I am heading into murky waters. Has anyone here ever dealt with a bank that has a subsidiary operating as an MSB? They offer check cashing, monetary instruments, utility payments and money gram transfers.

I am conducting an audit of the entity which has been established for SEVERAL years and want to make sure I am on the right path.

The parent company (main bank) does not provide any oversight authority to this function. It is independent from the bank and they have established their own board of directors. Unfortunately, the board of directors is comprised of the people that run the subsidiary, including the appointed BSA Officer. On that front, I am questioning the independence of the BSA Officer. Also, it appears that the people running the MSB may have (not fully confirmed) dual responsibilities at with the parent bank (ie. they fill in at branches and what-not from time to time).

On the other front, I am curious if this entity would need to comply with 314a, as well?

Finally, this MSB is required to have an independent review performed, annually. Another person from the retail banking area of the parent bank is conducting that review (which goes back to my statement above about dual responsibilities).... I would not say this is "independent" of the function.

Just curious if anyone has dealt with this type of situation before.... I am still not sure how or why they felt they needed to establish this subsidiary as an MSB. This is confusing!!!

They are not a financial institution and would not be subject to 314(a).

As far as the independence issues, I'm not sure anyone but your bank management and bank board can be of much help.

As for understanding the structure better, I would be contacting your legal counsel you use for corporate governance issues.