The Money Services Business (MSB) is usually a currency exchange and money transfer transaction. Individuals and organizations companies use it. It includes checks and foreign exchange as well.
Money Services Business Definition
A money service business is a non-bank financial institution that lets customers trade exchanges, store value, and transfer money. Like banks, money service businesses are also subject to the Bank Secrecy Act (BSA) and AML regulations. MSB is used as an umbrella term for financial services. Financial Action Task Force (FATF) revised the risk assessment of money service and remittance businesses in 2016. Any financial service that pays money to beneficiaries in cash or through a transaction is considered a money transfer business. The value of the transaction has to be higher or equivalent to $1,000 to be considered an MSB.
What Are The Services Offered by MBS?
- Transferring money
- Accepting cash for a transaction or currency exchange
- Providing global remittance services
- Selling cash checks
- Providing payment services
- similar to service payments, tax payments, and insurance premiums
- Providing intermediary payments
- Acting as an exchange office agency or dealer
- Providing additional money business services in the form of microloans, auto loans, crowdfunding, online market, investment services
An MSB provides a significant financial service to underdeveloped regions, often with limited or no banking services, such as a small organization with outlets such as markets, pharmacies, and retailers. There are many services that MSBs provide to such organizations or individuals. Some of these services are;
MBSs provide many financial services, but they are not banks. Banks differ from MBSs by having different customers and offers. MBSs offer bank alternatives to individuals. MSBs need to follow regulations local and global regulators impose on banks even though they are not banks.
What Is The Compatibility of MSB with AML?
MBSs are vulnerable to money laundering since cash and one-off transactions are often not traceable. Therefore, MSBs must have Anti-Money Laundering Compliance programs to comply with regulations and verify required information between interested parties during transactions.
There are different ways for money services businesses to identify suspicious customers and transactions. For example, High-risk countries follow the Financial Action Task Force (FAFT) recommendations that set global AML / CFT compliance standards.
MBSs should perform screening checks using Know Your Customer (KYC) services. Another example is high-value transactions; MBSs should be more careful with transactions in which large amounts of money are exchanged.
MBSs must scan their customers using screening services to identify risks their customers might bring. In addition, MBSs have to comply with different regulations depending on their business type and location.
Sanction Scanner helps money services businesses detect and prevent financial crimes with AML solutions. You can contact us or request a demo for more information.
