The Money Service 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 to obtain money or cash in exchange for payment means 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 are required to comply with the registration, reporting, record keeping, and anti-money laundering program requirements in the BSA.
MBSs are a catch-all term used by financial regulators representing the majority of the economy to describe a wide variety of businesses related to the conversion or transmission of money. To qualify as a money service business, a person needs to make more than $ 1,000 in one or more transactions on any given day. The money service business is also called a non-bank financial institution or a non-deposit provider of non-financial services. MBSs 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 MBS 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;
• Transfer money,
• Accepting cash for a money order or currency exchange,
• Providing global remittance services,
• Selling cash checks,
• Providing payment services in a similar way to service payments, tax payments, and insurance premiums,
• To make intermediary payments between a supplier that creates an amount and uses an application,
• Acting as an exchange office agency or dealer,
• Providing additional business services in the form of microloans, auto loans, crowdfunding, online market, investment services
As it is seen, MBSs serve at many points, but MBSs are not banks. We can explain the differences from the bank 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 a variety of financial services such as short-term loans, payment processing, and the transferor exchange of foreign currencies. Although they have different features from banks, 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 businesses. 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 standards for AML / CFT compliance. 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 to 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.
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