Check Cashers/Sellers & Payday Lenders Examination FAQs
Answers to common questions about examinations conducted by DFI.
What is a money services business (MSB)? Am I an MSB?
If you are licensed under the Check Cashers and Sellers Act, you may be an MSB under the Bank Secrecy Act. Check Casher and Seller licensees are MSBs if they engage in money transmission, check cashing (only if the licensee cashes checks over $1,000 for any one person in any one day), check selling (only if the licensee sells checks or money orders over $1,000 for any one person in any one day), or selling stored value (only if the licensee sells stored value over $1,000 for any one person in any one day). What does this mean for you? If you are an MSB, your business may be subject to additional rules and regulations.
Most MSBs are required to register with the Financial Crimes Enforcement Network (FinCEN). The registration is filed on FinCEN Form 107.
How often do I have to register as an MSB?
Re-registration is required every two years, or when certain other provisions of 31 CFR 103.41 are met. MSBs acting solely as agents or authorized delegates for other MSBs are not required to register. For example, if your payday loan store makes wire transfers as an authorized delegate for Western Union, you are not required to register unless you conduct other MSB activities, such as check cashing.
What is the required content of an AML program?
All MSBs are required to design and implement an anti-money laundering program to prevent their financial products and services from being used to facilitate money laundering and terrorist financing. An anti-money laundering program is required to be:
- Be commensurate with the risks posed by the location and size of, and the nature and volume of the financial services provided by, the money services business.
- Be in writing, and made available for inspection to the Department of the Treasury and other regulatory agencies upon request.
At a minimum incorporate policies, procedures, and internal controls reasonably designed to assure compliance with AML regulations, including requirements for:
- Verifying customer information
- Filing reports (such as Currency Transaction Reports and Suspicious Activity Reports)
- Creating and retaining records
- Responding to law enforcement requests
- Designate a compliance officer to assure day-to-day compliance with the program.
- Provide for periodic independent review to monitor and maintain an adequate program. The scope and frequency of the review shall be commensurate with the risk of the financial services provided by the money services business. This review may be conducted by an officer or employee of the money services business so long as the reviewer is not the designated compliance officer.
- Provide AML compliance training for employees concerning their responsibilities under the program, including training in the detection of suspicious transactions. Documentation showing that appropriate training was provided to all employees, including copies of training materials used to perform the training must be made available to the Department.
Do I have to maintain a general ledger?
Licensees are required by WAC 208-630-640 to maintain a general ledger containing all assets, liabilities, capital, income, and expenses.
How long do I have to maintain records?
Licensees are required to maintain all records for at least two years per RCW 31.45.060; however, federal law requires a five year retention period for any records pertaining to money services.
What should I expect on an examination?
DFI conducts examinations of its check casher/seller licensees approximately every 6-24 months, depending on the risk posed by the business. On an examination, an examiner will review a licensee’s financial condition, as well as compliance with all state and federal rules and regulations. The licensee’s transactions will be reviewed to ensure compliance with federal recordkeeping and reporting requirements under the Bank Secrecy Act. Management will be assessed to ensure they are not running the company in a manner that could prove to be unsafe for Washington consumers. If the licensee holds a small loan endorsement, contracts and customer files will be reviewed to ensure compliance with the Truth-in-Lending Act and military lending rules. Denied credit files will be reviewed to ensure compliance with the Equal Credit Opportunity Act. The examiner will also review compliance with various other parts of the Check Cashers and Sellers Act, as well as other applicable state and federal laws. The onsite examination can take anywhere from a day to several weeks, depending on the complexity of the licensee’s operations, willingness to provide requested documentation, and overall level of compliance.
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