Money services businesses (MSB) must have their own anti-money laundering compliance measures in place. The federal government takes these laws very seriously, and they have been enforcing them more vigorously in recent years. AML compliance issues can have very serious ramifications for a business when the government finds something wrong.
MSBs face a unique set of challenges that could make their operations more susceptible to those seeking to launder money. The major issue is that the Financial Crimes Enforcement Network (FinCEN) regularly reminds MSBs that they will be responsible for any acts committed by their agents. This means that an MSB could be fined for anything that happens at one of their locations or wrongdoing committed by an employee.
This becomes an important issue in the MSB industry where check cashing and currency exchange companies have agents. The principal does not always directly control the day-to-day acts of the agent. This is why compliance procedures are critically important because the principal has an obligation to monitor.
Therefore, the onus is on MSBs to monitor the acts of their agents. The principal must institute risk-based procedures that can scrutinize the agents’ transactions to ensure that they have a valid commercial purpose. The principal must contact law enforcement when they discover transactions that could break the law.
This is not just a one-time obligation. Monitoring and reporting are a daily requirement for any business that is subject to FinCEN rules. If the agent breaks the laws, the government will go after the principal. It could result in fines or even the loss of your business. FinCEN will look at whether the MSB had reasonable procedures in place and took steps to enforce them. Not knowing what the agent was doing is not a defense that FinCEN will accept.
The federal government has shown time and again that it means business when it comes to AML. For example, the Department of Justice hit MoneyGram with a $100 million fine for deficiencies in its AML program. Even individual employees have been penalized for their own actions. If you own an MSB, chances are that you will see the federal government on your doorstep more than once. This is why readiness is critical.
AML compliance is a task for an experienced professional. You should be able to trust that you have the procedures to keep you out of trouble. Agent monitoring is not an easy thing to do on your own, and the consequences for non-compliance are serious. Further, keeping track of what happens at many locations can be more than a challenge.
Bates Group LLC can help your MSB design its own agent monitoring system to help you follow AML regulations. We can review your business and help you figure out the procedures that you need. Contact us today to get started, so you can begin to ensure that you have your AML house in order when the government starts asking questions.
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