What You Need to Know
Are you interested in starting a money transfer business in the US? Whether you’re looking to help friends and family send money overseas or build a larger cross-border money transfer service, there are some crucial legal and regulatory aspects you need to understand.
Key Takeaways:
- Money transmission requires a license: If you act as a financial intermediary, facilitating money transfers between others, you are considered a money services business (MSB) and need a money transmitter license in each state you operate in.
- Federal registration is mandatory: You must register with the Financial Crimes Enforcement Network (FinCEN) at the federal level.
- Nationwide operations require 50 state licenses: Many MSBs obtain licenses in all 50 states to operate across the US.
- No statute of limitations: The government can prosecute unlicensed money transmission activities regardless of how long ago they occurred.
- Penalties for unlicensed operations are severe: These include fines, cease-and-desist orders, and even jail time.
- Failure to comply with regulations can lead to serious consequences: This includes disregarding anti-money laundering and terrorist financing laws, ignoring Office of Foreign Assets Control (OFAC) sanctions, and failing to conduct proper checks.
Essential Steps for Starting a Legal Money Transfer Business:
- Understand MSB laws and regulations: Thoroughly research state and federal requirements, including license applications, registration processes, and compliance protocols.
- Obtain a money transmitter license: Apply for and obtain licenses in each state you plan to operate.
- Register with FinCEN: Complete the federal registration process with FinCEN.
- Establish a compliance program: Implement anti-money laundering and terrorist financing measures, including OFAC sanctions screening and customer due diligence.
- Seek legal guidance: Consult with an experienced lawyer specializing in financial regulations for comprehensive advice and support.
Remember: Operating a money transfer business without the proper licenses and compliance measures can result in significant legal and financial consequences. By following these essential steps and staying informed about regulations, you can build a safe and successful business in the US money transfer industry.
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This page was last updated on December 6, 2023.
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