Answer:
This customer could be a lemon. A majority of auto loan customers do not trade-in a vehicle every other month just to purchase another one. Your institutition may want to ask some additional question to determine if this activity warrants a SAR. According to the FFIEC BSA/AML Exam Manual, institutions are now required to conduct Customer Due Diligence (CDD) to help the bank to predict with relative certainty the type of activity in which a customer is likely to engage. Below are some sample questions and action steps to help start the review process:
- Have your Loan Officer ask the customer why he consistently trades in his vehicles (Determine if his explanation makes sense).
- Review the loan application to determine his occupation/employer (e.g. Is he a college student with little money or is he a Professional football player who just loves driving different cars and doesn’t care about money).
- Look to see if he has deposit accounts with your bank and review them for possible suspicious activity.
- Determine the customer’s source of funds used to make car payments.
- Look at the location of this activity - Is this being done in a HIFCA (High Intensity Financial Crimes Area) or HIDTA (High Intensity Drug Trafficking Areas) which might increase the risk level of this activity.
After gathering all available information, you will need to make a decision if the activity makes sense or considered suspicious for this particular customer. If suspicious, you must file a SAR and review the activity again in 90 days to see if it has continued.
First published on BankersOnline.com 9/25/06
print
share