Blanket De-Risking of Money Services Businesses

Author: Kristin Pullar, CAMS-Audit

The purpose of this paper is to describe how the current regulatory environment is putting pressure on the banking industry to de-risk their client base, specifically money services businesses (MSB). The de-risking of MSBs often means termination of banking relationships and shutting down services to MSBs. The regulatory bodies of the Financial Crimes Enforcement Network (FinCEN) and the Financial Action Task Force (FATF) are against this blanket de-risking approach for an entire industry. However, I will demonstrate how the process still exists and how it impacts banking institutions and the global financial industry. More importantly I will describe the MSB regulatory environment to demonstrate how MSBs are responsible for implementing compliance programs in accordance with the Bank Secrecy Act (BSA) and the oversight by regulators of this process. The intent is to articulate how regulators need to encourage, through actions and practice, the banks use of FATF’s risk-based approach and leveraging existing regulatory oversight of MSBs when evaluating the decision to provide banking services to MSBs.

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