How to start a Money Transfer business?

Everyday Money transfers are conducted from all parts of the world. Sending money abroad has traditionally been an arduous and expensive task, exemplified by never-ending chains of middlemen, manual paperwork, and hidden charges. Fortunately, developments in the industry over the past couple of years mean that individuals and even small-to-mid-sized companies can now enjoy faster, cheaper, and value-added foreign money transfer services.

International Money Transfer Market is full of Money Transfer Operators (MTOs) which are financial companies (but usually not banks) engaged in cross-border transfer of funds using either their internal system or access to another cross-border banking network. Any transfer of money is subject to laws. They are non-bank entities that use networks of agents and banks to process payments and transfers across borders. To name a few: Western Union, TransferWise, Xoom acquired by PayPal, etc.

How does money transfer service work?

Sending money abroad or making international payments have become so fast-paced that it requires only a few minutes. Thanks to the internet, the data is exchanged instantaneously and money is delivered across. However, with the internet, there is always a question of safety i.e.

Money transfer business needs to be registered with the government. The money transfer businesses have to comply with rules and regulations set by the respective countries to combat money laundering. You will need to obtain a license to transmit money in the individual state that you will be operating in. Almost all states have a license requirement to transmit money within state borders, and you will have to check with your state government to determine what you will need. Most of that information is available online at your state government website.

Getting Money Service Business License

Every money transfer business starts with licensing. In US Money Transmitter Law is the subject of FinCEN. The MSB Registrant Search Web page contains entities that have registered as Money Services Businesses (MSBs) according to the Bank Secrecy Act (BSA) regulations at 31 CFR 1022.380(a)-(f), administered by the Financial Crimes Enforcement Network (FinCEN). All MSB registrations must be completed electronically through the BSA E-Filing System. Once you have your BSA E-Filing system account setup, you will need to login and submit the RMSB to satisfy the registration requirement.

Currency and Foreign Transactions Reporting Act or Bank Secrecy Act of 1970 (BSA) is a U.S. law requiring financial institutions in the United States to assist U.S. government agencies in detecting and preventing money laundering. The act requires financial institutions to keep records of cash purchases of negotiable instruments, file reports if the daily aggregate exceeds $10,000, and report suspicious activity that may signify money laundering, tax evasion, or other criminal activities. The USA PATRIOT Act is related to foreign terrorism. The FISMA or Federal Information Security Modernization Act of 2014 and more Federal institutions are there to deal with their regulation to follow US Money Transmitter Law.

Starting Money Service Business

After obtaining a License for Money Service Business, there must be a process of learning and absorbing as much knowledge about the field as you can, and establish the business model. You should also consider whether you will focus on cash remittance or electronic transfers, as the former option presents a higher risk as far as money laundering is concerned and therefore the ability to obtain a bank account, both for your business and segregating client monies. The next steps are Company forming, registering, choosing software and partners. Remittance-as-a-Service (or RaaS) is the all-in-one solution that allows entrepreneurs to launch a money transfer service from a particular geography.




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