Summary of BSA Requirements for MSBs
- Certain MSBs must register and maintain a list of agents, if any.
- If an MSB knows, suspects, or has reason to suspect that any transaction or activity is suspicious, it must file a Suspicious Activity Report (“SAR”).
- All MSBs are required to develop and implement an AML compliance program.
- If an MSB provides either cash-in or cash-out transactions of a certain amount with the same customer in a day, it must file a Currency Transaction Report (“CTR”).
- If an MSB provides money orders or traveler’s checks for cash to the same customer in a day, it must keep a record.
- If an MSB provides money transfers, virtual currency or fiat, of a certain amount to the same customer in a day, it must maintain a record. – This includes the transfer of virtual currencies from wallet to wallet.
- If an MSB provides currency exchanges, virtual currency or fiat, of a certain amount to the same customer in a day, it must maintain a record.
Registration – With few exceptions, each MSB must register with the Department of the Treasury. A person that is an MSB solely because that person serves as an agent of another MSB is not required to register. Registration of an MSB is the responsibility of the owner or controlling person of the MSB and must be filed by the registration deadline. Civil and criminal penalties may be imposed for violation of the registration requirement.
List of Agents – As part of the registration rule, each MSB that is required to register must prepare and maintain a list of its agents. The list must include each agent and contain specific information about each agent. Upon request, the MSB must make its list of agents available to FinCEN and the IRS.
Suspicious Activity Reporting – A transaction must be reported if the MSB knows, suspects or has reason to suspect that the transaction (or a pattern of transactions); involves funds or hides funds derived from illegal activity, is designed to evade the requirements of the BSA, or serves no business or apparent lawful purpose.
AML Compliance Program – Each MSB is required by law to have an effective AML compliance program. Each program must be commensurate with the risks posed by the location, size, nature and volume of the financial services provided by the MSB. An effective program is one designed to prevent the MSB from being used to facilitate money laundering. Each AML compliance program must be in writing and must:
- Incorporate policies, procedures and internal controls reasonably designed to assure compliance with the BSA;
- Designate a compliance officer responsible for day-to-day compliance with the BSA and the compliance program;
- Provide education and/or training of appropriate personnel; and
- Provide for independent review to monitor and maintain an adequate program.
Summary of OFAC Requirements for MSBs
Whenever a person enters an MSB to remit funds or otherwise engage in financial transactions, it is the responsibility of the MSB to determine whether those involved in the transaction are listed as a Specially Designated National (“SDN”) on OFAC’s SDN list. In failing to check the SDN list in compliance with OFAC requirements, an MSB could potentially allow financial dealings which support terrorism or other acts that threaten national security and foreign policy.
CryptoCompliance is a regulatory consulting firm and does not provide legal advice, opinion, or services. Our services cannot and should not be relied upon as legal advice or opinion. We recommend you consult a lawyer if you want legal advice, opinion, or services.