We have had a Latino grocery store as a customer for 20-years. They have sold MoneyGram money orders for the last 10-years and it is a very, very small % of their business and has certainly not impacted their CTR exempt status. Also, as BSA Officer I have never had a SAR referral for this customer.
Obviously, they have never registered as an MSB with FinCEN because of the money order activity (as an agent of MoneyGram).

About 6-months ago (unbeknowst to me) they started originating wire transfers (ACH?) transfers to Latino countries (primarily Mexico) via a product called InterCambio Express. From what I can gather, the charge is $8.00 for transfers up to $1,000 and $12.00 for amounts greater than $1,000. The realize the amount of the fees really don't matter, but I just wanted to provide some background information.

Based on account research, on a typical day their account is automatically charged approximately $1,500 by "InterCambio" for total transfers made. Some days there are no transfers, other days there are total transfers of say $2500-$3000. That is why I say the average is around $1200-$1500, but I would guess the individual transfers are probably in the $200-$300 range. We have an employee that has a grandmother that uses the service and she is in that range.

I'm fine with leaving this country on my exempt list as they are a grocery store/deli and a gift shop. (eligible activities are 99+% of their business). However, after some additional research on the accounts, I may add this customer to my high risk customer list....because they are now an MSB for two products; money orders and inter-country money transfers.

Where I need help is as follows:

1. Has anyone heard is InterCambio Express? Is it similar to MoneyGram or Western Union in that this grocery store is merely an agent of InterCambio Express?

2. If the grocery store is merely an agent do they still need to register with FinCEN as an MSB because they are facilitating inter-country wires (or ACHs or however they get the money transferred)???

Thanks for any responses.

1. Never heard of them, but a quick Google search reveals: http://www.intercambioexpress.com/e_faq.htm

2. I don't like calling mom and pop grocery stores MSBs...Unless they truly are. Which means cashing checks over $1,000 to any one customer in a single transaction(which is the most common case of a local grocery store being classified as an MSB), or if their transmitter services are a significant source of the store's revenue, usually more than 25%.

If they are only serving as an agent for a transmitter, or money order company, I generally don't consider them to be an MSB under the regulatory definition. Higher risk profile for monitoring purposes? Definitely. An MSB subject to all that definition entails? No.

The key to me is risk, products involved, and transaction volume.

** I forgot to add - If you do determine after reviewing the customer's activity that they are, in fact, operating as an MSB, I wouldn't exempt them from CTRs. **

FBH, thank you for helpful comments and insight.

I will respectfully disagree with FBH. The customer is most certainly an MSB with the only difference being that they do not have to register with FinCEN since they are a registered agent of another MSB (MoneyGram). Insofar as Intercambio, I suggest that you contact your customer about this activity and if they state that they are a registered agent you should request a copy of their agreement (as you probably did for the MoneyGram agreement). You also need to do your due diligence on Intercambio. Finally, I would never exempt an MSB customer, agent or otherwise.

devsfan - I think you're needlessly expanding the definition, but everyone interprets the rules differently.

Laketime - here's the most up to date definitions I could find on MSBs. It's bes to read it yourself and make a determination based on your interpretation. Page 10 is where it gets into what activities constitute being, and not being, an MSB.

Local grocery stores who act as agents, in my opinion, merely providing access to money transmission services, they are not the actual transmitters, and thus, not MSBs. If they are cashing checks locally, or cash checks for purchases, and give the remainder to the customer, they may be an MSB if the dollar threshold exceeds $1,000 per person, per day.

Again, best to read and determine for yourself: http://edocket.access.gpo.gov/2009/pdf/E9-10864.pdf

And I respectfully disagree with devsfan. Please don't be scared to exempt MSBs. I have several that I exempt. The businesses were willing to supply a financial statement showing all their sales, any certifications and licenses that I requested. Remember law enforcement only wants useful info in the CTR database. Reporting Mom & Pop who have been in business for years when nothing appears suspicious isn't exactly useful.

I agree - Exempting an MSB would be based on comfort level of the bank, the due diligence process it imposes and whether or not the MSB can provide the revenue information to allow the bank to determine whether they qualify under the revenue restrictions for ineligible business activity.

Intercambio Espress, Inc. is a registered MSB out of Indiana. If mom and pop are agents, they are an MSB under the definition, but they just don't have to register. Check the examination manual:

See 31 CFR 103.41. All MSBs must register with FinCEN (whether or not licensed as an MSB by any state) except: a business that is an MSB solely because it serves as an agent of another MSB; a business that is an MSB solely as an issuer, seller, or redeemer of stored value; the U.S. Postal Service; and agencies of the United States, of any state, or of any political subdivision of any state. A business that acts as an agent for a principal or principals engaged in MSB activities, and that does not on its own behalf perform any other services of a nature or value that would cause it to qualify as an MSB, is not required to register with FinCEN.

You are still expected to do your due diligence to make sure they are acting under an agency agreement. Again, see the examination manual.

MSB Due Diligence Expectations

Registration with FinCEN, if required, and compliance with any state-based licensing requirements represent the most basic of compliance obligations for MSBs. As a result, it is reasonable and appropriate for a bank to require an MSB to provide evidence of compliance with such requirements, or to demonstrate that it is not subject to such requirements due to the nature of its financial services or status exclusively as an agent of another MSB(s).


There is no $1,000 a day threshold for a money transmitter under the MSB defintion found in 103.11(uu):

(5) Money transmitter--(i) In general. Money transmitter:

(A) Any person, whether or not licensed or required to be licensed, who engages as a business in accepting currency, or funds denominated in currency, and transmits the currency or funds, or the value of the currency or funds, by any means through a financial agency or institution, a Federal Reserve Bank or other facility of one or more Federal Reserve Banks, the Board of Governors of the Federal Reserve System, or both, or an electronic funds transfer network; or

(B) Any other person engaged as a business in the transfer of funds.

I think that this from FinCen may be of some help.

They may not be a MSB as per FinCen

http://www.fincen.gov/financial_institutions/msb/pdf/FinCENfactsheet.pdf

Have to go with ricarey on this one. It's still an MSB if it engages in any of the defined activities, but may not have to register with FinCEN. As he says, there is no threshhold for money transmitters, so the agency agreements would exempt them for FinCEN purposes only on the money transfers.

Exempting them is just a matter of your policies and comfort.

Sorry If I gave the incorrect impression I believe (and agree) that they should by classifed as a MSB for Bank (risk) purposes.

They may be per FinCen due to the money transmitter provision. (no dollar threshold)

Original Poster here. First of all thanks everyone for the input. Let's beat this horse just a bit more with some stats. I analyzed the deposits of this Latino grocery store/deli/seller of money orders/transferer of monies to Latino countries and here's what the review revealed (I know, I know, I probably should have looked at this a bit more earlier, but for the last few years I have felt more comfortable with what was going on with the store since their business has been shrinking because of additional competition, the economy, the number of Latinos leaving the area/returning to country of origin because of lack of jobs, etc., etc.). If their revenues/deposits would have been increasing I obviously would have been much more concerned.

2010- ave. TOTAL monthly deposits (approx) $600,000
ave. monthly sales of money orders (included in the $600,000 total): $40,000
ave. monthly InterCambio transfers (included in the $600,000 total): $20,000

Hope this makes sense.

I plan to continue exempting the long-time customer, but now that I have added them to my high risk listing I will be performing more in- depth analysis every six-month (that is the frequency with which I review high-risk accounts).

FBH thanks for the link to FinCEN Notice of Proposed Rulemaking from May, 2009. I remember seeing it at the time, but not taking the time to actually read it (must have been busy with FACTA or something!). I just knew FinCEN was clearly, along with the rest of us, struggling with the whole MSB-issue. I read it last night and have an even greater appreciation for the complexity of the MSB topic. There are MSBs and then there are MSBs. Banking most of them shouldn't scare us....but then there's a small percentage that should scare the daylights out of us. Now if there was just a simple way to recognize the ones that should scare us...............