The Money Services Business (MSB) is usually a currency exchange and money transfer transaction. MSB, which has many forms, from individuals to global businesses, from payment companies to investments, are check, foreign exchange transactions, or money order transactions.
A money service business is a non-bank institution that provides mechanisms for people to pay in any way or obtain money or cash in exchange for payment through a financial institution or institution. Like other regulated financial institutions, such as MSBs, banks, and credit unions, they are subject to the Bank Secrecy Act (BSA). Money service businesses' compliance is required to comply with the registration, reporting, record keeping, and anti-money laundering program requirements in the BSA. MSBs are a catch-all term used by financial regulators representing the majority of the economy to describe various businesses related to the conversion or transmission of money. To qualify as a money service, a person needs to make more than $ 1,000 in one or more transactions on any given day. The money service business compliance is also called a non-bank financial institution or a non-deposit provider of non-financial services. Money Service businesses are traded a lot around the world. 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 otherwise is considered a money transfer business. FATF accepts that MSB may include a good digital platform or a variety of non-traditional remittance forms.
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. For example;
As it is seen, MBSs serve at many points, but MBSs are not banks. We can explain the bank's differences as follows; offers and customers are different; it offers services and alternatives to individuals who do not have access to traditional banking services. Moreover, it provides individuals with various financial services such as short-term loans, payment processing, and the transferor exchange of foreign currencies. Although they have different banks' features, MSBs still need to follow the same rules and regulations that banks and financial institutions deal with.
It is particularly vulnerable to money laundering of money services. The nature of their trades dealing with cash and one-off transactions that often cannot be tracked makes them a risk. MSBs need to have an anti-money laundering compliance program. The Anti-Money Laundering and Terrorism Financing (AML / CFT) compliance program should enable the company to identify the underlying purpose of a particular transaction and verify certain information about the interested parties. There are different ways for money services businesses to identify risky customers and transactions. For example, High-risk countries follow the Financial Action Task Force (TAFT) recommendations that set global AML / CFT compliance standards. Furthermore, High-risk countries MBSs should perform screening checks at Know Your Customer (KYC). Another example is big transactions; MBSs should be more careful in transactions where large amounts of money are exchanged. MBSs need to take care of the customer to identify risks or report problems to a regulatory authority as part of their suspicious transaction reporting responsibilities. MBSs will have to comply with different regulations by regulatory authorities, depending on their jurisdiction.
Sanction Scanner helps money services businesses detect and prevent financial crimes with AML solutions. You can detect financial crimes such as money laundering, terrorist financing, corruption, and bribery, strengthening your AML compliance in all processes from the customer engagement process to the customer transaction process. You can contact us or request a demo for more information.