Regulation: FinCEN's proposals for non-bank residential mortgage lenders
It's a mark of just how tunnel-visioned the USA's counter-money laundering strategy is that it is only now getting around to thinking about including non-bank lenders in its regulatory net. The US needs a massive kick in the soft bits and told to get its law sorted out, says Nigel Morris-Cotterill, Head, The Anti Money Laundering Network. It's time the FATF stepped in and issued a warning about the USA, he says.
The USA is retarded. It has an obsession with "codifying" - that is making detailed rules. It has driven this policy around the world - but fortunately in many cases (not enough) it has been told to get lost.
An example is the fact that the US has still not got its head around risk-based assessment for money laundering purposes.
Perhaps it's just that those who define policy are just too lacking in imagination. But more likely it's that they are thick and arrogant - and subject to pressure from industry activists.
Let's make this plain: if the mortgage industry is subject to money laundering risk - as it is and only a dimwit would say otherwise - then it is totally irrelevant who the lender is.
So, the regulatory and compliance regime should apply equally to all of those who grant mortgages. It's common sense.
But in the USA, incredibly, money laundering risk is NOT regarded as universal across mortgage lenders.
In the land where "hedge funds" and "financial intermediaries" have been relieved of their duty to undertake any form of due diligence with the withdrawal late last year of the "draft final rule," and where securities houses have no strict duty to perform due diligence on their customers prior to mid 2005, to find yet more holes in the system is outrageous.
If the FATF had the courage of its convictions, it should produce a warning notice indicating the risks of dealing with US financial institutions. The US roams the world threatening to blockade banks if they act in ways that US politicians don't like. It's time foreign institutions started asking serious questions about the weak systems and controls imposed by US law.
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