Feds Encourage Financials to Serve Check Cashers and Other MSBs

WASHINGTON-The Financial Crimes Enforcement Network, NCUA, and the other federal financial regulators recently issued a statement urging depository institutions not to discontinue service to money services businesses because of the perceived excessive risk. Money services businesses cover check cashers and money transmitters. “Money services businesses are losing access to banking services as a result of concerns about regulatory scrutiny, the risks presented by money services business accounts, and the costs and burdens associated with maintaining such accounts. Concerns may stem, in part, from a misperception of the requirements of the Bank Secrecy Act, and the erroneous view that money services businesses present a uniform and unacceptably high risk of money laundering or other illicit activity,” the regulators stated. “The money services business industry provides valuable financial services, especially to individuals who may not have ready access to the formal banking sector. It is important that money services businesses that comply with the requirements of the Bank Secrecy Act and applicable state laws remain within the formal financial sector, subject to appropriate anti-money laundering controls. FinCEN and the Federal Banking Agencies further believe it is essential that the money services business industry maintain the same level of transparency, including the implementation of a full range of anti-money laundering controls as required by law, as do banking organizations.” The statement said that BSA does not require, nor do FinCEN or the regulators expect, financial institutions to regulate MSBs. “Banking organizations that open or maintain accounts for money services businesses should apply the requirements of the Bank Secrecy Act on a risk-assessed basis, as they do for all customers, taking into account the products and services offered and the individual circumstances,” the regulators stated. NAFCU Director of Regulatory Compliance Linda Dent noted that this statement is pertinent to credit unions, particularly community chartered credit unions that may have MSBs within their fields of membership. FinCEN and the financial services regulators promised additional guidance shortly, as well as guidance for MSBs on their compliance obligations. [email protected]