What is a Money Service Business?

In the United States, the Financial Crimes Enforcement Network (FinCEN) has specific definitions and requirements of what constitutes an MSB and any business that meets any one of those criteria is subject to regulations under the Bank Secrecy Act (BSA). A few of those include money transfers, currency exchanges, prepaid access and check cashing. All MSBs must be registered with FinCEN, are subject to review by the Internal Revenue Service (IRS) and must be compliant with the appropriate and myriad state and federal regulations. Across the U.S., there are a lot of regulations and failure to comply will result in very serious penalties.

One of the biggest concerns for MSBs in the U.S. involves the funding of illegal or illicit activities – intentional or not. MSBs have a duty to ensure that they are not involved in or permitting money laundering from illicit activities such as drug trafficking, that they’re not helping with funding terrorist activities, and that they’re not violating economic or trade sanctions against a specific list of countries or organizations.

To stay in compliance, MSBs must have a written set of policies and procedures for filtering transactions, an individual (or team) within the organization responsible for overseeing compliance, and processes in place to keeping up to date on regulations and barred transactions (such as watch lists and sanctioned entities). FinCEN’s website offers a wealth of information and resources for registration, compliance and more.