Real new in BSA and I have a question about Money Service Businesses. If we have a MSB that is a loan customer only, no deposit accounts, do we need to conduct a onsite review, verify their BSA program, do a annual review, etc?

We do not as their deposit accounts aren't with us and loans are a lower risk product IMO than if MSB activity is flowing through the Bank via deposit accounts.

I understand it would be low risk, but I cannot find anything that states it would be exempt if the MSB is considered low risk to the bank.

Exempt from what? It's all risk based.

Exempt from monitoring the account & accountholder? Do you do any monitoring on your MSB loan customers, like source of payments made during a year?

Do you verify when the account is open if the MSB is registered?

We only have two MSB's and both have deposit accounts here so we monitor them anyway. The only reason we have them is because they are grandfathered from a merger, current policy states we won't bank them today. If there is a potential to an exception for one, I am consulted as BSA Officer and to be honest, if the only relationship they had was a loan, I would not conduct ongoing due diligence, only if we had the deposit relationship as that is where the MSB activities run through.

I am going to interject that if the loan payments coming in are in the form of cash, it would warrant monitoring for potential money laundering and tax evasion. Just my 2 cents, and yes, you should make sure that they are registered as a MSB.