In the world of money services businesses (MSBs), a principal license holder refers to an entity that holds a primary license to conduct activities related to money services. These activities can include money transmission, check cashing, issuing or selling money orders, and providing foreign currency exchange.
The term “principal” is used because this entity is the main party responsible for complying with the various regulatory requirements associated with operating as an MSB. These requirements can include adhering to anti-money laundering (AML) rules, carrying out Know Your Customer (KYC) checks, and reporting large or suspicious transactions to the relevant authorities.
The specific license held by a principal license holder will depend on the jurisdiction in which they operate and the specific activities they conduct. In the United States, for example, MSBs must be registered with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury, and may also require licenses from individual state regulators.
In many cases, principal license holders can work with authorized delegates or agents who can conduct MSB activities on their behalf. These agents must operate under the guidance and supervision of the principal license holder, who remains responsible for ensuring compliance with all relevant rules and regulations.
It’s worth noting that the terminology and specific regulations can vary considerably between different jurisdictions, so it’s always important to understand the specific legal and regulatory context in which an MSB operates.
—
This page was last updated on May 24, 2023.
–