MSB and State Requirements

Posted By: bobo07

MSB and State Requirements - 11/26/14 02:45 PM

We are a state chartered bank and have numerous companies coming to us for ACH processing, wire services etc. (MSBs) and they would like to fall under an agency agreement with us to avoid registering with each state. Due to the fact that we are an state chartered bank, are they exempt from having to register with each state or do we need to be a national bank for that to work?
Posted By: rlcarey

Re: MSB and State Requirements - 11/26/14 02:48 PM

How could you possibly appoint these companies as agents of the bank - State or National??? Even if allowed - What would be in it for you???

See this thread:
Posted By: bobo07

Re: MSB and State Requirements - 11/26/14 03:36 PM

That is a question for my superiors. We have an extremely strong and strict compliance program. Your point aside, do you or anyone have any input regarding my question?
Posted By: rlcarey

Re: MSB and State Requirements - 11/26/14 03:50 PM

Again - how do you propose signing these people up as agents of the bank? Really - an agent? I cannot even imagine the liability. Call your State regulatory body and ask them about it.

The question of whether or not it gets them or you out of registration or licensing/bonding requirements in each individual State - that would be a question that only could be answered by examining the State laws in the specific States in question.
Posted By: John Burnett

Re: MSB and State Requirements - 11/26/14 04:09 PM

My "Danger, Will Robinson" radar goes off whenever the stated purpose of doing something is to avoid a state registration (or other similar) requirement. I can understand the hassle of registering, but do these people have something to hide?
Posted By: Elwood P. Dowd

Re: MSB and State Requirements - 11/26/14 08:06 PM

As I understand it, it's the potential customer who is the primary source of advice here; i.e. the customer is asserting that by using your bank as an agent it would not be required to register as an MSB. I simply do not believe that's true. Whether your bank has a state or a national charter is irrelevant.

MSBs are required to register and disclose their agents; they are not exempt from registration because they have agents. In the 3 or 4 states where I looked at MSB registration requirements in detail at one point, if the MSB has agents in that state the MSB must register in that state. I'm willing to go out on a limb and say that most states probably have similar requirements.

You got rlcarey's gut reaction. Mine is not based on a specific fact situation and it already appears in the thread he linked. I suggest you call both your state and federal regulators and run your customer's scenario and its advice past them. Sometimes it's our job to train our superiors. I will acknowledge that mine never really appreciated my efforts... wink