MSB Policy

Has anyone developed a MSB policy that they would be willing to share? I'm trying to get some examples so that I can develop a policy. Our exam is coming up in the next couple months and I want to have it in place when the examiners get here.

Easy - one sentence.

If we identify a customer as an MSB, we will immediately notify them that we will be closing their account.

Otherwise, you better plan on spending the rest of your life babysitting them.

Ditto to rlcarey's response. Our bank policy "Prohibits" banking MSBs; however, due to the relationship of a few accounts, we grandfathered 4 MSBs as long as they comply with the AML regulation. Out of the 4 MSBs that we retained, 2 accounts have been closed because the customer failed to register as an MSB or did not supply the bank with a copy of their written AML program. Because the branch insisted on retaining these few accounts, it is the responsibility of the branch of account to follow-up with their MSB customer each year to review the customer's training program and provide proof that an independent audit was performed. Just for these 2 customers, it is a lot of follow-up!!

I'm increasingly sensitive to the fact that MSB's service millions of customers that banks do not want. In many cases, I think closing their accounts across the board is a mistake. Yet, if a bank concludes that it cannot mainain the relationship profitably, that is the only reasonable choice.

Three fourths of maintaining the relationship profitably is adjusting fee schedules to reflect the necessary level of administration and monitoring as well as the regulatory risk involved. However, the other fourth is developing the expertise necessary to review the MSB's policies and procedures as well as to be able to develop policies and procedures on the part of the bank. It's that last fourth, the expertise, that is the most critical.

A borrowed policy from another bank, even a good one, is more likely to get you skewered than protected.

You mentioned a schedule of fees for MSBs. Can anyone give me an idea of what these fees are, specifically, what do you charge the MSB and what do you charge for? Monthly maintenance & monitoring? Monitoring these accounts would probably cost several hundred dollars a month.

12 CFR §7.4002 National bank charges.
(b) Considerations. (1) All charges and fees should be arrived at by each bank on a competitive basis and not on the basis of any agreement, arrangement, undertaking, understanding, or discussion with other banks or their officers.

Agree with Ken (sorry Randy.) The GOOD MSBs - and there are some - serve a market that the banks cannot or will not reach, no matter how hard they try. If the MSB has the desire to get it right and to fully comply with the law, there is a place for them. Rather than locking them out of the bank services you can provide (and profit from) why not help them find the resources to do it right? NOT doing it for them but in guiding them to the right place to get the information they need.