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#2002470 - 03/18/15 07:39 PM MSB bank requirements
abbyauditor Offline
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abbyauditor
Joined: Dec 2006
Posts: 75
texas
In a recent exam performed by the OCC, they found that bank has 2 Money Service Business customers and that minimum due diligence was expected with opening and maintaining accounts for MSB. We should 1) apply the bank's CIP, 2) Confirm FinCEN registration, if required, 3) Confirm compliance with state or local licensing requirements, if applicable; 4) Confirm agent status, if applicable; and 5) Conduct a basic Bank Secrecy Act / Anti-Money Laundering risk assessment to determine the level of risk associated with the account and whether further due diligence is necessary. Can someone please tell me how to get all this information? I have sent letters and such to the businesses but get no response. Truthfully I really don't know what I'm supposed to be getting. Please someone help.

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#2002488 - 03/18/15 08:15 PM Re: MSB bank requirements abbyauditor
kw004h Offline
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Joined: Nov 2009
Posts: 219
Chicagoland, IL
Obviously, if you have reached out to your business customer and have gotten no response, there is a problem. Perhaps the customer's relationship manager could assist you in communicating with the customers to express the importance of updating your files with the information requested. If you are not the BSA Officer for your bank, perhaps s/he has additional information which should help you.

In the meantime, here are some places to start:

1) I'm going to assume you've got this covered
2) If the business doesn't respond, try going here to see if the business is registered: http://www.fincen.gov/financial_institutions/msb/msbstateselector.html
3) Because your location lists Texas, go here to determine what state or local licensing requirements might apply to the particular activities your customers are doing: http://www.dob.texas.gov/money-services-businesses. Here's a page you'll likely find very helpful: http://www.dob.texas.gov/money-services-businesses/faqs
4) If your customer's activity is conducted as an agent for another, FinCEN registered company (such as Western Union), your customer will be able to provide evidence of agent status
5) Consult the FFIEC manual section for MSBs as a starting point so that you can analyze the customer, the customer's activity, and the customer's own customer base, and determine the level of risk.




Last edited by kw004h; 03/18/15 08:15 PM.
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#2002490 - 03/18/15 08:17 PM Re: MSB bank requirements abbyauditor
abbyauditor Offline
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abbyauditor
Joined: Dec 2006
Posts: 75
texas
Thank you very much.

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#2002508 - 03/18/15 09:01 PM Re: MSB bank requirements abbyauditor
devsfan Offline
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Joined: Jun 2004
Posts: 1,927
NYC
If you have sent letters to the customer requesting things and they have not replied I would strongly consider closing the account.

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#2002531 - 03/18/15 09:57 PM Re: MSB bank requirements abbyauditor
Elwood P. Dowd Offline
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Next to Harvey
Your regulators got all their suggestions from 2005 Interagency Guidance. (That's good, the OCC is notorious for just making stuff up.)

The only way you can comply with the guidance is to request various pieces of information and documentation from the customer. If the customer blows you off then all that remains is to close the account and file the SAR as the guidance indicates.
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#2015078 - 05/19/15 09:29 PM Re: MSB bank requirements abbyauditor
complofcr Offline
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Joined: Apr 2010
Posts: 180
SE USA
Can someone point me to where it says the bank must obtain a copy of the MSB's BSA Policy?

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#2015082 - 05/19/15 09:40 PM Re: MSB bank requirements abbyauditor
Sunshine Lady Offline
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Sunshine Lady
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The information below is from the FFIEC BSA/AML Examination Manual Page 303 and from what I am reading, it does not state that we have to obtain a copy unless we consider it a high risk customer. Someone else may interpret it differently.

Regulatory Expectations

The following regulatory expectations apply to banks with MSB customers:

• The BSA does not require, and neither FinCEN nor the federal banking agencies expect, banks to serve as the de facto regulator of any type of NBFI industry or individual NBFI customer, including MSBs.

• While banks are expected to manage risk associated with all accounts, including MSB accounts, banks are not be held responsible for the MSB’s BSA/AML program.

• Not all MSBs pose the same level of risk, and not all MSBs require the same level of due diligence. Accordingly, if a bank’s assessment of the risks of a particular MSB relationship indicates a lower risk of money laundering or other illicit activity, a bank is not routinely expected to perform further due diligence (such as reviewing information about an MSB’s BSA/AML program) beyond the minimum due diligence expectations. Unless indicated by the risk assessment of the MSB, banks are not expected to routinely review an MSB’s BSA/AML program.
MSB Risk Assessment
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#2015083 - 05/19/15 09:41 PM Re: MSB bank requirements abbyauditor
Doug Hendrickson Offline
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Doug Hendrickson
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The section on Nonbank Financial Institutions - Overview of the FFIEC BSA/AML Examination Manual, under "MSB Due Diligence Expectations". It advised that if the bank determines that the MSB presents a higher level of money laundering or terrorist financing risk, that EDD measures should be taken (based on perceived risk. One of the actions is to 'review the MSB's BSA/AML program'. Page 306

Also agree with Sun Shine Lady's comments about risk-based.
Last edited by Doug Hendrickson; 05/19/15 09:43 PM.
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#2015102 - 05/20/15 11:12 AM Re: MSB bank requirements abbyauditor
complofcr Offline
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Joined: Apr 2010
Posts: 180
SE USA
Thank you both so much! I couldn't find it but an FDIC examiner was asking why I didn't have a copy in my file. We have less than 10 MSBs and while 2 of them are check cashing businesses, the rest are small convenience stores in rural areas that cash checks. Most of them are small dollar but every now & then they'll have one over $1,000. We don't consider these high risk.

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#2015105 - 05/20/15 11:51 AM Re: MSB bank requirements complofcr
Elwood P. Dowd Offline
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Elwood P. Dowd
Joined: Aug 2001
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Next to Harvey
Quote:
an FDIC examiner was asking why I didn't have a copy in my file.


It was the FDIC's old examination procedures, sporting assumptions like this, that generated the 2005 interagency guidance linked above. That guidance was the wellspring for the language currently found in the Examination Manual.

Its your risk assessment for a particular MSB that dictates what your documentation requirements should be. You may want copies of policies for one, but not for the next.
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