The Office of the Comptroller of the Currency (OCC) has released a crucial statement to guide national banks, federal savings associations, and foreign bank branches operating in the U.S. This guidance, titled “Statement on Risk Management Associated With Money Services Businesses,” addresses the agency’s supervisory expectations when banks offer services to money services businesses (MSBs). It’s essential for financial institutions to understand these guidelines to ensure compliance and effective risk management in this sector.
The OCC’s statement clarifies several key points for banks working with MSBs. Firstly, it explicitly states that the OCC does not mandate banks to indiscriminately open, close, or maintain accounts. Furthermore, the agency discourages the practice of broad de-risking – terminating entire categories of customers without properly assessing individual risk. This is a significant point for MSBs who have sometimes faced challenges in accessing banking services. The OCC emphasizes a balanced approach where banks should evaluate each MSB customer individually, based on their specific risk profile and the bank’s capacity to manage that risk.
The statement underscores that MSBs are not a monolithic high-risk category. The risk profiles of MSBs can vary significantly depending on the services they offer, their geographic reach, and their customer base. Banks are expected to conduct thorough, case-by-case risk assessments for each MSB client. This assessment should inform the implementation of appropriate controls and due diligence measures, tailored to the specific risks presented by that particular MSB. This nuanced approach allows banks to serve MSBs while maintaining robust risk management frameworks.
This regulatory clarity from the OCC reinforces the importance of fair access to financial services for all legitimate businesses, including MSBs. By focusing on individual risk assessment and proportionate risk management, the OCC is promoting a system where banks can confidently serve MSBs while upholding the integrity of the financial system. Banks are reminded to apply the principles of the Bank Secrecy Act (BSA) based on their own risk assessment of each customer, considering the products, services, and individual circumstances involved. Effective risk management systems are crucial for preventing illicit activities and ensuring the safety and soundness of financial institutions.
For further details or inquiries regarding this statement, banks are encouraged to contact Grovetta N. Gardineer, Deputy Comptroller for Compliance Operations and Policy at the OCC. This direct line of communication underscores the OCC’s commitment to supporting banks in navigating the complexities of Banking Money services businesses effectively and responsibly.
