Enabling Real-Time Money Service Business Risk Assessments

Money Service Businesses (MSBs) provide services to people who may not use the banking network. While MSBs are not banks, they are bound by many of the same regulations and laws and must ensure compliance just like banks. Most compliance and risk management solutions in the Fintech domain are aimed at banks or born-digital financial startups and MSBs are underserved by the domain. Solutions designed for MSB workflows can enable real-time money service business risk assessments. Better assessments would be better not just for the MSB but also for its clients and the community.

The Importance of Money Service Businesses

MSBs serve an essential function in the American economy. They serve communities and areas where banking networks may not exist and allow more people to easily run their businesses by providing essential financial services. This is, however, also why MSBs need better protection against risks. Due to the nature of the MSBs, there can be more volatility in their outlooks. The banking network has many records because they engage in long-term relationships with customers. MSBs are often used to send money out of the country, for facilitating international commerce, as an intermediary for payments, and to exchange currencies.

MSBs are required to use better tools for compliance and risk management in this age. Managing risks is essential not just from a financial standpoint but also for business continuity. No MSB wants to get involved in any suspicious transaction or commercial activity and subject itself to increase scrutiny by the regulatory bodies. There is thus a renewed interest in risk assessment solutions that can allow MSBs to instantly detect any unmitigated risks or suspicious transactions and resolve the problem.

It is always important to remember that when a regulatory body performs an audit, the body doesn’t just look for compliance or risk management failures – the focus is instead more on the mechanism and framework that the business has to detect and resolve the problems. The regulatory bodies are aware that mistakes will occur and they cannot ask for businesses to be perfect in each and every transaction – but it is vital that the business has a mechanism in place which allows it to detect the failures and fix the problems in a timely manner.

Therefore, it is necessary for money service businesses to have a robust anti-money laundering program in place. Risk management technology allows MSBs to transform their risk management framework and enable real-time risk monitoring and assessments.

The Operational and Financial Advantages of Enhanced Risk Assessments

The benefits that risk technology can provide to an MSB can be categorized into operational benefits and regulatory benefits.

Operational Benefits

The operational benefits of risk management technology are most useful. Risk technology transforms the way an organization detects, assesses, and mitigates enterprise risks. Risk assessments are a great example of the transformative nature of risk technology. In the absence of risk technology, the assessments are static documents that are periodically updated. The assessments are outdated because it takes a considerable amount of time to go-through all the documentation and assess overall risks.

Risk management technology can automate the detection and assessment of risks, so it can happen in real-time. This means that instead of having to rely on documentation that is months old, the assessments are based on real-time data as it is entered into the system. Any factor that suddenly increases, enterprise risks will be instantly highlighted and can be easily mitigate. MSBs that use risk management technology can expect higher risk management productivity and efficiency.

These operational benefits also help with the bottom line of the MSB. Being more efficient at detecting and mitigating risks through automated results in a reduction in risk management costs. Improved risk mitigation means that the business will be more stable in dealing with risks and thus will be in a stronger position financially.

Regulatory Benefits of Real-Time Risk Assessments

Risk management technology also improves the relationship between a business and the regulatory bodies governing its business processes. As discussed previously, the regulatory bodies are concerned about the existing framework to detect and manage risks. It is difficult for businesses to prove that they are doing a satisfactory job of ensuring compliance with regulations and managing risks when risks are being handled manually. The regulatory body needs to perform an in-depth audit to discover all the audit trails and communication which proves that there is a mechanism exist to detect and mitigate risks.

The same process is trivial when risk management technology has been implemented. A risk management platform codifies the risk mitigation practices. A business can simply show the tech framework in place to detect risks and risk related problems. Another major advantage of a centralized risk management platform is that every step taken leaves an audit trail. Instead of requiring an in-depth audit, all the information required by the regulatory bodies can be extracted in a few clicks.

MSB risk assessments

Modern Regtech solutions can be configured for money service business workflows, resulting in improved efficiency in MSB risk assessments. These solutions are designed with the input of risk experts and risk managers to ensure that they provide real world benefits to risk teams. The assessments done through these solutions aren’t just easier to do for the risk team; they are also much more insightful. The reports created through these solutions include advanced analytics and risk predictions, which help management quickly detect vulnerabilities and mitigate them. This results in a more efficient risk management framework.

Real-time money service business risk assessments help the business to manage risks properly, lower risk management costs, while at the same time improving relationships with regulatory bodies. Due to these benefits, risk management technology is now becoming the norm in the MSB domain. Are you looking for technology that can help and improve the way risks are assessed in an MSB? Get in touch with our risk management experts to see a demonstration of our risk assessment software tools.