On March 11, 2016, FinCEN issued Guidance reminding MSBs and their agents of their respective AML obligations and, most importantly, reminding MSBs that they are responsible for their agents’ activities. The Guidance reminds the industry that both principal MSBs and their agents are required by the BSA rules to establish and maintain a written AML program, but that MSB principals are ultimately liable for the activities of their agents.
Although the Guidance focuses on MSBs and their agents, it also deserves careful consideration by bankers. When a bank provides money transmitter, prepaid access or similar “MSB” services through an agent, both the bank and its agent have AML program obligations. While an agent has independent legal liability for AML program weaknesses, the bank, as principal, is ultimately liable for the activities of its agent when acting on behalf of the bank.
The Guidance states, among other things, that principals must monitor the activities of their MSB agents and take appropriate action when weaknesses are identified. It also outlines both initial and ongoing monitoring requirements and periodic risk assessment obligations.
The Guidance is summarized in more detail here.