Late last week, the Colorado-based MSB said authorities were investigating whether the firm knew about gaming transactions involving other nations, and if sufficient AML safeguards were in place. Western Union (WU) said the company could face significant fines if the government brings charges. WU was recently served with subpoenas seeking information about transactions to and from 43 Nicaragua-based MSB agents. Prior company disclosures indicated that the probe also included transactions involving the Bahamas, Dominican Republic, Haiti, Peru, the Philippines, and Vietnam.
Regulatory stakes for MSBs remain at an all-time high. Let’s hope the WU investigation doesn’t give MSBs another black eye or lead to further “derisking”. The probe itself appears to focus on higher risk customers, transactions, and geographies, and WU’s ability to effectively mitigate these elevated risks with adequate controls. Higher risk customers, transactions, and geographies necessarily mandate stronger, more robust AML controls. This might include more information gathering at the time of transaction, limiting transactional amounts, or engaging in recurring customer and agent reviews.
Gaming transactions are not uncommon to bitcoin companies, as online casinos have become a popular use case and burgeoning sub-sector. Bitcoin MSBs are encouraged to screen for customers and transactions involving gaming, and apply stricter controls. Also, many of the jurisdictions identified in the WU probe have, at least anecdotally, experienced strong adoption and business growth within the bitcoin space. Again, bitcoin MSBs must know and understand that certain geographies pose an elevated level of risk, and apply stronger AML controls accordingly.