Foreign Money Services Business (FMSB)
A foreign MSB is a money services business located outside the United States that does business wholly or in substantial part within the United States, and must therefore register with FinCEN. Canada uses the same term for a separate status of its own.
Also called: foreign MSB · FMSB · foreign money services business
The phrase “foreign MSB” names two different legal statuses in two different countries. The words are identical; the tests, the regulators and the obligations are not. Anyone using the term should say which country they mean.
Under United States law
FinCEN’s rules reach a business with no physical presence in the United States. If a firm abroad does business wholly or in substantial part within the United States in one of the listed activities, it falls inside the money services business definition. It must complete FinCEN registration, designate a person in the United States to accept service of legal process, keep the records the Bank Secrecy Act requires, and run an AML program covering its US activity.
Under Canadian law
Canada created a separate foreign money services business category for firms with no place of business in Canada that direct services at persons in Canada. Those firms register with FINTRAC and take on Canadian AML obligations, including a compliance program, record keeping, and reporting to FINTRAC. A foreign money services business that fails to register can be refused a Canadian banking relationship and listed publicly as non-compliant, which is usually the more immediate commercial problem.
In both countries the trigger is where the customers are, not where the servers, staff or incorporation are. Marketing to residents, accepting them through an online signup flow, quoting in the local currency or working through local agents all point toward doing business in the country. A firm that serves customers in both countries can end up carrying both statuses at once, each with its own filings, its own renewal cycle and its own consequences for missing them. Banks reviewing a cross-border payments business will ask for both, and will read a gap in either as a reason to decline the account.
In practice
Check which regime is meant before acting on the abbreviation. Under FinCEN it is a non-US business doing business wholly or in substantial part within the United States, which must register federally; under Canada’s FINTRAC regime it is a separate status with its own registration. Registering in one country says nothing about the other, and neither registration is a license to transmit money in any US state.
Example
A London e-money firm opens accounts for US-resident customers and advertises to them. It registers with FinCEN as a foreign MSB and appoints a US agent for service of process. That registration is complete and correct — and it still cannot lawfully transmit money for a customer in California or New York until it holds those states’ money transmitter licenses.
Commonly confused with
| Term | How it differs |
|---|---|
| FinCEN Registration | FinCEN registration is the filing a foreign MSB makes; foreign MSB is the status that makes the filing compulsory. |
| Money Transmitter License | A state money transmitter license grants permission to transmit money in that state; foreign MSB status grants no permission anywhere — it imposes federal AML and registration duties. |
| Money Services Business | An MSB is defined without regard to location; foreign MSB is the subset of that definition sitting outside the United States. |
See also
- Money Services BusinessA money services business is a category in US federal law under the Bank Secrecy Act, covering seven capacities: dealer in foreign exchange, check casher, issuer or seller of money orders or traveler’s checks, provider of prepaid access, seller of prepaid access, money transmitter, and the US Postal Service.
- FinCEN RegistrationThe federal filing a money services business makes with FinCEN, on Form 107, to put itself on the Treasury’s MSB register. It must be renewed every two years. It is a notification that the business exists, not an approval of it.
- FINTRACCanada’s financial intelligence unit and anti-money-laundering supervisor. Money services businesses must register with FINTRAC before operating in Canada, report prescribed transactions to it and are examined by it — but FINTRAC issues no license and grants no permission to move money.
- FinCENThe bureau of the US Treasury that administers the Bank Secrecy Act. FinCEN writes the anti-money-laundering rules applying to financial institutions, receives suspicious activity and currency transaction reports, and maintains the federal register of money services businesses.
- Money Transmitter LicenseA money transmitter license is permission granted by a US state for a company to receive money from the public in that state and pay it, or its value, to someone else. Each state licenses separately.