What action must a credit union take if it determines that an MSB is non-compliant with regulations?

When a credit union determines that a Money Services Business (MSB) is non-compliant with regulations, the appropriate course of action is to report the MSB to the Financial Crimes Enforcement Network (FinCEN). This is crucial because it aligns with the obligations under the Bank Secrecy Act (BSA), which mandates financial institutions to report suspicious activity that may involve violations of the law or regulation. Reporting to FinCEN helps ensure that the necessary investigative measures can be taken to address potential non-compliance and protect the financial system from further risks.

The requirement to report is based on the belief that when a financial institution identifies potentially criminal conduct or behavior that violates compliance obligations, it must take steps to alert regulatory authorities who oversee compliance and enforcement actions. This is an essential part of the regulatory framework designed to prevent money laundering, terrorist financing, and other financial crimes.

While other actions like ignoring the situation or closing the MSB's account may seem like possible reactions, they do not address the regulatory responsibilities imposed on credit unions. Providing technical assistance may help the MSB improve its compliance, but it does not fulfill the reporting obligation that is critical when faced with violations. Thus, reporting the non-compliant MSB to FinCEN is the correct