Question: Is a store which provides an ATM for its customers considered a Money Services Business? We have a customer who owns a stationary store with lottery sales, however, does not provide any other financial services to classify it as an MSB or agent of an MSB. The owner approached us and inquired whether he would be considered an MSB if he put an ATM machine in his establishment to dispense cash only. He is apparently going to purchase the ATM machine, fill the machine as needed, and contract with a vendor to provide the software and communication services. Essentially, he is going to be the owner and operator of the machine.
Since the store is a cash intensive business, we track his transactions for suspicious activity as part of our AML program. However, even though ATMs are not a specific service listed in the definition of MSB, could this type of service be considered an MSB activity and would he need to follow the BSA/AML requirements set forth in the regulation? With an ATM machine, the potential is there for money laundering, even if cash is taken out in small amounts. Any guidance would be greatly appreciated.
Answer: We expect there will be a lot of questions on which business is an MSB and which is not. If you are truly in doubt, it's safe to assume it is. The Code of the Federal Register - 31 CFR Ch. 1 - 103.15 (uu) defines a Money Service Business. You should keep a copy on the new accounts desk. It very clearly lists:
Currency dealer or exchanger
Check casher
Issuer of traveler's checks, money orders, or stored value
Seller or redeemer of traveler's checks, money orders, or stored value, (over $1,000 in each case)
Money transmitter
Owning and servicing an ATM does not fall into any of these categories, so if all your customer wants to do is set up an ATM for withdrawals, then no - according to the definitions, it's not a money service business - especially if all the ATM will do is dispense cash. And with the types of AML monitoring you have in place, you've covered your exposure for possible money laundering also.
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