Author: mtraAdmin

The Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN) has published a new list of registered money services businesses from December 2001 to April 15, 2005. The list contains 23,481 companies. 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.

In its continuing effort to reduce the reporting burden on the Money Services Business industry, FinCEN has taken action to revise the suspicious activity report used by MSB’s. Several data elements have been removed from the revised report as well as one entire section. Of particular note is the complete elimination of the “Continuation Sheet” for recording traveler’s checks; money orders and wire transfer document numbers. FinCEN is requesting public comment on the recommended revisions. Comments may be sent to the address listed in the Federal Register dated April 18, 2005.

BY J. PHILIP GODDARD, PRESIDENT, MTRA

I had been looking forward to attending a recent meeting in Washington, D.C., on March 8, 2005 concerning the issues relating to banks closing accounts of money transmitters. This meeting was sponsored by FinCEN and Chaired by Ezra Levine. It was attended by many from the money transmission industry, bankers and federal regulators. I had been hearing rumors of a “conspiracy” among some federal regulators encouraging banks not to do business with money transmitters due to the serious risks of liability. The fear was that banks would do business with someone who later was determined to be laundering money or tied to terrorist financing. Unfortunately, I could not attend due to family matters but the Vice President of MTRA, Joe Rooney of Maryland, did attend and made a presentation as the regulator from the state of Maryland. Joe expressed concern and displeasure over the fact that this situation existed.

While there is no way of knowing the true situation relative to the conspiracy allegations, I nevertheless am offended by the situation in general. Other state regulators who license money transmitters should be equally offended. Whoever is responsible for making the decision that banks not conduct business with money transmitters is in effect scoffing at the license that we, as state regulators, have issued. If a federal agency is unofficially encouraging banks to not have accounts of money transmitters, who are duly licensed by a state regulator, then they ought to be ashamed for contributing to the demise of an industry that state legislatures have acknowledged as legitimate, and subject to regulation by state licensing laws. In effect, a federal agency would be preempting the legitimate goals and efforts of state legislatures.

My particular state has stringent licensing requirements. We interview applicants and do background searches. Bonds are posted. Character and fitness are established. Honesty is established. Firewalls are established to ensure against insider transactions and unfounded loans to directors and officers. Applicants have taken as long as two years to get a license from us. We rigorously examine our licensees and no stone goes unturned. For one of our licensees, who has gone through the exercise of establishing themselves as good corporate citizens, to not even rise to the level of being able to have an account with a bank makes a sham out of our efforts to ensure an industry based on safety, soundness honesty and integrity.

I believe that state regulators should not only be concerned about this situation but remain vigilant as to what is taking place and who is responsible for fostering this demeaning status of the licenses we issue.

On March 30, 2005, there was a joint statement issued by the Fed, FDIC, FinCen, NCUA, OCC, and the OTS addressing the issues relative to banks maintaining accounts with money transmitters. The MTRA was represented by our Vice President, Joe Rooney of Maryland, at a recent meeting conducted by FinCen who was investigating the issues resulting from banks closing accounts or not maintaining accounts for money transmitters. Hopefully this policy statement will go a long way in resolving misconceptions and unfair conduct. The full joint statement follows:

JOINT STATEMENT ON PROVIDING BANKING SERVICES TO MONEY SERVICES BUSINESSES

The Financial Crimes Enforcement Network (“FinCEN”), together with the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration (collectively, the “Federal Banking Agencies”) are jointly issuing this Statement to address our expectations regarding banking institutions’ obligations under the Bank Secrecy Act for money services businesses, such as check cashers and money transmitters.¹ Money services businesses are losing access to banking services as a result of concerns about regulatory scrutiny, the risks presented by money services business accounts, and the costs and burdens associated with maintaining such accounts. Concerns may stem, in part, from a misperception of the requirements of the Bank Secrecy Act, and the erroneous view that money services businesses present a uniform and unacceptably high risk of money laundering or other illicit activity.

The money services business industry provides valuable financial services, especially to individuals who may not have ready access to the formal banking sector. It is important that money services businesses that comply with the requirements of the Bank Secrecy Act and applicable state laws remain within the formal financial sector, subject to appropriate anti-money laundering controls. FinCEN and the Federal Banking Agencies further believe it is essential that the money services business industry maintain the same level of transparency, including the implementation of a full range of anti-money laundering controls as required by law, as do banking organizations.

The Bank Secrecy Act does not require, and neither FinCEN nor the Federal Banking Agencies expect, banking institutions to serve as the de facto regulator of the money services business industry. Banking organizations that open or maintain accounts for money services businesses should apply the requirements of the Bank Secrecy Act on a risk-assessed basis, as they do for all customers, taking into account the products and services offered and the individual circumstances. Accordingly, a decision to accept or maintain an account with a money services business should be made by the banking institution’s management, under standards and guidelines approved by its board of directors, and should be based on the banking institution’s assessment of risks associated with the particular account and its capacity to manage those risks.

Guidance on account relationships with money service businesses will be issued shortly by FinCEN and the Federal Banking Agencies outlining further our compliance expectations for banking institutions. FinCEN will issue concurrent guidance to money services businesses outlining their compliance obligations. We believe this guidance will clarify the Bank Secrecy Act requirements and supervisory expectations as applied to accounts opened or maintained for money services businesses.

¹ Under existing Bank Secrecy Act regulations, money services businesses are defined to include five distinct types of financial services providers and the U.S. Postal Service: (1) currency dealers or exchangers; (2) check cashers; (3) issuers of traveler’s checks, money orders, or stored value; (4) sellers or redeemers of traveler’s checks, money orders, or stored value; and (5) money transmitters. See 31 CFR 103.11(uu).

US Immigration and Customs officials arrested a Virginia man on March 15, 2005 at Dulles Airport, Va and charged him with illegally operating a money transmission business. Louay Habbal was arrested as he was returning from Syria and was charged pursuant to the US Patriot Act that requires money transmitters to obtain the required state license and register with FinCEN, an agency of the US Treasury, before engaging in the money transmission business. Habbal was allegedly wiring millions of dollars to Syria, Iraq, Lebanon and other nations under the name Mena Express from his home in suburban Vienna, VA according to an indictment in the U.S. district court in Alexandria, Va. Authorities said no terror charges have been brought against Habbal, but the investigation is continuing. Habbal is a naturalized US citizen.

Between November 2001 and July 2004, officials of the HIDTA Money Laundering Initiative said, Habbal deposited funds from worldwide customers in a Virginia bank account. After taking out his fee, Habbal transferred the funds to individuals designated by his customers. U.S. Immigration and Customs Enforcement investigators seized more than $100,000 from the Mena Exchange bank account.

Habbal was released after court appearance on condition of wearing an electronic monitoring device.