Need Help with MSB Requirements

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Question:

I'm confused about our bank's obligations regarding money service businesses. Specifically, we have a customer who is an agent for an MSB. We're concerned, because he is accepting cash from his customers, depositing it with us, then wiring the funds by means of RIO (a western-union type company), so that RIO can prepare a draft on behalf of the beneficiary. Should we be asking our customer to do a CIP?

Answer:

If your customer offers MSB services only as an agent for a registered MSB, your customer won't have to individually register as an MSB with FinCEN, but that's just about where the difference ends between your customer and any other MSB, as far as what you need for comfort.

You need to consider this customer a high-risk business for money laundering, and assure yourself that he/she has in place an anti money laundering program designed to detect and report laundering and attempts at laundering. You will also need to monitor activity in your account for this customer more actively than you might monitor lower risk businesses. You will want to assure yourself that the business files appropriate reports when it detects or suspects money laundering, and that the registered MSB for which it acts as agent has adequate AML processes and programs in place.

First published on BankersOnline.com 11/1/04