USA MSB License (Money Services Business): Introduction
USA MSB License for Money Services Business is easy to secure with Tetra Consultants’ assistance to our international clients. Generally, all money services businesses in the USA are required to register with the Department of the Treasury, unless the person is solely an agent of a registered MSB. Government agencies and the US Postal Service are also not required to register as an MSB.
According to the Banking Secrecy Act (BSA), money services businesses must register and file reports with the Financial Crimes Enforcement Network (FinCEN) through the BSA e-filing system.
The FinCEN is a bureau of the United States Department of the Treasury that collects and assesses information regarding financial transactions with the purpose of combating both domestic and international money laundering, as well as terrorist financing and other financial crimes.
All money services businesses in the US must renew its MSB license with FinCEN every 2 years.
In cases where there is a change in ownership or transfer of voting power or equity interest of more than 10%, the money services business will be required to re-file a registration form.
Money services businesses that increase their number of agents by more than 50% will also be required to re-register.
When will you require a USA MSB License?
- All money services businesses in the USA must apply for a MSB license. Under the Financial Crimes Enforcement Network, a business that sells the following product or service will be treated as a money services business:
Money Order or Traveler’s Checks
- This includes issuers, sellers and redeemers of money orders or traveler’s check.
- As long as a company issues or sells traveler’s checks or money orders that are greater than US$1,000 to any person on any day, it will be regarded as a money services business.
- Generally, companies that transmit currency, funds or other monetary instruments from one person to another person or location are considered to be conducting money transmission business.
- An individual or company that accepts checks or monetary instruments in return for currency or other monetary instruments worth at least US$1,000 on behalf of another person in one day is regarded to be a check casher.
- However, this does not include companies that sell prepaid access in exchange for a check or monetary instrument; companies that accept monetary instruments as payment for goods or services; and companies that hold customers’ check as collateral.
- Specifically, an individual or company that accepts currency or other monetary instruments in the currency of another country in an amount greater than US$1,000 on behalf of another person is regarded to be a dealer in foreign exchange.
- This includes providers and sellers of prepaid access.
- In general, a provider of prepaid access refers to any person that receives funds from clients. These funds can be subsequently retrieved by clients through an electronic device or means.
Mandatory requirements for USA MSB License
Anti-Money Laundering (AML) program
- It is mandatory for all money services businesses to develop, implement, and maintain an effective AML program with the purpose of preventing and deterring money laundering and the financing of terrorist activities.
- The scale of the AML program will depend on the nature and size of the money services business.
- The AML program must include the necessary policies and internal controls to ensure compliance in the following areas:
- Verification of customer’s identity
- Creation and maintenance of records
- Response to law enforcement requests
- The money services business institution must also designate a compliance officer to ensure that the institution complies with the AML program. The compliance officer will be in charge of the following:
- Ensuring that the money services business properly files, creates and retains reports.
- Ensuring that the compliance program is regularly updated when necessary.
- Ensuring that there is proper training and education to the relevant personnel with regards to the AML compliance program. This includes training to detect possible suspicious transactions.
- Providing an independent review to monitor and maintain the compliance program.
Maintenance of list of agents
- All money services businesses must prepare and maintain a list of its agents.
- Although there is no requirement for the agent list to be filed during registration, the agent list must be maintained within the United States.
- The list will include the personal information of each agent.
- Both the FinCEN and the Internal Revenue Service (IRS) have the authority to request a money services business to submit a list of its agents at any time.
- The following money services business (MSB) must report suspicious activities:
- Money order – issuers, sellers and redeemers
- Traveler’s check – issuers, sellers and redeemers
- A report must be filed when a transaction of an amount greater than US$2,000 is regarded to be suspicious. A transaction is considered to be suspicious if it is suspected that the funds are derived from or intended for illegal activities; designed to evade requirements of the Bank Secrecy Act; or serve no business or lawful purpose.
- The Suspicious Activity Report (SAR) must be filed through the SAR MSB form within 30 days.
- Generally, money services business other than a casino must also file a report for a currency transaction involving an amount greater than US$10,000.
- Money services businesses must maintain the following records for at least 5 years:
- A record of each extension of credit for amounts greater than US$10,000, unless the extension of credit is secured by an interest in real property.
- A record of each advice, request, or instruction received or given regarding any transaction resulting or intending to result in the transfer of currency or other monetary instruments, funds, checks, investment securities, or credit, of more than $10,000 to or from any entity outside the United States.
- A record of each advice, request, or instruction given to another financial institution or person, regarding a transaction intended to result in the transfer of funds, or of currency, other monetary instruments, checks, investment securities, or credit, of more than $10,000 to an entity outside the United States.
- Generally, the transaction record must retain the information listed below:
- The name and address of the transmittor
- The amount of the transmittal order
- The execution date of the transmittal order
- Any payment instructions received from the transmittor
- The identity of the recipient’s financial institution
- It is also mandatory for money services businesses to maintain as much of the following information if possible:
- The name and address of the recipient
- The account number of the recipient
- Any other specific identifier of the recipient
- All forms regarding funds transfers (must be signed or filled in by the individual who placed the order for the transfer)
- In addition, money services businesses must maintain records of bank checks and drafts, cashier’s checks, money orders and traveler’s checks that are worth at least US$3,000.
How long to secure USA MSB License?
- Generally, you can expect your USA MSB license (Money Services Business) application to take approximately 1 week.
- Within approximately 2 business days, applicants will have their MSB license application processed and approved through the BSA E-Filing System account.
- The time taken to apply for a money transmitter license (if applicable) will depend on the state(s) your money services business is operating in and the number of license(s) you are applying for.
How to apply for an MSB license in USA?
Step 1: Application of MSB License
- Tetra Consultants will assist you in preparing the documents required for the application of MSB license. Documents required include the FinCEN Form 107, business volume estimate, information about the ownership and control of the money services business and a list of agents that will be authorized to sell or distribute MSB services.
- Once the required documents have been consolidated, Tetra Consultants will register your institution as a money services business with the Department of the Treasury through the BSA e-filing system.
Step 2: Implementation of Anti-Money Laundering (AML) Program
- All money services businesses are required to develop and implement an AML program within 90 days after the business has been established.
- Tetra Consultants will assist in providing the necessary legal expertise to implement an AML program that complies with the Federal Regulations.
Step 3: Procurement of a Money Transmitter State License
- Most money services businesses that provide money transmitter or money transfer services in the US will be required to obtain a money transmitter license.
- The regulation for money transmitters differs based on the state your money services business operates in.
- Generally, a money transmitter license will require a license application form, an AML compliance program, financial statements, a business plan, a surety bond, a background check and a minimum capital amount.
- Tetra Consultants will assist you in procuring the relevant money transmitter license for your business.
What happens when a MSB does not comply with FinCEN regulations?
- FinCEN will issue a warning letter to the MSB when it identifies an actual or potential violation of the BSA regulation or any relevant legislation. FinCEN may seek equitable remedies, legal settlements or issue civil money penalties when an MSB is found to be non-compliant with FinCEN regulations. If circumstances warrant, FinCEN may even refer a matter to appropriate law enforcement agencies for criminal investigation and/or criminal prosecution.
What is the Multistate MSB Licensing Agreement Program (MMLA)?
- The Multistate Money Services Businesses Licensing Agreement (MMLA) Program is a program meant to simplify license application for money services businesses operating in multiple states. This program will help money services businesses to apply for multiple state licenses more conveniently.
- All applicants who wish to enter the MMLA program to secure a license from the state need to fill in the MMLA Intake Form and submit it to the Department of Financial Institutions of Washington. Through the MMLA program, a state agency will conduct a Phase 1 review of the MSB’s application. If approved, the state agency will certify its review to other states. Other state agencies will conduct a Phase 2 review of the application based on the state’s regulations. Once approved, the applicant will be granted a license from each state.
What FinCEN reports must be e-filed?
- Currency Transaction Reports (CTRs), Suspicious Activity Reports (SARs), Registration of Money Services Businesses (RMSBs), and Designation of Exempt Persons (DOEPs) must be e-filed through the BSA e-filing system.
- Money services businesses can choose to file Form 8300 and the Report of Cash Payments Over $10,000 Received in a Trade or Business electronically or on paper. However, it is highly encouraged that businesses e-file instead to increase efficiency.
What is the cost of e-filing through BSA E-Filing?
- The BSA e-filing system is free.
- All MSBs must renew its registration every two years, on or before December 31.
- A MSB may be required to re-register with FinCEN if it meets at least one of the conditions below:
- There is a change in ownership of the MSB.
- More than 10% of voting power or equity interest is transferred. This is with the exception of certain publicly-traded MSBs.
- The number of agents in the MSB increase by more than 50%.
Who regulates MSB in the US?
- All MSBs in the US are regulated by the Financial Crimes Enforcement Network (FinCEN). The FinCEN is a bureau of the US Department of the Treasury that administers the Bank Secrecy Act (BSA). It ensures that MSBs comply with the regulations in the BSA so as to prevent and deter money laundering, terrorist financing and other criminal activities.
When do I need a money transmitter license in the US?
- Generally, companies that transmit currency, funds or other monetary instruments of any amount from one person to another person or location will be required to obtain a money transmitter license in the US.