Credit unions serving, or considering serving, money services businesses (MSBs) could see reduced compliance burdens on several fronts. MSBs, which can be currency dealers, check cashers, or issuers/sellers of traveler’s checks, among other things, often present compliance issues due to increased regulatory scrutiny, and are a popular topic of discussion at CUNA’s Bank Secrecy Act school.
First, the Nationwide Multistate Licensing System (NMLS), designed to keep track of bad actors in the mortgage licensing area, expanded its functionality in 2012 to include MSBs. Currently, 34 state agencies use NMLS for MSB licensure, and more agencies are expected to follow as laws and regulations are adjusted.
Additionally, there is a state effort underway to develop a unified MSB call report. The Conference of State Bank Supervisors reports that this will provide state and federal regulators with standardized information about MSB activities that will allow them to better assess risk and identify trends.
This should result in reduced compliance burdens for credit unions servicing MSB accounts, and also prevent MSBs from being excluded from traditional financial services.
The U.S. Treasury’s Financial Crimes Enforcement Network has expressed concern over the past few years about MSBs losing access to the financial system through “de-risking,” when a financial institution seeks to avoid perceived regulatory risk.