United States: FinCEN "Reiterates" The Importance Of MSB Agent Monitoring

FinCEN itself says that there's not much new in the guidance to money services businesses that the agency released last Friday (March 11, 2016) on agent monitoring (the Guidance).1 But MSBs that rely on agents should still review the Guidance carefully. The fact that FinCEN has decided to release this Guidance now shows that the agency is focused on the issue. And the agency does clarify some important points related to agent monitoring by MSBs.

FinCEN described the Guidance as a "reiteration" of earlier guidance, which it was reissuing to complement recent guidance from state authorities. Indeed, in large measure, the Guidance essentially repeats interpretive guidance issued in 2004 and guidance set forth in its Bank Secrecy Act/AML Examination Manual for MSBs (MSB Exam Manual).2 However, the Guidance does clarify a few aspects of earlier interpretations. Notably, and as discussed in more detail below, the Guidance makes clear that both principal MSBs and agents are independently responsible for their own AML compliance, regardless of the existence of contractual arrangements; e.g., those that require the agent to adhere to the policies of another, principal, MSB.3 In addition, the Guidance clarifies that principal MSBs are responsible for agent monitoring for domestic agents as well as non-US agents. The Guidance also indicates that principal MSB oversight of agents will be a focus of future examination and enforcement by FinCEN and state supervisors.

As part of its focus on agent "monitoring," the Guidance touches on additional concepts, such as agent risk assessment, agent due diligence, independent testing and corrective action in the event of noncompliance by agents.

In contrast, recently updated guidance from the Financial Action Task Force (FATF) gives complementary but significantly more detailed guidance about how a principal MSB should manage agent relationships as a whole. FATF's guidance covers in detail subjects such as agent risk assessment, agent due diligence, agent monitoring, agent training, testing, and corrective actions in the event of agent noncompliance.4 The FATF guidance is not binding on US MSBs, but MSBs looking for more detailed information on best practices for managing the AML risk posed by agent relationships than that currently set forth by FinCEN should consult the FATF guidance as well.

We have summarized relevant highlights of the Guidance below:

Responsibility for AML Compliance. The Guidance clarifies that both the principal MSB and its agents are independently and entirely responsible for implementing an adequate AML program, even if the MSB (principal or agent) contractually delegates responsibility for the initial development of its AML program to another party. An MSB cannot avoid liability for not establishing or maintaining an adequate AML program, regardless of whether the MSB has contractually designated another party responsible for its AML program.

Agent Monitoring. The Guidance states that an MSB principal must have policies and procedures in place to identify suspicious or unusual agent behavior (e.g., activities lacking commercial purpose or justification or otherwise not supportable by verifiable documentation). Principal MSBs must also have risk-based procedures to monitor agents' transactions. A principal MSB is also responsible for all reporting (including suspicious activity reporting) and recordkeeping requirements triggered by agents, and should have disciplinary procedures, specified in contracts as well as policies and procedures, that set forth consequences, including termination, when agents do not comply with the law or the MSB principal's requirements.

Characteristic of all AML compliance programs, an MSB principal should have risk-based policies, procedures, and internal controls that enable the MSB principal to:

  • Reliably confirm the identity of the owners of its agents;
  • Evaluate on an ongoing basis the operations of the agents, including a capability to spot variations in those operations;
  • Evaluate an agents' implementation of and adherence to its AML policies, procedures and internal controls; and
  • Implement corrective actions when an MSB becomes aware of weaknesses or deficiencies in its program.

Additional obligations include aligning AML program reviews with the AML risk facing that MSB (principal or agent). Such reviews should include testing to ensure there are no material weaknesses or internal control deficiencies in its program. Testing procedures must be keyed to the risk presented by the products and services offered by the MSB, so that as the risk increases, testing protocols will be appropriately aligned.

MSB Risk Assessment and Agent Risk Factors. The Guidance lists the following as risk factors to consider for agents:

  • Whether owners are known to be or suspected to be associated with criminal conduct or terrorism;
  • Whether the agent has an established and effective AML program that is appropriately implemented;
  • Nature of the markets that the agent serves and the associated money laundering or terrorist-financing risks present in those markets;
  • Services an agent is expected to provide and the agent's anticipated activity level; and
  • Nature and duration of the relationship.

314(b) Voluntary Information Sharing. The Guidance recommends that MSB principals make use of voluntary information-sharing protocols with other regulated institutions as set forth in Section 314(b) of the USA PATRIOT Act.

Examination Expectations. Most importantly, the Guidance puts MSBs on notice that in upcoming examinations of MSB principals, FinCEN, the Internal Revenue Service and state regulators will be paying particular attention to agent selection, monitoring and disciplinary protocols.


1 See FIN-2016-G001, Guidance on Existing AML Program Rule Compliance Obligations for MSB Principals with Respect to Agent Monitoring (March 11, 2016), available at https://www.fincen.gov/statutes_regs/guidance/pdf/FIN-2016-G001.pdf. Agents, for purposes of this Guidance, include authorized delegates, foreign agents or counterparties, agents and sub-agents.
2 See MSB Exam Manual at 50-52; available at https://www.fincen.gov/news_room/rp/files/MSB_Exam_Manual.pdf.
3 FinCEN's absolute statement that all MSB agents are independently obligated to ensure compliance with US AML requirements technically is not correct for non-US agents of domestic MSBs. Compliance with US AML laws by a non-US agent is a derivative obligation imposed on the agent through the principal MSB's compliance program.
4 See FATF, Guidance for a Risk-Based Approach, Money or Value Transfer Services (February 2016), available at http://www.fatf-gafi.org/media/fatf/documents/reports/Guidance-RBA-money-value-transfer-services.pdf.

Originally published on 17 March 2016

Visit us at mayerbrown.com

Mayer Brown is a global legal services provider comprising legal practices that are separate entities (the "Mayer Brown Practices"). The Mayer Brown Practices are: Mayer Brown LLP and Mayer Brown Europe – Brussels LLP, both limited liability partnerships established in Illinois USA; Mayer Brown International LLP, a limited liability partnership incorporated in England and Wales (authorized and regulated by the Solicitors Regulation Authority and registered in England and Wales number OC 303359); Mayer Brown, a SELAS established in France; Mayer Brown JSM, a Hong Kong partnership and its associated entities in Asia; and Tauil & Chequer Advogados, a Brazilian law partnership with which Mayer Brown is associated. "Mayer Brown" and the Mayer Brown logo are the trademarks of the Mayer Brown Practices in their respective jurisdictions.

© Copyright 2016. The Mayer Brown Practices. All rights reserved.

This Mayer Brown article provides information and comments on legal issues and developments of interest. The foregoing is not a comprehensive treatment of the subject matter covered and is not intended to provide legal advice. Readers should seek specific legal advice before taking any action with respect to the matters discussed herein.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

In association with
Related Topics
Related Articles
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.


The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.


Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions