Hopefully someone can share their insight with me. I have been told by a MSB that they will not give us any of the required information due to the fact that the larger institutions they deal with do not require this information. The business is a large well know retailer. How is that possible that they do not have to provide any information? Is there a loophole that I am unaware of? We are not that small of a FI with 11 branches. Any help with this will be greatly appreciated. We have lost this account due to my request for the MSB information.

I would go to msb.gov and print out all the relevant info. you can find and get it to them. Emphasize that you aren't making the rules, and you're not sure why other FIs aren't requiring this, but you have to.

I explained to them that it is a Federal requirement of the Bank Secrecy Act and she still told me they would not give me any information regarding their policies, their registration number or any audit information. She insisted that they have an on staff BSA officer who is aware of this issue and that no other FI has asked for this information. It makes me wonder if I know what I am required to do. How are these large FI, as she put it, gathering this information for their exams?

Good question. Will she give you their Compliance Officers number so you can discuss it further?

No, she would not. I have since called her back and left a message that I would like to discuss who these large FI are so I may contact them and find out how they are not requiring information on MSB's. So far she has not returned my call. I also called their main office and asked to speak to their BSA officer and there is no-one there with that title. So I asked to speak to someone who handles government regulations and was given another voice mail so I left a message that I needed to speak to someone regarding the Bank Secrecy Act. So far no response.

How important is this account to your bank?

I would just tell them to go away; that's why I am not in marketing or sales... It could be that the big banks just didn't get around to it yet.

A few of the "really big banks" have dropped MSBs from their customer list. They are no longer providing accounts for them.

It's not that important financially to the bank. I feel we are simply a clearing house for their checks. When I explained this to our CFO he asked me to investigate how other FI's are getting around this requirement. I find it hard to believe that is possible with everything I have read. Devil Queen, you may be right and they have not gotten around to it yet. Perhaps it will take a few more large banks to be found in violation before everyone gets on the same program. I just want to ensure that my FI is not one of those that have not complied with this regulation.

I am just curious if this is a well know national retailer that is publicly traded, we may have the same customer.

Your bank should not deal with a customer that refuses to provide you with any information about their AML program. You should make certain that all in your organization are "on board" with the decision, and then emphatically inform the customer that if they refuse to cooperate, they can have 10 days to get their accounts out of your bank.

Personally, I think their statement that "the big banks don't require" them to provide the information is unadulterated bovine droppings. It just does not seem reasonable.

Cow chips, John, cow chips.

The big banks are pushing their MSB customers at least as hard as smaller banks are. Moreover, this is not a recent development for them.

To: Thomas J. Yes it is.

To the others out there, does the fact that this is a publicly traded, Phase I exemptable customer who is a registered MSB (check casher) mean anything? If they are filing with the SEC and so forth, does any of the documentation burden shift from the bank or is that wishful thinking.

Wishful thinking, I believe. Let's get those comment letters going. This seems like an excellent point for our letters.

Thomas J,
I agree with Elena, there isn't anything that says you can ignore their MSB status just because they are publicly traded. Using Wal Mart as an example, their eligibility for Phase I exemption has no legal effect on their status as an MSB.

However, the cloud that hangs over MSBs is one of presumptive risk; they have not been proven (as a class) to represent actual danger. In my opinion, the fact that a particluar MSB is publicly traded and listed on a major exchange dilutes any presumption of risk; i.e. it justifies a lower level of documentation.

To do anything less than require evidence of a BSA/AML and an OFAC program etc. you are going to have to assume your examiners are sophisticated and are not just marching in lockstep with the examination procedures. Your second assumption has to be that this relationship is profitable and you want to retain it.

If you can clear both hurdles, you might consider the examination procedures in their intended role, as "guidance" rather than as a checklist. Obviously, you can obtain evidence of the company's registration from the MSB web site. You can easily document the services they offer by visiting their local store. You might also contact the company's corporate headquarters and see if they can provide any documentary support for your attempt at flexibility. (In re-reading Rae's posts, it sounds as if that's what he or she tried to do without success.) I'm tempted to say you could also monitor their activity, but if they do not segregate their deposits from MSB activity, I don't think that comment is realistic - there is simply a stream of cash going through your bank and its sources are not discernable. Finally, you should call the EIC from your last examination, verbally test your "light documentation" theory, and document the conversation.

To attempt to make my own position clear, I do not think there is any practical justification for extracting all this BSA/AML information from a publicly traded company. (Big banks may have reached the same conclusion.) I just can't guarantee you that your examiner will see it that way.

In the Western Union case in New York a few years ago, the company was fined $8 million for BSA violations. Examiners did a thorough study of their compliance area. I believe they have communicated regularly about the status of compliance with BSA requirements. At least one large bank required full details about MSB compliance programs for account parties. Examiners expect financial institutions perform due dilignece on these businesses considering the risk of these activities. It would be expected that MSB's provide their manuals and programs, including agent training and monitoring. If the information is not forthcoming, the account should be going.

As the original poster I want to thank everyone for their opinions. I found it very hard to believe that the larger FI's did not require any information on MSB's. It is good to hear from the larger FI's that they have to follow the same requirements that the smaller institutions do. Evidently the individuals that I spoke to at this particular business must be using their left hand and are unaware of what is happening with their right .

I wanted to bump this post back to the top because of some information that I found at the MSB website. If you look at the definition of Money Services Business it says

"Money Services business" shall not include a bank, nor shall it include a person registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission."

Can any one offer an interpretation as to what that means when we are dealing with a publicly traded company that is regulated by the SEC?

(( You can easily document the services they offer by visiting their local store.))
The MSB registration listing has codes that tell you what services they are authorized to offer, i.e. Western Union, Money Orders etc. A visit of course will give you even more, such as Fishing/Hunting Licenses, Lotto etc.

Hi all. First, large banks are asking for all of the MSBs regulatory info. Some may just have been a little slower to start. Second, don't missinterpret the publicly traded exclusion. That is mean to exclude broker/dealers, but not the Western Unions. Finally, I would expect some large MSB institutions to be tired of proving they are compliant, but they will do it nonetheless. Anyone refusing to provide info is not instep with the current regulatory enviornment and is jeopardizing their business.