The U.S. Financial Crimes Enforcement Network (FinCEN) includes in the broad category of money services businesses (MSB’s) currency dealers/exchangers (and now digital currency exchangers), check cashers, issuers or redeemers of traveler’s checks and money orders, prepaid cards, money transmitters, and the U.S. Postal Service.  With the increased utilization of MSB’s by many people in the U.S. and abroad, implementation of strict licensure and regulatory requirements must be clear and concise, not just on a state-by-state basis, but also at the national and international level.

On Friday, February 7, 2014 at the Association of Certified Financial Crime Specialists Conference’s session on “Financial Crime and MSB’s”, Jeff Sklar, managing partner of Sklar Heyman Hirschfield & Kantor, discussed the four “MUST Pillars of any AML Program,” that have proven successful for other MSB’s.  These pillars include the designation of an MSB’s compliance officer, written internal controls, policies and procedures training for all agents of service, and the independent review of transactions.  Mr. Sklar went on to explain that compliance begins on the ground with high-quality employee training which should be reviewed on a “constant and evolving basis.”  To maximize efficiency, training programs should be tailor-made for each employee’s role because they can no longer have a one-size-fits-all approach.

Well-trained agents and MSB’s must ensure that they are obtaining all the necessary information from their clients in an effort to remain compliant.  Beyond the standard requests made for a name, address, and phone number, in most cases personnel must practice due diligence by requesting additional information such as photo identification.   Other experts on the panel impressed upon attendees that MSB reporting must also include the date, time, location, and the amount of the transaction (and when applicable, totals over time).  While this CDD is typically done for most transactions over $1000, in some jurisdictions like Yemen, the threshold for CDD is $1.  Compliance in Europe is getting more complicated as examiners are calling out companies for not being in compliance with the Third European AML Directive, which requires both CIP and PEP screening even for one-off customers.

In closing, the panelists strongly encouraged the audience to study the Deferred Prosecution Agreements of both Sigue and Moneygram, for learning important lessons. With the increased use of MSB’s around the world it is imperative for these businesses to partner with government regulators.  Compliance begins with trained employees who can prevent financial crime.  As the U.S. government’s expectations of MSB’s grow, robust client-on-boarding and documentation can prevent crimes before they even happen, ensuring the continued success of money service businesses.