Right now we have no Money Service Businesses banking with us. We have an opportunity to do business with one. I was told by one of my supervisors that the growing trend is to shy away from doing business with MSBs because of the regulatory burden. It's my understanding that unless they meet high risk criteria there isn't as much burden involved. I would appreciate input (positive or negative) from financial institutions that do business with MSBs. Thanks

IMHO, if they are low risk, there is not a huge burden. You will have to track cash activity, but we do that with so many accounts, one more wouldn't be considered a burden. You would need to keep track of their MSB registration papers, but in our office, that is a once a year undertaking, and easy to get ahold of. Just my 2 cents....

Thank you. For low risk, I thought I could reevaluate there status annually when I do CTR Exempt customers in February. They're already going to hit my cash reports.

Dottie, I think you would need to look at the MSB activity on a monthly basis. The degree of 'low risk' that could be applied to an MSB would depend on the area that you are in and the types of services that the MSB offers.
If they are a check casher only, with no large checks and no corporate checks, in a rural area, it would be low risk.
You want to be reviewing the items that are in their deposits, and also the cash that they order from you to cash those checks. The dollar amount of their deposits should be fairly equal to the cash they order, unless they have other services in the store that is generating cash, such as Money Orders, Bill Payments, Western Union, Lotto etc.

Depending on the amount of income derived from cashing checks you may have to monitor their AML program and the rest of BSA that they are required to follow. I don't think I would ever classify a MSB as low risk. They always have been a high risk at our bank and will continue to be so.

Interagency Guidance issued in April is very clear regarding the fact that MSBs are no longer considered to be presumptively high risk. One of the specific requirements in that guidance is that your bank must evaluate the risk posed by the MSB customer based on specific issues and reach your own conclusion regarding the risk they represent.

Please consider that even an MSB which you have correctly labeled as "low risk" will require more documentation and monitoring than any other garden variety business account. Your fee schedule should reflect that. If it doesn't, opening that first MSB account is a poor decision.

Unfortunately, after I posted this I saw a CTR for a large cash withdrawal for one of our existing customers, a convenience store. This is unusual activity for them, so I called the account officer, and lo and behold, the business had just started cashing checks. So now, I have the new relationship and an existing relationship to consider. The existing relationship already gets monitored monthly when I look at my AML reports and large cash reports that we match up to CTRs. They are both registered as an MSB. Senior management does not like the idea of the additional monitoring for a high risk msb and frankly, since I would probably be the one doing it, neither do I. There are a lot of things to consider, but if I have to do additional monitoring other than what I'm already doing on a low risk msb, it just doesn't seem worth it for a one person compliance dept.

Should a low risk retail check casher be required to provide the bank with a copy of the AML program evidencing the appointment of a compliance officer, training, etc?

I am against receiving documents of that nature because if they are inadequate or erroneous in any way, - you could be held responsible as you now have knowledge. FinCen has stated that we are not the regulators of this industry, so the most that I would do is ask them verbally if they are aware of their responsibilities under BSA, and direct them to a website that lists them and explains them.