Money Services Business Settles Charges for BSA Violations
Commentary by Jeff Ziesman
A "money services business" settled FinCEN charges for failing to register as such, failing to maintain an effective AML program and failing to file Suspicious Activity Reports ("SARs").
According to the Consent Order, the company transported approximately $800 million in bulk currency shipments, including cross-border transactions involving Mexico and Spain, without properly identifying the source of funds or the final beneficiary. FinCEN said the company continued these shipments despite internal concerns raised by employees, including suspicions that currency shipments contained illicit proceeds.
FinCEN said the company was aware of its obligation to register as a money services business, but failed to do so despite multiple warnings from law enforcement dating back to 2011. FinCEN found that the business either willfully failed to file SARs, or failed to file SARs in a timely manner, and that such failures involved transactions linked to potential money laundering and other financial crimes.
As a result, FinCEN determined that the company violated BSA Rules 1022.380 ("Registration of money services businesses"), 1020.210 ("Anti-money laundering program requirements for banks") and 1022.320 ("Reports by money services businesses of suspicious transactions").
The company agreed to pay a civil money penalty of $37 million and to hire an independent consultant to review and improve its AML program. FinCEN credited $20 million paid to the US Department of Justice.
Commentary
The takeaways from this matter are: (1) the term Money Services Business ("MSB") has a potentially broad, elastic definition—businesses regularly engaging in activities involving significant amounts of currency and funds (like the common carrier in this case) should carefully assess whether they fall under the expansive definition of an MSB (to the extent they are not already a financial institution under FinCEN regulations); (2) exemptions in this area, as in other areas of law, are very narrowly (and sometimes overly technically) construed; and (3) if an entity is an MSB (or some other type of financial institution), AML violations can result in staggering financial penalties and attendant settlement terms (such as retaining a consultant).