Prior to 2005, the FDIC's examination procedures required that banks obtain a copy of the MSB's BSA policy and evidence of its program. Unless the agency's goal was to paper the file, they intended the recipient bank to review and analyze those documents. Banks reacted by saying they were not going to serve as the MSB's defacto regulatory agency and started kicking them out the door, right & left.
MagicCity's excerpt had its source in the Interagency guidance promulgated in 2005 which was intended to put an end to the idea that a depositary bank was to act as the MSB's keeper. It said:
As with any other accountholder that is subject to anti-money laundering regulatory requirements, the extent to which a banking organization should inquire about the existence and operation of the anti-money laundering program of a particular money services business will be dictated by the banking organization’s assessment of the risks of the particular relationship.
If a bank adjudges an MSB as high risk, then obtaining the documentation is simply prudent. However, on lower risk MSBs its a bit worse than a waste of file space, it's an unnecessary assumption of responsibility. There is no point in "mitigating" risk that you do not believe exists.
As evidence of the fact that those who do not remember history are doomed to repeat it, an FDIC exam team recently recommended to a client that the bank obtain copies of the policies of all MSB customers. Just as it should have, the bank balked. In defense of the recommendation, the FDIC directed the bank to that agency's "Risk Management Manual of Examination Policies."
However, that resource neither requires nor implies that banks should obtain MSB policies as a matter of routine. It pays to ask: "Where does it say that?"
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.