With mounting pressure from global financial policing organizations responding to ties between banks and various terrorist activities coupled with the looming deadline for compliance in January of 2016, it’s no surprise that more and more banks are severing ties to what they perceive to be high risk clients: money service businesses (MSBs).
The Bank’s Side of the Story
FinCEN continues to keep a close eye on the MSB industry, ensuring that MSB banking is in strict compliance with the BSA. It has become a significant expense for banks to implement the proper training to stay within this compliance, not to mention the risks of banking executives being held personally liable if they have not adhered to the Know Your Customer policy that has become expected. Since 2012, banks have paid over $4 billion in penalties and forfeitures brought in whole or in part by the BSA.
No wonder banks are taking the precautions they are: “The BSA is not a tip; it is not a suggestion,” cautioned Preet Bharara, the U.S. attorney for the southern district of New York, in January 2014. “It is a legal requirement, enforceable through criminal sanction,” he continued. “ Financial institutions need to take it seriously because we are deadly serious about enforcing it.”
Banks feel their relationships with MSBs are under extreme scrutiny and the risk is not worth the benefit. Despite being warned about indiscriminately de-banking customers and FinCEN’s statement, “MSBs play an important role in a transparent financial system,” banks are reluctant to hold on to those relationships that they perceive to be poor risk management.
The MSB’s Side of the Story
Money service businesses should not be disregarded. As a $100 billion industry, it’s safe to assume that MSBs aren’t going anywhere anytime soon.
MSBs face the same compliance regulations. In fact, inadequacy or lack of proper AML procedures is cited as being one of the top violations in the financial industry as a whole, not limited to banks.
MSB’s need access to real bank accounts and supported MSB services so that they can provide their customers with the ability to send and receive money expeditiously.
The Solution to Meet in the Middle
Simply put, no matter what side of the fence you’re on, the industry seeks compliance, risk mitigation and speed.
It will undoubtedly be a sustainable solution to establish these MSB friendly banking relationships paying special attention to effectively managing risks while maintaining profitability.
National Check and Currency recognizes the need for MSB friendly banking and has built their core offerings on the needs of the industry. The NCC team provides redundant MSB banking with emphasis on speed and compliance. Our vigilance and dedication to supporting our clients sets us apart in the industry and offers clients vast benefits highlighting lower risk and greater profits.