Compliance with Bank Secrecy Act for MSBs

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Hello. I’m Kevin McCarthy of the IRS and I would like to discuss with the money services business market segment how an effective anti-money laundering or AML program can assist you in complying with the Bank Secrecy Act, also known as the BSA.

Money services business, or MSB, activities may include:

  • The issuance and sale of money orders and traveler’s checks;
  • Money transmission;
  • Check cashing; and/or
  • Currency exchange or dealing.

Any of the financial services offered by an MSB carries the risk of being used in money laundering or terrorist activities. This risk is determined by the types of products offered and customers served, high-risk geographic areas, and by the absence of a comprehensive anti-money laundering or AML program.

An AML program is the key component in managing your risk. The program must be sufficient to allow the MSB to identify, monitor, mitigate and, when required, report financial activity. It must also comply with BSA regulatory requirements.

IRS BSA examiners and state regulators conduct examinations to determine compliance with the BSA. Examinations are risk-based and focus on the AML program. The examiner will consider:

  • The risk assessment of the MSB,
  • The strength of the MSB’s AML program,
  • The training provided to personnel,
  • The quality of independent testing conducted, and
  • The MSB’s compliance history.

Generally, an examination will include:

  • An on-site visit and walk-through of the business,
  • Interviews with key employees such as personnel conducting transactions and the AML compliance officer,
  • Examination of the AML program to assess its adequacy, and
  • Examination of the books and records, to include limited transaction testing.

More information is available in the Bank Secrecy Act/Anti-Money Laundering Examination Manual for Money Services Businesses.  This manual can be found at IRS.gov by entering keywords “money services businesses” or at FinCEN.gov. Click on the MSB link. I hope this information is useful and assists you in complying with the Bank Secrecy Act.