Does anyone have a MSB policy statement they are willing to share? My auditors have requested I add something to the BSA policy about money service businesses and I am trying to get it in there before the examiners show up in two weeks! THANKS (email: susan.norton@the1st.com)

Do you plan on banking MSBs or not banking MSBs?

At the moment we don't have any. Our intent is to monitor, use questionnaires and do a risk assessment based on the relationship with the customer. In our rural area, the only entities that could be even remotely construed as MSBs are mom and pop stores that cash checks for customers (generally under $100) - those we would continue to bank.

I don't have a policy statement, and even though we bank MSBs - no one has ever suggested that we put a statement to that effect in our policy.
I would imagine though, that if I had to put one in, it would be a simple sentence in the area where you address the types of accounts that the bank has, or in the area where you address your risk assessment.
For example, where we speak of exempt accounts for CTR purposes, we have a statement (one sentence) that says "the Bank does not have exempt accounts".
So in one of the areas mentioned above, you could have a statement that says "The Bank does not intend to bank MSBs," or, "The Bank will bank MSBs on a case by case risk-defined basis."

Here is what I added to our BSA policy. Exhibit D is the MSB risk assessment from the BOL Tools page:

Under existing Bank Secrecy Act regulations, FinCEN has defined money service businesses to include five distinct types of financial services providers and the U.S. Postal Service: (1) currency dealers or exchangers; (2) check cashers; (3) issuers of traveler’s checks, money orders, or stored value; (4) sellers or redeemers of traveler’s checks, money orders, or stored value; and(5) money transmitters. There is a threshold requirement for businesses in the first four categories – a business that engages in such transactions will not be considered a money services business if it does not engage in such transactions in an amount greater than $1,000 for any person on any day in one or more transactions. See 31 CFR 103.11 (uu).

With limited exceptions, money services businesses are subject to the full range of Bank Secrecy Act regulatory controls, including the anti-money program rule, suspicious activity and currency transaction reporting rules, and various other identification and recordkeeping rules. Additionally, existing FinCEN regulations require certain money services business principals to register with FinCEN. Many money service businesses, including the vast majority of money transmitters in the United States, operate through a system of agents. While agents are not presently required to register with FinCEN, they are themselves money service businesses that are required to establish anti-money laundering programs and comply with other recordkeeping and reporting requirements described above.

YOUR Bank will apply the requirements of the Bank Secrecy Act on a risk-assessed basis to all money service business accounts. The minimum due diligence performed for each account will include:
• Apply the bank’s Customer Identification program;
• Confirm FinCEN registration, if required;
• Confirm compliance with state or local licensing requirements , if applicable;
• Confirm agent status, if applicable; and
• Conduct a basic BSA/AML risk assessment to determine the level of risk associated with the account and whether further due diligence is necessary.

The bank will use the risk assessment worksheet attached (Exhibit D) to determine what level of risk each individual money service poses. Additional due diligence will be performed for Money Service Businesses listed as “high risk”.

Another little can of worms to be opened.... what are everyone's thoughts on Grand fathered accounts? Is there such an animal?

The reason I ask is that recently we went through the entire portfolio - went through the process, but we DID NOT check the state licensing issue, and now, it's in the guidance, do I need to go back to these customer again (who feel we've been VERY intrusive as it is) and state to them that they need to ensure that they are licensed with the state, and to prove that with a copy to us or we will close the account?

Thoughts?

I think first you need to make sure they are registered with FinCen, then depending on your state requirements you may have to make sure they are registered with the state. You might look at your states website to see if there are any guidelines as to when a business is considered a MSB by your state, It could be very different than FinCen. They may not have to register with the state but still be registered with FinCen.

Don't you just love it when the government makes us the cops but they can't pass a national standard for drivers license's or make DMV's check people applying for a drivers license through OFAC. It costs them too much money and they would have to change things. Do those statements sound like things bankers said and it didn't matter, we have to comply.

Yes, I hate when the government makes us the cops for their policies, but what is REALLY annoying is the fact that there isn't ONE place for these people to go and find out what they are required to do.

Most of the accounts in my portfolio that are under these regs are mom & pops that are shocked when I contact them in the first place to become registered with FinCen... Now, after working with them and getting through our process (which is pretty lenghty) the guidance came out and now I just realize that they are probably needing to be state licensed as well. Personally, *I* had no idea, and I know for a fact they don't, so again *I* have to go to the customer and say "the government says you have to do this" and I look like a witchtroll.

Oh, and if you don't this and give me evidence, I'm closing your account in 30 days. thankyouverymuch.

am I bitter? ::sigh:: yes, right now I am.

The interagency guidance did not introduce the issue of banks monitoring state licensure - it was already addressed as a part of the "due diligence" concepts spelled out in the FDIC examination procedures and mentioned in an OCC AL as well. All the interagency guidance did on this specific point was elevate a failure to comply with state licensing requirements to the level of a "SARable" offense.

"Grandfathering" generally doesn't apply to an oversight and the concept does not exist in BSA compliance in general. There are lots of variables, but you may be able to identify licensed customers through the office that grants licenses; i.e. you may not need to contact all of them in order to complete your due diligence.

We have added procedures to our account opening to identify MSBs in the future, but how do I determine whether we have any already? We are a small bank in a small town. I don't know of any, and I sent around questionairre/memos to our tellers, customer service reps and bookeepers and they did not come up with any either.

I am sending a letter to the only one I think could be an MSB, but I believe they are acting as agent for Western Union.

I am having my tellers look at check deposits and report any customers that deposit 3rd party checks. I also had a report produced in branch order of all business accounts. The branches identified each busines type.

You should be able to recognize MSBs easily two ways.
Review your Cash Out reports. MSBs need cash to conduct business.
If they are in a cash intensive business, therefore not ordering cash from the bank, your tellers can pick it up by the checks in the deposit.

that only covers the check cashers - what about the wire transmitters, money orders, etc.....

I printed a listing of accounts by servicing officer, and sent each one their section with a memo outlining what an MSB is to remind them. They were to go through their listing to identify any potential MSBs and get back to me with their findings to see if there were some they could identify or that they thought might be potential and need some more account reviews. I also go through the system reports on cash transactions, large items, etc. to try to identify any that way.