Money Services Businesses Money Transmitters

1
Money Services Businesses (Money Transmitters)

• Patton Boggs LLP

2
Banking Services for MSBs

• High-risk customers
• Problem grew following Riggs and AmSouth cases
• Wells Fargo action
• JPMorgan Chase, North Fork announcements

3
FinCEN/Bank Regulatory Joint Statement

• March 2005 Joint Statement
• MSBs provide important service
• Banks not regulators for MSBs
• MSBs not uniformly high-risk
• Important that MSBs remain within regulated
  financial sector

4
FinCEN/Bank Regulatory Guidance

• April 2005 Guidance to MSBs on Maintaining
  Banking Services
• April 2005 Interpretive Guidance on Providing
  Banking Services to MSBs
• Minimum due diligence expectation
• Risk assessment and risk indicators
• Enhanced due diligence for higher-risk MSBs

5
Response

• MSB accounts dropped
• Increased charges to MSBs
• Congressional hearings
• March 2006 ANPR

6
Solution

• Compliance safe harbor for banks
• MSBs properly licensed, regulated
• Code of Practice
• AML policy
• Cooperate w/ legitimate investigations
• Head of compliance
• Centralized records
• Seal of Approval

7
Conclusion

• Uncertain requirements
• Two-tiered money transfer system
• Consolidation
• Banks as money transmitters
• Informal, invisible, undetectable funds transfers