Money services business
MSBAlso called money service business, non-bank money transmitter
A money services business is a non-bank firm that transmits money, exchanges currency, cashes cheques, issues or sells money orders or provides prepaid access. In the US it is a defined category under the Bank Secrecy Act that must register with FinCEN. In the UK the term covers firms that must register for AML supervision.
How it works
In the US, a firm is an MSB if it carries on one of the listed activities, with most categories caught only above $1,000 for any person on any day. Money transmitters are covered at any amount. MSBs must register with FinCEN within 180 days of starting business and renew every two years, keep a list of their agents, run an AML programme and file currency transaction and suspicious activity reports. Most states also require a money transmitter licence.
In the UK, money service businesses such as currency exchanges, money transmitters and cheque cashers must register with HMRC for AML supervision unless the FCA supervises them. Owners, officers and managers must pass a fit and proper test. Banks treat MSB customers as higher risk and check their registration, licences, agent networks and AML controls before opening and during the relationship.
The rules
Defines who is an MSB, including foreign-located MSBs doing business in the US, and brings them under Bank Secrecy Act reporting, recordkeeping and AML programme duties.
Dealers in foreign exchange, cheque cashers, issuers and sellers of money orders and traveller's cheques, prepaid access providers and sellers, and money transmittersRequires MSBs to register with FinCEN on Form 107 within 180 days of being established, renew every two years and keep a list of agents.
MSBs, other than those excluded such as agents and sellers of prepaid access in some casesRequire money service businesses to register with HMRC unless FCA-supervised, pass a fit and proper test for owners and managers and meet customer due diligence and reporting duties.
Money service businesses in the UKCommon questions
Is a fintech payment app an MSB?
Often, yes. A US firm that accepts and transmits funds for customers is usually a money transmitter, and so an MSB, unless it falls under an exemption such as acting only as a bank's agent.
Does FinCEN registration replace state licences?
No. FinCEN registration is a federal requirement. Most states separately license money transmitters, and firms need both.
Are crypto exchanges MSBs?
In the US, businesses that exchange or transmit convertible virtual currency are generally money transmitters under FinCEN guidance, so they register as MSBs.
