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Tuesday, July 19, 2011

FinCEN clarifies MSB definitions

The Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, issued the final rule concerning which financial service providers qualify as Money Services Businesses (MSBs) and are therefore subject to the anti-money laundering (AML) regulations contained in the Bank Secrecy Act (BSA).

The final rule announced on July 18, 2011, defines MSB as any business that conducts $1,000 worth of transactions per person per day or any entity that engages in money transmission of any amount. Such businesses must comply with the BSA's AML rules.

The rules also include MSBs based outside the United States that conduct business in the United States. This addition was necessitated by the Internet and other technologies that allow foreign entities to operate as MSBs in the United States from foreign locations.

The ruling can be accessed at www.fincen.gov/statutes_regs/frn/pdf/MSB_Final_Rule_Definition_and_OtherRegulations.pdf .

To clarify how prepaid card businesses are affected by the new regulations, FinCEN issued a separate document (in June 2010) to distinguish providers of stored-value instruments – such as prepaid cards – from issuers, sellers and redeemers of traveler's checks and money orders.

FinCEN is still formulating how to update the BSA regulations to include stored-value service providers. The June 2010 notice of proposed rulemaking, entitled Financial Crimes Enforcement Network; Amendment to the Bank Secrecy Act Regulations—Definitions and Other Regulations Relating to Prepaid Access, is available at edocket.access.gpo.gov/2010/pdf/2010-15194.pdf. end of article

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