What federal regulations apply to MSBs?

All money service businesses, unless solely serving as an agent for another MSB, are required to comply with FinCEN’s Bank Secrecy Act (BSA) and anti-money laundering (AML) programs, as well as OFAC’s AML requirements.

BSA/AML – The Bank Secrecy Act is sometimes referred to as an “anti-money laundering” law or jointly as BSA/AML. The BSA was enacted by Congress in 1970 to fight money laundering and other financial crimes. It requires many financial institutions to create “paper trails” by keeping records and filing reports on certain transactions. These reports are submitted to the U.S. Department of the Treasury’s FinCEN, which collects and analyzes the information to support law enforcement investigative efforts and to provide U.S. policy makers with strategic analyses of domestic worldwide money laundering developments, trends and patterns. The BSA’s reporting and record-keeping provisions apply to banks, savings and loans, and credit unions as well as other financial institutions, including MSBs.

OFAC – The Treasury Department has a long history of dealing with sanctions. OFAC is the successor to the Office of Foreign Funds Control (the “FFC”), which was established at the advent of World War II following the German invasion of Norway in 1940. OFAC regulations require businesses to identify and freeze the assets of targeted countries, terrorists, drug cartels and other specially designated persons. The U.S. Department of the Treasury’s OFAC issues the Specially Designated Nationals and Blocked Entities List (“SDN List”). MSBs have a legal obligation to avoid doing business with these persons and entities; to freeze all property and block payment of funds to anyone and any entity on the list; and to file timely reports of all such actions with OFAC.

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