MSB Refresher

The NCUA released its February 2016 issue of the NCUA Report. The Report contains a good overview of the requirements for credit unions if they offer accounts to Money Service Businesses.

While credit unions are allowed to provide accounts and services to MSBs, the credit unions must have proper controls in place to identify and manage the risks inherent with these types of entities. Credit unions should have a clear understanding of the MSB operations and conduct ongoing due diligence and comply with the BSA’s reporting requirements.

The minimum due diligence that credit unions are expected to perform, when opening and maintaining accounts, include:

  • Applying customer identification procedures, including determining whether a business meets the MSB definition. Customer identification and verification is one of the most effective ways to detect and guard against money laundering schemes.
  • Confirming their Financial Crimes Enforcement Network registration, if applicable. Remember, these registrations must be renewed every two years. FinCEN outlines their requirements for MSBs at http://go.usa.gov/cPGwT.
  • Confirming member MSBs comply with state or local licensing requirements, if applicable.
  • Confirming a member MSB’s agent status, if applicable.
  • Conducting a Bank Secrecy Act anti-money laundering risk-assessment to determine the level of risk associated with the account and whether additional due diligence is necessary.

The NCUA outlined the due diligence expectations in its Letter to Credit Unions 14-CU-10, Identifying and Mitigating Risks of Money Services Businesses, and the associated Supervisory Letter.

Credit unions that offer, or are considering offering, services to Money Services Businesses should read the NCUA Report, along with Supervisory Letter and the Letter to Credit unions.

Leave a Reply

Your email address will not be published. Required fields are marked *