We are a small community bank and this is our/my first experience banking a NFBI. We have collected the articles, verified with the secretary of state, and completed our NFBI CIP form is there anything I am missing. Should they be registered with FinCEN? I know this will be looked at come exam time since this is our first and only. I want to be sure we have all the documents required. They are risk rated high and will be monitored closely. Thank you.

The term "non bank financial institution" (NBFI) takes in any customer providing financial services that is not a bank, from a convenience store that cashes checks to a $10 billion insurance company. They are not automatically "high risk" customers. A thorough due diligence evaluation will help you in that determination. The only one that needs to register is a money service business. Licensure is governed by state law and you need to know if this particular customer needs to be licensed to perform their services.

Someone in your institution must be attending public BSA training programs. Find the manual they received and review it as these issues should be addressed there.

That would be me Ken, I did look at that section in the manual. This type of account is unfamiliar to me, and I was looking for a little clarity. Thank you for replying so promptly.

NBFI's may or may not have regulators depending on many circumstances. MSB's depending on the amount and type of service offered may be required to register with FinCEN and possibly their state regulators.

Insurance companies are regualted at the state level and IA's and BD's are regulated at the SEC and FINRA level. "Finance Company" is open to interpretation as to what it actually does.

I will add that BSA is just one concern when you bank a finance company. You may also have compliance and UDAAP concerns if the finance company is using your bank to obtain payments from consumers so at the very least, you need to know if your state requires finance lenders to be licensed, and if so, that your customer has the appropriate license and it is current. If your customer asks for ACH origination services, then you will really need to take a look at their operations in terms of UDAAP, SCRA, Military Lending Act, Fair Dept Collection and so on. Request copies of independent audits.

If the finance lender does mortgage lending, then they are required to have a BSA/AML program and you can request copies of independent testing of that program.