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FinCEN Statement Berates Banks Closing Remittance Accounts

FinCEN Statement Berates Banks Closing Remittance Accounts
12 Nov 2014

FinCEN states their concern that, “banks are  indiscriminately terminating the accounts” of Money Transmitter Licence holders. This follows their recent guidelines stating Bitcoin intermediaries should all have a Money Transmitter Licence.

FinCEN 2 quote 1

“Currently, there is concern that banks are indiscriminately terminating the accounts of all MSBs, or refusing to open accounts for any MSBs, thereby eliminating them as a category of customers. Such a wholesale approach runs counter to the expectation that financial institutions can and should assess the risks of customers on a case-by-case basis.”
— – FinCEN

FinCEN previously put companies dealing with Bitcoin under the expensive regulatory umbrella of MSBs. Money Service Businesses (MSBs), as defined by the US Financial Crimes Enforcement Network (FinCEN), include money transmission services. The previous Guidelines defined The term “money transmission services” as “the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means”. With money transmission services requiring a money transmitter licence. Licensing to conduct business across the US is estimated at $7M USD.

The new FinCEN guidelines go on to describe the effect of its regulatory efforts, “Money services businesses (“MSBs”), including money transmitters important to the global flow of remittances, are losing access to banking services, which may in part be a result of concerns about regulatory scrutiny, the perceived risks presented by money services business accounts, and the costs and burdens associated with maintaining such accounts.”

FinCENs influence extends far beyond the borders of the United States, late last year the UK bank Barclays closed the accounts of 4 Somali money transfer services explaining, “As a global bank, we must comply with the rules and regulations in all the jurisdictions in which we operate.”

They clarified further, “it is recognised that some money service businesses don’t have the necessary checks in place to spot criminal activity, with the degree of confidence required by the regulatory environment under which Barclays operates.”

The UK High Court granted an injunction preventing the bank from closing one of the accounts, Dahab-shiil. CEO Abdirashid Duale explained, “The Somali private sector, including Dahabshiil, is one of the few Somali success stories that has helped keep the country afloat during more than two decades of conflict, famine and other hardships. Our strong compliance record is reflected in the fact that we are a trusted partner to the United Nations and other international NGOs and development agencies. This is good news for all our customers who are reliant on us to transfer money safely to the Somali region and all other countries in which we operate.”

Barclays had decided that some 250 UK account holders no longer met their criteria for Anti Money Laundering requirements, 80 of which worked in the money transmission sector.

Barclays stated they “could be punished by our regulators and potentially fined, as we have seen with global banks receiving fines of hundreds of millions for anti-financial crime failures.”

The Canadian Committee on Banking recently had their 11th hearing on Bitcoin and the UK reached out to the community for comments on Bitcoin while regulators of the worlds most influential financial market continue to plough ahead, while the underbanked become unbanked.

“Money services businesses (“MSBs”), including money transmitters important to the global flow of remittances, are losing access to banking services, which may in part be a result of concerns about regulatory scrutiny”
— – FinCEN


B.Holmes, author of The Range of Illusion and The Private Key installments, is currently located in Thailand, researching and writing about crypto. You can follow B.Holmes on twitter @BanteringB, or contact via email: [email protected]


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