Risk Management
Risks to a Money Services
Business fall into four general categories:
Legal
The business, its owners, managers and
employees may each be subject to potential civil and
criminal penalties for any failure to comply with
applicable federal and state laws and regulations.
Businesses need to understand the requirements and also
implement effective policies, procedures and controls to
mitigate such risks.
Credit
MSBs that cash checks typically provide
immediate credit for checks that may later be returned as
uncollected. These returned checks could result from
either insufficient funds on the Payor's account or from
check fraud. At best the business will be delayed in
receiving good funds; at worst, the business suffers a
loss.
Operating
Human beings are prone to being human -
it’s in our DNA!. We all make errors and the risk of
error increases as the volume of transaction activity
increases. Also, people often become more complacent over
time and lose sight of the risks inherent in the
transactions they are conducting; when this happens,
people are more likely to take shortcuts or become
distracted and fail to follow procedures necessary to
controlling risk. Further, MSBs are more prone to
becoming targets of robbery due to the likelihood of
large amounts of cash being available on hand.
Reputation
All businesses rely on good will and
the support of their community. This is especially true
for small businesses. If your business becomes involved
in money laundering or terrorist financing schemes,
whether unwittingly or intentionally, it will harm the
business’s reputation causing a loss of customer
relationships.
