Sensitivity on MSBs

Money Service Businesses have to bank somewhere. If that somewhere is your bank, you should be aware of the MSB requirements for registering with FinCEN. While the registration and other forms of compliance, such as reporting, is the primary responsibility of the MSB, the existence of an MSB as a deposit customer of a bank brings a high level of risk to the bank. Thus, regulatory agencies expect banks to recognize and manage this risk. OCC's AL 2004-7 outlines steps banks should take to manage the risk associated with MSBs as deposit customers.

In terms of risk management, financial institutions should determine that MSBs are registered and that they have adequate anti-money laundering policies and controls. In addition, institutions should conduct due diligence on MSBs and their owners and closely monitor the account activity.Copyright © 2004 Compliance Action. Originally appeared in Compliance Action, Vol. 9, No. 10, 10/04