MTRA NEWS

RECORD NUMBER TO ATTEND MTRA FIVE-DAY OPERATIONS SCHOOL 19 March, 2009 - A record number of examiners have registered to attend MTRA's five-day Operations School in San Francisco, California from March 30 - April 3, 2009. This five day, hands-on course will be the largest ever with 57 attendees from 20 states including Alaska and Hawaii. The School is designed to help examiners gain an understanding of a foreign transmitter's operations. Attendees will be exposed to the inner workings of a money transmitter's operations from receipt to delivery of the funds, with special emphasis on the foreign currency function. Other operations topics covered are a money transmitter's agent operations, IT system and related internal control risks. This school will also include an in-depth introduction to the money transmission industry, as well as AML/BSA compliance and safety and soundness issues, including financial statement and permissible investments analysis. Interactive class exercises and case studies will give the students an opportunity to apply the concepts presented at this school. FinCEN AND IRS RELEASE MSB BSA/AML EXAMINATION MANUAL 9 December 2008 - The Financial Crimes Enforcement Network (FinCEN) and the Internal Revenue Service (IRS) released today the MSB Bank Secrecy Act/Anti-Money Laundering Examination Manual (MSB BSA/AML Examination Manual). The manual's release marks an important step forward in the effort to ensure the consistent application of the BSA to all Money Services Businesses. The MSB BSA/AML Examination Manual was developed by the Financial Crimes Enforcement Network (FinCEN), Internal Revenue Service (IRS), and the state banking agencies through the Conference of State Bank Supervisors (CSBS) and Money Transmitter Regulators Association (MTRA). The MSB BSA/AML Examination Manual emphasizes an organization's responsibility to establish and implement risk-based policies, procedures, and processes to comply with the BSA and safeguard its operations from money laundering and terrorist financing. The BSA/AML examination procedures will guide examiners through an evaluation of an organization's BSA/AML compliance program regardless of its size, complexity or business lines. The MSB BSA/AML Examination Manual provides narrative guidance and resource materials as well as specific examination procedures. This includes an overview of the BSA requirements and the federal and state banking agencies' supervisory expectations in this area. FinCEN is planning telephone conferences to brief the industry and field examiners on the MSB BSA/AML Examination Manual for early 2009. Registration details for the industry calls will be communicated shortly to the industry via separate notice. Money Service Businesses are encouraged to participate in these voluntary sessions. (More information on these events will be released at a later date.). The manual can be found at www.fincen.gov/news_room/rp/msb_exam_materials.html The Conference of State Bank Supervisors (CSBS) is the nationwide organization for state banking, representing the bank regulators of the 50 states, the District of Columbia, Guam, Puerto Rico and the Virgin Islands, and approximately 6,100 state-chartered financial institutions. CSBS also is responsible for improving the quality of state bank supervision by providing department performance evaluation and accreditation programs and supervisory education/training programs for state banking department personnel. The Money Transmitter Regulators Association (MTRA) is a national non-profit organization dedicated to the efficient and effective regulation of money transmission industry in the United States of America. The MTRA membership consists of state regulatory authorities in charge of regulating money transmitters and sellers of traveler's checks, money orders, drafts and other money instruments. Incorporated in Texas in 1989, MTRA is governed by a ten-member board of directors elected to serve two-year terms. Information Contact: Mary White, Vice President, Communications, CSBS, mwhite@csbs.org or 202-728-5715 Susan Shermer, Administrator, MTRA, sshermer@shermer-assoc.com or 717-545-9991 NEWBERG APPOINTMENT TO MTRA BOARD September 2008 - Stephanie Newberg, Deputy Commissioner, Texas Banking Department, has been appointed a member of the board of directors of MTRA to fill the unexpired term of Randal James, who announced his retirement at the end of August, 2008. Mr. James was vice president for the last three years. He was elected to the Board in 2003. Mr. James was honored by the board of directors of both MTRA and CSBS at the MTRA annual conference in September 2008 for outstanding services to both associations and for excellent public service. Stephanie Newberg is not a stranger to MTRA. She has been an active participant for a number of years. Stephanie joined the Department of Banking in November 1992 overseeing among other areas the regulation of money service businesses. She is also active on various BSAGAA committees. Stephanie is very excited about joining the board and contributing to the MTRA mission of advancing the efficient and effective regulation of the money transmission industry. MTRA HOLDS ANOTHER SUCCESSFUL CONFERENCE September 2008 - MTRA's 18th Annual Conference was held September 2-5, 2008 at Snow King Resort, Jackson Hole, Wyoming. More than 200 regulators and industry officials attended the four day event, representing 28 member states and numerous money transmitters across the country. The conference was opened by MTRA President Joseph E. Rooney of Maryland who outlined the objectives, goals and accomplishments of the association. Wyoming Commissioner Jeffrey C. Vogel welcomed the conferees to Wyoming and praised the record and achievements of MTRA. The conference included separate, as well as, joint sessions of regulators and industry representatives. In a closed session of regulators, there was a presentation from FinCEN and the IRS on Bank Secrecy Act issues emphasizing the need to improve cooperation between states and federal agencies. This year's theme was "Taking the High Road". The program provided an opportunity to facilitate networking and the exchange of ideas and information between and among industry and regulators. There were timely presentations on Mobile Payments, Private Equity Investments in Money Transmitters, and Monitoring Agents of Money Transmitters. There was also a discussion of the FinCEN case against Sigue, LLC. Lastly, a panel consisting of FinCEN, the FDIC and Banco Popular North America officials lead a healthy discussion of what is being done to address the problem of closing bank accounts of money transmitters. President Joseph E. Rooney announced that MTRA will hold a 5-day examiners' school in the first quarter of 2009. The school's core objective is to provide examiners and analysts in-depth and comprehensive examination procedures and concepts for intrastate and interstate examinations of money transmitters. It will help many states which do not examine money transmitters develop examination programs. President Rooney thanked the MTRA Board of Directors and MTRA Administrator Susan Shermer for the organization of the conference. He also presented a commemorative plaque to Randall James, MTRA Vice President and Texas Banking Commissioner, who is retiring, and announced that Ms Stephanie Newberg, Deputy Commissioner, Texas Banking Department was appointed by the MTRA board to fill the remaining term of Mr. James. CSBS Chairman Timothy J. Karsky also presented a framed resolution from CSBS honoring Mr. James. Finally, President Rooney announced that the 2009 conference will be held at Stoweflake Resort & Conference Center, Stowe, VT - August 31-Sept 3, 2009. MTRA INTERMEDIATE EXAMINERS SCHOOL A BIG SUCCESS 1 May 2008 - MTRA held a successful five-day intermediate examination school in Miami, Florida from April 21 - April 25, 2008. This five day, hands-on course was attended by 34 regulators from 17 states. The objective of the school was to offer the tools to become a proficient examiner, using MTRA joint examination procedures to evaluate money transmitters, and to provide networking opportunities with fellow state examiners. The school curriculum incorporated safety and soundness and compliance considerations in examining money transmitters, and the class used the MTRA rating system in simulated examinations. Students learned mining techniques using actual data to assure compliance with anti-money laundering laws and detect violations, and performed computer aided instruction and exercises. The school curriculum has been designed by the MTRA Education Committee. The school was taught by veteran State regulators: John Bishop, Senior Administrator, Ohio Division of Financial Institutions; Rollin Badal, Financial Examiner, Maryland Office of the Commissioner of Financial Regulation; Bert Gonzalez, Financial Examiner, Texas Department of Banking; and Tom McVey, Jr., Chief Examiner, West Virginia Division of Banking. Nick C. Kyrus, Deputy Commissioner of Financial Institutions in Virginia, and MTRA past president and current director attended, and commended the instructors for their hard work and dedication. Mr. Kyrus pledged MTRA's support of the professional development of examiners and announced that MTRA is planning a beginners school for early 2009. SIGUE OF CALIFORNIA SETTLES FOR AML DEFICIENCIES 28 January 2008 - The Financial Crimes Enforcement Network (FinCEN) announced the assessment of a civil money penalty in the amount of $12 million against Sigue Corporation and Sigue, LLC, a money services business headquartered in San Fernando, California, for violations of the Bank Secrecy Act (BSA). Sigue, without admitting or denying the allegations, consented to the civil money penalty. Concurrently, the Department of Justice announced today that Sigue has also entered into a deferred prosecution agreement on charges of failing to maintain an effective anti-money laundering program and will forfeit $15 million to the U.S. government. FinCEN's penalty will be deemed satisfied by a portion of the $15 million payment to the Department of Justice. Sigue has more than 7,000 agent businesses or "authorized delegates" located throughout the United States, providing money transmission services from the United States to Mexico and Latin America. The authorized delegates, which are typically small businesses and Sigue each, earn a small fee for the transactions conducted through these agents. FinCEN determined that Sigue failed to establish and implement an anti-money laundering program reasonably designed to ensure compliance with the Bank Secrecy Act which led, in turn, to a failure by management at Sigue to implement measures to respond to continued patterns of suspicious activity, with repeated common characteristics, at certain agent locations. Specifically, on multiple occasions over an extended period of time, 47 agents assisted customers in the structuring of transactions represented to be drug trafficking proceeds to avoid the currency transaction reporting requirements of the Bank Secrecy Act. Sigue's failure to implement effective internal controls, training or independent testing to manage the risk of money laundering was serious, longstanding and systemic. "Today's enforcement action reinforces our message on the importance of compliance by all the diverse sizes and types of financial institutions subject to the Bank Secrecy Act," said James H. Freis, Jr., Director of the Financial Crimes Enforcement Network. "Principals of money services businesses must exercise effective oversight and control over the authorization, transactional activity and operations of their agents to ensure compliance with the BSA and prevent money FINCEN DIRECTOR FREIS ADDRESSES MTRA ANNUAL CONFERENCE October 2007 - The 2007 Annual Conference of the Money Transmitter Regulators Association (MTRA) kicked off on October 9th in Charlotte, North Carolina. Over 200 regulators and industry officials attended the three day event, representing member states and money transmitters across the country. James H. Freis, Jr., Director of the Financial Crimes Enforcement Network (FinCEN) was the keynote speaker. In his address, Director Freis announced the availability of a new resource to help reduce common errors found on Suspicious Activity Reports (SARs). The activities and transactions reported through SARs provide law enforcement and regulatory authorities with useful information to detect and disrupt potentially illegal activities such as money laundering and terrorist financing. The document was compiled after FinCEN completed an analysis of SARs (http://www.fincen.gov/SAR_Common_Errors_Web_Posting.pdf). The conferees also heard presentations from academics who shared their research on money transmission. Dr. Dean Yang from the University of Michigan described his theory linking the volume of transmissions with the degree of control held by the remitter over the ultimate use of the funds. The results of his study of money transmission by Salvadoran migrant workers in Washington, D.C., Virginia and Maryland will be completed in 2008. Dr. Manuel Orozco reviewed and analyzed the main dynamics of the $100 billion in annual remittances from U.S. migrants which represent 30% of global flows. In a separate meeting of regulators, the preliminary results of a MTRA survey of state regulation of money transmission in the U.S. were presented by Nick C. Kyrus and Karen S. Heede. The survey showed that with the exception of Alaska, Montana and South Carolina, 47 states and the District of Columbia require money transmitters to obtain licenses prior to offering services to their residents. Before issuing licenses, most state laws require regulators to make findings about the character and financial responsibility of the applicant and its senior members. Supervision of operations of money transmitters consists of on-site and off-site examinations, review of periodic reports filed by licensees, and resolving consumer complaints. The regulators elected the following MTRA directors and officers for a two year term: Joseph E. Rooney (MD) President and Director, Randall S. James (TX) Vice President and Director, Robert Venchiarutti (CA) Secretary and Director, Tracy M Hudson (WV) Treasurer and Director, Sonya L. Allen (KS) Director, John Bishop (OH) Director, Reitzel Deaton (NC) Director, Greg Gonzales (TN) Director, Nicholas C. Kyrus (VA) Director, and Regina A. Stone (NY) Director. President Rooney announced that the 2008 MTRA Annual Conference will be held at the Snow King Resort, Jackson Hole, Wyoming on September 3-5. MTRA HELD FIRST WEEK-LONG SUCCESSFUL EXAMINERS SCHOOL 2 July 2007 - Twenty-five state examiners attended the first week-long MTRA School for Money Transmitter Examiners held in San Francisco, California on June 18-22, 2007. Attendance was limited to the first 25 registrants and due to high demand, another session of the school will be held in Annapolis, Maryland, August 20-24 at the Historic Inns of Annapolis. MTRA president Joseph Rooney praised the organizers and school instructors for their hard work and dedication. He stated that the use of veteran examiners as instructors, the careful selection of relevant topics for discussion, and the prevailing informal atmosphere made the school more meaningful and a great success. Six veteran state examiners made presentations on topics such as planning the exam, analysis of financial statements of money transmitters, data mining, the MTRA core exam, the MTRA rating system, and anti money laundering and OFAC compliance. The instructors were Jeanette Barraza, CAMS, Financial Institutions Supervisor, California; John Bishop, Senior Administrator, OH; Bert Gonzalez, Financial Examiner, TX; Julio Prada, CAMS, Assistant Deputy Commissioner, CA; Julie Vanderslice, CAMS, Financial Examiner Supervisor, WA; Robert Venchiarutti, Deputy Commissioner, California; and Robert Mbama, CAMS, Consultant. The curriculum of the school was developed by the speakers. MTRA STRATEGIC PLANNING 8 May 2007 - The MTRA Board of Directors had a strategic planning retreat in Austin Texas last month for the purpose of defining MTRA's mission, objectives/ goals, and devise strategies to meet them over the next five years. The meeting was facilitated by J. Keith Hughey of Wilson, Hughey & Yarbrough, LLC, a management consulting firm, and hosted by Texas Banking Commissioner Randall James. The mission of MTRA, as formulated by the Board, is "to advance the efficient and effective regulation of the money transmission industry". It was agreed that the core values needed to meet MTRA's mission are cooperation, integrity, service, and excellence. The Board's vision for the next five years is the establishment of a cooperative state regulatory framework for the benefit of the member states, the industry and the public. Such a regulatory framework will be established by (a) advancing uniform examination standards, reports, forms and ratings that are crucial in providing value to both the membership and the industry; (b) promote a more efficient and less burdensome state regulatory system that has universal respect and credibility; (c) provide quality educational opportunities and certification to participants through a well defined curriculum: (d) collect and disseminate reliable industry specific data , common analytical standards, and best practices: (e) serves as the authority for money transmission issues on a national scale; and (f) partner with state and federal authorities to further efforts in the direction and elimination of illegal activities, including terrorist financing. JAMES H. FREIS, JR. NAMED DIRECTOR OF FINCEN 5 March 2007 - U.S. Treasury Secretary Henry M. Paulson, Jr. named James H. Freis, Jr. as the new Director of the Financial Crimes Enforcement Network (FinCEN). Freis currently serves as Deputy Assistant General Counsel for Enforcement & Intelligence. As Deputy Assistant General Counsel, Freis provides legal support to Treasury's Office of Terrorism and Financial Intelligence, including supervising the legal counsel to FinCEN, the Office of Foreign Assets Control, and the Treasury Executive Office for Asset Forfeiture. He is also responsible for developing international financial measures against rogue states. Before coming to Treasury, Freis served as Senior Counsel in the Legal Service of the Bank for International Settlements in Basel, Switzerland, where he supported the banking and risk control departments in providing financial services to central banks and international organizations for management of monetary reserves. He also had regular interaction with the Basel-based committees of experts setting international financial standards. He previously served in the Federal Reserve Bank of New York's legal department, where he advised on payment and settlement systems issues at wholesale and retail levels, administration of foreign government and central bank accounts, and legislative and regulatory reform. He was part of the successful defense of the Bank before the Iran-U.S. Claims Tribunal in The Hague with respect to the management of Iranian funds during the hostage crisis. Freis also spent one year working in the financial sector in Germany. Freis earned his Juris Doctorate from Harvard Law School and his bachelors degree from Georgetown University, graduating with honors from each institution. He is an attorney-at-law and a Chartered Financial Analyst (CFA) charterholder. Freis currently resides in Washington, DC with his wife and two children. Freis replaces Robert Werner, who resigned in December 2006. MTRA's Response to MSB Account Closings by Banks John Reich, Chairman, Office of Thrift Supervision Robert Werner, Director, FinCEN Sheila Bair, Chairman, Federal Deposit Insurance Corp. Scott Alvarez, General Counsel, Federal Reserve Board John Dugan, Comptroller of the Currency IRS AND STATES JOIN FORCES TO COMBAT MONEY LAUNDERING  27 April 2006 - The Internal Revenue Service announced today agreements with 33 states and Puerto Rico to begin sharing Bank Secrecy Act (BSA) information. The agreements will allow the IRS and the participating states to share information and leverage their resources to ensure that money services businesses (MSBs) are complying with their federal and state responsibilities to register with the government and report cash transactions and suspicious activities. "We already work cooperatively with over 40 states to combat abusive tax shelters," said IRS Commissioner Mark W. Everson. "This new agreement will help the federal and state governments leverage resources while attacking illegal money laundering." The IRS and participating states will share enforcement leads and coordinate their efforts to make sure they are doing all the Bank Secrecy Act examinations on MSBs as required by law without overlapping efforts. The agreements will also help the IRS and the states present a united compliance front to MSBs and their representatives. Along with Puerto Rico, the following states have signed partnership agreements with the IRS: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin and Wyoming. Colorado, Hawaii, Montana, New Hampshire, New Mexico and Montana cannot enter into these agreements with the IRS because either state law prohibits them from doing so or they do not regulate the industry. The information the IRS and the states may share under these agreements is limited to Bank Secrecy Act examination information, not tax information. The IRS has separate, long-standing agreements with the states for the exchange of tax information.  FinCEN NOTICE OF RULE MAKING TO HELP MSB ACCESS TO BANKING SERVICES March 8, 2006 - The Financial Crimes Enforcement Network (FinCEN) issued an Advance Notice of Proposed Rulemaking seeking comments from both the money services business industry and the banking industry on the issue of money services businesses obtaining appropriate access to banking services. Today's action is part of FinCEN's ongoing efforts to address continued concerns about the ability of money services businesses to open and maintain accounts and obtain other services at banks and depository institutions as well as the caution of the banking industry in dealing with money services businesses. "Money services businesses play an important role in America's economy by providing valuable financial services to many Americans who do not, or cannot yet, take advantage of typical savings or checking accounts," said Robert W. Werner, FinCEN's Director. "It is critical for the health and safety of the U.S. financial system that MSBs obtain and maintain banking services and not be driven underground." Money services businesses have run across obstacles to creating or maintaining deposit accounts in banks. FinCEN, in conjunction with subcommittees of the Bank Secrecy Act Advisory Group, aimed to address these concerns and misperceptions by hosting a fact-finding meeting a year ago during which representatives from the money services business and banking industries, along with government regulators, came together to voice their concerns. Based on the facts and recommendations presented during this meeting, FinCEN and the federal banking agencies sought to clarify Bank Secrecy Act compliance expectations for the banking industry in interpretive guidance issued in April 2005. FinCEN also concurrently issued an advisory to MSBs emphasizing their Bank Secrecy Act regulatory obligations. Despite these steps, FinCEN remains concerned that money services businesses may still face barriers to obtaining appropriate access to banking services. This Advance Notice of Proposed Rulemaking solicits updated facts concerning this situation as well as recommendations regarding the extent to which additional guidance or regulatory action under the Bank Secrecy Act might address these concerns. Written comments may be submitted for 60 days after publication in the Federal Register. LIST OF REGISTERED MONEY SERVICES BUSINESS WITH FINCEN The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) makes available a new list of registered money services businesses. The list provides information per state/territory and reflects information provided by filers. Each is arranged alphabetically - first, by the selected state, then, by each city within the selected state, and finally, by MSB Registrant name within each city. FinCEN said the list should only be used as a general reference for the public and may contain inaccuracies. The list can be downloaded at: www.msb.gov/guidance/msbstateselector.php.