Anti-Money Laundering (AML) and Money Service Business

AML
Share on facebook
Facebook
Share on google
Google+
Share on twitter
Twitter
Share on linkedin
LinkedIn
Reading Time: 3 minutes

The Bank Secrecy Act (BSA) requires all Money Service Businesses (MSBs) to establish and maintain an effective and robust written Anti-Money Laundering (AML) program that is designed in its capacity to reasonable prevent the entity from being misused for Money Laundering and terrorist financing activities. This guidance is for both principals and their agents.

Furthermore, FinCEN has solidified its guidance pertaining to “Money Service Businesses” (MSB) principal-agent relationships, and consistent with the purposes of the Money Remittances Improvement Act to encourage coordination between Federal and state regulators on such issues.

No matter what, each MSB remains independently and wholly responsible for implementing adequate AML program requirements.

We are Certified Anti-Money Laundering Specialist with years of experience providing Independent review & testing of AML program, assessment of risk, review internal control & monitoring. Contact us now!

Under 31 CFR § 1022.210, an MSB’s AML program must, at a minimum:

  • Incorporate policies, procedures, and internal controls reasonably designed to assure compliance with the BSA and its implementing regulations
  • Designate a person to assure day to day compliance with the program and the BSA and its implementing regulations
  • Provide education and training of appropriate personnel concerning their responsibilities under the program, including training in the detection of suspicious transactions to the extent that the money services business is required to report such transactions under the BSA
  • Provide for independent review to monitor and maintain an adequate program

An MSB principal is exposed to risk when an agent engages in transactions that create a risk for money laundering, terrorist financing, or other financial crime. In order to reduce exposure to such risks, for example, the MSB principal must have procedures in place to identify those agents conducting activities that appear to lack commercial purpose, lack justification, or otherwise are not supported by verifiable documentation.

The principal must implement risk-based procedures to monitor the agents’ transactions to ensure that they are legitimate. The procedures must also ensure that, if the agents’ transactions trigger reporting or recordkeeping requirements, the principal handles the information in accordance with regulatory reporting and recordkeeping obligations. In addition, the MSB principal should implement procedures for handling non-compliant agents, including agent contract terminations.

Accordingly, principals are required to develop and implement risk-based policies, procedures, and internal controls that ensure adequate ongoing monitoring of agent activity, as part of the principal’s implementation of its Anti-Money Laundering program.

Read more about our AML Anti-Money Laundering service and how our Certified Anti-Money Laundering Specialist can help you.

When conducting monitoring of their agents, principals must, at a minimum:

  • Identify the owners of the MSB’s agents
  • Evaluate on an ongoing basis the operations of agents, and monitor for variations in those operations
  • Evaluate agents’ implementation of policies, procedures, and controls

As is true for all industries FinCEN regulates, FinCEN expects MSB principals and agents to tailor their AML programs to reflect the risks associated with their particular business services, clients, size, locations, and circumstances. AML risks can be jurisdictional, product-related, service-related, or client-related.9

Principals must periodically reassess risks associated with their agents and update the principals’ programs to address any changing or additional related risks. Principals must also take corrective action once becoming aware of any weaknesses or deficiencies in their AML programs. MSB principals and agents are required to conduct reviews with a scope and frequency commensurate with the risks of money laundering or other illicit activity such principal or agent faces. A principal must conduct internal and/or external independent testing to ensure there are no material weaknesses (e.g., inadequate training) or internal control deficiencies (e.g., monitoring agents). In addition, the testing must factor in products and services provided to determine if the procedures are sufficient to detect and report suspicious activity.

Risk factors that principals should consider when conducting agent monitoring include, but are not limited to:

  • Whether the owners are known or suspected to be associated with criminal conduct or terrorism
  • Whether the agent has an established and adhered to AML program
  • The nature of the markets the agent serves and the extent to which the market presents an increased risk for money laundering or terrorist financing (This does not mean that principals with agents providing services involving regions affected by conflict or terrorism cannot manage such risks, but rather that principals must take steps to account for and mitigate such risks)
  • The services an agent is expected to provide and the agent’s anticipated level of activity
  • The nature and duration of the relationship

FinCEN recognizes that an agent may enter into contracts to offer services with more than one principal or may provide additional services on its own. In such situations, principals are encouraged to share information with other eligible financial institutions through participation in the 314(b) voluntary information-sharing program.10

FinCEN reminds MSB principals that the culture of an organization is critical to its compliance, as has been highlighted in FinCEN’s Advisory to U.S. Financial Institutions on Promoting a Culture of Compliance.11 The general principles set forth in the advisory illustrate how MSBs may improve and strengthen organizational BSA compliance at both the principal and agent levels.

Leave a Reply

Your email address will not be published. Required fields are marked *

Client Reviews
AKIF CPA
5.0
Based on 95 reviews
powered by Google
Ammoria Daniels
Ammoria Daniels
02:11 16 Sep 21
We contacted Akif with an urgent matter regarding corporate taxes. Akif immediately understood what was needed and... within days had everything ready to sign. The level of service we received was amazing and unmatched. Waqar expertise in trucking industry made our situation seamless. His communication was outstanding; I heard from him daily and could have been completed sooner if I was as fast as he was 😃 Highly recommended!read more
Joe Paneitz
Joe Paneitz
18:30 18 Aug 21
What an absolute pleasure to work with this CPA firm. My business is already seeing such a positive impact and growth.... I cannot believe I didn't connect with them sooner. This firm is helping in so many ways! 5 stars is an understatement! Thank you so much for your help AKIF CPAread more
Helptest ARCpoint Labs
Helptest ARCpoint Labs
15:02 18 Aug 21
The firm is quick, responsive, and has the latest technological software. Thus far, I have been with them for 3+ years... and will continue to work with them even after relocating. They make it easy even when I'm miles away. Would highly recommend them.read more
Luz Tipaz
Luz Tipaz
16:06 13 Jul 21
Saim and his team are the best CPAs in town. I have been their client for years. All started when I needed help with... company structure with multiple companies and then accounting and Taxes. I have been very happy ever since. Thank you AKIF CPA.read more
Maria perez
Maria perez
18:31 08 Jun 21
Me and my husband have been getting all of our personal Taxes, business Taxes, monthly bookkeeping, accounting and... payroll done with AKIF CPA. Recently, we had more stuff come up and had detailed analysis done on capital gains, single family rentals (SFR) and business disposition. You will only know how great this CPA company is until you have worked with them and given them a chance. Words can’t describe our experience. AKIF CPA gets the job done every time - very reliable, professional and affordable.read more
Afnaan Amin
Afnaan Amin
22:14 02 Jun 21
Very good experience, we had unique situation in regards to cross border income as Canadians currently residing in the... US. Income on both sides of the border through completely different channels. Everything was very easy and completed timely, I also had lots of random questions and Mohammad provided top notch service along the way and even after we finished our taxes!! Highly recommended.read more
Ryan Paton
Ryan Paton
10:56 08 May 21
I moved to the USA from Canada late 2018 as part of a promotion/relocation for work. For my 2019 returns, I used an... accounting firm recommended by the local Canadian social club in my city, which was a terrible experience. They were slow to respond to inquiries and would follow up in piecemeal requests which dragged out my return process over several months, often asking for information I had already provided.For the price I paid, I vowed to find better service. I found Mohammad online and decided to reach out. Mohammad was extremely responsive, took care of my US and Canadian returns as well as my wife's business returns in a timely manner. Overall, it was a very positive experience and I would recommend him to another in my situation.read more
Tuan Vo
Tuan Vo
01:59 20 Apr 21
I relocated to Texas from Alberta, Canada and needed a CPA to help me with my cross-border taxes as I was not happy... with the CPA that I used previously. During my interviewing process to find another CPA, I had good feedback from Mohammad as he was able to answer my questions regarding my unique tax situation with expertise, and importantly to me, in a timely manner. I decided to use his services for the current tax year and I have nothing but compliments for the work Mohammad provided. If you are in need of a professional cross-border CPA, I highly recommend reaching out to Mohammad Akif.read more
See All Reviews