Risks to a Money Services Business fall into four general categories:
The business, its owners, managers and employees may each be subject to potential civil and criminal penalties for any failure to comply with applicable federal and state laws and regulations. Businesses need to understand the requirements and also implement effective policies, procedures and controls to mitigate such risks.
MSBs that cash checks typically provide immediate credit for checks that may later be returned as uncollected. These returned checks could result from either insufficient funds on the Payor’s account or from check fraud. At best the business will be delayed in receiving good funds; at worst, the business suffers a loss.
Human beings are prone to being human – it’s in our DNA! We all make errors and the risk of error increases as the volume of transaction activity increases. Also, people often become more complacent over time and lose sight of the risks inherent in the transactions they are conducting; when this happens, people are more likely to take shortcuts or become distracted and fail to follow procedures necessary to controlling risk. Further, MSBs are more prone to becoming targets of robbery due to the likelihood of large amounts of cash being available on hand.
All businesses rely on good will and the support of their community. This is especially true for small businesses. If your business becomes involved in money laundering or terrorist financing schemes, whether unwittingly or intentionally, it will harm the business’s reputation causing a loss of customer relationships.