Money Services Business (MSB) Registration
In the United States, any person or entity doing business in one or more of the following capacities is considered a Money Services Business (MSB):
1) Currency dealer or exchanger - who exchange more than $1,000 for any one customer on any day.
2) Check casher - who cash checks totaling more than $1,000 for any one customer on any day.
3) Issuers of traveler’s checks, money orders or stored value - who issue more than $1,000 in traveler’s checks, money orders or stored value.
4) Sellers of traveler’s checks, money orders or stored value - who sell more than $1,000 in traveler’s checks, money orders or stored value for any one customer on any day.
5) Redeemers of traveler’s checks, money orders or stored value - who redeem more than $1,000 in traveler’s checks, money orders or stored value for any one customer on any day
6) Money transmitter - including providers of convertible virtual currency
MSBs are regulated at the federal level under the Bank Secrecy Act (BSA), administered by the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. Registration is a mandatory step for any fintech or financial institution intending to offer money services to U.S. persons.
Important Regulatory Notice:
Federal MSB registration is a foundational requirement, not a comprehensive license. It serves as the official notice to the U.S. government of your intent to operate and establishes your formal Anti-Money Laundering (AML) obligations.
However, please be advised that FinCEN registration does not satisfy individual state or local licensing requirements, nor does it grant the authority to conduct business within specific U.S. jurisdictions. Furthermore, while registration is a prerequisite for financial operations, it does not guarantee or secure a corporate banking relationship. For most money transmitters, obtaining state-level Money Transmitter Licenses (MTL) remains a critical subsequent step for full legal operation.
The Key Requirements to apply for MSB Registration
A) The definitions of Business Activities:
➤ A “currency dealer or exchanger” is a person who engages in the physical exchange of currency for retail customers.
➤ A “check casher” is a person engaged in the business of providing cash to persons in return for a check.
➤ An “issuer” is the business that is ultimately responsible for payment of money orders or travelers checks as the drawer of such instruments, or a money transmitter that has the obligation to guarantee payment of a money transfer.
➤ A “seller” is a business that issuers authorize, through written agreement or otherwise, to sell their instruments or their send and receive transfer services.
➤ A “redeemer” is a business that accepts instruments in exchange for currency or other instruments for which it is not the issuer. You are not a redeemer if you take the instruments in exchange for goods or general services, provided that the amount of cash returned is not more than $1,000 for any one customer on any day.
➤ A “money transmitter” is a person that engages as a business in the transfer of funds through a financial institution.
➤ An “Informal value transfer system” - is a kind of money transmitter. An informal value transfer system includes any person who engages as a business in an informal money transfer system or any network of people who engage as a business in facilitating the transfer of money domestically or internationally outside of the conventional financial institutions system.
B) The definitions of Owner or Controlling Person:
➤ Any person who owns or controls a money services business is responsible for registering the MSB.
Registrant Business | Owner or Controlling Person |
|---|---|
Corporation | (i) The largest single shareholder; or
(ii) If more than one person owns or controls the business, they may enter into an agreement designating one of them to register the business.
|
Trust | A trustee |
Partnership | A general partner |
Sole Proprietorship | The individual who owns the business |
C) When to Register:
(A) Initial registration:
➤ File the form within 180 days after the date the business is established.
(B) Renewal:
➤ Each MSB must renew its registration every two years, on or before December 31.
(C) Correction:
➤ Correct a prior report.
(D) Re-registration
➤ A change in ownership;
➤ More than 10% of voting power or equity interest is transferred; or
➤ The number of agents increase by more than 50%.
D) Further requirements:
(i). Entity Incorporation:
A valid legal entity is a prerequisite for registration. The requirement to register as an MSB applies to both U.S.-incorporated entities and foreign-incorporated entities that conduct MSB activities within the United States.
(ii). U.S. Address:
While a physical U.S. business address is not a strict requirement for foreign-located MSBs, you must assign a U.S. agent for service of process to handle legal and regulatory correspondence.
(iii). Jurisdictions:
Registrants may elect to operate in specific states or territories, or authorize your business to operate nationwide across all U.S. jurisdictions. Most applicants choose to select "All States/Territories" to allow for maximum future scalability without the need for immediate registration amendments.
(iv). Branch:
An MSB may operate from a single primary headquarters or through a network of multiple branches. Furthermore, the FinCEN framework recognizes Mobile Operations (e.g., services provided from a vehicle). Please note that for registration purposes, each mobile unit is legally treated as a separate branch.
(v). Agent:
You may expand your reach by authorizing Agents to sell or distribute your MSB services on your behalf. When calculating your total number of locations, you should include these authorized agents. However, you should not count individual branches or personnel who are strictly direct employees of the MSB.
(vi). Primary Transaction Account:
If you already have an account to do money services business, then it is great. But most U.S. banks will not open a corporate account for an MSB until you can show proof of FinCEN registration. FinCEN recognizes this.
(vii). Record Keeping:
The registrant must retain for five years certain information at a location within the United States. That information includes: (1) The copy of the registration form. (2) Annual estimated volume of the registrant’s business in the coming year. (3) The Ownership Structure showing the name and address of any shareholder holding more than 5% of the registrant’s stock, any general partner, any trustee, and/or any director or officer of the business. (4) The agent list.
E) AML requirements:
According to 31 Code of Federal Regulations (CFR) 1022.210(d), the money services business shall develop, implement, and maintain an effective anti-money laundering program. An effective anti-money laundering program is one that is reasonably designed to prevent the money services business from being used to facilitate money laundering and the financing of terrorist activities. The AML program must, at a minimum, includes:
1.Written Policies and Procedures: Incorporate policies, procedures, and internal controls reasonably designed to assure compliance with the BSA (including verifying customer identity, filing SARs, and recordkeeping).
2.Designated Compliance Officer: Appoint a qualified individual responsible for day-to-day BSA/AML oversight who must be located within the United States. This officer must possess the seniority and independence to report directly to management, ensuring compliance priorities remain separate from business operations. Key responsibilities include supervising the "Four Pillars," managing the filing of Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTRs), and serving as the primary point of contact for FinCEN or IRS regulatory inquiries.
3.Ongoing Training: Provide education and/or training for appropriate personnel regarding their responsibilities under the program.
4.Independent Audit: Provide for independent testing (an audit) to monitor and maintain an adequate program.
F) Penalties for failure to comply:
Any person who fails to comply with the requirements to register, keep records, and/or maintain agent lists may be liable for civil penalties of up to $5,000 for each violation. Failure to comply also may subject a person to criminal penalties, which may include imprisonment for up to five years and criminal fines.
Before You Start
➤ Establish a Legal Entity: Incorporate a valid business structure (e.g., a U.S. LLC or Corporation) and obtain a Federal Employer Identification Number (EIN).
➤ Formalize Professional Partnerships: Confirm service arrangements with your legal, tax, and compliance consultants to ensure end-to-end support.
➤ Draft a Comprehensive AML Program: Develop a written Anti-Money Laundering policy tailored to your specific business model and risk profile.
➤ Finalize Operational Workflows: Document a detailed business plan including fund flow diagrams, customer onboarding procedures, and transaction monitoring workflows.
➤ Appoint a Compliance Officer: Identify a qualified individual located in the United States to lead your compliance department and act as the regulatory liaison.
What ComplianceOne can do for you
What ComplianceOne can do for you
Navigating the complexities of U.S. financial regulations requires local expertise and a global perspective. ComplianceOne is a leading specialist in money service licensing and a well-established regulatory compliance consultancy.
With a proven track record of serving thousands of clients, our professional team possesses deep-rooted expertise in anti-money laundering (AML) laws across multiple jurisdictions. Our diverse clientele ranges from traditional brick-and-mortar money changers to innovative, technology-driven online remittance companies across Southeast Asia, the Middle East, Africa, Europe, South America, and the USA.
We provide end-to-end support for your U.S. market entry:
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MSB Eligibility Assessment: We conduct a deep-dive analysis of your business model to determine your specific regulatory obligations under FinCEN and the Bank Secrecy Act (BSA).
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Entity Formation Support: Assistance in establishing a robust U.S. corporate presence, ensuring your legal foundation is sound from day one.
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AML/BSA Program Drafting: We leverage our international experience to tailor a comprehensive AML/CFT policy that meets stringent U.S. federal standards while remaining operationally efficient.
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FinCEN Registration Management: Our team handles the entire formal filing process for the MSB Registration, including critical biennial renewals and any necessary re-registrations.
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Strategic Advisory & M&A Support: We bridge the gap between federal registration and the preparation for complex state-level Money Transmitter License (MTL) applications. We also provide specialized support for mergers, acquisitions, and institutional risk assessments.
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Audit & Examination Readiness: Drawing from our success in helping hundreds of directors pass competence assessments and mock examinations, we prepare your team for IRS/FinCEN audits through rigorous external AML audits and training.
Supporting Services
To provide a truly comprehensive solution for your international expansion, ComplianceOne offers a suite of ancillary services designed to streamline your operations and ensure technical compliance:
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Executive Search & Professional Recruitment: We leverage our deep industry network to assist in the recruitment of qualified Management and Compliance Officers. We ensure all candidates meet the rigorous regulatory standards and "fitness and propriety" requirements necessary for the MSB sector.
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Institutional-Grade Fintech Solutions: Through our affiliate, eDon Fintech Limited, we provide robust trading systems specifically tailored for Money Service Businesses. This ecosystem includes a comprehensive CRM, automated background check capabilities, and sophisticated ongoing monitoring modules.
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Proprietary RegTech & AML Screening: We implement advanced AML/KYC technologies, including our signature Screen-X AML/CRM Solutions. This system automates critical compliance tasks such as Sanction and PEP screening, adverse media searches, and real-time transaction monitoring to protect your business from regulatory risk.
Anticipated Timeline
The journey from initial consultation to achieving a fully registered and compliant MSB status typically follows a structured 4 to 6-week path.
This process begins with a deep-dive business model review, eligibility assessment, and U.S. entity incorporation during the first two weeks, followed by the drafting of a customized "Four Pillars" AML Program and internal control workflows over the subsequent two weeks.
By the end of this period (typically week four), we facilitate the formal submission of the federal registration form and the appointment of the U.S. Agent for Service of Process. Please note that the relevant federal processing authority will typically send a formal acknowledgment of receipt to the registrant within approximately 60 days after the form has been processed.
Following registration, the focus shifts to staff training, assisting with banking applications, and scheduling the first mandatory independent audit.
External Reference
1)Financial Crimes Enforcement Network - Money Services Business (MSB) Registration:
https://www.fincen.gov/resources/money-services-business-msb-registration
2)The Bank Secrecy Act (BSA) Regulations
https://www.fincen.gov/resources/statutes-and-regulations/bank-secrecy-act
3)Bank Secrecy Act (BSA) - Code of Federal Regulations (CFR)
https://www.ecfr.gov/current/title-31/subtitle-B/chapter-X/part-1022/subpart-B/section-1022.210