WASHINGTON, D.C. – The Conference of State Bank Supervisors and the Money Transmitter Regulators Association (MTRA) today released a white paper on the state system of regulation and supervision for money services businesses (MSBs). The white paper outlines the structure and degree of an established state regulatory system for overseeing MSBs that is focused on consumer protection, safety and soundness and Bank Secrecy Act and Anti-Money Laundering (BSA/AML) compliance.
MSBs, and especially money transmitters, play an important role in providing financial services to more than one-quarter of U.S. households around the country. At the same time, state financial regulators are finding that banks may be indiscriminately terminating or denying MSB accounts due to concerns of BSA/AML risks.
“State regulators have long standing regulatory and supervisory programs that mitigate financial, consumer, and BSA/AML risk,” said John W. Ryan, CSBS President and CEO. “By releasing this white paper, we hope to raise the level of understanding to which the states authorize and regulate MSBs and encourage financial institutions to make decisions based on specific risks and mitigation practices.”
“Licensed remittance companies have encountered long-standing challenges with establishing and maintaining banking relationships over the years, an important element of maintaining a transparent financial system,” said MTRA President Doug Buras. “With the release of this white paper, the MTRA hopes to shed light on how state regulatory authorities license and supervise money transmitters in an effort to help address this important issue.”
The white paper, titled “The State of State Money Services Businesses Regulation & Supervision,” highlights state financial regulators’ history of supervising licensed MSBs, the credentialing that occurs through the licensing process, and the coordinated supervision of MSBs among state financial regulators and between state and federal agencies. Also discussed in the white paper is the use of the Nationwide Multistate Licensing System (NMLS) as an effective and adaptive tool for streamlining licensure of MSBs, especially those operating in multiple states.
The white paper is available on the CSBS website here.