IRS, States and Territories Share Bank Secrecy Act Information for Money Services Businesses (“MSBs”)

In April 2006, the Internal Revenue Service (“IRS”) signed agreements with thirty-three states and Puerto Rico to share Bank Secrecy Act (“BSA”) information.  This information under this agreement allowed the IRS and the participating states to share information under the Bank Secrecy Act. This information sharing allowed the federal government and the states to share information regarding sophisticated activities of criminal organizations.

Along with Puerto Rico, the following states participated in this agreement with the IRS: Alabama, Alaska, Arizona, Arkansas, California, Connecticut, Georgia, Idaho, Illinois, Indiana, Kansas, Kentucky, Louisiana, Maine, Maryland, Massachusetts, Minnesota, Nebraska, New Jersey, New York, North Carolina, Ohio, Oregon, Pennsylvania, South Dakota, Tennessee, Texas, Utah, Vermont, Washington, West Virginia, Wisconsin, and Wyoming.

At the time the agreement was signed, Colorado, Hawaii, Montana, New Hampshire, New Mexico, and Montana could not enter into the agreement with the IRS because specific state law prohibited them from doing so, or the state did not regulate MSB’s.

To further information sharing, in 2012 the Money Transmitter Regulators Association (“MTRA”) along with the Conference of State Bank Supervisors (“CSBS”) signed a cooperative agreement with forty-four states and territories, including Puerto Rico, to conserve regulatory resources and minimize the regulatory burden on supervised entities.  As of September 25, 2012, the following states had not signed to participate in the agreement: California, Colorado, Florida, New Mexico, North Dakota, Rhode Island, South Carolina, and Wyoming.

What does the Agreement do?

The agreement provides a nationwide framework for cooperation and coordination among state money transmitter regulators who have concurrent jurisdiction over a Multi-State MSB.   As defined in the agreement, a “Multi-State Money Transmitter” means a money transmitter that engages in the business of a money transmitter in two or more licensing states.  In addition, the agreement conserves regulatory resources and minimizes the regulatory burden on supervised entities, consistent with each state attaining its supervisory objectives.

How does the Agreement work?

The state supervisors who share regulatory responsibility for a multi-state money transmitter will designate one state supervisor to be the lead state supervisor of each multi-state money transmitter.  The lead state supervisor will be the primary point of contact under the agreement.  The parties, under the agreement, recognize that each state supervisor has the responsibility to monitor money transmitters that operate in their respective states and to ensure that those money transmitters are operating in compliance with applicable state law within each jurisdiction.

Information Sharing and Confidentiality

A state supervisor may request from another state supervisor information regarding a money transmitter that operates or proposes to operate in both states. The request must be in writing, and it  must be specific regarding the information being requested.  Under this agreement, the information shared is confidential unless otherwise specified by the originating authority.

Responsibility for Examinations

The lead state supervisor shall be responsible for examining or coordinating the examination of all money transmitters assigned to and accepted by the lead state.  The lead examiner may request the assistance of other licensing state examiners to assist in a joint examination of a multi-state money transmitter. The lead state may include in joint examinations as broad a participation of licensing state examiners as is practical.  Any licensing state may perform its own examination concurrent with the lead state’s examination or at any time if the licensing state examination cannot be scheduled concurrently with the lead state’s examination.

Enforcement Actions

The lead state and licensing states will coordinate enforcement actions to the extent permitted by applicable law.  The lead state will consult and coordinate, to the degree the lead state deems appropriate, enforcement actions against a multi-state money transmitter.  The lead state supervisor shall use its best efforts to notify all relevant licensing state supervisors of any enforcement action, formal or informal, taken against a multi-state money transmitter.  If possible, the lead state supervisor will provide notification to the other states in advance of the issuance of the enforcement action.

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