Our board approved BSA Policy states that we will not bank MSBs. We recently discovered a customer who opened accounts with us in July is an MSB. If managment decides to keep this customer, should I suggest revising the BSA Policy to allow MSBs if managment approves and certain conditions are met?

This customer is a smaller regional grocery store chain. We have the accounts of two of their stores (out of about 20 total). One of the stores does not act as an MSB, while the other cashes checks and sells money orders. The customer is registered with FinCEN as a money transmitter, seller of prepaid cards, check casher, and seller of money orders. In my eyes, we cannot fully monitor this customer because we don't have all of their accounts. Their higher risk MSB activities are in accounts at other banks. I am looking for thoughts/opinions on this and if your bank would allow this type of relationship.

I have always been under the impression that you really shouldn't make exceptions to your BSA Policy, because when you do, you need to be getting additional information in most cases and it usually opens a can of worms. Does your bank allow you to make exceptions to the BSA Policy? If so, what kind of exceptions are allowed and are they spelled out in the policy?

your bank allow you to make exceptions to the BSA Policy? no

https://www.bankersonline.com/forum/ubbthreads.php?ubb=showflat&Number=1424988

Examiners use your policy to predict your future actions. If you can make exceptions to a policy, then you really don't have a policy, just a piece of paper and your actions are wholly unpredictable.

Given regulatory concern with de-risking, a blanket policy statement that you will not bank MSBs could draw criticism in its own right. As it is, you either need to 1) close the account or 2) change your policy to match your behavior. Current regulatory thought process are that you should be willing to consider an application from an MSB and make your decision on opening the account based on the amount of risk represented by that particular customer, not MSBs in general.

Our BSA Policy allows the BSA Officer to have a certain level of discretion when it comes to certain BSA matters. Timing of closing accounts, providing extensions to obtain outstanding documentation, etc. Having a policy that allows almost no flexibility sounds great on paper and may work at banks where management is all in on certain topics, but in general, it doesn't work as circumstances are not always black and white.

Discretion, as in saying we will do a risk assessment before opening an account for an MSB and make a decision based on judgment, is fine. An exception, where the policy says we will not do something, but someone decides otherwise, is something different.

Ed - I saw that thread and it was talking specifically about CIP.

Ken - that was how I interpreted it. If te policy says "we won't bank MSB" we probably shouldn't be doing that. I assume that language has been in the policy for years and never been changed. We were mid-exam when this was discovered and I did get the BSA examiners blessing on a MSB risk assessment I developed - so if we chose to keep them it will be a matter of collecting that information and changing the policy.

ACB - the policy that I wrote at the last bank I was at allowed discretion of the BSA Officer at certain times as well. But it was in the policy and certain issues would be escalated to senior management/board of directors. The policy at this bank is rather vague in some areas.

Thank you all for your comments.

Ken - I actually know the difference between the two. What I was alluding to was writing an AML policy in a black and white fashion is probably not the best course to follow as it often backs a bank into a corner. What seems reasonable at the moment may not be so reasonable based on the needs of the business as they change based on various market conditions.

I'm definitely not proposing that a Bank employee violate a requirement of their employer's BSA Policy.

We do allow for policy exceptions regarding certain higher risk businesses and it's included in the policy itself. We have a procedure for handling policy exceptions and it requires the authorization of both the Chief Risk Officer and Chief Banking Officer. We have not had any regulatory criticism thus far. Our next exam is in September.

Thanks for your input, and good luck with the exam.