FinCEN SAR Activity Review, Trends, Tips & Issues, Issue 10

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person who provides money services solely as the agent of another registered
MSB is not required to register with FinCEN. 19 Similarly, certain types of
MSBs in some states may not have licensing requirements.
Further, it should be reiterated that banking organizations are not expected
to terminate existing accounts of MSBs based solely on the discovery that the
customer is an MSB that has failed to comply with licensing and registration
requirements (although continuing non-compliance by the MSB may be an
indicator of heightened risk). There is no requirement in the BSA regulations
that a banking organization must close an account that is the subject of
a suspicious activity report. The decision to maintain or close an account
should be made by a banking organization’s management under standards
and guidelines approved by its board of directors. However, if an account
is involved in a suspicious or potentially illegal transaction, the banking
organization should examine the status and history of the account thoroughly
and should determine whether or not the institution is comfortable
maintaining the account. If the banking organization is aware that the
reported activity is under investigation, it is strongly recommended that the
banking organization notify law enforcement before making any decision
regarding the status of the account.
As set forth in the April 2005 Interagency Guidance, 20 depository institutions
must conduct a reasonable inquiry into a business’ registration or licensing
status before they can accurately determine whether a business is
unregistered or unlicensed and thus should be the subject of a SAR. It should
be clarified that a bank is not required to file a SAR if it makes a business
decision to close an MSB’s account based solely on the level of risk, and not
on the business’ registration or licensing compliance or other reportable
activity. As the Interagency Guidance makes clear, requesting that the
business provide copies of correspondence acknowledging their registration or
licensing is one reliable method of verifying that an MSB has registered with
FinCEN. As clarified later in this section (see Question 2), there should be no
conflict between this request and SAR confidentiality.
19 On February 3, 2006, FinCEN issued guidance entitled, “Registration and De-Registration of Money
Services Businesses.” That guidance can be located at http://www.fincen.gov/msbregistration_de_
registration.pdf.
20 http://www.fincen.gov/guidance04262005.pdf.