For those of you that don't subscribe to the FinCEN e-mail service, they have just issued a joint agency statement on providing banking services to Money Services Businesses.

You can read it here:
http://www.fincen.gov/bsamsbrevisedstatement.pdf

So if you are in the middle of an exam and having a "discussion" with your examiners over an MSB customer, you may want to print this out and show them.

it doesn't clear anything up

accepting an account is not as much an issue as those we already have. it's the monitoring that is the issue and expense

I agree with anon - it isn't much help.

How does FinCEN define "shortly"?

I think it says "We acknowledge that the issue of banking services for NBFIs and MSBs is a tough one. We don't expect you to regulate these customers. We think we know what we expect you bankers to be doing, but we haven't figured out how to tell you yet."

I found this statement to be quite telling:

Money services businesses are losing access to banking services as a result of concerns about regulatory scrutiny, the risks presented by money services business accounts, and the costs and burdens associated with maintaining such accounts. Concerns may stem, in part, from a misperception of the requirements of the
Bank Secrecy Act, and the erroneous view that money services businesses present auniform and unacceptably high risk of money laundering or other illicit activity.

There is a real concern that if banks cut off all access to registered MSB's, it may drive the activity underground where regulatory supervision will be impossible, and may even encourage illegal activity.

Talk about the law of unintended consequences......

There are a few examiners out there who should be disciplined because of the "terrorist examiner" approach they have taken to banks with respect to MSB's. IMHO, a number of these examienrs got power-hungry, or self-righteous, or perhaps both, and the results have not been healthy for anyone.

To be fair, I think that most examiners are doing what they believe they are supposed to be doing. It's a large group of people and they've been getting mixed signals from the top. Some of the regulators have been dealing with whiplash from congressional inquiries and well-publicized violations. It's understandable how, without a firm hand from above, some of the examiners could assume a "zero tolerance" posture.

John, I agree that the examiners themselves were probably not given clear guidelines. Having said that, there ARE examiners out there who seem to take delight in tormenting banks over MSB's.

I have spoken with a Community Development specialist at one of the agencies who shares my view that BSA is killing CRA and will make life very difficult for low income persons and communities.

I believe this quote:

The Bank Secrecy Act does not require, and neither FinCEN nor the Federal Banking Agencies expect, banking institutions to serve as the de facto regulator of the money services business industry

coupled with the promise to provide quidance on MSB relationships is very, very important.

One of my clients had just started her first phase in implementing an MSB related compliance program. One of her customers did not know anything about MSB requirements, but, when informed, promptly registered. The examiner, after reviewing the correspondence, said if the proof of registration was not received in 30 days the account was to be closed.

That's wrong on a couple levels. The customer had just filed the form and FinCEN says it will take 4 -6 weeks to get the acknowledgement. The customer is doing what was requested. If the bank closes the account based on an arbitrary time frame it looks like bad faith to the customer. In addition, I've heard senior officials from this agency and all the others say it's not their responsibility to tell banks who to do business with; i.e. it's not up to any agency to direct a bank to close an account.

If they can homogenize the way the agencies approach things, if a banker can pull out published guidance and say, "You're not singing the company song" to an examiner who simply "knows best," then these anecdotes will go away. This MSB debacle must be hugely embarassing and FinCEN is trying to fix it. My strongly held opinion is that the regulatory agencies don't really like it that FinCEN's Director, Bill Fox, is trying to get them to sing on key and in chorus. However, Director Fox simply doesn't back off.

I am in agreement that FinCEN is in a wrestling match with the regulators and do not want to be the first bank to find out the statement is subject to a broad interpretation at the field level.

It was interesting to read an article in the Orlando Sentinel today about the regulators acknowledging post 9-11 laws being a drain on banks. A couple bankers commenting that they did not see much in the statement and we will see what the guidance amounts to before we embrace MSBs. The last couple paragraphs were from a financial author and professor who said, "Until they can demonstrate this kind of information actually helps fight terrorism, I don't see it being used very effectively. Other wise, it's just more paperwork for the bureaucracy." The article finishes, "Federal authorities argue that the law has generated thousands of suspicious activity reports, leading to a variety of arrests, most of them not highly publicized." It should be interesting to see how the spin doctors publicize any investigations leading to arrests when it began as a SAR.

I read that Mr. Fox intends to transform FinCEN from a passive database of information to an active analyst of financial information which will volunteer information to law enforcement. I don't think he can back off and accomplish that transformation. It should be interesting to watch.