Businesses subject to Money Services Businesses (MSBs) requirements play a vital role in providing financial services to the “unbanked” and “self-banked” in niche markets across the United States. MSBs provide much needed services like money transfer, prepaid stored value cards and money orders to their clients. Multi-state businesses subject to MSB regulation quickly learn that the challenges associated with registering in multiple jurisdictions is time consuming, expensive and complex. Outsourcing MSB compliance to an experienced firm will save your business money and headaches.
All MSBs are expected to develop written, risk-based policies, procedures and controls covering their responsibilities under the Bank Secrecy Act. Operations should then be managed to conform to the written compliance policies and tested periodically via the independent review process. MSBs that provide services through Agents or who use foreign counterparties to facilitate transactions are at increased risk and must take additional action to mitigate risk. MSBs are required to perform Due Diligence prior to establishing such relationships, perform ongoing monitoring for compliance and to monitor for potentially suspicious activity by or through such relationships.
We at Rapid believe the best way to handle complex MSB Requirements is by partnering with Banks who actively manage MSB type risks on a daily basis. Banks take these guidelines serious and make it part of their daily routine to stay on top of the latest banking regulations to safeguard our clients and partner’s personal information. Contact us today to learn more our unique way to solve MSB challenges through leveraging our long standing banking relationships.
Risks to a Money Services Business fall into four general categories:
The business, its owners, managers and employees may each be subject to potential civil and criminal penalties for any failure to comply with applicable federal and state laws and regulations. Businesses need to understand the requirements and also implement effective policies, procedures and controls to mitigate such risks.
MSBs that cash checks typically provide immediate credit for checks that may later be returned as uncollected. These returned checks could result from either insufficient funds on the Payor’s account or from check fraud. At best the business will be delayed in receiving good funds; at worst, the business suffers a loss.
We all make errors and the risk of error increases as the volume of transactional activity increases. Also, people often become more complacent over time and lose sight of the inherent risks in the transactions they are conducting. When this happens, people are more likely to take shortcuts or become distracted and fail to follow procedures necessary to control risk.
All businesses rely on good will and the support of their community. This is especially true for small businesses. If your business becomes involved in money laundering or terrorist financing schemes, whether intentionally or not, it will harm the business’s reputation causing a loss of customer relationships.