After attending a conference I learned it is common practice to charge a monthly fee for MSB accounts which is something we are not currently doing. After asking around it seems every bank charges a very different fee, whether it be a percent of deposits or a flat monthly rate. I would like to know what is recommended for a bank of our size? We have eight MSB accounts and are not currently accepting any more. Our asset size is 112 and we have two locations.

Welcome to BOL Discussion Forums, HereToLearn!

Under OCC regulations (12 CFR §7.4002 national banks should establish their fees "on a competitive basis and not on the basis of any agreement, arrangement, undertaking, understanding, or discussion with other banks or their officers.

Paragraph (b)(2) of that section says:

(2) The establishment of non-interest charges and fees, their amounts, and the method of calculating them are business decisions to be made by each bank, in its discretion, according to sound banking judgment and safe and sound banking principles. A national bank establishes non-interest charges and fees in accordance with safe and sound banking principles if the bank employs a decision-making process through which it considers the following factors, among others:

(i) The cost incurred by the bank in providing the service;

(ii) The deterrence of misuse by customers of banking services;

(iii) The enhancement of the competitive position of the bank in accordance with the bank's business plan and marketing strategy; and

(iv) The maintenance of the safety and soundness of the institution.

Probably the biggest determinant of the charge you come up with will be the costs you bank incurs in providing the service to the MSB. So how many people spend how much time each month on things that are unique to the MSBs? Are you handling a lot of cash for them (more than the average amount of cash you handle for non-MSBs)? Do you do a lot of manual monitoring of these accounts that you don't do for the typical business account? What are the fully-loaded personnel costs (don't forget benefits, employment taxes, vacation time, etc/)? Etc.

You do not want to charge customers a fee based on status; i.e. an "MSB fee." You want to charge fees based on activity; e.g. "monitoring fee."

We currently have 8 MSBs and are a billion dollar institution. We charge a monitoring fee of $500 per month. Like Ken said, look at the additional time/enhanced due diligence it takes to monitor these accounts. We had a BSA exam recently and the fee was not questioned. We did have 3 MSBs close their accounts when we went to the flat fee, since they felt the fee was too high.

Imposing the fee has two possible results, either of which should be acceptable. That is one of them.

Our large businesses I'm sure will not be upset with a 'monitoring fee' but there is a chance our 2 small businesses may close their account with us if we choose to do a flat rate. I guess what I am struggling with is how to come up with the dollar value of the fee. Yes I can add up the time I spend and put a value on that, but the time I spent per business varies by a large amount.

We charge:

$100 MSB Monitoring Fee
$.15 per $100 cash deposited
$1.50 per strap sold
$.15 per coin roll sold

Also must be in Commercial Checking with analysis fees.

This is very helpful, thank you!