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Nationwide Cooperative Agreement for Msb Supervision

In recent news, the Conference of State Bank Supervisors (CSBS) and the Financial Crimes Enforcement Network (FinCEN) have signed a nationwide cooperative agreement for the supervision of money services businesses (MSBs). This agreement aims to streamline the examination process for MSBs and enhance communication between state regulators and FinCEN.

MSBs are financial institutions that offer services such as money transfers, currency exchange, and check cashing. They play an essential role in providing financial services to individuals and businesses that may not have access to traditional banking services. However, MSBs are also vulnerable to illicit activities such as money laundering, terrorist financing, and other financial crimes.

The cooperative agreement between CSBS and FinCEN is a significant step towards combating financial crimes in the MSB industry. Under this agreement, state regulators will have access to FinCEN`s database of MSB registrations and Bank Secrecy Act (BSA) reports. The database contains information about MSBs` ownership, locations, and services offered. It also includes Suspicious Activity Reports (SARs) filed by MSBs, which can provide crucial information about potential financial crime.

State regulators will use this information to conduct risk-based examinations of MSBs. These exams will focus on assessing the effectiveness of MSBs` anti-money laundering (AML) and counter-terrorist financing (CTF) programs. Regulators will also evaluate other areas such as customer due diligence, transaction monitoring, and recordkeeping.

The agreement also enhances communication between state regulators and FinCEN. MSBs that operate in multiple states will only need to undergo one exam by their primary regulator. The primary regulator will coordinate with other state regulators to ensure that all necessary information is shared. This will reduce the compliance burden on MSBs and improve regulatory consistency across states.

Overall, the nationwide cooperative agreement between CSBS and FinCEN shows a significant commitment to combatting financial crime in the MSB industry. By streamlining the examination process and improving communication between regulators, this agreement will enhance the effectiveness of AML and CTF efforts. It will also promote regulatory consistency and reduce the compliance burden on MSBs.