Overview of US MSB Registration
Money Services Businesses (MSBs) in the United States must register with the Department of the Treasury under the Bank Secrecy Act (BSA). The Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department, administers MSB registration requirements and enforces compliance with anti-money laundering regulations.
MSB registration provides the federal foundation for money services operations, though state-level money transmitter licenses are typically required for operations within individual states.
Regulatory Framework
US MSB regulation operates under federal oversight:
Financial Crimes Enforcement Network (FinCEN): The primary federal regulatory authority administering the Bank Secrecy Act and MSB registration requirements.
Bank Secrecy Act (BSA): The legislative framework establishing MSB registration, reporting, and recordkeeping requirements.
State Regulators: Individual state agencies licensing money transmitters and other money services activities within their jurisdictions.
When MSB Registration is Required
Businesses providing these services must obtain FinCEN registration:
Money Orders and Traveler's Checks
- •Issuers, sellers, and redeemers of instruments exceeding $1,000
Money Transmission
- •Companies transmitting currency or funds between persons or locations
- •Includes traditional and digital currency transmission
Check Cashing
- •Entities accepting checks worth $1,000+ on behalf of others
Currency Exchange
- •Dealers accepting foreign currency over $1,000
Prepaid Access
- •Providers of prepaid access products
- •Stored value programs
Mandatory Requirements
Anti-Money Laundering (AML) Program
All MSBs must develop and maintain an effective AML program including:
- •Policies and procedures to prevent money laundering
- •Customer identity verification procedures
- •Designated compliance officer oversight
- •Proper record creation and retention
- •Filing of appropriate reports with authorities
- •Employee training programs
Agent List Maintenance
- •Prepare and maintain a list of all agents
- •Keep list within the United States
- •Include personal information for each agent
- •Submit to FinCEN/IRS upon request
Reporting Obligations
Suspicious Activity Reports (SARs):
- •File for transactions exceeding $2,000 deemed suspicious
- •File reports within 30 days of detection
Currency Transaction Reports (CTRs):
- •Report currency transactions over $10,000
Record Keeping Requirements
- •Maintain records for minimum 5 years
- •Document transmitter and recipient information
- •Keep transaction execution dates and payment instructions
- •Preserve bank checks, drafts, and money orders worth $3,000+
Registration Process
Step 1: MSB License Application
Timeline: Approximately one week for approval
- •Prepare required documents including FinCEN Form 107
- •Business volume estimates
- •Ownership information
- •Authorized agent lists
- •Registration through BSA e-filing system with Department of Treasury
Processing: Within approximately two business days through BSA E-Filing System
Step 2: AML Program Implementation
Timeline: Within 90 days after business establishment
- •Develop comprehensive AML program
- •Implement customer identification procedures
- •Establish compliance monitoring
- •Train staff on requirements
Step 3: State Money Transmitter Licenses
Timeline: Varies by state
- •Obtain state-specific money transmitter licenses
- •Requirements typically include:
- Application forms
- AML compliance program documentation
- Financial statements
- Business plan
- Surety bond
- Background checks
- Minimum capital requirements
Costs
Federal Registration
- •BSA e-filing system is free
- •No federal registration fee
State Licenses
- •Vary significantly by state
- •Include application fees, surety bonds, and minimum capital requirements
Renewal
- •All MSBs must renew registration every two years by December 31
Re-Registration Requirements
Businesses must re-register if experiencing:
- •Change in ownership
- •Transfer of over 10% voting power or equity interest
- •More than 50% increase in agent numbers
Compliance and Penalties
Non-Compliance Consequences
FinCEN enforcement actions may include:
- •Warning letters
- •Equitable remedies
- •Legal settlements
- •Civil money penalties
- •Criminal referral to law enforcement agencies
Importance of Compliance
The BSA framework prevents money laundering and terrorist financing. Non-compliance carries significant legal and financial consequences.
State-Level Considerations
Money Transmitter Licenses
Most states require separate money transmitter licenses in addition to federal MSB registration. Requirements vary by state but typically include:
- •State-specific application procedures
- •Surety bonds
- •Minimum net worth requirements
- •Background investigations
- •Ongoing compliance obligations
Multi-State Operations
Businesses operating in multiple states must obtain licenses in each state where they conduct money transmission activities.
Timeline Summary
| Activity | Timeline |
|---|---|
| MSB Federal Registration | ~1 week |
| BSA E-Filing Processing | ~2 business days |
| AML Program Implementation | Within 90 days |
| State Money Transmitter License | Varies by state |
Practical Considerations
Professional Support
Most applicants engage:
- •US legal counsel specializing in money services regulation
- •Compliance specialists for AML program development
- •State licensing specialists for multi-state operations
Business Structure
Delaware is a common state for MSB incorporation due to favorable corporate laws, though operations in other states typically require additional state licenses.
Banking Relationships
Establishing banking relationships for MSBs requires enhanced due diligence. Early engagement with banks experienced in serving MSBs is advisable.
Ongoing Compliance
Regular Obligations
- •Annual compliance reviews
- •Regular AML program updates
- •Employee training programs
- •Transaction monitoring
- •SAR and CTR filing as required
Record Retention
- •5-year minimum record retention
- •Documentation must be available for examination
Conclusion
US MSB registration provides the federal authorization foundation for money services operations under FinCEN supervision. The free BSA e-filing system and approximately one-week approval timeline offer efficient federal registration, though comprehensive AML programs must be implemented within 90 days.
State money transmitter licenses typically represent the more significant regulatory burden for multi-state operations. Success requires robust AML compliance frameworks, proper agent management, and ongoing reporting and recordkeeping.
Companies considering US MSB operations should engage appropriate legal and compliance support and understand both federal registration requirements and state-specific licensing obligations for their operational footprint.