Money Remittance Improvement Act Eases Regulatory Requirements for MSBs

BSA  •  FinCEN  •  Money Transmission  •  Small Dollar Lending/Lenders  •  U.S. House  •  U.S. Senate

On August 1, Congress passed the Money Remittances Improvement Act of 2014 (signed by President Obama on August 8, 2014), which reduces regulatory hurdles and duplication between state and federal regulation of money services businesses.  Specifically, the Act permits the Secretary of the Treasury to “rely on examinations conducted by a State supervisory agency of a category of financial institution” if that category of financial institution is required to comply with federal regulations, or if the state supervisory agency conducts its examination for compliance with federal requirements.  It also requires increased communication and coordination between state and federal regulators.

The law should improve compliance with the Bank Secrecy Act, and make it easier for the Financial Crimes Enforcement Network to focus on institutions at greatest risk.  The Act is a significant improvement in regulation of nonbank financial institutions, particularly for money services businesses that lack a federal regulator.  The Act’s immediate intent is to make it easier for individuals in the U.S. to send money to family members oversees, but this should also make regulatory compliance easier for money services businesses, particularly for newer technology-based businesses.  Newer companies, such as those that operate through mobile apps and internet technologies, can now comply with federal requirements by obtaining a state license, and thereby narrow their focus to compliance with only one regulatory regime.  Money services businesses seeking to obtain or renew a state license should investigate if they can meet federal requirements with their state license or through their state’s agency exam.

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