While there are many reasons for being declined by a bank as an MSB or FSC, these are some of the most common:

10. PROCRASTINATION

Many of our clients come to us at the 11th hour. If you receive a letter from the bank, make sure to inform us, or your preferred compliance consultant early.

DO NOT PROCRASTINATE! Immediately engage. Get documents in early.

9. NON-RENEWAL

It is important to make sure that all your licenses, permits, registrations, and other business-related documents are up to date and not expired. If a document is expired, it may extend the turn-around time to meeting a deadline.

Ex. FinCEN registration, check casher permit, deferred deposit license etc.

8. TEMPLATES

Believe it or not we still see compliance programs that are NOT tailored to a business. Storeowners will at times try to copy another business owner’s or family member’s AML program, or even attempt to use a copy of their Western Union AML program, which of course will not cover check cashing or lending practices. Make sure your AML program and/or CMS is customized to your business.

7. INADEQUATE MONITORING

Electronic monitoring technology is much more effective than manual monitoring. Although manual monitoring is acceptable, the bank is more comfortable whenever technology is involved for monitoring due to accuracy, efficiency and better safeguards.

Technology is especially important when tracking loans/transactions over a given amount of time and specific thresholds for small-dollar short-term loans.

6. UNQUALIFIED THIRD-PARTY

When a bank asks for an independent review to be conducted by a qualified third-party, three types of professionals are acceptable to conduct; attorney, CPA and CAMS specialist. From a bank’s perspective, the CAMS certified specialist would always have the better review, as they are most familiar with the industry and the internal workings of a financial service center.

Through experience, we have seen many businesses come to us after they have attempted to have an attorney or CPA take a stab at reviewing their business, and unfortunately fail. There are a few that do specialize in working with MSBs, but most do not. It is more efficient to directly seek out a compliance professional that works specifically with MSBs and FSCs.

5. FAILURE TO ADHERE

What’s the point of having a compliance program in place when it is not being followed? Banks want to know that you have policies in place and that the owners, managers and employees are abiding by those policies and procedures.

Side note: Your compliance program and risk assessment should be updated/reviewed at least annually, as well as anytime a change in service providers and/or compliance officer is made.

4. NOT KNOWING YOUR BUSINESS

“Compliance is everybody’s business”

As a business owner the more you know about your business and policies and procedures, the better.

3. RED FLAGS

This one is tough to hear sometimes. However, you need the bank more than the bank needs you. From experience, we know that banks will reject an application or renewal based on what they call a “character decline.” So, be nice to your relationship manager. Respect the risk department and MSB department’s requests, and comply.

2. TRANSPARENCY

As stated previously, it is important to know your business. Full transparency is very important. It can be the difference between being approved and being declined. Or even worse, being approved and then being declined later on because the bank finds out a client did not disclose everything on their application.

1. UNCOOPERATIVE

It’s important to create a symbiotic relationship with the bank. Government imposes rules and enforces them by auditing the banks. Banks need to abide by their own set of policies. It’s important to view that you and the bank are working together to appease the federal government.

If you would like help with any of the above, contact us. Our CAMS certified consultants would love to take a look and see how we can help.

(855) 922-4325

support@CapitalComplianceExperts.com

Tags: AML, BSA/AML Programs, CMS, Compliance Consulting, Compliance Management System, Custom Anti-Money Laundering Programs, Financial Services, FSC, Money Service Business, MSB, Online Employee Training, Red Flags, Third Party Independent Reviews