Money Services Business (MSB)
Tue, Apr 15A Money Services Business is a classification within the financial industry that refers to a business or individual acting as a business that engages in any of the following activities:
- Functions as a currency dealer or exchange.
- Cashes checks.
- Issues traveler’s checks, money orders, or stored value.
- Sells or redeems traveler’s checks, money orders, or stored value.
- Operates as a money transmitter.
MSBs are subject to strict regulations due to their role in transmitting, converting, or exchanging money. This classification was established primarily to identify individuals or businesses that may be conducting money-related operations illegally, without the necessary business registration, licenses, and regulatory oversight from the Federal Government.
In the U.S., centralized cryptocurrency exchanges (CEX) must manage the registration of MSBs differently from other business account registrations because of their potential involvement in illegal money-handling activities.
Regulation of MSBs is part of a broader anti-money laundering (AML) initiative implemented by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).
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