Why are banks closing MSBs bank accounts?
This question may seem out of place, but we have been continuously receiving this question for more than a year. We decided to investigate the reasons behind this seemingly harsh decision by the banks to close MSBs accounts. If you are not aware of it, there has been an increasing trend about bank and other financial institutions closing down accounts of MSB (Money Service Businesses). This phenomenon is more prevalent in the US and Canada, but have been followed in other countries too. The general impression is that banks are trying to kill their competition by eliminating their ability to bank. This may seem like a valid incentive, but it is not the real reason behind their decision. The real reason boils down to risk-control and management for compliance reasons. MSBs are inherently risky clients in terms of being target of money launderer and terrorist financers. However, there are more than one factor or two that determine the risk score of an MSB. Banks have to go through a very
