We have a new customer that is a gas station. The station does not issue cashiers checks or travelers checks and is not a money transmitter, but it does issue money orders. Its limit is $300 per money order.

According to FinCEN, the threshold to be classified as a Money Service Business is $1,000 per person per day for issuing any monetary instruments. Since the gas station's limit is $300 per money order, is it classified as an MSB or not? What if someone purchases 4 $300 money orders worth $1,200? I doubt there's a limit on the number of money orders.

Any guidance is appreciated!

Technically, they are not an MSB. However, I would ask your customer what their policy is with respect to multiple sales of money orders to the same person on the same business day. If they are aware of the MSB registration rules, they likely have a policy limiting sales. If so, you need to find out what internal controls they have in place to make sure their employees observe the rules. Then ask yourself if you are comfortable with their internal controls.

Some banks will not entertain any customer that offers these services regardless of the limits the customer may have in place.

Who's money orders? Their own? If so, I would imagine they have to be licensed with the State. If not, then they have to be an agent of a licensed MSB.

To add to Randy's comment, if they are an agent of a licensed MSB (as must be the case since who would buy a gas station's MO)they are also considered an MSB with the only difference being that they do not need to register with FinCEN. So to you and for your risk rating, monitoring, etc purposes they would be considered an MSB.

For those of you who bank MSBs and/or MSB Agents, do you require them to provide documentation related to their contract with those businesses (agreements to provide a specific service, BSA/AML policies and contacts, etc.)? If you do and they can’t provide anything, do you take any specific actions or steps towards them? We don't bank MSBs, but do have a number of businesses (mostly convenience stores) that act as agents for MSBs and they have increasingly become harder to mangage and monitor. Any guidance would be greatly appreciated.

The April 2005 guidance indicated that you should obtain copies of the agency agreements. However, that was a tad naïve as some of the large MSBs consider that contract to be proprietary and prohibit their agents from disclosing it. (Some do anyway.)

Generally, you can just go to the MSB's web site, look up your town, then your customer, and print the page where the information appears. Your browser should date it across the bottom automatically. That should be enough to prove you did your homework.

We have a few accounts for MSB agents and require a copy of their agreement with the MSB (Western Union, Moneygram, etc) but don't require a copy of their BSA program. We also require an annual site visit. We monitor their activity and conduct a formal review semi-annually.

If the MSB agents can't or won't provide a copy of their agreement with the MSB, what steps do you take, if any? How do you know they are complying with having a BSA program in place? Do you leave that up to the MSB they are an agent of to police that?

Per the April 2005 Interagency Guidance you are to risk rate each and every one of your MSB customers. That risk rating should drive your requirements for documentation and monitoring.

Examination procedures that required you to get copies of policies, procedures, etc. were outmoded when they published the Guidance then the Examination Manual. If you have an MSB you classified as "high risk," you would do well to get copies of their compliance program and have a third party verify its functionality. An agent for an MSB with a national presence is probably at the bottom of a sliding scale of bank requirements for documentation.

As with any customer if they do not provide what you need close (or do not open) the account.

If they are truly an agent of WU or MG there should be no problem for them to provide you with a copy of the agreement. You should also be able to find them on the WU or MG website since you can search for their registered agents, but I always want to get a copy of the agreement and, as EDAudit stated, if they cannot or will not provide it I would close the account. Insofar as their BSA compliance program I don't ask for it since WU or MG will provide them with it and should be auditing them on it periodically.

At conferences, I've heard both Western Union and MoneyGram employees say their contracts are proprietary and their agents are instructed not to provide copies. However, I know some do. It could be that 1) their policies have changed or 2) their agents are just ignorant.

One other possibility: The potential loss of the agents' local banking relationship looms as a larger threat than the risk of WU or MG's learning of and reacting to the breach of confidentiality.

We bank MSBs. We request their Agent Agreement and understand that they may not provide it due to contract privacy issues. In those situations, we obtain a letter from the agency verifying that our mutual customer is in fact selling money orders/wire transfers on their behalf.

This works fine for us as ultimately we are trying to verify that there is a contract in place. Don't rely solely on the Agency's website, I've found many times that it takes long for their info to be updated.

If the agent is not listed on the website, contacting the company for verification would be the only remaining option outside a copy of the agreement. If it is listed on the website, there is no point in going further.

This is so helpful. I really appreciate all of the responses.

For those that mentioned they require an annual site visit, is that visit conducted by branch personnel or Compliance personnel?

Either can do the Site Visit.
At least, that is how we handle it.
Sometimes I go (Compliance) ...
at times I ask the Branch Manager to do the visit.
Our policy states Compliance Officer or designee, so we are covered.

Just make sure branch personnel are trained what to look for. I saw one site visit where the branch personnel said that it was a typical convenience store operation, snacks, gas, several amusement games, etc. It was near the hotel that I was staying at so I stopped by on the way to the hotel. The amusement games turned out to be a whole wall of eight-liners. It was no wonder this MSB check cashing customer was routinely depositing cash rather than withdrawing cash. geezz.....

MagicCity - Do you mind sharing with me what you do on your site visits? When is the customer made aware that there will be site visits conducted? You can PM me if you are able to share.

Thanks.

Our process for coaching branch personnel on what to look for has been an uphill battle and I would very much like to establish some processes that will help us along the way.

I have used google street maps as part of my review. It is noted that I am an auditor and not a compliance person. I am not suggesting that a BSA Compliance review should or could use it but could be used as check on a designated reviewer.

I have found that a laundry also had a "Cash for Gold" on site.

Not being from Texas I had to look up "eight-liners" are they legal in Texas as a state lottery?

Newbietoo: Your settings do not allow PMs.

Our Branch Managers and tellers at the branches that have MSBs are given training on the risks of MSBs to the bank, and what we are looking for, and what the MSBs are not allowed to deposit, such as checks payable to companies.
I schedule my visit with them because it is a two-hour drive to their location.
I look for any changes in what they sell or offer to their customers. I discuss any changes in their activity that I may have noticed in the prior period, and I discuss any upcoming rulings to their industry that I know about; but we are not their regulator and this is just chit-chat on my part to see if they are aware of the change and if they are keeping up with regulations.
I complete a standard site visit form afterwards detailing what I saw and what we may have discussed.
Hope this helps you.

Ahhh - not hardly. All such gambling is illegal in Texas. Although it is still somewhat prevalent.