FinCEN Issues Statement Encouraging Banks to Evaluate Money Services Businesses on a Case-by-Case Basis

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On November 10, 2014, the Financial Crimes Enforcement Network (FinCEN) issued a Statement addressing bank “de-risking,” often described as the practice of closing accounts or refusing to open accounts for particular types customers. The focus of the Statement is bank de-risking with respect to money services businesses (MSBs). The Statement appears to be a regulatory response to address what FinCEN states is a concern that “banks are indiscriminately terminating the accounts of all MSBs, or refusing to open accounts for any MSBs. . . .” FinCEN said that the purpose of the Statement is to “reiterate” regulatory expectations under the Bank Secrecy Act for banks that provide services to MSBs.

FinCEN EXPECTS BANKS TO EVALUATE MSBS ON A CASE-BY-CASE BASIS -

In the Statement, FinCEN observes that MSBs play an important role in the financial services sector and that de-risking related to MSBs may result in diminished transparency in the financial system. In this regard, FinCEN said in the Statement that it generally discourages the practice of de-risking and expects financial institutions to properly manage and mitigate any risks presented by providing banking services to MSBs on a case-by-case basis. In evaluating MSBs on a case-by-case basis, FinCEN states that financial institutions should...

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