Our bank policy states that we “have chosen not to open accounts for Money Service Businesses.” We have a customer who wants to open their business account with us but their store sells money orders. Does this automatically make this a money service business, making it so we cannot open the account according to our policy? We also currently have another business customer that sells money orders, are we out of compliance?

Selling money orders does not make them an MSB automatically- you need to have a conversation with your customer (potential and current). It is very likely that they are acting as an agent on behalf of an MSB- i.e. selling money orders for Western Union or MoneyGram, but only as an agent. Also their limits that they will sell for would come into play. If they are acting as an agent and not an individual MSB they should be able to provide you with documentation from WU/MG etc stating such.

Acting as an agent of a registered MSB is relevant for registration purposes. The entity still needs to have an AML Policy, comply with record retention, etc.

As New mentioned, selling money orders doesn't automatically classify as entity as an MSB. There is a threshold involved, which I believe is $1,000 per day to one individual. How you will determine if the entity exceeds that threshold is another matter entirely.

As the recipient of several lashings over this issue, I'll simply provide the information here. In paragraph 2 page 2 it says if you you are an agent for an MSB (like Moneygram who sells Money Orders), you are an MSB. I'd like your opinion if you differ with that conclusion.
http://www.fincen.gov/statutes_regs/guidance/pdf/guidance04262005.pdf

You really expect anyone to differ from a conclusion put forth by FinCEN??

Cornhusker- you are absolutely correct. What I was getting at and did NOT state is that if they are only an agent they aren't required to register. But I did not state that- thank you for pointing that out! I need to be more careful giving partial opinions/answers. Thanks!!

Rl - No. And it wasn't New2's comment I was refering too - I could have been more clear too!

It was this, "As New mentioned, selling money orders doesn't automatically classify as entity as an MSB. There is a threshold involved, which I believe is $1,000 per day to one individual. How you will determine if the entity exceeds that threshold is another matter entirely."

One could infer that this was meant to say, 'If you sell MOs but stay under $1,000 you aren't an MSB'. I was pointing out that if you are an agent for an MSB but keep your MO's under $1,000 you are still an MSB. Just making a clarification.

You may not have seen this or read it that way. But I did.

I don't see any way that a bank can determine if a customer sells more or less than $1,000 of MOs to a person, aside from the customer's statement which I would be reluctant to believe, so I would always consider such a customer as an MSB and treat them accordingly.

If they are acting as an "agent of an MSB", such as MoneyGram, the fact of the matter is, that even if that location chooses not to sell more than $1,000 to any one person on any one day, it becomes a moot point.

Corn - I was out of the office on Friday, but the date on that link is 2005. FinCEN has updated their MSB Guidance and the Final Rule is as of 7/2011. See the link below.

http://www.fincen.gov/news_room/nr/html/20110715.html

See page 44 of the PDF which states:

Issuer or seller of traveler's checks or money orders. A person that
(i) Issues traveler's checks or money orders that are sold in an amount greater than $1,000 to any person on any day in one or more transactions; or

(ii) Sells traveler‘s checks or money orders in an amount greater than $1,000 to any person on any day in one or more transactions.

At the end of the day, FinCEN has the final say. If you disagree with me, call the Helpline.