If Iām a licensed MSB outside the U.S., can I legally operate an online service offering transfers from the U.S. to my country?
Money Transmitter License
Asked by Question Bot04/Oct/20141 answer
1 Answer
F
Faisal Khan
Answered 04/Oct/2014
It all depends on how you have structured yourself and how you are soliciting business from the US for purposes of Money Transfer.
You will have to register as an MSB with FinCEN (even if you are physically based out of the US). Under the new rules, this is now applicable to all MSBs engaged in money transfer business to/from the US.
Ref: FIN-2012-A001 (Foreign Located Money Service Businesses)
If you are soliciting business from the US, you most likely will come under the definition of a Money Service Business (See FinCEN's definition of an MSB: Money Services Business). Another important rule worth reading is the FinCEN Proposes Rule Relating to Money Services Businesses - International Law Office.
The MSB Registration page of FinCEN can be seen here: Money Services Business (MSB) Registration
There are exceptions to the registration - which can be seen here: Definition: Exceptions
In addition to this, you will be required to have a Money Transmitter License as per the various US states and their State Regulatory Authority/Agency for moving of money across state lines for money transmitter purposes. Currently 45 US States require this license.
The law is now very clear, if you are onboarding (soliciting) an American client, you would need a money transmitter license coverage or the licenses themselves.
If you have a system that is 100% entirely outside the US, and is open to all countries (for payments) and the processing of this money is done outside the US, and you do not market and/or actively solicit business from the US, then a money transmitter license is not required. But because you will be soliciting business from the US, chances are each state would like you to get an MT license.
One way around this is to tie up with a licensed MSB / MT and assign them as an agent. The easiest way is to associate yourself with a US bank (though this may be difficult to do, if you do not have enough transaction volume).
Another is to look at companies that can provide you such services (Money Transmitter license association) as well as MSB, but they would most likely add to the cost of doing business and for state side processing, they would like to get into the action.
In short, there is no "hack" for this or a go-around. Either you get yourself an MSB license and an MT license for each state, or you associate yourself with someone who already has it.
You will have to register as an MSB with FinCEN (even if you are physically based out of the US). Under the new rules, this is now applicable to all MSBs engaged in money transfer business to/from the US.
Ref: FIN-2012-A001 (Foreign Located Money Service Businesses)
If you are soliciting business from the US, you most likely will come under the definition of a Money Service Business (See FinCEN's definition of an MSB: Money Services Business). Another important rule worth reading is the FinCEN Proposes Rule Relating to Money Services Businesses - International Law Office.
The MSB Registration page of FinCEN can be seen here: Money Services Business (MSB) Registration
There are exceptions to the registration - which can be seen here: Definition: Exceptions
In addition to this, you will be required to have a Money Transmitter License as per the various US states and their State Regulatory Authority/Agency for moving of money across state lines for money transmitter purposes. Currently 45 US States require this license.
The law is now very clear, if you are onboarding (soliciting) an American client, you would need a money transmitter license coverage or the licenses themselves.
If you have a system that is 100% entirely outside the US, and is open to all countries (for payments) and the processing of this money is done outside the US, and you do not market and/or actively solicit business from the US, then a money transmitter license is not required. But because you will be soliciting business from the US, chances are each state would like you to get an MT license.
One way around this is to tie up with a licensed MSB / MT and assign them as an agent. The easiest way is to associate yourself with a US bank (though this may be difficult to do, if you do not have enough transaction volume).
Another is to look at companies that can provide you such services (Money Transmitter license association) as well as MSB, but they would most likely add to the cost of doing business and for state side processing, they would like to get into the action.
In short, there is no "hack" for this or a go-around. Either you get yourself an MSB license and an MT license for each state, or you associate yourself with someone who already has it.