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Washington
FinCEN gives guidance on money services definition
WASHINGTON (9/11/08)—Credit unions and other financial institutions with Bank Secrecy Act (BSA) compliance obligations received a little further guidance Wednesday on whom the Financial Crimes Enforcement Network (FinCEN) considers a money services business. The FinCEN interpretative guidance specifically addressed whether a broker or dealer in currency or other commodities is a money transmitter when, in the ordinary course of business, the broker or dealer accepts and transmits funds in order to effect transactions in currency or other commodities for or with a customer. “When a broker or dealer in currency or other commodities accepts and transmits funds solely for the purpose of effecting a bona fide purchase or sale of currency or other commodities for or with a customer, such person is not engaged as a business in the transfer of funds, and is not acting as a money transmitter as that term is defined in our regulations,” FinCEN noted in a release. “In such circumstances, the transmission of funds is a fundamental element of the actual transaction necessary to execute the contract for the purchase or sale of the currency or the other commodity. The transmission of funds is not a separate and discrete service provided in addition to the underlying transaction. It is a necessary and integral part of the transaction,” it added. However, the agency warned that the conclusions reached in its guidance are limited to circumstances in which a broker or dealer in currency or other commodities accepts and transmits funds as an integral part of the execution and settlement of a transaction other than the funds transmission itself. In 2006, FinCEN began seeking public comment regarding the impact of BSA regulations on the ability of MSBs to open and maintain accounts and obtain other banking services at depository institutions. Also, the U.S. Congress has been considering legislation to encourage credit unions and banks to serve MSBs by clarifying that they would not be responsible for whether the MSB is complying with anti-money laundering laws and any other applicable Bank Secrecy Act (BSA) requirements. A bill passed the House on July 22.
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