Private Money Lending--Requests Made by my Bank

[John Jacobs]

Hello BP,

I have been a very active private money lender since 2014. I have a single member LLC (me as the sole member) that lends only to real estate investors. That is I do not lend to owner occupants. I only lend to businesses (i.e. LLCs and Incs.) who are renovating the property for sale or to keep as a buy and hold rental. I only lend in states in which I do not have to have a license in order to lend. My lending entity (i.e. my LLC) has a bank account at a national bank. I have been making loans out of this bank account since 2014. For all loans, amongst other things, I have a recorded Mortgage/Deed of Trust, Promissory Note, and Personal Guarantee in place.

Yesterday, out of nowhere, my bank reached out to me and asked me if my business was regulated. I said no. I explained to them the nature of my business. The bank is now requiring the following two things from me: (1) That there be an Anti-Money Laundering (AML) Program in place. (2) That I have a Third Party Audit conducted of my "company" which as stated is a single member LLC.

Does anyone have any experience with the above requests?  I am considering moving my money to another bank.  On the other hand I might consider complying but frankly I don't know how to get the two aforementioned requests accomplished.

Thoughts?

JJ

[Jay Hinrichs]

banks have to do patriot act.  I have never heard of this. 

I would simply get away from any large bank and go to a small local community bank that will cherish your deposit relationship..

I mean I have also had up to 30 million in Lines of credit for HML ing and they never once asked for any of this. Although of course to get the LOC's its full doc financials etc.

But for you lending your own dough this is not something I would even remotely consider personally.