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FDIC Advisory Committee on Economic Inclusion
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Money Services Businesses At a Glance
What is a Money Service Business (MSB)?
MSBs are non-bank financial institutions that provide certain financial services to their customers. They range in size and complexity, from small, one-shop businesses to multi-state sophisticated providers. As defined by the Financial Crimes Enforcement Network (FinCEN), MSBs include five distinct types of financial services providers and the U.S. Postal Service:
There is a threshold requirement for businesses in the first four categories — a business that engages in such transactions will not be considered an MSB if it does not engage in such transactions in an amount greater than $1,000 for any person on any day in one or more transactions (31 CFR 103.11(uu)). FinCEN has issued guidance stating that certain businesses that cash their own checks do not meet the definition of a “check casher.” See FIN-2006-G005 - PDF, Frequently Asked Questions — Businesses Cashing Their Own Checks, March 31, 2006, at www.fincen.gov. The definition is broad enough to include such businesses as grocery stores that provide check cashing services for customers without a fee.
MSBs fill a need in many communities. They provide convenient access to financial services in many neighborhoods with few or no bank branches. Billions of dollars in micropayments pass through MSBs every year.
Who Supervises MSBs?
Many States have regulations and enforcement responsibilities over MSBs. Federally, the Internal Revenue Service (IRS) has the authority to examine nonbank financial institutions (NBFI), which include MSBs for compliance with the Bank Secrecy Act (BSA), and to investigate potential criminal BSA violations; to collect and store BSA reported data by all financial institutions. FinCEN in turn, oversees the administration of BSA by numerous agencies including IRS and the Federal banking agencies.
Registration Requirements with FinCEN
Persons/entities defined as MSBs are generally required to register with FinCEN. Registration is required within 180 days after the day that the person/ entity is established as an MSB. Thereafter, the MSB must renew its registration every two years by December 31st for as long as the MSB continues to meet the MSB definition.
The following MSBs are not currently required to register:
Bank Secrecy Act and MSBs
FinCEN and the federal banking agencies issued interpretive guidance on April 26, 2005, to clarify the BSA requirements and supervisory expectations as applied to accounts opened or maintained for MSBs. With limited exceptions, many MSBs are subject to the full range of BSA regulatory requirements, including the anti-money laundering program rule, suspicious activity and currency transaction reporting rules, and various other identification and recordkeeping rules.
The Relationship Between Banks and MSBs
Due to the nature of MSB business activities, they require specific banking services. These services include the establishment and maintenance of a bank account, transaction processing and currency processing. MSBs may also require a variety of credit facilities, such as lines of credit for liquidity purposes.
The banking relationship is crucial to MSBs. They require access to the payments system that a bank provides in order to clear or process checks or transfer funds. The relatively recent phenomenon of bank discontinuance is of concern to the MSB industry.
Supervisory Guidance with Respect to MSBs as Bank Customers
MSB’s BSA/AML program.
FinCEN and the federal banking agencies do not expect banks to uniformly require any or all of the actions identified above for all MSBs.
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