Money Laundering, Terrorism and Financial Institutions - USA Patriot Act Monitor

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1/14/2008 SEC Registration of Securities Does Note Exclude Business From MSB Definition

FinCEN previously considered whether a tax return preparer that cashed checks for customers for whom it made refund anticipation loans was a check casher, and thus a type of money services business. The answer in 2006 Q&A guidance was that this was not an MSB because the business was, in effect, disbursing loan proceeds in cash. A variation of the same issue was recently posed to FinCEN, regarding a publicly traded company listed on the NASDAQ exchange, with SEC-registered securities. The additional issue presented was whether the company was excluded from the MSB definition because of the securities registration, given that 31 CFR 103.11(uu) excludes “a person registered with, and regulated or examined by” the SEC or CFTC. FinCEN said that this exclusion did not apply merely because an entity’s securities are SEC-registered, citing the preamble to 1999 revisions to the regulatory definitions. The preamble indicated that the exclusion was meant to apply to entities that were SEC examined or regulated. The issue will be discussed in a forthcoming issue of the Monitor and in the next update to Part II of the treatise.

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