Common Deficiencies

Common Deficiencies in MSB BSA Compliance Programs

Common (far too common) compliance pitfalls with money services businesses (particularly smaller MSBs) and their Bank Secrecy Act / Anti-Money Laundering compliance programs include the following:

  1. compliance officer has not been formally designated by the appropriate authority and given clearly defined roles and responsibilities. A BSA Officer should have responsibility, authority, and budget to ensure compliance.
  2. Lack of documentation related to training; inability to demonstrate that training of employees has occurred and is consistent with the level of risk to the MSB.
  3. Poor or no documentation, organization and maintenance of agent files (and/or foreign counterparty files for money transmitters).
  4. Lack of a documented risk assessment.
  5. Policies and procedures do not exist, are so poorly documented as to be meaningless, or have little or no resemblance to the actual practices of the business.
  6. Independent testing of the compliance program. MSB has failed to perform independent testing; testing was completed by someone who was not independent; or, testing was inadequate, not documented or was poorly documented. Although the frequency is not specified in the regulation, best practices suggest that the independent review be performed no less frequently than annually. Also, MSBs at high risk of being unwittingly used for money laundering should have more robust independent audit programs than do those MSBs at low risk.
  7. Lack of OFAC controls to ensure that updates are performed in a timely manner and that controls are in place to verify that the updates are complete. (This weakness relates primarily to principal MSBs for money transmittal.)

These compliance weaknesses could potentially result in penalties to the MSB for noncompliance with the Bank Secrecy Act. MSBs also frequently have deficiencies in their compliance with state laws, common areas being: registration, documentation requirements, advertising and marketing, receipts.

The likelier and more immediate problem for the MSB faced with these shortfalls could be the loss of their banking relationship.

If your business’ BSA compliance program is not where it should be, take steps to move towards full compliance. The resources available on this website and in the Money Services Business Bank Secrecy Act / Anti-Money Laundering Compliance Guide can help you get your business into compliance and maintain your valued banking relationship.