What regulations must be followed when starting a payments business that uses ACH?
Payments
Asked by Question Bot11/Sep/20151 answer
1 Answer
F
Faisal Khan
Answered 11/Sep/2015
If you want to start a payments business, your first order of the day is to see if you would be regulated or not, i.e. do you need to be registered with FinCEN and then in turn obtain money transmitter licenses in each state or not?
Depending on the type of business you are in and how your funds-flow are structured, you could be on either side of the fence.
For ACH handling, you could go directly with a bank or work with an existing ACH provider, much will rest on your business case and your fund-flow (how you had originally envisioned it, etc.)
If you are to be regulated and require licensing, then you would need to apply for a money transmitter license in each State you want to do business in, the list of States and their financial regulators can be found here: List of Money Transmitter License Regulators
The depending if you really want to go own-your-own-licensing route or not, you may want to consider some of the options you may have (you can read a blog post I wrote, albeit for the money-transfer industry: How Do I Set Up A Remittance Money Transfer Business?)
Depending on how you have decided to go, you would either be given a compliance manual to work with our you would have to develop one. A compliance program would be the key/core ingredient of your business, so spend ample of money, resources and thought into it.
As a payments business you would have to know your legal responsibility for compliance both on a State &/or Federal level. AML/CFT training is highly recommended.
Depending on the type of business you are in and how your funds-flow are structured, you could be on either side of the fence.
For ACH handling, you could go directly with a bank or work with an existing ACH provider, much will rest on your business case and your fund-flow (how you had originally envisioned it, etc.)
If you are to be regulated and require licensing, then you would need to apply for a money transmitter license in each State you want to do business in, the list of States and their financial regulators can be found here: List of Money Transmitter License Regulators
The depending if you really want to go own-your-own-licensing route or not, you may want to consider some of the options you may have (you can read a blog post I wrote, albeit for the money-transfer industry: How Do I Set Up A Remittance Money Transfer Business?)
Depending on how you have decided to go, you would either be given a compliance manual to work with our you would have to develop one. A compliance program would be the key/core ingredient of your business, so spend ample of money, resources and thought into it.
As a payments business you would have to know your legal responsibility for compliance both on a State &/or Federal level. AML/CFT training is highly recommended.