money services business (MSB)
2022-04-05 · 4 min read
MSBs are considered financial instituions. Businesses in the following areas are MSBs:
- Currency dealer or exchanger
- Check casher
- Issuer of traveler's checks, money orders, or stored value
- Seller or redeemer of traveler's checkes, money orders, or stored value
- Provider of prepaid access
- Money transmitter
- U.S. Postal Service
My very likely inaccurate summary of this list: MSBs are (1) currency exchangers and (2) money transmission intermediaries who hold custodial, depository, or bearer privileges.
Currency dealer or exchanger #
Check casher #
Money transmitter #
A person that provides "money transmission services". These are services where a business accepts currency, funds, or other monetary instruments from one person and transmits the currency, funds, or other monetary instruments to another by any means.
"Any means" includes, but is not limited to transmission through
- a financial agency or financial instituion
- a Federal Reserve bank
- an electric funds transfer network
- an informal value transfer system
- any other person who is a Money transmitter
Money transmitter exclusions #
- Provide delivery, communication, or network access services used to support money transmission services.
- Act as a payment processor through a clearance and settlement system by agreement with the creditor or seller.
- Operate a clearance and settlement system or otherwise acts as an intermediary soley between BSA regulated institutions. This includes, but is not limited to
- the Fedwire system
- electronic funds transfer networks
- registered clearning agencies regulated by the SEC
- derivatives clearing orgs or clearing house arrangements
- Physically transport currency, other monetary instruments, commercial paper, or other value that substitutes for currency as a person primarily engaged in such business, like an armored car. This transport is only between the same person from one physical location to another.
- Provides pre-paid access
- Accepts and transmits funds only integral to the sale of goods or services (other than monetary transmission services) by the person who is accepting and transmitting the funds.
Activity Threshold #
There is an activity threshold under which a business is not an MSB. Engaging in one of the above activities in amounts greater than $1000 per person per day in any number of transactions, qualifies that business as an MSB.
Note that each activity is considered separately, so you can simulataneously not be an MSB for cashing checks if you're under the threshold, but be an MSB for currency exchange if you're over the threshold.
No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.
Not an MSB #
The following are not included as MSBs:
- Persons or entities regulated by the SEC or CFTC