Back to Basics, Continued—the Financial Crimes Enforcement Network (FinCen) and the Bank Secrecy Act



Well, it didn’t take long! Last week, I issued a challenge asking readers to name all of the federal agencies that touch and concern the lending practices of consumer finance companies. See Can you name all the federal agencies responsible for consumer credit compliance? I came up with ten. But, as someone pointed out to me, there is at least one more.

The Financial Crimes Enforcement Network (FinCen) is a bureau of the United States Department of the Treasury. FinCen is responsible for collecting and analyzing information about financial transactions to combat domestic and international money laundering, terrorist financing, and other financial crimes pursuant to the Bank Secrecy Act. 

Generally speaking, FinCen has little to do with consumer finance—except when creditors engage in any money service business (MSB), including:

  • Currency dealing or exchanging
  • Check cashing
  • Issuing traveler’s checks, money orders or stored value cards
  • Selling or redeeming traveler’s checks, money orders or stored value cards
  • Conducting the business of a “money transmitter.”

These activities are defined in the applicable regulation but have pretty straight forward meanings. There is a $1000 per person per day threshold for the first four activities listed above. There is no monetary threshold applicable to the activities of a money transmitter. 

MSB activity or residential lending activity create the obligation on the business to comply with the regulations of FinCen. So, if a traditional consumer finance company engages in such business lines, it should be aware of the compliance requirements of FinCen reporting.

Review my blogs of September 18, 2019 and August 15, 2018 for a description of the requirements placed on MSBs. 

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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