In speaking at various bank and credit union events about the banking of businesses that are  cash intensive, or “Money Services Businesses” (MSBs), one common theme is clear:  despite changes in the regulatory landscape, the process for banking MSBs has remained the same.  As a result of systematic “de-risking,” MSBs across the country have been losing access to the financial system.  But with a driving force behind de-risking, Operation Choke Point, now officially ended, it is time to assess the aftermath of de-risking, and specifically how financial institutions can service MSBs in this new environment.  For this to happen, institutions must be ready to discard legacy concepts and practices associated with banking MSBs and embrace a new approach.

De-risking created a wealth of new opportunities with respect to the banking of MSBs.  As many large financial institutions have exited the MSB market, small and regional institutions are poised to fill the void left by them.  For MSBs themselves, losing access to financial institutions represents an existential threat to their businesses, regardless of how long they’ve been around or their adherence to regulations.  This means there are many responsible MSBs desperate to regain banking access, and many financial institutions open to serving them. Nonetheless, much of the MSB industry remains underserved.  So, what is the problem?

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