first_imgThe regulatory expectations surrounding the banking of money service businesses (MSBs) are a frequent source of confusion for financial institutions. Many financial institutions are surprised to receive deficiencies and matters requiring attention in examinations, even though they believe they have followed the regulatory guidance. Because of this confusion, the National Credit Union Administration (NCUA) has announced that it intends to make providing services to MSBs or other types of high-risk businesses a supervisory priority this year, with field staff tasked with targeting this area. This article will discuss potential problem areas for credit unions with MSB customers.MSBs and regulationMSBs are defined generally as businesses transacting largely with cash: currency dealers, check cashers, issuers and redeemers of traveler’s checks, money orders, stored value, money transmitters, and the U.S. Postal Service. MSBs are regulated by the Internal Revenue Service, and with just a few exceptions, all MSBs must register with the Department of the Treasury. In addition to the IRS, most states have Money Transmitter requirements regulated by their DFIs (development finance institution or equivalent) that certain types of MSBs are subject to follow.The FFIEC guidance regarding MSBs clearly states that the Bank Secrecy Act (BSA) does not require, and neither FinCEN nor the federal banking agencies expect, financial institutions to serve as the de facto regulator of their MSB customers. Specifically, the guidance states:“While banks are expected to manage risk associated with all accounts, including MSB accounts, banks will not be held responsible for the MSB’s BSA/AML program.” continue reading » 10SHARESShareShareSharePrintMailGooglePinterestDiggRedditStumbleuponDeliciousBufferTumblrlast_img

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