INTERCONTINENTIAL CAPITAL GROUP

ANTI-MONEY LAUNDERING PROGRAM

Effective 2-25-2016

Purpose
The Anti-Money Laundering (“AML”) program is designed to comply specifically with
the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Department of
the Treasury (“Treasury”), Final Rule which defines non-bank residential mortgage
lenders and originators (“RMLOs”) as loan or finance companies for the purpose of
requiring them to establish anti-money laundering programs and report suspicious
activities under the Bank Secrecy Act (“BSA”). The rule is effective April 16, 2012 and
the compliance date for 31 CFR 1029.201 is August 13, 2012.

Intercontinental Capital Group (ICG) is committed to compliance with AML regulations.

Management and employees are required to understand and adhere to these policies and
procedures.

Background
This program was originally designed to comply with the Executive Order 13224 issued
by President Bush on September 24, 2001 to block the property of, and prohibit
transactions with, those who commit, threaten to commit, or support terrorism. While
loan and finance companies were required to comply with the Office of Foreign Asset
Control (“OFAC”) provision, in 2002, FinCEN temporarily exempted loan and finance
companies from the requirement to establish AML programs, to allow the opportunity to
study whether BSA requirements should be applied to the loan and finance companies.

FinCEN has now determined that RMLOs are in a unique position to assess and identify
money laundering risks and fraud because they are dealing directly with the consumers
regarding their financial needs, and must establish AML programs.

Money Laundering Defined

Money laundering occurs when someone uses legitimate financial mechanisms to make
the proceeds of his or her illegal activity appear legitimate. Recent events have revealed
that some activities, including terrorist activities, may be financed through reverse money
laundering, that is, using legitimate sources of funds to support illegal activity.

Company Policy Against Money-Laundering

The Company has developed and implemented an AML program that is reasonably
designed to prevent the company from being used to facilitate money laundering or the
financing of terrorist activities. The AML program has been approved by senior
management. A copy of the AML program is available at all times to FinCEN or it’s
designees upon request.

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AML Program Requirements
RMLOs are required to develop and institute an anti-money laundering program that at a
minimum:
 Includes internal policies, procedures and controls;
 Designates an officer to administer and oversee the program;
 Provides for ongoing employee training; and
 Includes an independent audit function to test programs

Internal policies, procedures and controls

 Effective risk management
 Development and implementation of policies, procedures, such as AML, OFAC
and Red Flags policies
 Verification of customer identity
 Filing of required reports
 Creation and maintenance of required records
 Responding to law enforcement requests

Compliance Officer
The Anti-Money Laundering Compliance Officer (“Compliance Officer”) is
Mindy Bass. The Compliance Officer will ensure that
 the AML policy is implemented effectively, including monitoring compliance by
the company’s agents and brokers with their obligations under the program
 the AML program is updated as necessary
 appropriate persons are educated and trained concerning their responsibilities
under the AML program
 Compliance officer is required to
o Participate in annual training.
 Review of Policy - The AML policy must be reviewed at least annually for
compliance with current law, history within the company of Suspicious Activity
Reports, and industry trends. In addition, the review must include a determination
that suspicious activity was appropriately reviewed and responded to, and
reported to the applicable agency. Review is to be conducted by outside vendor.

Anti Money Laundering Committee

Management will name an AML Committee, which will consist of the Compliance
Officer and Officers of the company. The number of members of the Committee is
determined by the company size. The Committee is currently functioning as a subset of
the company’s Quality Control, Quality Assurance and Compliance Committee.

Training
All employees are given the company’s AML policy at the onset of employment by
ICG’s Human Resources department and acknowledge receipt of same.
Effective March 1, 2016, HR will provide the AML Compliance Officer and the Chief
Operating Officer copies of the acknowledgements.
The company provides initial and on-going training of management and employees
regarding their responsibilities under the AML program. This requirement can be

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satisfied by a) the company directly training such persons, or b) verifying that such
persons have received training by a competent third party.

The AML Compliance Officer shall be responsible for providing applicable associates
who have a reasonable expectation of dealing with or being exposed to money laundering
acts on more than an occasional basis, with information and training relative to the
detection of money laundering activities. ICG has determined that this includes
accounting, processing, underwriting and sales staff (including MLO’s and sales
assistants).

Training will be conducted for all new employees in designated areas within 30 days of
employment, and at least annually for existing employees in designated areas. This
training may be held in conjunction with or as part of other fraud-related training.

Specific information relative to the requirements of the Patriot Act, the Anti-Money
Laundering Program and how to identify “red flags” that could indicate suspicious
behavior will be provided to all affected employees.

Training will include:

 The AML policy
 Laws covering AML, Bank Secrecy Act, Patriot Act, OFAC
 How the policies impacts each person’s job responsibility
 Red Flags
 How to respond to an AML risk or red flag
 Reporting suspicious activity to the AML Committee

The AML Compliance Officer will maintain a record of attendees and successful course
completion.

Testing
Independent testing is provided to monitor and maintain an adequate program. The
testing may be conducted by a third party or by any officer or employee of the loan or
finance company (other than the AML Compliance Officer). We are currently using
First Compliance Group to audit our program, and this audit will be performed annually
in January of each calendar year.

Policies, Procedures and Controls

Intercontinental Capital Group has internal controls in place to assist in the detection and
prevention of money laundering activities.

As the types of transactions that may be used by a money launderer are almost unlimited,
it is difficult to define a suspicious transaction. However, a suspicious transaction will
often be one that is inconsistent with a customer’s known, legitimate business or personal
activities or that is inconsistent with the normal course of business for a mortgage loan
borrower.

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The following are examples of activity that may be indicative of unusual or potentially
suspicious activity (“Red Flags). These examples are not intended to be all-inclusive;
there may be other types of unusual behavior that could indicate a potentially suspicious
activity.

 A customer exhibits an unusual concern regarding the Company’s compliance

with government reporting requirements, particularly with respect to his or her
identity, type of business and assets, or is reluctant or refuses to reveal any
information concerning business activities, or furnishes unusual or suspect
identification or business documents.
 The customer wishes to engage in a transaction that lacks business sense or is
inconsistent with the customer’s stated business.
 The information provided by the customer that identifies a legitimate source for
funds is false, misleading, or substantially incorrect.
 The customer refuses to identify or fails to indicate any legitimate source for his
funds or other assets.
 A customer has a questionable background or is the subject of news reports
indicating possible criminal, civil or regulatory violations.
 The customer exhibits a lack of concern regarding transaction costs.
 A customer appears to be acting as the agent for another entity but declines,
evades or is reluctant, without legitimate commercial reasons, to provide any
information in response to questions about that identity.
 A customer has difficulty describing the nature of his or her business or lacks
general knowledge of his or her industry.
 A customer wishes to make a lump sum payment by wire transfer originating
from a country known as a suspected financial haven such as the Cayman Islands,
Colombia, Hong Kong, Lichtenstein, Luxembourg, Panama, or Switzerland.
 A customer wishes to make a payment with foreign currency. The customer
attempts to conduct frequent or large transactions, or asks for exemptions from
the company AML policies.
 The customer engages in transactions involving cash or cash equivalents or other
monetary instruments that appear to be structured to avoid the $10,000
government reporting requirements, especially if the cash or monetary
instruments are in an amount just below reporting or recording thresholds.
 For no apparent reason, the customer has multiple accounts under a single name
or multiple names, with a large number of inter-account or third-party transfers.
 The customer has unexplained or sudden extensive money service activity.
 The customer has a large number of wire transfers to unrelated third parties
inconsistent with the customer’s legitimate business purpose.
 The customer makes a fund deposit followed by an immediate request that the
money be wired out or transferred to a third party, or to another firm, without any
apparent business purpose.
 The customer requests that a transaction be processed to avoid the company’s
normal documentation requirements.

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  The customer used multiple accounts, or maintains accounts in the names of
family members or corporate entities, with no apparent purpose.
 The customer has cash flow or other assets well beyond the known income of
resources of the customer.

The following potential Red Flags may be indicators of illicit activity related to
mortgage fraud, but are not an exhaustive list.

 Borrower submits invalid documents to cancel or pay off existing loan balance
 Same notary public or other ‘authorized representative’ preparing, signing and
sending packages of debt elimination documents for multiple borrowers, or
working with or receiving payments from large number of borrowers
 Borrower applies for primary residence but does not reside there, or other
individuals reside there
 Language in a short sale contract indicates that the property could be resold
promptly, a sign of possible illegal ‘flipping’.
 Low appraisal values
 Unlicensed agent of the buyer and/or seller in a mortgage transaction
 Improper or incomplete file documentation
 Apparent resubmission of rejected loan application with key borrower or buyer
details changed or modified
 Request from third party affiliates on behalf homeowners to pay advance fees for
services involving mortgage counseling, foreclosure avoidance, loan
modification, etc.
 Third party solicitation of distressed homeowners for purported mortgage
counseling, foreclosures avoidance, loan modification or other services.

Company will view these Red Flags in the context of other indicators and the individual
fact patterns. The presence of any of these Red Flags may indicate a need for further due
diligence and a decision whether to file an SAR.

In addition, the following types of mortgage loan fraud should be reported in Suspicious
Activity Reports.
 Occupancy Fraud – when borrowers claim that properties will be their primary
residences (instead of vacation or investment properties) in order to obtain better
loan terms
 Income Fraud
o Overstating income to qualify for a larger mortgage amount, or
o Understating income to qualify for hardship concessions and
modifications
 Appraisal Fraud
o Overstating the value to obtain higher sale amount or refinance, or
o Understating the value to purchase a property at a discount
 Employment Fraud – misrepresentation of
o Whether, where and length of time of employment

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 o Whether borrower is collecting unemployment benefits or is unemployed
o Whether borrowers are independent contractors or business owners
 Liability Fraud – when borrowers fail to list significant liabilities, such as
mortgages, car loans, student loans, on mortgage applications, to avoid a lender’s
accurate assessment of ability to repay
 Debt elimination schemes – using fake legal documents and alternative payment
methods to argue that existing mortgage debt is invalid or illegal. Some scams
require fees from the borrowers for the ‘services’.
 Foreclosure rescue scams – fraudulent offers of services purportedly to stop or
delay a foreclosure. Some scams require the homeowner to transfer title to the
‘rescuer’ or to make monthly payments to the rescuer instead of to the mortgage
holder. Some ‘rescuers’ require advance fees for the ‘servicers’.
 SSN Fraud and other Identity Theft – use of an SSN or other government id card
that belongs to someone else in a loan application. Identity theft includes broader
use of another’s identity to obtain a mortgage.
 Home Equity Conversion Mortgage (HECM) – Reverse mortgage schemes which
targets seniors for purpose of stealing or acquiring some or all of the funds a
senior receives from a HECM program. This may involve other frauds, including
appraisal or investment fraud, or identity theft to acquire HECM funds without
the knowledge of the senior who owns the property.

Suspicious Activity Reports

If an associate becomes aware of such activity, the associate must notify his or her
manager as well as notify the AML Compliance Officer, along with supporting
documentation, for further review. The AML Compliance Officer will convene a
meeting of the Compliance Committee, which will review the circumstances to determine
if the Company will file a Suspicious Activity Report (“SAR”) to FinCEN.
The investigation may include:

 Researching and obtaining more information from internal and/or external sources
 Contacting the applicable government entity
 Suspending or denying the loan
 Filing a Suspicious Activity Report with FinCEN

A transaction will be reported if it involves aggregates funds or other assets of at least

$5,000, and the company knows, suspects, or has reason to suspect that the transaction:
a) involves funds derived from illegal activity or is intended or conducted to hide
or disguise funds or assets derived form illegal activity as part of a plan to violate or
evade any Federal law or regulation or to avoid any transaction reporting requirement
under Federal law or regulation
b) is designed to evade any of requirements of the Bank Secrecy Act
c) has no business or apparent lawful purpose or is not the sort in which the
customer would normally be expected to engage, nor does the company know of any
such reasonable explanation
d) involves use of the company to facilitate criminal activity

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A SAR will be filed with FinCEN of any suspicious activity relevant to a possible
violation of law or regulation. Company may also file with FinCEN a report of any
suspicious transaction that it believes is relevant to the possible violation of any law or
regulation, but whose reporting is not required. Beginning August 13, 2012, Company
will file Suspicious Activity Reports (“SAR”) in accordance with filing instructions in
effect as of that date. Updated SAR filing instructions are included on the FinCEN
website www.fincen.gov.

When more than one company has an obligation to report the same transaction, one joint
report may be filed, provided that the report filed contains all relevant facts, including the
name of each financial institution involved in the transaction, the report complies with
instructions applicable to joint filings, and each institution maintains a copy of the filed
report, with supporting documentation.

Non-Disclosure of SAR
RMLOs are prohibited from notifying any person involved in the transaction that the
transaction has been reported. Any RMLO, director, officer or employee, if subpoenaed
or requested to disclose an SAR is prohibited by law from doing so. The required
response in that case is to notify FinCEN of any such request.

What to file
ICG will report a suspicious transaction to FinCEN by filing a Suspicious Activity Report
(“SAR”) via the website developed by FinCEN, and collecting and filing any supporting
documentation. The NMLS Id of the Company must be included in the narrative section.
Who files with FinCEN
ICG has registered two officers with FinCEN who are set up to file SAR’s through the
website. Those officers are Mindy Bass, the AML Compliance Officer, and Karen
Schoenfeld, the company’s Chief Operating Officer.

When to file
ICG will file the SAR no later than 30 calendar days after the date of the initial detection
by the company. If no suspect has been identified, the filing of the SAR may be delayed
by an additional 30 days to identify a suspect, but in no case will reporting be delay by
more that 60 calendar days.

Mandatory reporting to law enforcement

If the situation involves violations that require immediate attention (suspected terrorist
financing or ongoing money laundering schemes), ICG will immediately notify by
telephone an appropriate law enforcement authority in addition to filing the SAR.

Voluntary notification to FinCEN

ICG may voluntarily report suspicious transactions that may relate to terrorist activity by
calling FinCEN’s Financial Institutions Hotline at 1-866-556-3974 in addition to filing a
timely SAR.

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Confidentiality of SARs
ICG, or any director, officer, employee or agent of Company, will not disclose a SAR or
any information that would reveal its existence. However, the SAR may be disclosed to
1) any government agency that is examining ICG for compliance with the BSA, or 2) to
another financial institution for the preparation of a joint SAR or 3) to a director, officer,
employee or agent of Company within Company’s corporate organization structure for
purposes consistent with Title II of BSA. Government authorities shall not disclose a
SAR except as necessary to fulfill official duties consistent with Title II of BSA.

Retention of Records
Company will maintain a copy of any SAR filed, and any supporting documentation, for
a period of five (5) years from the date of the SAR filing. Company will make the
documentation available to FinCEN or any other agency that examines the company for
compliance with BSA.

Safe Harbor - Limitation on liability

Company, and any director, officer, employee or agent of Company, that makes a
voluntary disclosure of any possible violation of law or regulation to a government
agency or to any other authority, is protected from liability for any such disclosure.

Employee Approval

In signing, I acknowledge that I am in receipt of the Intercontinental Capital Group Anti-

Money Laundering Policy and Program and have been given an opportunity to ask a
company Representative questions (if any) that I may have concerning the stated contents
of this Policy.

Employee Signature: _______________________ Date: __________________

Employee Name: __________________________

Employee Title: ___________________________