What must an African company do to start a money-transfer business from the U.S. to their African country?
Payments
Asked by Question Bot08/Sep/20151 answer
1 Answer
F
Faisal Khan
Answered 08/Sep/2015
Well for starters you would need to get a license in your own country for being a licensed money transfer operator (MTO). This may/may-not be an easy feat depending on the regulatory process, bureaucratic hurdles and just the over all way things are done in your country. Almost universally, it is never allotted in the time-frame the regulator/government would cite. Multiple the time-frame given by x2 or even x4 to get a realistic date.
If you do not want to go the MTO route yourself, you can partner up with an existing licensed MTO or a Bank. Banks generally are exempt from obtaining a separate MTO license. Once you have a relationship with either the MTO or the Bank, you are then in a position to talk to a licensed money transmitter in the US.
Depending on which country in Africa you are originating/based-in, the results can be mixed. Many money transmitters may decide to talk to you, many may not. It all depends on your approach, your business model, your know-how of the business, and your value proposition.
For the last couple of years, the US money transmitters have been very cautious as to whom they do business with. Many of them are scaling back operations from high-risk countries or from international corridors all together. This can be a damper, but don't lose hope. If you know where to look, you will find them.
The association you will have is either a Correspondent one or as an Agent of the licensed money transmitter. Depending on how your structure your entire deal, how customers would be on-boarded, how/who will do the processing, etc. the outcome can suddenly change from being extremely positive to No thanks, we cannot work with you. The reverse is also true.
The money transfer business is all about understanding the AML/KYC requirements, the regulatory compliance issues, the flow of funds and minimizing risk. Systems, procedures and human resources make it happen. If you lack in a certain area, that would pretty much kill the deal.
If you do not want to go the MTO route yourself, you can partner up with an existing licensed MTO or a Bank. Banks generally are exempt from obtaining a separate MTO license. Once you have a relationship with either the MTO or the Bank, you are then in a position to talk to a licensed money transmitter in the US.
Depending on which country in Africa you are originating/based-in, the results can be mixed. Many money transmitters may decide to talk to you, many may not. It all depends on your approach, your business model, your know-how of the business, and your value proposition.
For the last couple of years, the US money transmitters have been very cautious as to whom they do business with. Many of them are scaling back operations from high-risk countries or from international corridors all together. This can be a damper, but don't lose hope. If you know where to look, you will find them.
The association you will have is either a Correspondent one or as an Agent of the licensed money transmitter. Depending on how your structure your entire deal, how customers would be on-boarded, how/who will do the processing, etc. the outcome can suddenly change from being extremely positive to No thanks, we cannot work with you. The reverse is also true.
The money transfer business is all about understanding the AML/KYC requirements, the regulatory compliance issues, the flow of funds and minimizing risk. Systems, procedures and human resources make it happen. If you lack in a certain area, that would pretty much kill the deal.