer Rights
National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on IRS Funding and Taxpayer Rights
Source: Internal Revenue Service
National Taxpayer Advocate Nina E. Olson today released her annual report to Congress, identifying the combination of the IRS’s expanding workload and declining resources as the most serious problem facing taxpayers. The result, the report says, is inadequate taxpayer service, erosion of taxpayer rights, and reduced tax compliance. The Advocate expressed her continuing concern that the IRS’s expanding use of automated processes to adjust tax liabilities is causing harm to taxpayers and recommended that Congress enact a comprehensive Taxpayer Bill of Rights.
+ Executive Summary: 2011 Annual Report to Congress (PDF)
+ Complete Report: 2011 Annual Report to Congress
IRS Offshore Programs Produce $4.4 Billion To Date for Nation’s Taxpayers; Offshore Voluntary Disclosure Program Reopens
IRS Offshore Programs Produce $4.4 Billion To Date for Nation’s Taxpayers; Offshore Voluntary Disclosure Program Reopens
Source: Internal Revenue Service
The Internal Revenue Service today reopened the offshore voluntary disclosure program to help people hiding offshore accounts get current with their taxes and announced the collection of more than $4.4 billion so far from the two previous international programs.
The IRS reopened the Offshore Voluntary Disclosure Program (OVDP) following continued strong interest from taxpayers and tax practitioners after the closure of the 2011 and 2009 programs. The third offshore program comes as the IRS continues working on a wide range of international tax issues and follows ongoing efforts with the Justice Department to pursue criminal prosecution of international tax evasion. This program will be open for an indefinite period until otherwise announced.
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The program is similar to the 2011 program in many ways, but with a few key differences. Unlike last year, there is no set deadline for people to apply. However, the terms of the program could change at any time going forward. For example, the IRS may increase penalties in the program for all or some taxpayers or defined classes of taxpayers – or decide to end the program entirely at any point.
IRS Releases New Tax Gap Estimates; Compliance Rates Remain Statistically Unchanged From Previous Study
IRS Releases New Tax Gap Estimates; Compliance Rates Remain Statistically Unchanged From Previous Study
Source: Internal Revenue Service
The Internal Revenue Service today released a new set of tax gap estimates for tax year 2006. The tax gap is defined as the amount of tax liability faced by taxpayers that is not paid on time.
The new tax gap estimate represents the first full update of the report in five years, and it shows the nation’s compliance rate is essentially unchanged from the last review covering tax year 2001.
The tax gap statistic is a helpful guide to the scale of tax compliance and to the persisting sources of low compliance, but it is not an adequate guide to year-to-year changes in IRS programs or to year-to-year returns on IRS service and enforcement initiatives.
The following table summarizes the new estimates being released today, as compared to the 2001 estimates, along with the total tax liabilities in each year.
The voluntary compliance rate — the percentage of total tax revenues paid on a timely basis — for tax year 2006 is estimated to be 83.1 percent. The voluntary compliance rate for 2006 is statistically unchanged from the most recent prior estimate of 83.7 percent calculated for tax year 2001.
IRS — Enforcement and Service Results for FY 2011
Enforcement and Service Results for FY 2011 (PDF)
Source: Internal Revenue Service
The Enforcement and Service Results for FY 2011 detail the audit, collection and taxpayer service numbers.
FINCEN Annual Report 2011
FinCEN is fundamentally a service organization to law enforcement, and, therefore, we measure our performance in relevant part by our ability to advance the missions of our respective law enforcement customers. FinCEN analysis at the strategic level supports intelligenceled efforts to more efficiently deploy law enforcement resources to combat threats, while case level analysis furthers specific criminal investigations and prosecutions. Even as we have focused for decades on expanding law enforcement access to, and utilization of, the financial transactions reporting that FinCEN collects and holds in the public trust, our collective experience has repeatedly and increasingly confirmed the value to law enforcement of analytical support by FinCEN’s small yet highly specialized team. This can best be understood in the context of the facts that a criminal investigator, even one specialized in financial crime, may spend years on all aspects of a case in which detailed financial transactions analysis comprises only a small percentage of the investigator’s time (even if a critical component) in comparison to other duties involving surveillance, interrogation, evidence gathering, etc.FinCEN dedicates its finite analytical resources to support those criminal investigations demanding advanced expertise in interpreting the ways money moves, involving large amounts of data, or novel situations where the insights from the specific investigation can be extrapolated and shared across the many agencies FinCEN supports. In this past year’s survey of law enforcement, FinCEN’s customers reported a a 6 percentage point increase to 86 percent of them confirming that FinCEN’s analytic reports contributed to the detection and deterrence of financial crime, for example by generating a new lead, providing information previously unknown, or resulting in the opening of a new investigation. This positive impact of FinCEN analytical support in individual cases – be they related to healthcare fraud, narcotics trafficking, or terrorist financing – was particularly noteworthy when viewed in conjunction with the increased number of cases supported: in fiscal year 2011, the number of law enforcement requests received was up 27 percent over 2010 and double that of only two years earlier in 2009.On the regulatory front, FinCEN also delivered more substantive improvements than in perhaps any year in its history. FinCEN saw through to fruition the effort to reorganize our regulations in a more clear and straightforward way, and thereby also provide a logical framework for any future changes. The MSB rules were clarified to better reflect evolution of the industry and its oversight over the past dozen years. FinCEN also expanded its regulations to cover two new sectors: prepaid access and non-bank mortgage brokers and originators, which regulations will take full effect in 2012. The regulations over these two distinct and significant financial sectors address regulatory gaps that criminals have sought to exploit. In 2011, FinCEN also implemented a regulation in furtherance of the Comprehensive Iran Sanctions, Accountability, and Divestment Act, in addition to the abovementioned efforts to implement provisions of the Bank Secrecy Act.
FinCEN Assessment of Impact of Amendments to the Regulations Defining Mutual Funds as Financial Institutions
On April 14, 2010, the Financial Crimes Enforcement Network (FinCEN) published a final rule that became effective on May 14, 2010, the Amendment to the Bank Secrecy Act Regulations – Defining Mutual Funds as Financial Institutions. The amendment was intended to streamline certain requirements for mutual funds by subjecting mutual funds to rules on the filing of FinCEN Form 104, Currency Transaction Report (CTR) and on the creation, retention, and transmittal of records or information for transmittals of funds. FinCEN is committed to reviewing the impact of new regulations, or significant changes to existing regulations, and providing affected institutions with written feedback as part of its efforts to efficiently and effectively implement provisions of the Bank Secrecy Act (BSA).
The primary purpose of this report is to assess the effectiveness of FinCEN’s rulemaking in bringing the mutual fund industry into greater conformity with other parts of the financial industry that currently file CTRs. To make this assessment, this report highlights key findings from analyses based upon trends in industry reporting.
As FinCEN provides this and other feedback to the industry on changes to its regulations and/or trends it finds in overall regulatory reporting, FinCEN encourages financial institutions to respond with reactions and comments to this report and other feedback products. FinCEN provides this information so that financial institutions can improve the effectiveness and efficiency of their AML compliance and general anti-fraud programs. Accordingly, FinCEN wants to make these products as beneficial to industry as possible.
