Articles & Research Papers


FinCEN Releases Statement Encouraging Banks to Offer Services to Money Service Businesses (MSBs)

In what may be good news for emerging virtual currency companies and emerging payments companies, the Financial Crimes Enforcement Network (“FinCEN”) released a public statement yesterday regarding the willingness of banks to offer accounts to Money Service Businesses (“MSBs”).

The statement expressed FinCEN’s concern that “[MSBs], including money transmitters important to the global flow of remittances, are losing access to banking services, which may in part be a result of concerns about regulatory scrutiny, the perceived risks presented by money services business accounts, and the costs and burdens associated with maintaining such accounts.” The concern centers on FinCEN’s observation that

banks are indiscriminately terminating the accounts of all MSBs, or refusing to open accounts for any MSBs, thereby eliminating them as a category of customers. Such a wholesale approach runs counter to the expectation that financial institutions can and should assess the risks of customers on a case-by-case basis. Similarly, a blanket direction by U.S. banks to their foreign correspondents not to process fund transfers of any foreign MSBs, simply because they are MSBs, also runs counter to the risk-based approach.

FinCEN’s statement warned that “refusing financial services to an entire segment of the industry can lead to an overall reduction in financial sector transparency that is critical to making the sector resistant to the efforts of illicit actors. This is particularly important with MSB remittance operations.”

Highlighting the “important role” that MSBs play in the global financial system, FinCEN declared that “it is important to reiterate the fact that banking organizations can serve the MSB industry while meeting their Bank Secrecy Act obligations.” As such, “FinCEN does not support the wholesale termination of MSB accounts without regard to the risk presented to the bank’s ability to manage the risk.” The Statement declares that “[a]s with any category of accountholder, the levels of risk will vary, therefore, MSBs should be treated on a case-by-case basis.” Noting that not all MSBs are high-risk, and that banks should conduct due diligence that is commensurate with the level of risk presented by the MSB customer, FinCEN suggested that “an institution [that] follows existing guidance and establishes and maintains an appropriate risk-based program . . . will be well-positioned to appropriately manage [MSB] accounts.”

The release of the statement coincides with the 2014 American Bankers Association Anti-Money Laundering Conference, held in Washington D.C., where Director Jennifer Shasky Calvery addressed many of the Nation’s banking leaders in a keynote address where she highlighted the statement and encouraged banks to improve their evaluation of MSB account applicants rather than avoid the business type altogether.