What should a bank do if it suspects one of its employees may be involved in mortgage loan fraud?

According to the ACAMS Study Guide for the CAMS Certification Exam (6th edition), page 215, one of

the best practices for banks to prevent and detect mortgage fraud is to conduct internal

investigations when there are red flags or suspicions of fraud involving bank employees. The

investigation should include reviewing the employee’s loan files, interviewing the employee and

other relevant parties, verifying the information and documents provided by the employee, and

documenting the findings and actions taken. Filing a suspicious activity report (SAR) may be

appropriate after the investigation is completed and the bank has reasonable grounds to suspect

fraud. Filing a police report or initiating civil litigation may also be options depending on the

outcome of the investigation and the bank’s policies, but they are not the first steps to take when the

bank suspects an employee of mortgage fraud.

Reference:

ACAMS Study Guide for the CAMS Certification Exam (6th edition), page 2151

Mortgage Fraud: Understanding and Avoiding It2

Mortgage Fraud: What You Need To Know3