Has anybody ever heard of a rule that we cannot put "Personal" as a purpose on loan documents if the loan is over $5,000? My old bank branch went by this rule but the new one doesn't. I'm trying to find proof on this either way. I don't even know which reg to begin with. Thanks!

If you are a HMDA reporter and report non mortgage secured home improvement loans it could affect you. Also, BSA requires any loan of over $10,000 non-real estate secured have a specific purpose. Plus, why wouldn't your bank want to know what the customer is doing with the money. Here we always (OK - most of the time) have a specific purpose.

Every loan I have ever gotten is for personal purposes. Labeling a loan as personal purpose tells you nothing.

Can anybody tell me where the rule is in BSA? I need to show an officer proof of this rule.

I found something at the FFIEC website that makes it sound like it is opional to me:

• A record of each extension of credit in an amount in
excess of $10,000, except an extension of credit
secured by an interest in real property. The record
must contain the name and address of the borrower,
the loan amount, the nature or purpose of the loan,
and the date the loan was made. The stated purpose
can be very general such as a passbook loan, personal
loan, or business loan. However, financial institutions
should be encouraged to be as specific as possible
when stating the loan purpose. Additionally, the
purpose of a renewal, refinancing, or consolidation is
not required as long as the original purpose has not
changed and the original statement of purpose is
retained for a period of five years after the renewal,
refinancing or consolidation has been paid out.

You may find the following of some interest:

CMP: $250,000 Agencies: OCC Assets 9/30/06: $807 million

The International Bank of Miami, N.A., Coral Gables, Florida, is alleged to have violated the Bank Secrecy Act; to have engaged in unsafe and unsound practices when it failed to supervise adequately its Capital Markets Group (CMG); and to have failed to ensure that CMG's securities transactions were conducted safely, soundly, and legally. Specifically, the OCC's order alleges that the bank:

• Violated the BSA and 31 CFR 103.33(a) [records of loan transactions] by permitting CMG to maintain records that frequently failed to adequately identify a legitimate business purpose for loans, or fully and adequately describe the nature and purpose of loans (loans were described merely as being for "working capital").

• Failed to maintain a system of controls to monitor and report suspicious activity.

• Failed to adequately identify and monitor accounts of politically-exposed persons (PEPs).

• Failed to monitor loans accounts and payments for suspicious activity.

• Did not have an adequate training program on detecting and reporting suspicious activity.

• Permitted CMG to make loans that did not conform to the bank's own lending policies, and to omit obtaining proper authorization for large credits.

• Allowed CMG to provide incomplete or inadequate loan documentation and recordkeeping, not in accordance with bank policies.

• Failed to do adequate customer due diligence, especially for high-risk customers.

• Allowed CMG to maintain an inadequate record of its securities transactions.

• Permitted OMG to engage in securities transactions in violation of OCC regulations.

• Allowed CMG to conduct securities transactions with high-risk countries without risk management procedures.

Once upon a time, the BSA threshold was $5,000. Some banks' policies date back to that time and weren't changed when the rule was amended.

Basically, if all you know is "personal" or "business" how can you make any determination at all whether or not the transaction makes sense for the borrower?