FORT LAUDERDALE, Fla. – The role and status of money service businesses (MSBs)—which are known to have caused the conservatorship of at least one credit union already–were hot topics during the NASCUS/CUNA Bank Secrecy Act (BSA) Conference here.
Bill Berg, vice president of compliance of the League of Southeast Credit Unions (LSCU), told the 300-plus participants at the conference that he routinely tells audiences of compliance officers that when it comes MSBs “Regulators don't like ’em, so don't do ’em.” However, he acknowledged to the group, “You probably have them in your field of membership, and you don't know it.”
An MSB is defined by the federal Financial Crime Enforcement Network (FinCEN) as a business with an activity threshold of greater than $1,000 per person per day in one or more transactions, which applies to the definitions of currency dealer or exchanger; check casher; issuer of traveler's checks, money orders or stored value; and seller or redeemer of travelers' checks, money orders or stored value.
The businesses often, though not exclusively, serve underserved groups.
David Reed of the Virginia law firm Reed and Jolly noted that MSBs are important services to underserved groups that are largely unappreciated.
Kelly Botti, vice president of compliance and credit union counsel at Trumark Financial Credit Union in Philadelphia, noted that in large cities such as Philadelphia, “There is an absolute need for these businesses.”
But she also stressed that many credit unions don't have the resources to manage MSBs among their memberships. “The regulations make it very difficult for us to do that,” she said.
Added LSCU’s Berg, “The regulatory burden is ridiculous.”
Botti suggested that as credit unions have advocated before Congress and regulators for relief from their regulatory requirements, reducing the burden imposed on service to MSBs “has fallen by the wayside.”
Cindy Williams, vice president of regulatory compliance for PolicyWorks in Des Moines, Iowa, said she was holding out hope that “someone will see the light” about easing regulatory burden in serving MSBs. She noted that the federal Office of the Comptroller of the Currency (OCC) took a look at requirements for banks, and found that community banks were disadvantaged in service to MSBs, due to regulatory hurdles. She said that convinced OCC “that they should step back.”
The NASCUS/CUNA BSA Conference runs through Wednesday at the Marriot Harbor Beach Hotel in Fort Lauderdale.