CIP and MSBs

Question: I cannot find any regulation that states that our CIP must address our responsibilities when a customer qualifies as an MSB. Should this be included in the CIP, and if so, any suggestions?

Answer: There is no specific requirement that a CIP program itself address whether or not a customer is an MSB. However, examiners are sending the message that they expect banks to know or find out. Knowing the business and expected transactions of a customer is essential for determining customer risk. The question becomes how to find out. For purposes of complying with BSA, the responsibility lies with the customer, but you should still take steps to be sure the customer is aware of the rules. One way of doing this would be to send a fact sheet to your small business customers about what activities constitute becoming an MSB and what an MSB must do to register. Most small businesses, such as Mom and Pop grocery stores, don't realize that when they cash checks for customers, they could become an MSB. The fact sheet is an easy way to inform them.

Copyright © 2005 Compliance Action. Originally appeared in Compliance Action, Vol. 10, No. 11, 10/05