AML Requirements for Non-Bank Financial Institutions
What are Non Bank Financial Institutes (NBFIs)?
NBFIs are broadly defined as institutions other than banks that offer financial services. Common examples include: Brokers or Dealers in Securities Insurance Companies Finance/Loan Companies Vehicle Dealers Pawnbrokers Casinos Travel Agents
Dealers in Precious Metals, Stones, or Jewels Real Estate Closing and Settlement Services Financial Service Intermediaries such as Investment Advisors Money Service Businesses (remittance providers, cash exchange)
MONEY SERVICES BUSINESS (MSB)
A Subset of the NBFI Universe Includes: ◦ Money Transmitters ◦ Currency Dealers or Exchangers ◦ Check Cashers ◦ Issuers, Sellers, or Redeemers of ●
Traveler’s Checks
●
Money Orders
●
Stored Value
◦ US Postal Service (Money Orders)
NBFI Risk Factors There is a higher risk for potential money laundering activities with NBFIs because many NBFIs: Maintain limited or inconsistent recordkeeping on customers and transactions. Engage in frequent currency transactions. Are prone to less regulation and often unaware of regulations. Can quickly enter or exit into business. Sometimes operate without proper registration or licensing. Require minimal or no identification from customers.
AML Requirements NBFIs must have a written BSA/AML policy and procedures to establish: Internal controls BSA Officer Ongoing BSA training Independent testing
MSB Regulatory Requirements
Must register with FinCEN (other than agents) Must be licensed in accordance with state and/or local laws Must file CTRs with no exemptions based on customer profiles Must file SARs Are subject to OFAC requirements
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