AML Compliance Program for MSB Services


Challenges in an AML Compliance Program for MSBs


A large retailer with thousands of stores and a diverse portfolio of products and services in North America was looking for a better way to comply with anti-money laundering (AML) regulations for its money transfer service.


Specifically, the retailer and Money Service Business (MSB) wanted a transaction monitoring solution that could review thousands of transactions across thousands of retail outlets to identify suspicious transactions including structuring, smurfing and flipping,


It also wanted a solution with Know Your Customer (KYC) analytics that could identify and link related parties that may use different retail locations to transfer funds.


From a regulatory reporting perspective, the company wanted a solution that reduced the manual efforts for generating currency transaction reports (CTRs) and suspicious activity reports (SARs) for FinCEN. They also needed to be able to store source transaction data and historical CTRs and SARs.


Finally, the retailer needed a solution that was able to consolidate data from multiple sources for analytics and make investigations easier by automating workflows and processes as well as, engaging the entire business for AML compliance.



To overcome the challenges the retailer turned to Alessa’s comprehensive transaction monitoring, KYC analytics, and automated regulatory reporting capabilities to meet its AML obligations and comply with the latest regulations.


The fully integrated modules have totally transformed and sped up the compliance workflow and investigation processes and replaced the previous manual due diligence processes.


Transaction Monitoring

The automated transaction monitoring system reviews all transactions and identifies suspicious or out-of-compliance transactions using data analytics, and is vital for an effective AML compliance program for MSBs. Data analytics used by the retailer include identifying:


  1. Transactions from a single customer that when combined breach an acceptable threshold
  2. Customers that are receiving payments from many sources
  3. All transactions completed by a blacklisted customer
  4. Customers who regularly complete transactions from multiple locations
  5. Transactions that happen immediately after a received transaction by the same customer
  6. Different customers using the same addresses or ID numbers
  7. Multiple customers sending wire transactions from within the same city to shared receiver(s)
  8. Individuals with debits or credits in excess of $10,000 over a 24-hour period at any location
  9. Aggregate transactions by a single sender or to a single receiver exceeding a set daily/weekly/monthly threshold


KYC Analytics

As a registered money services business (MSB), the retailer does not use the same onboarding systems and processes as banks and it needed a solution to detect scenarios such as structuring and smurfing.


A special feature of the solution is its ability to connect transactions from the same sender (or same receiver) across different retail outlets in order to help identify cases where:

  • Customer uses false identification
  • Two/more customers use similar IDs
  • Customer alters spelling or order of his/her full name
  • Two or more customers working together to break one transaction into two or more transactions in order to evade the BSA reporting or recordkeeping requirement
  • Customer uses two or more locations or cashiers in the same day in order to break one transaction into smaller transactions and evade the BSA reporting or recordkeeping requirement
  • Customers attempt to hide the size of a large cash transaction by breaking it into multiple, smaller transactions by conducting smaller transfer at different times on the same day, with different MSB cashiers on the same day or different days and/or at different branches of the same MSB on the same or different days


Investigations and Regulatory Reporting

After the detection of a suspicious activity, flagged transactions are sent to the case management module and assigned to an investigator. Once reviewed by the compliance team, any transactions that need to be reported are sent to the regulatory reporting module.


There details about the receiver, sender, transactions and more are auto-populated into the appropriate FinCEN form, thereby reducing the time spent by the compliance team on manual data retrieval.


FinCEN Guidance

When investigating, FinCEN says MSBs should look for the following:


  • Attempts to Evade BSA Reporting or Recordkeeping Requirements: Customers who try to keep their transactions just below the reporting or recordkeeping thresholds
  • Customer who are reluctant to provide information needed for a reporting or recordkeeping requirement, whether required by law or by company policy
  • Customer who is reluctant to proceed with a transaction or breaks a large transaction into smaller transactions after being informed that a report must be filed or a record made
  • Customer who presents different identification each time a transaction is conducted, spells his/her name differently or uses a different name each time he/she initiates or receives a money transfer or purchases traveler’s checks, does not have a local address but appears to reside locally because he or she is a repeat customer, uses altered or expired ID and/or any other means to conceal their identity
  • Anyone that bribes, attempts to bribe or forces an MSB employee not to file any required reporting forms or not to create a record entry required by law or company policy
  • Customer cashing multiple instruments (money orders, traveler’s checks, cashiers’ checks, foreign drafts) that appear to have been purchased in a structured manner (e.g. each in an amount below $3,000).
  • An individual or business customer conducts MSB transactions in large amounts inconsistent with the income generated by their stated occupation or business or any other unusual activities or characteristics
  • Customers with sudden changes in transaction patterns or behaviors such as an individual money order customer begin to make weekly purchases of money orders in the same amounts (when previously he or she only purchased money orders on payday for rent, utilities, etc.).



After implementing Alessa, the retailer achieved some dramatic results, including:


  • Review of 100 percent of their transactions to look for compliance violations
  • Reduced number of alerts by 70 percent and increased accuracy of alerts by 80 percent. This has significantly reduced the time needed to remediate alerts, going from hours to minutes to complete and reduced risk of “missing” a transaction that needed to be reported.
  • Lowered estimated time to work a case by 60 percent by eliminating manual data retrieval for standard requests and improving workflow
  • Automated report filing to regulators has reduced the compliance team’s workload reducing program and operational cost.
  • Improved efficiency of the compliance team by 60 percent by reducing manual administrative costs


To learn more about how Alessa can help your AML compliance program for MSBs and other industries, contact us today.

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