Feds Issue Guidance and Advisory on Money Services Businesses
WASHINGTON-The federal financial services regulatory agencies, including NCUA, and the Financial Crimes Enforcement Network issued joint guidance and an advisory April 26 on banking services for money services businesses in the United States. Regulators have expressed concern that depository institutions have not been serving money services businesses-such as check cashers and wire transfer businesses-because of risks associated with the USA PATRIOT and Bank Secrecy Acts. The interpretive guidance clarifies requirements for and helps financial institutions to assess and minimize the risks involved in dealing with money services businesses. FinCEN also issued a concurrent advisory to money services businesses to emphasize their BSA obligations and explain the types of information they are expected to provide to a banking organization to open or maintain accounts. It makes clear that money services businesses that fail to comply with the most basic requirements of the BSA will be subject to scrutiny and continued non-compliance will likely result in the loss of banking services. The federal regulators stated that they wanted accounts for money services businesses treated on a risk-weighted basis like all others as it pertains to the BSA. BSA requirements demand credit unions and banks, at a minimum: * Apply the banking organization's Customer Identification Program; * Confirm FinCEN registration, if required; * Confirm compliance with state or local licensing requirements, if applicable; * Confirm agent status, if applicable; and * Conduct basic risk assessment to determine the level of risk associated with the account. "While banking organizations are expected to manage risk associated with all accounts, including money services business accounts, banking organizations are not required to ensure their customers' compliance with all applicable federal and state laws and regulations," a statement from federal regulators read. The guidance also explains that credit unions and banks should file suspicious activity reports on money services businesses that are not registered with FinCEN, if required, or did not get a state license, if required. The guidance is available at http://www.fincen.gov/fincenadv 04262005.pdf.