We have a newly opened sole proprietorship account and the type of business indicated is "merchant service". We asked the branch for more info and they replied that he is an agent for bankcard service. A review of his documents shows that he received his Green Card in April of this year and that he just registered the business last week. This raises the question in my mind of what due diligence the credit card companies conduct on their agents. From what I can see this individual has no business experience in the US, is just "off the boat" and now he is a merchant service provider. What am I missing? I have reviewed the info in the FFIEC examination procedures on payment processors and don't see how our new customer has any of the background info that we would be asking for. Any thoughts on this would be helpful.

You're not responsible for the EDD that the credit card agency conducts on their customer.

As long as you run your CIP on the customer and their business then you should be good.

Also be certain to monitor the account for the ACH activity as well as where the outgoing payments are going.

As long as that information can be justified you guys will be ok.

Jay, I know that we are not responsible for the EDD that the c/c company conducts on their agents but I was looking for anyone's experience about folks like this becoming a merchant service processor without any history, business or personal, in the country. Also, I believe that we need to go beyond CIP and basic monitoring since we need to do a risk assessment, know who their customer's are, etc.

"...he just registered the business last week..."

Does your CIP permit foreign businesses? Most community banks don't have the resources and expertise to manage such relationships. Not saying that you can't, just asking whether you want to.

You may want to review this article.

http://www.fdic.gov/regulations/examinations/supervisory/insights/sisum11/managing.html

There are some links in the footnotes to sites that would also be worth viewing.

"he is an agent for bankcard service."

I would like someone to kindly explain exactly what this means??

My best guess is he works/sub-contracts for a Merchant Bankcard ISO (Independent Sales Organization)rather than a finacial institution reselling merchant Bankcard services. Because they're just salesmen, they don't need to be trained in payment processing. Many receive a percantage of the transaction income off of any merchant they sign up.

As a merchant acquirer, we sometimes run into their sales reps trying to sign-up our merchants. There are good ISOs and bad ISOs. I recommend checking his parent company out on complaint boards and see if you want to be affiliated with his business.

Why would you subject this person to any more scrutiny than any other sales person then??? They should just receive a commission check from the ISOs they work for, say an agent for Fuller Brush? There shouldn't be actual transactions running through their account. Would I monitor it for a a couple of months, maybe...., but probably not any more than any other NRA account.

For an example, here’s a link to one of many unscrupulous companies reselling bankcard services:

http://www.bbb.org/central-northern-west...nix-az-97017441

In this scenario, he may be a victim of the parent company. Bankcard Empire continued to market their services despite cease & desist orders in multiple states. According to articles on the company, one of their principles was also convicted of money laundering in 2001.