Setting Up a Money Service Business With FinCEN
When it comes to money service businesses you’ll find that they are actually very well scrutinized and regulated. In fact, 49 out of 50 states have not only federal law regulations but statutes as well.
This type of business is one that provides different types of financial services, from money orders and traveler’s checks, to exchanging currency, money transmission, and check cashing. And there are plenty of other money related services that may be provided as well. But overall, it’s important to know that these facilities are highly regulated by the Bank Secrecy Act, administered by the Financial Crimes Enforcement Network under the United States Department of the Treasury.
These regulations, as well as the Patriot Act, require registration for all MSBs, and also create rules related to reporting, anti-money laundering, and record keeping. Even more, those 49 states have additional regulations that are very similar to federal requirements. The most important thing for someone looking to set up this type of business is to work with a compliance attorney.
Registration Requirements
So, just what is required of these facilities? The Banking Secrecy Act requires registration with FinCen. It must then be filed with the BSA within 180 days of establishing the business.
That doesn’t mean when the business is able to actual start functioning, but when it is established.
In order to register the business needs a great deal of information. This includes a name and the fees, but it also includes statements of financial institutions and bank accounts where transactions can happen, types of business the institution will conduct, the ownership of the business, the branches or agents operating, and more. This is why it’s important to go through the registration process very carefully and that you provide all of the necessary information the first time around.
In order to register the business needs a great deal of information. This includes a name and the fees, but it also includes statements of financial institutions and bank accounts where transactions can happen, types of business the institution will conduct, the ownership of the business, the branches or agents operating, and more. This is why it’s important to go through the registration process very carefully and that you provide all of the necessary information the first time around.
Record-Keeping Requirements
A money services business has a great deal of regulation when it comes to record keeping. They must be in a format that is easily retrievable and they must be stored at a physical location for at least five years. There may be different types of information that need to be stored this way, but in general you should count on supporting documentation for registration. This includes estimates of value, lists of agents in operation, and a copy of the registration form that was originally filed. Suspicious activity reports, currency transaction reports, and any information that you get through Know Your Customer programs are also required.
Make sure that you are storing this information in a place that is easily accessible and that you are following the rules and regulations related to storage and safety of these documents as well.
Make sure that you are storing this information in a place that is easily accessible and that you are following the rules and regulations related to storage and safety of these documents as well.
Reporting Requirements
These types of business are always required to report specific information to FinCEN, which includes suspicious activity and any transactions that take place and are above a set amount. Requirements also include the provision of currency transaction reports that are more than $10,000 and made by a single person on a single business day. These reports are required to include everything possible about the parties that are involved, including taxpayer identification and customer identity verification.
Reports of suspicious activity include anything that the MSB knows or has reason to know is related to some type of illegal activity or has been done to hide money from illegal activities.
Reports of suspicious activity include anything that the MSB knows or has reason to know is related to some type of illegal activity or has been done to hide money from illegal activities.
AML Requirements
These businesses must have anti-money laundering campaigns as well. These are quite complex and can be a burden for these types of businesses, which are considered a standard financial institution. Economic sanctions and some other types of regulation are not required to follow a compliance program, however.
This type of compliance program is designed to allow the company to verify information about those involved in a transaction and also to determine the purpose of the transaction. Federal regulations require this to make sure that the financial system is not being used illegally or to hide anything illegal.
In general, whether or not you need this type of program will depend on the volume or transactions being handled, the nature of those transactions, and the size of the transactions. There will always be set minimums regarding information and records, but the higher-level recording depends on additional criteria.
If the institution has hundreds or thousands of transactions per day the requirements may be stringent and complex. On the other hand, if you have only a few transactions per day you may be able to go with a simpler design. Working with a compliance officer will help you figure out just what you are required to do and how you can make sure you’re following along with the requirements. This also makes sure you’re not wasting your time and energy on something you don’t need.
Get an Attorney
An attorney can help you understand the process of setting up your business as well as help you stay on track with everything that needs to be done along the way
They can help you follow along with regulations and make sure that your business is doing what it should to stay in business and take care of laws as well as your customers.