What is Money Service Business?

The monetary service business is also called a non-banking financial institution or a non-deposit provider of non-financial services. MBS are widely traded around the world.

The Money Service Business (MSBs) is a non-bank institution that allows people to pay in any way or to obtain money or cash in exchange for payment means through a financial institution. MBS is a comprehensive term used by financial regulators that represent the majority of the economy to describe a wide range of businesses involved in the conversion or transfer of money. To qualify as a money services business, a person must earn more than $ 1,000 in one or more transactions on any given day. The monetary service business is also called a non-banking financial institution or a non-deposit provider of non-financial services. MBS are widely traded around the world.

According to the FinCEN website, an official website of the United States Government, the term “money services business” includes any person doing business, whether or not regularly or as an organized business concern, in one or more of the following capacities:

• Currency dealer or exchange
• Check cashier
• The issuer of traveler’s checks, money orders, or stored value
• Seller or redeemer of traveler’s checks, money orders, or stored value
• Money transmitter
• U.S. Postal Service

Starting a Money Service Business (MSBs) is strictly regulated by law. The registration must be submitted to the BSA electronic application system within 180 days from the date of establishment of the MSB. That deadline should be kept in mind because, for many MSBs, the company was created long before they started doing business.

How to Start a Money Service Business?

Starting a Money Service Business (MSBs) is strictly regulated by law. Every MBSs needs to register with FinCEN and adhere to several different record-keeping, reporting, and anti-money laundering requirements. Besides, 49 of the 50 states have also implemented MSB regulation that largely mirrors the federal requirements.

The registration must be submitted to the BSA electronic application system within 180 days from the date of establishment of the MSB. That deadline should be kept in mind because, for many MSBs, the company was created long before they started doing business.
Registration is simply: naming a company, paying a simple fee, providing information such as the type of business in which it is engaged, financial institutions and bank accounts through which the transactions may be taking place, the ownership or control of the MSB, and the number of different branches and/or agents which are operating in the United States.

Money service businesses are required to report certain types of transactions to FinCEN, including any suspicious activity, and transactions that are valued over a certain threshold amount.

What is the compatibility of Money Service Business and AML?

Money service businesses are required to have an anti-money laundering compliance program. MSBs must have an anti-money laundering program. The Money Laundering and Terrorist Financing Coordination Program (AML / CFT) should enable a company to determine the basic purpose of a particular transaction and to verify certain stakeholder information. There are different ways in which money service companies can identify risky customers and transactions.

An anti-money laundering (AML) program must enable the company to identify the underlying purpose of a given transaction and verify certain information about the parties involved. Federal regulators require this to ensure that the United States financial system is not used illegally or by bad actors to cover up illegal cash flows.

The needs of AML compliance programs largely depend on the nature, size, and scope of the transactions that a particular SME deals with, but there are some minimum requirements as to what data should be identified and what records should be kept. A bank that handles thousands of transactions per day may require a sophisticated AML compliance program that integrates prohibition software that can identify and label customer names and display them on various lists.