Massachusetts Division of Banks Issues Letter to Raise Awareness of Money Transfer Services Fraud

On April 8, the Massachusetts Division of Banks issued a letter to CEOs of licensed money transmitters regarding an increase in consumer scams related to the use of money transfer systems. The Division noted that “it is important that your employees and agents, as well as your customers, become familiar with warning signs of a scam and take appropriate action to avoid them.” To this end, the Division encouraged money transmitters to review existing programs regarding agent monitoring and anti-fraud to ensure, among other things, that (i) staff and agents are appropriately trained to monitor transactions and identify red flags; (ii) staff is authorized to terminate or place a hold on transfers which raise red flags for suspected fraud; and (iii) comprehensive policies, procedures, and training requirements for compliance with the BSA are in place.


FinCEN Supplements 2011 FAQs Regarding Prepaid Access

On March 24, FinCEN issued FIN-2016-G002 to supplement guidance issued in 2011 regarding aspects of its Prepaid Access Final Rule. FIN-2016-G002 provides answers to a list of frequently asked questions related to the following areas: (i) the relationship between de minimis cash refund requirements under state law and the exemption in FinCEN’s regulations for closed loop prepaid access products; (ii) conditions under which the use of quick response codes and other technology would fall within the definition of closed loop prepaid access; (iii) whether the term “defined merchant” in the context of closed loop prepaid access is limited to a single merchant; (iv) policies and procedures reasonably adapted to avoid the threshold for being designated as a “seller” of prepaid access; and (v) listing sellers of prepaid access on the provider’s money services business (MSB) agent list.


FinCEN Imposes Civil Money Penalty Against Owner of Kentucky-Based Money Services Business

On March 24, FinCEN assessed a civil money penalty against a Kentucky-based MSB and its owner for violations of the Bank Secrecy Act (BSA). As the designated AML compliance officer of the MSB, the owner willfully violated the BSA’s AML program and reporting requirements by failing to ensure that the MSB complied with obligations under the BSA and its implementing regulations. In 2009, after an IRS Small Business/Self-Employed Division (IRS SB/SE) examination of the MSB’s activities, FinCEN issued a warning letter advising the company to take corrective actions. A subsequent 2013 IRS SB/SE examination found continued violations. Specifically, the MSB failed to (i) establish and implement an effective AML program by “failing to implement policies, procedures, and internal controls reasonably designed to assure ongoing compliance, failing to designate an adequate compliance officer, failing to provide adequate training, and failing to conduct independent testing of its compliance program”; and (ii) file accurate and timely currency transaction reports. The MSB’s owner admitted to violating the BSA’s AML program and reporting requirements and agreed to a $10,000 civil money penalty.


FinCEN Highlights Existing AML Program Obligations on MSB Principal-Agent Relationships

On March 11, FinCEN issued FIN-2016-G001 to provide clarity to money services business (MSB) principals regarding the risks associated with foreign agents’ AML compliance. FinCEN’s guidance, which complements recently issued state guidance, encourages coordination among Federal and state regulators on issues related to MSBs’ AML program obligations. FinCEN emphasizes that an MSB “remains independently and wholly responsible for implementing adequate AML program requirements,” noting, therefore, that “neither the agent nor the principal can avoid liability for failing to establish and maintain an effective AML program by pointing to a contract assigning this responsibility to another party (whether the agent or principal).” Read more…


BuckleySandler Counsel Provides Testimony at Digital Currency and Blockchain Technology Hearing

Dana Syracuse, Counsel at BuckleySandler LLP, testified before the U.S. House of Representative Subcommittee on Commerce, Manufacturing, and Trade on March 16, 2016. The hearing was titled “The Disruptor Series: Digital Currency and Blockchain Technology.”

Prior to joining the firm, Syracuse served as Associate General Counsel at the New York Department of Financial Services, where he was responsible for numerous initiatives surrounding emerging payment systems and financial technologies, digital currency and blockchain technologies, including the creation of the nation’s first BitLicense regulation program. Read more…

COMMENTS: Comments Off
POSTED IN: Digital Commerce, Payments