Serving money services businesses (MSBs) can be a hard decision to make, but current technology is making compliance more achievable, John Vardaman, executive vice president and general counsel at Hypur told attendees Wednesday at the CUNA/National Association of State Credit Union Supervisors Bank Secrecy Act (BSA) Conference.
“A lot of what we hear out there is how hard it is to serve MSBs, but the truth is, technology is changing, the revenue potential is changing,” Vardaman said. “Everything begins and ends with compliance. But compliance used to be a way to avoid serving MSBs, now compliance is making it possible to serve them.”
There are five distinct types of MSBs:
As of September, there were 31,934 MSBs registered with the Treasury’s Financial Crimes Enforcement Network (FinCEN). Vardaman noted that credit unions may be especially well situated to serve them.
“Rather than a Bank of America serving 1,000 money service businesses nationwide, maybe it’s more natural for a credit union to serve the three or four that is in their community,” he said.
Vardaman added that, between FinCEN’s 2014 statement on providing financial services to MSBs, the Trump administration’s de-regulation of the financial market and the end of Operation Choke Point, serving MSBs is becoming easier.
“Technology is the great equalizer,” said Andre Herrera, executive vice president, banking and compliance at Hypur. “It’s fairly easy for smaller financial institutions to get the same software used by bigger institutions, which helps with transparency, safeguarding data, standardization, accuracy, accountability and collaboration, all of which are needed.”
Credit unions should engage in transaction monitoring to: