“Money Services Businesses- Access to the Banking System”
Download
1 / 35

AdobeCM eAdobed - PowerPoint PPT Presentation


  • 657 Views
  • Updated On :

“Money Services Businesses- Access to the Banking System” Presented to The FDIC Committee on Economic Inclusion Tom Haider MoneyGram International October 24, 2007 MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved. MoneyGram International Our Purpose:

loader
I am the owner, or an agent authorized to act on behalf of the owner, of the copyrighted work described.
capcha
Download Presentation

PowerPoint Slideshow about 'AdobeCM eAdobed ' - paul2


An Image/Link below is provided (as is) to download presentation

Download Policy: Content on the Website is provided to you AS IS for your information and personal use and may not be sold / licensed / shared on other websites without getting consent from its author.While downloading, if for some reason you are not able to download a presentation, the publisher may have deleted the file from their server.


- - - - - - - - - - - - - - - - - - - - - - - - - - E N D - - - - - - - - - - - - - - - - - - - - - - - - - -
Presentation Transcript
Slide1 l.jpg

“Money Services Businesses- Access to the Banking System”

Presented to

The FDIC Committee on Economic Inclusion

Tom Haider

MoneyGram International

October 24, 2007

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Slide2 l.jpg

MoneyGram International System”

Our Purpose:

“To help people and businesses by providing affordable, reliable and convenient payment services.”

2

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Moneygram international l.jpg
MoneyGram International System”

Table of Contents

  • Company Overview

  • Security vs. Economic Inclusion –

    Are they Mutually Exclusive?

  • Bank Discontinuance

  • Next Steps

3

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Slide4 l.jpg

MoneyGram International System”

  • Payment services company conducting business in 170 countries through more than 138,000 locations

  • Core products

    • Money transfers

    • Money orders

    • Official checks

  • Publicly traded on NYSE

    • $2 billon market cap

  • Founded in 1940 as Travelers Express – a money order company

    • Merged with MoneyGram in 1998

    • MoneyGram started by American Express in 1989

    • Headquartered in Minneapolis

4

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Moneygram international5 l.jpg
MoneyGram International System”

Money Transfers

  • Consumers

    • Recent immigrants who want to send money home to their families

    • Debtors who need to pay overdue loan to avoid collection action

    • People who need funds in an emergency

    • Average industry transaction is $300

  • Sellers

    • MoneyGram’s services are sold through a network of “agent” locations

    • Agents include banks, supermarkets, convenience stores, post offices, and “mom and pop” retailers

      • 138,000+ agent locations in 170 countries

  • Fees

    • Consumers can send up to $1,000 to many countries for a flat fee of about $10

    • A foreign exchange between 1 to 2% is applied to most currency conversions

5

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Global agent partners l.jpg
Global Agent Partners System”

6

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Slide7 l.jpg

MoneyGram International System”

Money Orders

  • Definition

    • Payment instrument used in lieu of a personal check to pay regular bills, like rent and utilities

    • Average face amount is $150

  • Consumers

    • Low and fixed income

    • Individuals who cannot maintain a bank account

    • Renters whose landlords require payment by money order

    • Small merchants who convert cash to money orders to reduce crime

  • Sellers

    • Many of the same entities that sell money transfers

      • 55,000 retail locations in all 50 states

  • Fees

    • Fee is determined by the seller

    • Retail average is less than $1

7

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


How can the two interests be brought into balance to better achieve everyone s goals l.jpg

Security / Anti - Money Laundering vs. Economic Inclusion System”

How can the two interests be brought into balance to better achieve everyone’s goals?

Economic Inclusion

Security / Anti-Money Laundering

8

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Slide9 l.jpg

Security / Anti – Money Laundering vs. Economic Inclusion System”

Key Constituencies

  • Law enforcement agencies

  • Regulators

  • Elected officials

    Key Issues for MSBs

  • Compliance and training

  • Transaction analysis and reporting

  • Licensing and regulation

Security/Anti-Money LaunderingEconomic Inclusion

  • Key Constituencies

  • Consumer groups

  • International development programs

  • Elected officials

    Key Issues for MSBs

  • Reduce cost of service

  • Consumer disclosures

  • Increase agent network to make service more easily available and expand service delivery methods

9

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Security anti money laundering l.jpg
Security / Anti – Money Laundering System”

MoneyGram Action

  • Know Your Agent

    • Background screening of all agent applicants

  • Ongoing training and testing of all agents

    • In-person reviews of select agents

    • On-line, computer based refresher training

    • Compliance Program set-up

  • Continuous investment in technology and staffing

    • Multi-million $ transaction analysis and OFAC screening systems

    • 5% of global workforce dedicated to compliance/regulatory issues

10

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Security anti money laundering11 l.jpg
Security / Anti – Money Laundering System”

MoneyGram Action

  • Licensed and regulated by 48 State Banking Departments

  • IRS is primary regulator for Bank Secrecy Act compliance

    • MoneyGram and agents examined by States and IRS

  • Close cooperation with law enforcement

    • 38,000+ SARs/year

    • 4,000+ CTRs/year

    • 4,500+ information requests/year

    • Regular joint-training programs

11

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Moneygram anti money laundering tools l.jpg
MoneyGram Anti-Money Laundering Tools System”

Agent

Agent

Background Checks

Transaction Information

Tools from MoneyGram to Agent

Transaction Information

Tools from MoneyGram to Agent

MGITransaction Analysis and OFAC Screening

On-Site Reviews

Training

Tools from MoneyGram to Agent

Transaction Information

Transaction Information

Tools from MoneyGram to Agent

Compliance Program Set-up

Agent

Agent

12

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


How do msbs detect suspicious activity l.jpg
How Do MSBs Detect Suspicious Activity? System”

MoneyGram

Agent

Agent

Agent

Bad Guy

Bad Guy

Bad Guy

Consumers

= Individual structuring transactions in small amounts at multiple locations. MoneyGram will detect and file SAR/CTR

= Individuals working together to structure transactions may be detected by agent. Regardless whether agent detects, MoneyGram will detect and communicate with agent to ensure filing of SAR/CTR

13

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Security anti money laundering14 l.jpg
Security/Anti – Money Laundering System”

CHALLENGE – Regulatory Compliance

  • Complexity of complying with different interpretations of Federal anti-money laundering laws - Bank Secrecy Act, OFAC Regulations and USA Patriot Act - by 48 State Banking Departments

14

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Security anti money laundering15 l.jpg
Security/Anti – Money Laundering System”

SOLUTION – Federal Licensing

  • Establish an optional Federal regulator for MSBs that can provide uniformity and efficiencies in compliance

15

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Security anti money laundering16 l.jpg
Security/Anti – Money Laundering System”

CHALLENGE - MSB Definitions

  • Anti-money laundering laws treat all MSBs the same

    • Who’s the MSB?

      • MoneyGram

      • American Express

      • Hilton Hotels

      • Carlson Wagonlit Travel

      • Albertsons

      • Jackson Hewitt Tax Service

      • Bob’s Deli

    • Objective standards are now overshadowed by complex

      and often confusing risk-based, subjective requirements

16

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Security anti money laundering17 l.jpg
Security/Anti – Money Laundering System”

SOLUTION - Re-define MSB

  • Re-define MSBs to facilitate compliance by agents

    • Treasury Secretary Paulson and FinCEN Director Fries have stated their intent to re-examine the MSB definition

    • Treasury should adopt a “rules based” approach – not “principles based” – for smaller agents

      • Rules will improve compliance if MSB service is only an ancillary part of agents’ business

      • Policies and procedures should not be the priority

17

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Slide18 l.jpg

Security / Anti – Money Laundering vs. Economic Inclusion System”

Key Constituencies

  • Law enforcement agencies

  • Regulators

  • Elected officials

    Key Issues for MSBs

  • Compliance and training

  • Transaction analysis and reporting

  • Licensing and regulation

Security/Anti-Money LaunderingEconomic Inclusion

  • Key Constituencies

  • Consumer groups

  • International development programs

  • Elected officials

    Key Issues for MSBs

  • Reduce cost of service

  • Consumer disclosures

  • Increase agent network to make service more easily available and expand service delivery methods

18

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Economic inclusion l.jpg
Economic Inclusion System”

MoneyGram Action

Consumer Cost

  • Fees and exchange rates have dropped

    significantly

    • Simplified pricing has replaced multiple pricing tiers with a flat fee of $9.99 for transactions up to $1000 for Mexico and Latin America, and up to $500 to most other destinations

19

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Moneygram s average fee per transaction l.jpg
MoneyGram’s Average Fee Per Transaction System”

20

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Moneygram s average foreign exchange rate to mexico l.jpg
MoneyGram’s Average Foreign Exchange Rate to Mexico System”

21

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Transaction volume growth trends to mexico l.jpg

45% System”

40%

35%

30%

25%

20%

15%

10%

MoneyGram

5%

Banco De Mexico reported overall volume changes

0%

Q1 2005

Q2 2005

Q3 2005

Q4 2005

Q1 2006

Q2 2006

Q3 2006

Q1 2007

Q2 2007

Q1 2004

Q2 2004

Q3 2004

Q4 2004

Q4 2006

Transaction Volume Growth Trends to Mexico

22

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Economic inclusion23 l.jpg

Money Transmitters’ Price Tag System”

Send Agent Commission $_____

Receive Agent Commission $_____

AML Compliance $_____

Bank Fees for Transmitter and Agent $_____

Training $_____

PC and Telecommunication for Agent $_____

Signs, Forms, Receipts $_____

Economic Inclusion

Consumer Cost

  • Fees are about as low as they can go without regulatory streamlining

23

MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


Economic inclusion24 l.jpg
Economic Inclusion System”

MoneyGram Action

Consumer Disclosures and Services

  • Senders receive a receipt showing

    • Amount paid

    • Transaction fee

    • Exchange rate

    • Amount of local currency their recipient will be paid

  • Senders receive free calling card to notify recipient

  • Receivers can pick up transaction within minutes after sent

  • Free, multi-lingual customer service available 24x7

  • 24

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Economic inclusion25 l.jpg
    Economic Inclusion System”

    MoneyGram Action

    Service Availability

    • MoneyGram’s agent network rapidly expanding globally to provide greater consumer convenience

      • Network is the key to providing consumers with service when and where they want it

      • Network provides consistency in pricing – MoneyGram receivers are never charged a fee

      • Network provides consumers certainty that funds will be available

        • Amount is guaranteed

        • Funds can be picked up within minutes of being sent

    25

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Moneygram s global network expansion l.jpg

    138,000 System”

    MoneyGram’s Global Network Expansion

    • MoneyGram has invested heavily in building a high-quality agent network

    26

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Global network expansion l.jpg

    5,500 System”

    5,500

    11,300

    11,300

    +205%

    +205%

    +205%

    +205%

    28,400

    28,400

    28,000

    28,000

    37,800

    37,800

    29,400

    29,400

    4,100

    4,100

    +33%

    +33%

    +33%

    +33%

    +5%

    +5%

    +5%

    +5%

    9,900

    9,900

    +241%

    +241%

    +241%

    +241%

    16,500

    16,500

    4,000

    4,000

    9,500

    9,500

    20,500

    20,500

    4,700

    4,700

    11,400

    11,400

    +24%

    +24%

    +17.5%

    +17.5%

    +20%

    +20%

    +24%

    +24%

    +17.5%

    +17.5%

    +20%

    +20%

    Legend:

    Legend:

    Black = June 2006

    Black = June 2006

    30% year

    -

    over

    -

    year growth

    Ø

    Blue = June 2007

    Blue = June 2007

    Global Network Expansion

    27

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Economic inclusion28 l.jpg
    Economic Inclusion System”

    MoneyGram Action

    Service Availability

    • Partnering with banks around the world

      • U.S.

        • 2,500+ US Bancorp locations

      • International

        • Standard Bank in Africa; ICBC in China; Bank Pekao

          in Poland; Bank of Ireland; Privat Bank in Romania;

          Rosbank in Russia; etc.

    28

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    South american banking relationships l.jpg

    Colombia System”

    Brazil

    • Banco Davivienda

      Ecuador

    • Banco del Pichincha

    • Banco del Austro

    • Banco del Pacifico

    • Cooperativa de Ahorro

      Peru

    • Banco Financiero del Peru

    • FENACREP

      Bolivia

      Banco Nacional de Bolivia

    • Banco Itau

    • Banco Bankpar

      Paraguay

    • Banco Integracion

      Uruguay

    • Exprinter

      Argentina

      Banco Itau Buen Ayre

    • Banco Piano

    South American Banking Relationships

    29

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Central american banking relationships l.jpg

    Honduras System”

    Honduras

    Belize

    Belize

    Banco

    Banco

    Atlantida

    Atlantida

    Belize Bank

    Belize Bank

    BGA

    BGA

    Banco

    Banco

    Mercantil

    Mercantil

    Guatemala

    Guatemala

    Federacion

    Federacion

    de

    de

    Cooperativas

    Cooperativas

    Banco de

    Banco de

    Desarrollo

    Desarrollo

    Rural

    Rural

    de

    de

    Ahorro

    Ahorro

    y

    y

    Credito

    Credito

    Banco Industrial

    Banco Industrial

    Banco

    Banco

    Fichosa

    Fichosa

    FENACOAC

    FENACOAC

    Nicaragua

    Nicaragua

    Banco de la

    Banco de la

    El Salvador

    El Salvador

    Producci

    Producci

    ó

    ó

    n

    n

    Banco Agricola

    Banco Agricola

    Comercial

    Comercial

    Central

    Central

    Cooperativa

    Cooperativa

    Banco

    Banco

    Cuscatlan

    Cuscatlan

    de

    de

    Ahorro

    Ahorro

    y

    y

    Credito

    Credito

    FEDECACES

    FEDECACES

    Banco

    Banco

    Uno

    Uno

    Nicaragua

    Nicaragua

    Costa Rica

    Costa Rica

    ScotiaBank

    ScotiaBank

    El Salvador

    El Salvador

    Banco de San Jose

    Banco de San Jose

    FEDECREDITO

    FEDECREDITO

    Banco De Costa Rica

    Banco De Costa Rica

    Banco

    Banco

    ProAmerica

    ProAmerica

    Banco BANEX

    Banco BANEX

    Central American Banking Relationships

    30

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Economic inclusion31 l.jpg
    Economic Inclusion System”

    Bank Discontinuance

    • Solving the Bank Discontinuance problem will improve the availability of MSB services

      • MSB industry - working with bank trade groups - has drafted legislation to address the problem

      • Regulatory support of legislation will increase the chance of success

      • Why is legislation needed?

        • Guidance issued in April 2005 by FinCEN and Federal Banking Agencies did not solve the problem

        • FFIEC’s BSA/AML Examination Manual does not provide clear examples of when banks do not need to review an MSB’s BSA/AML program

    31

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Economic inclusion32 l.jpg
    Economic Inclusion System”

    Banks and MSBs Working Together

    • MoneyGram seeking opportunities to partner with more banks

      • Money Orders

      • Money Transfers

    • Regulators can help by reducing banks’ concerns with MSB accounts

    • Money transfers can help migrants become banked consumers

    32

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Economic inclusion33 l.jpg

    Bank System”

    Money

    Transmitter

    Partners with

    Bank

    Economic Inclusion

    Steps for migrants to become banked

    Bank/MoneyGram Agent

    MoneyGram Agent

    Migrant

    Becomes

    Banked and

    Remits at

    Bank which is

    now a

    MoneyGram

    Agent

    Migrant

    Becomes

    Remitter

    Migrant

    Becomes

    Employed

    New

    Migrant

    Arrives in US

    33

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Security anti money laundering vs economic inclusion l.jpg
    Security/Anti – Money Laundering vs. Economic Inclusion System”

    MGI recommends the Committee on Economic Inclusion

    • Seek greater uniformity, consistency, and clarity in the regulation of MSBs by allowing MSBs to opt for a federal license

    • Encourage Treasury to revise the definition of MSBs to facilitate compliance by agents, focusing on a rules-based approach for smaller agents

    • Encourage greater partnerships and linkages between MSBs and banks

    • Address the critical issue of MSB banking relationships through further regulatory guidance or Congressional action

    34

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    Security anti money laundering vs economic inclusion35 l.jpg
    Security/Anti – Money Laundering vs. Economic Inclusion System”

    Conclusion

    • MSBs provide vital services to consumers

    • MSBs work with banks around the world

    • Money transfer fees have dropped significantly

    • The regulatory environment influences the ability of MSBs to serve consumers

    • A balance is needed between ensuring that our nation’s interests are protected through strong AML regulation, while at the same time making sure MSBs are able to serve their consumers

    35

    MoneyGram Proprietary & Confidential. © 2007 MoneyGram. All rights reserved.


    ad