Archive

FinCEN: ANPR on MSBs

ABA Contact: Richard Riese
Published: 71 Federal Register 12308; March 10, 2006
Extension notice: 71 Federal Register 27980, May 15, 2006
Comments Due: July 10, 2006
Disposition: Filed

Summary

FinCEN's Advance Notice of Proposed Rulemaking seeks comments from both the money services business industry and the banking industry on the issue of money services businesses obtaining appropriate access to banking services.  As with ANPRs in general, this notice does not propose new guidance, but rather seeks information, insights and experience about how MSBs continue to be impacted by BSA/AML expectations.

The comment period, which would have expired on May 9, 2006, has been extended until July 10, 2006.

ABA Preliminary Analysis of Position on ANPR

Although FinCEN and the federal banking agencies attempted to redress the trend toward discontinuance of bank services to MSBs attributable to unintended or uncertain regulatory expectations with respect to BSA/AML obligations of insured banks vis-à-vis their MSB customers, the Interagency Interpretive Guidance on Providing Banking Services to Money Services Businesses Operating in the U.S. (the Guidance) and the Interagency BSA/AML Examination Manual (the Manual) have fallen short of that goal.

ABA believes this shortcoming is fundamentally a failure to match the policy pronouncement that insured banks are "not expected …to act as the de facto regulators of the money services business industry" with the standards applied by examiners following the Guidance or the Manual.

ABA Comments

The ABA emphasized that the Interagency Interpretive Guidance on Providing Banking Services to Money Services Businesses Operating in the U.S. (the Guidance) and the Interagency BSA/AML Examination Manual (the Manual) issued by FinCEN and the federal banking agencies remain unclear on certain provisions and made the following recommendations:

  • Expressly state in the Guidance and the Manual that the federal banking agencies rely on FinCEN, the state licensing authorities and the Internal Revenue Service (IRS) to regulate and supervise the BSA/AML obligations of MSBs.
  • Simplify the Guidance and eliminate any due diligence statement that suggests that a bank review or evaluate the policies, controls, training or testing an MSB employs to comply with its BSA/AML obligations.
  • Recognize that most MSBs serving low-income or immigrant markets are generally lower risk for money laundering or terrorism financing.
  • Decriminalize the compliance obligations of banks that serve their communities' MSBs in good faith.
  • Conduct joint industry/agency training to promote more consistent application of the Guidance and the Manual.

In addition, the ABA proposed that modifications be made to the Guidance in the following manner:

  • A direct statement in the Guidance and the Manual that the federal banking agencies rely on FinCEN, the state licensing authorities and the IRS to regulate and supervise the BSA/AML obligations of MSBs—and that it is not the role of the banks to review MSBs' AML programs.
  • A more accurate identification of genuine levels of risk presented by MSBs that serve emerging markets rather than a blanket designation of all such MSBs as high risks.
  • A firm endorsement of self-certified MSB questionnaires, by those few MSBs considered high risk, as meeting banking agency supervisory expectations of the due diligence responsibilities of banks.
  • A strong statement that federal banking regulators have primary jurisdiction over a bank's BSA obligations in connection with serving MSBs and that state or local prosecution of money laundering by an MSB's customer is not grounds for law enforcement to take BSA enforcement action against banks that serve community MSBs in good faith.

2006 Regulations Chart
Comment Letter
Federal Register
Extension Notice