Risk-Based Audit Approach to MSB Programs for Sellers of Prepaid Cards

Elisa Evans, CAMS-Audit

This paper provides guidance for a risk-based approach to conducting an audit for large organizations that are considered both a retailer and a Money Services Business (MSB). The MSB referenced in this paper has over 4,000 retail stores throughout the U.S., an e-commerce website and a major publicly traded retailer. The MSB sells a variety of prepaid cards. The MSB sells its own branded reloadable gift card in addition to a variety of other gift cards, reloadable prepaid gift cards and prepaid debit cards; it also offers additional financial services such as check cashing, money orders, wire transfers and bill payments.

Conducting a Bank Secrecy Act (BSA) /AML audit on an MSB such as the one described in this paper can also be challenging for an auditor. There are many unique factors to consider from an auditing standpoint with a company of this magnitude such as selecting the right sample size for each of the program elements as well as evaluating risk, effectiveness of training, cross-chain know your customer (KYC) data collection and evaluating the transaction monitoring system.

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