On September 30, the DCU released Bulletin B-16-17, which provides Guidance on Money Service Businesses (MSBs).

Operation Choke Point, and additional pushing from regulators, urged financial institutions to avoid offering services to specific businesses identified as high risk – such as money service businesses.  In late 2014, the DOJ and FDIC determined that they should not be doing this, and rather financial institutions should take a risk based approach in determining whether they offer services to these higher risk customers.

Financial institutions are still leery of accepting these businesses as customers, therefor, the DCU provided the Bulletin explaining the existence, structure and degree of an established regulatory system for MSBs.  These state requirements focus on customer protection, safety and soundness, and adherence to BSA and AML requirements.

Credit unions can use the bulletin to help understand the MSBs that they serve, including the supervisory structures designed to authorize and regulate these businesses, and make decisions based on the individual risk profile of each MSB.