On Dec. 9, 2008, the Financial Crimes Enforcement Network (“FinCEN”) announced the release of a manual (the “Manual”) to provide guidance to officials examining money services businesses (“MSBs”) for compliance with the requirements of the Bank Secrecy Act (“BSA”). The Manual is modeled on the BSA/Anti-Money Laundering (“AML”) Examination Manual (last issued by the Federal Financial Institutions Examination Council in August 2008) and serves to centralize the applicable guidance for MSB examiners.
A principal goal of the Manual, which represents a collaborative effort between regulatory agencies and industry advocates, is to ensure consistency in the application of BSA requirements among regulators, as well as assist MSBs in their efforts to comply with the BSA. In addition, the Manual aims to provide guidance to BSA examiners that enhances their ability to perform risk-based BSA examinations of MSBs, provide a summary of BSA compliance requirements and examination practices to the MSB industry and facilitate the efficient allocation of examination resources between federal and state BSA regulators.
The Manual, which is part of FinCEN’s regulatory efficiency and effectiveness initiatives announced in June 2007, reflects FinCEN’s recognition that not all financial institutions are subject to the same risks, as well as being part of a broader effort by FinCEN to address specific issues relating to MSB oversight and MSB access to banking services. The Manual seeks to ensure that financial institutions and regulators treat BSA/AML compliance obligations in a manner that helps to prevent expenditures that are not commensurate with actual risk. To that end, the Manual is structured to allow examiners to tailor the BSA examination scope and procedures to the unique risk profile of the MSB under examination. Moreover, it provides guidance for MSBs on identifying and controlling risks and requires that an MSB undertake a risk assessment to ensure that its AML program is commensurate with the risks posed by the location and size of the particular MSB, and by the nature and volume of the financial services it offers.
Along with the Manual, FinCEN issued a sample MSB examination work program that includes examination procedures for principal and agent MSB examinations. The sample work program specifically notes that it is not a checklist, but rather is an example that examiners may use and adjust for each MSB examination. The document is an extraction of the examination procedures presented in the Manual and expressly states that “the specific examination procedures that will need to be performed depend on the BSA/AML risk profile of the MSB, the quality and quantity of independent testing, the MSB’s history of BSA compliance, and other relevant factors.”
FinCEN and the IRS will hold several conference calls on Jan. 27, 2009, for the MSB industry to discuss the general outline and procedures included in the examination manual, and participation is strongly encouraged. Information regarding participation in these calls will be available on FinCEN’s website at www.fincen.gov.
FinCEN’s press release concerning the Manual, as well as the Manual itself, can be viewed on FinCEN’s website at http://www.fincen.gov/news_room/nr/html/20081209.html and http://www.fincen.gov/news_room/rp/files/MSB_Exam_Manual.pdf, respectively.