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How to Use the MSB Industry Report to Facilitate Onboarding and Ongoing Due Diligence

October 12, 2018
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State Regulators Release Inaugural MSB Industry Report, Call Report

On October 4th, the Conference of State Bank Supervisors announced the release of the inaugural MSB Industry Report covering data from 2017. The data was collected by the Nationwide Multistate Licensing System (NMLS). The report is aimed at helping state regulators understand the nature of MSB businesses in order to better regulate the industry. However, this rich data, along with the MSB Call Report, can help others in the financial industry facilitate onboarding and ongoing due diligence of their MSB customers.

The MSB Call Report provides financial institutions that are banking MSBs a more detailed breakdown of their financials, in a uniform, easy-to-understand format. All MSBs complete the same form for the Call Report so the data is easier to break down instead of trying to analyze each individual business’ financial dashboard. It also breaks down in what geographies MSBs are conducting business and the volumes of transactions associated with those geographies, which drives the risk profile of a customer. When conducting due diligence, institutions can request copies of their MSB customers’ quarterly call report. The actual report is meant for the MSB’s regulators, but MSBs can share that information with a financial institution if the institution knows to request it.

Financial institutions should be familiar with the quarterly call report because they are required to file their own reports. However, those filed by institutions are much more detailed and in-depth and are filed through a different agency.

You can read the first NMLS Money Service Business Industry Report here. Also, check out the Money Service Businesses Call Report here.

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