The recipe for offering accounts for money services businesses

by Jane Pannier

For anyone who has attempted to make a complicated recipe, you know that even the best-laid plans can go awry. This sounds a lot like regulatory compliance—financial institutions have all the rules laid out in front of them, but extenuating circumstances, accidents, or outright violations happen (much like baking, you have to take into account your altitude and make sure you soften the butter before putting it in the mixer).

One of the trickiest portions of compliance has to do with money services businesses,  the soufflé of the financial services industry, if you will. Let me begin by saying that, when done right, most money services businesses (MSBs) and soufflés provide great satisfaction. In the case of MSBs, they provide a much-needed service for individuals that may not have access to or don’t want to use traditional banking accounts or services. However, MSBs, like soufflés, can also be a rather risky venture, because MSBs have historically been an avenue of choice for money laundering purposes. As a result, FinCEN and your examiner are going to expect that if you have MSB accountholders in your institution that you will apply additional scrutiny and due diligence to these accounts.

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