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Board of Governors of the Federal Reserve System Federal Deposit Insurance Corporation
Financial Crimes Enforcement Network
National Credit Union Administration
Office of the Comptroller of the Currency
Office of Thrift Supervision

FOR IMMEDIATE RELEASE
March 30, 2005
contact: (703) 905-3770

JOINT STATEMENT ON PROVIDING BANKING SERVICES TO MONEY SERVICES BUSINESSES

The Financial Crimes Enforcement Network (“FinCEN”), together with the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration (collectively, the “Federal Banking Agencies”) are jointly issuing this Statement to address our expectations regarding banking institutions’ obligations under the Bank Secrecy Act for money services businesses, such as check cashers and money transmitters.1 Money services businesses are losing access to banking services as a result of concerns about regulatory scrutiny, the risks presented by money services business accounts, and the costs and burdens associated with maintaining such accounts. Concerns may stem, in part, from a misperception of the requirements of the Bank Secrecy Act, and the erroneous view that money services businesses present a uniform and unacceptably high risk of money laundering or other illicit activity.

The money services business industry provides valuable financial services, especially to individuals who may not have ready access to the formal banking sector. It is important that money services businesses that comply with the requirements of the Bank Secrecy Act and applicable state laws remain within the formal financial sector, subject to appropriate anti-money laundering controls. FinCEN and the Federal Banking Agencies further believe it is essential that the money services business industry maintain the same level of transparency, including the implementation of a full range of anti-money laundering controls as required by law, as do banking organizations.

The Bank Secrecy Act does not require, and neither FinCEN nor the Federal Banking Agencies expect, banking institutions to serve as the de facto regulator of the money services business industry. Banking organizations that open or maintain accounts for money services businesses should apply the requirements of the Bank Secrecy Act on a risk-assessed basis, as they do for all customers, taking into account the products and services offered and the individual circumstances. Accordingly, a decision to accept or maintain an account with a money services business should be made by the banking institution’s management, under standards and guidelines approved by its board of directors, and should be based on the banking institution’s assessment of risks associated with the particular account and its capacity to manage those risks.

Guidance on account relationships with money service businesses will be issued shortly by FinCEN and the Federal Banking Agencies outlining further our compliance expectations for banking institutions. FinCEN will issue concurrent guidance to money services businesses outlining their compliance obligations. We believe this guidance will clarify the Bank Secrecy Act requirements and supervisory expectations as applied to accounts opened or maintained for money services businesses.

1. GUIDANCE – Develop guidance jointly with the federal banking agencies to outline with specificity Bank Secrecy Act compliance expectations when banks maintain accounts for money services businesses.

The provision of written guidance to the banking industry is a necessary first step. To be effective, the guidance must provide a sufficient level of detail concerning the controls that must be established and the due diligence that must be exercised when accounts are maintained for the variety of money services businesses. Such guidance will assist banks in assessing the varying degrees of risks posed by the different types of money services businesses.

2. EDUCATION – Provide to the banking industry and bank examiners enhanced education on the operation of the variety of products and services offered by money services businesses and the range of risks that each may pose.

The Financial Crimes Enforcement Network will build on the significant steps already taken by our agency and the federal banking regulators toward establishing the framework and mechanism for providing this type of educational outreach. For example, the Financial Crimes Enforcement Network is working together with the federal banking regulators to develop a unified set of examination procedures, which will include a section devoted to money services businesses. Additionally, the Financial Crimes Enforcement Network has already begun joint examiner training that will provide a forum to provide training on the money services business industry.

3. REGULATION – Strengthen the existing federal regulatory and examination regime for money services businesses, including coordinating with state regulators to better ensure consistency and leverage examination resources.

Ensuring money services business access to banking services begins with ensuring an effective regulatory and examination regime. The Financial Crimes Enforcement Network will continue to evaluate and modify, if necessary, the existing Bank Secrecy Act requirements and will also continue to work closely with the Internal Revenue Service, the delegated examiner of money services businesses, to enhance the examination regime through the development of revised examination procedures, information sharing, and examination targeting. Additionally, the Financial Crimes Enforcement Network is working with the Conference of State Bank Supervisors to develop a model information sharing agreement with state banking agencies. Executing individual agreements with state banking agencies will ensure better coordination and synergy with state-based examiners.

1 Under existing Bank Secrecy Act regulations, money services businesses are defined to include five distinct types of financial services providers and the U.S. Postal Service: (1) currency dealers or exchangers; (2) check cashers; (3) issuers of traveler’s checks, money orders, or stored value; (4) sellers or redeemers of traveler’s checks, money orders, or stored value; and (5) money transmitters. See 31 CFR 103.11(uu).

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