Although few businesses intend to get into the sector of offering financial and money services to their customers, it easier than you may think to find yourself under the regulation of the Bank Secrecy Act (“BSA”). The definition of a Money Services Business (“MSB”) is rather broad, and encompasses a number of consumer-facing offerings that many businesses are likely interested in offering. But along with these service offerings come some strict regulations, and no shortage of fees to be operating within the letter of the law.
What Constitutes a MSB?
Set forth in the Electron Code of Federal Regulations Title 31, Section 1010.100, MSB regulations and requirements are handled by the United States Department of the Treasury’s Financial Crimes Enforcement Network (“FinCEN”). As defined by FinCEN, companies can find themselves within the definition of an MSB if offering the following:
What are the MSB Registration Requirements?
Registration as an MSB is done on a state-by-state basis, and the requirement are vastly different. The California State Assembly Committee on Banking and Finance provides a comprehensive table covering the Money Transmitter Licensing Requirements on a per-state/territory basis. This table lists all of the statute-backed licensing and examination requirements. The 141-page length of this table should provide a quick bit of insight into the complexity of registering in all possible U.S. territories.
Companies must also register federally through FinCEN E-filing system, or use a FinCEN Form 107. Specified information must also be retained in a location in the United States for a five (5) year period including:
Form. A copy of the filed registration form. (Or E-file)
Estimate of Business Volume. Estimate of the business volume of the MSB for the coming year.
Ownership or Control. Information with regard to the ownership or control of the MSB.
Agent List. A listing of agents that the MSB has authorized to sell or distribute its MSB services.
The agent list is comprehensive, and requires the following information:
Name: The name of the agent, including any trade names or doing-business-as names.
Address: The address of the agent, including street address, city, state, and ZIP code.
Telephone Number: The telephone number of the agent.
Type of Services: The type of MSB services the agent provides on behalf of the MSB maintaining the list.
Gross Transaction Amount: A listing of the individual months in the 12 months immediately preceding the date of the agent list in which the agent’s gross transaction amount for financial products or services issued by the MSB maintaining the agent list exceeded $100,000.
Depository Institution: Name and address of any depository institution at which the agent maintains a transaction account for any of the funds received in or for the MSB services the agent provides on behalf of the MSB maintaining the list.
Year Became Agent. The year in which the agent first became an agent of the MSB.
Branches: The number of branches and sub-agents the agent has, if any.
The agent list must be revised every January 1.
What Does it Cost?
Registering as a MSB will not necessary be too expensive for companies looking to do business in a single, or just a few, territories--but for those interested in being covered across all states and territories, the fees will be considerable. We have compiled a table with cost breakdowns per state/territory, and the estimated upfront fees for all territories are over $175,000, and yearly maintenance fees breaking the $135,000 mark. Please contact us for further fee information.
There is no fee for the federal registration.