What is a Money Service Business

If you’re interested in a money service business, you should know what it is all about. Basically, this type of business offers checks cashing, traveler’s check, money orders, and currency exchange or dealing, and money transfers.

In order to start a money service business, you have to comply with the requirements of the Bank Secrecy Act.

To comply with the requirements of the said act, there is a need to register the business with the government using Form 107. All cash transactions above $10,000 should be reported by filling out Form 8300, as well as any suspicious activity (Form 109). The reporting of the cash transactions and payments can be better understood by reading the Publication 1544. You also need to check with the anti-money laundering compliance program before you can launch the business.

These rules should be observed by businesses and trades that are offering money service. US individuals that have signature authority or financial interest over a foreign account should file for FBAR (Report of Foreign Bank and Financial Accounts) when the value exceeds $10,000.

According to statistics, a lot of money service businesses are not registering with the FinCEN (Financial Crimes Enforcement Network). The law was first past in the year 2001 and if you’re new in the industry, you must comply accordingly. You see, those who failed to register or renew registrations can be charged of criminal and civil penalties. If you want to know more about it, you can check the Bank Secrecy Act.

To register as an MSB, you should be a seller, redeemer, or issuer of traveler’s checks or money orders; a provider of cashing services for checks; exchanger or currency dealer. You have to register the business before December 31st and renew it on the second year. After this, you will now renew the business after two years. If you fail, your MSB will no longer be registered.

Knowing the basics about the money service business will allow you to maintain a legitimate MSB. This is very important to avoid potential legal issues in the future. Familiarize yourself with the Bank Secrecy Act today.


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