FAQs
Question: We have several convenience stores that act as agents for Western Union. What do you recommend for ongoing monitoring of these types of entities that only act as an agent for a Money Service Business (MSB), and are not an MSB themselves?
Answer: Agents for MSBs are not required to register with FinCEN, but they are required to establish and maintain an effective written AML program reasonably designed to prevent the MSB from being used to facilitate money laundering and the financing of terrorist activity.
Therefore, if a bank has an account relationship with a business that acts as an agent for a MSB, the bank should take this fact into consideration when risk rating that customer. Not all MSBs present the same risk and each bank’s risk management process is different, so risk rating may vary from bank-to-bank and from one MSB agent to another based on the activities the agent is engaged in and the effectiveness of the agent’s AML program. Banks are expected to include these customers in their due diligence monitoring, but the level of monitoring will vary based on the business’ risk rating.
For more information and details pertaining to monitoring expectations, refer to this OCC guidance document that speaks to the subject.
Question: The FFIEC manual states the bank should have policies, procedures and processes in place for accounts opened or maintained for money service businesses (MSBs). These are to ensure the bank can:
- Apply the bank’s CIP to the MSB
- Confirm FinCEN registration, if required
- Confirm state licensing, if applicable
- Confirm agent status, if applicable
- Conduct a risk assessment to determine the level of risk associated with each account and whether further due diligence is required.
Are MSB’s required to be licensed in Iowa and if so, where can the bank go to confirm the state licensing and agent status?
Answer: Yes, section 533C of Iowa Code requires the licensing of MSBs. Specifically, under section 533C.201, a license is required for a person that engages in the business of money transmission or who advertises, solicits or holds itself out as providing money transmission. Section 533C.301 requires a license for money exchangers. The license is issued by the Iowa Division of Banking and can be checked using the NMLS Consumer Access website at www.nmlsconsumeraccess.org. For bank’s looking to verify “authorized delegates”, they should submit a request to the Iowa Division of Banking for verification. Requests can be made to:
Craig D. Christensen
Sr. Examiner – Finance Bureau
Iowa Division of Banking
200 E. Grand Avenue, Suite 300
Des Moines, IA 50309
515-281-4014
515-242-0272 (direct)
(January 2020)
Question: What are our requirements if we learn that our customer, a money services business (MSB), has failed to file as an MSB with FinCEN?
Answer: While the Bank Secrecy Act (BSA) describes no specific requirements, the OCC issued guidance to its institutions regarding bank obligations related to MSBs. See the OCC bulletin 2005-19 at: https://www.occ.gov/news-issuances/bulletins/2005/bulletin-2005-19a.pdf. This bulletin states:
“Given the importance of the licensing and registration requirement, a banking organization should file a suspicious activity report if it becomes aware that a customer is operating in violation of the registration or state licensing requirement. Banking organizations are not expected to terminate existing accounts of money services businesses based solely on the discovery that the customer is a money services business that has failed to comply with licensing and registration requirements (although continuing non-compliance by the money services business may be an indicator of heightened risk).”
The decision to maintain or close an account should be made by a banking organization’s management under standards and guidelines approved by its board of directors. However, if an account is involved in a suspicious or potentially illegal transaction, the banking organization should examine the status and history of the account thoroughly and should determine whether or not the institution is comfortable maintaining the account. If the banking organization is aware that the reported activity is under investigation, it is strongly recommended that the banking organization notify law enforcement before making any decision regarding the status of the account.