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Payment Companies Propose Best Practices to Avoid Bank Shutouts

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A set of compliance greatest practices standardizing how money-services companies can shield themselves in opposition to monetary crimes may have an extra knock-on impact: stopping banks from dropping them as clients.

The first aim of the brand new doc from a bunch of business associations, together with the Digital Transactions Affiliation and the Cash Companies Enterprise Affiliation, is to assist fee corporations battle illicit exercise resembling cash laundering and terrorism financing. However its authors additionally hope the requirements will assist shield in opposition to so-called de-risking by banking companions leery of the authorized hazard such enterprise companions can pose, an issue that has lengthy plagued the business.

Banks may be held responsible for processing any illicit funds {that a} companion sends or receives on behalf of a buyer. In some circumstances, they’ll select to easily minimize off enterprise with a money-services firm that will have an uneven or unknown file of compliance with anti-money-laundering guidelines.

The authors of the perfect practices launched Wednesday hope the doc will allow money-services companies that adhere to its requirements to higher display that they don’t pose an outsize danger in relation to their compliance protocols.

“To have the ability to maintain this up and say, ‘I’m assembly these requirements,’ the commerce teams consider that it will allow market contributors to extra simply get hold of banking relationships,” mentioned

Clay Roberts,

deputy head of economic crimes compliance for

Western Union Co.

“The perceived dangers and cash-intensive nature of money-services companies have made it difficult for a lot of of them to open and preserve financial institution accounts in recent times,” mentioned

Rob Rowe,

vice chairman and senior counsel for the American Bankers Affiliation, who suggested on the creation of the perfect practices.

“These pointers are an essential step in serving to money-services companies develop and cling to strong compliance applications which have the potential to facilitate extra banking relationships going ahead,” Mr. Rowe mentioned in an emailed assertion.

Extra from Threat & Compliance Journal

The doc, which has greater than 40 pages, contains discussions of  transaction monitoring, due diligence and know-your-customer procedures.

Corporations that facilitate funds vary from conventional money-transfer corporations resembling Western Union to financial-technology startups trying to disrupt the normal monetary order. One problem was designing requirements that may be related to a broad spectrum of these corporations, its authors mentioned.

“You possibly can see that the doc is designed to seize the frequent floor amongst all these entities,” mentioned

Scott Talbot,

senior vice chairman of presidency relations for ETA. The underside line, he mentioned, is “what does each single money-services enterprise want to consider to place them in the perfect place to battle fraud?”

Write to Dylan Tokar at dylan.tokar@wsj.com

Corrections & Amplifications
Remarks from Rob Rowe, vice chairman and senior counsel for the American Bankers Affiliation, had been incorrectly attributed to a spokeswoman for the ABA in an earlier model of this text. (Corrected on Might 12)

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