AML (Anti-Money Laundering Program) Compliance Policies

Strict anti-money laundering policies and procedures are prescribed for Money Transmitters.  FinCEN (The Financial Crimes Enforcement Network) requires money transmitters and MSBs to put anti-money laundering programs into place according to these principles:

⇒ The policy must be in writing.

⇒ It must include policies and procedures to assure compliance with AML laws.

⇒ It has to prevent money laundering and the financing of terrorism.

⇒ It must include controls, policies, and procedures to verify customers’ identities.

⇒ It must include reporting capabilities and record retention practices.

⇒ Compliance must be designated to a compliance manager.

⇒ The policies and procedures must be periodically updated to ensure ongoing compliance.

License Examination Requirements

New applicants have to pass specific examination and investigation requirements, depending on the state where the application is made.

Investigation at Application

The state may require an investigation as soon as the application is received to verify and review the businesses’ financial responsibility, experience in the industry, the applicant’s character, and the enterprise’s potential officers and directors.

Annual Departmental Examination

Money Transmitter license holders’ business and business owners may be reinvestigated annually.

All of the above must be submitted with your money transmitter license application to the state’s licensing organization.

Cost Of A Money Transmitter License

Application Fee

⇒ It will vary from state to state. The total cost will vary from a few hundred dollars to a few thousand dollars.

Annual License Fee

⇒ Money transmitters have to pay yearly license renewal fees, which are generally less expensive than the initial license fees and range between $50 and $1,000.

Investigation Fee

⇒ The cost of the investigation upon application and an examination after receiving a license can be offset to the money transmitter and typically range between $50 and $1,000.

Minimum Net Worth

Money transmitter licenses are regulated at the state level, and it varies much.  In Alabama, the net worth requirement is a mere $5,000, while Arizona requires a net worth of $100,000 for the primary location plus an additional $50,000 for every other site. High volume money transmitters will need to add $500,000 in net worth.

Security

States require security from money transmitters to protect customers and the state from bad business practices, and this also varies from state to state.  In California, the surety bond must be at least $250,000 while Colorado demands at least $1,000,000 and depending on the licensee’s financial standards, more can be required.

Most money transmitters will go for a surety bond than securities on deposit, although not all agencies will deal with money transmitters since it is a risky business.  It is vital to determine the best available bond for your business.

Federal Law

MSBs are not only regulated under state law. They also need to comply with federal law, including registration with FinCEN (Financial Crimes Enforcement Network), a department of the US Treasury.  Registration is a fast and straightforward process that can be completed online and renewed every two years, and in rare cases, re-registration is required.

A person that is an MSB only because he serves as an agent of another MSB does not have to register.

FinCEN Registration

It is the responsibility of the owner or controlling person of the MSB to register with FinCEN.  Registration requires the completion and undersigning of FinCEN Form 107, Registration of Money Service Business, and has to be filed within 180-days after the MSB has been established.  The MSB has to retain a copy of filed FinCEN Form 107 and all supporting documents at a US site for five years.  Civil and criminal penalties can be imposed if the registration requirements are violated.

Every MSB must develop and implement AML Compliance plans to prevent individuals from using the MSB for money laundering or terrorist financing.  AML Programs must be written and has to take inherent risks into account.

Written AML Compliance Plan

The written document should include:

⇒ The name of the person appointed to ensure daily compliance with the BSA

⇒ Include well-designed policies, procedures, and internal controls to enable compliance with the BSA

⇒ Provide Education and training to relevant personnel

⇒ Provide for independent audits to monitor and maintain appropriate procedures

⇒ Know your customer (KYC): MSBs must verify their customers’ identity for specific activities and transactions in compliance with the Money Laundering Control Act of 1986, including the following:

⇒ Establish and verify the client or account holder’s identity, and in certain instances, the same for the non-account holder (beneficiary).

⇒ Establish the customer relationship and continuously monitor the customer’s business activities’ nature regarding specific risks¾to determine that the customer’s capital source is legal and the business activities meet the requirements.

⇒ Assess risks associated with AML and terrorist financing for this customer.

⇒ Provide for a US MSB Cash report:

⇒ Every cash transaction or series of cash transactions requires submitting a CTR (cash transaction report) within 15-days if:

⇒ Payments and withdrawals exceed $10,000.

⇒ Is performed by the same customer or his agent.

⇒ Is completed on the same trading day

⇒ Multiple transactions must be considered the same if performed by the same customer or its agent on the same date or by one or more branches or agents of the same US MSB and if the total amount withdrawn or paid in cash exceeds $10,000.

⇒ Should provide for a US license suspicious activity report (SAR) to be submitted within 30-days after the suspicious transaction is discovered:

⇒ An MSB must report suspicious activity if the value of the transaction or transaction model exceeds $2,000.

⇒ If the issuer reviews the record of redemption of notes of $5,000 or more.

Documents Required For A MSB License Application

⇒ Basic US company information including the company tax number

⇒ Detailed personal information of shareholders and directors of the US company:

⇒ Scanned passport.

⇒ Personal phone numbers.

⇒ Residential address.

⇒ Shareholders’ US SSN.

⇒ Address of US office

⇒ Bank account information:

⇒ Account opened date.

⇒ Account number.

⇒ Bank account branch address.

⇒ Contact details of the compliance officer

⇒ Details of the branches, if any.

⇒ A monthly list of all the transaction totals that exceeded $100,000 for financial services issued by the MSB for the past 12-months.

Frequently Asked Questions (FAQ)

What are the requirements to obtain an MSB License in the US if I have a company abroad?

First the MSB license is the Money Services Business License is also known as the money transmitter license outside of the US, here in the US basically the MSB license is needed when one person is going to transfer money to another person, third party. Same thing as PayPal, as Western Union. The requirement for someone who is not US citizen or someone who is they are the same, they don’t change. But the basic requirement is that the company shows in addition to the application, shows a money laundering policy, this is a book that the company should show to provides with the application in addition of a business plan explaining how the company is going to operate and this needs to be attached to the application in the state. Here in the US, there is no 1 license application for money service business license, you must apply state by state just like PayPal has 48 MSB licenses in the US. So it all depends where you plan to operate and where your clients will be in addition to all this requirements you also need to submit fingerprints, so someone who is not in the US will need to come to the US and have their fingerprints taken and submitted to the financial division of the state and the state will provide you a code for those fingerprints to be submitted directly to the database of the state. Also, you need at least, it depends on the states because some require thousands of dollars in capital and some states require less, some states like new jersey or New York they are in the 5k to a 1 million dollar in capital. For non us and us citizens they need to have an office with an LLC or corporation already opened. Also, you rent an office, hire one employee, you have a telephone number, a fax number, an email address, and a website.

That is required to start the application, provide a business plan, anti-money laundering policy, fingerprints, identification like passport or driver’s license, if you’re not a us citizen you have to have one employee based in the US who is to be the contact on the application, to act as the shareholder of the company, once you have all this you deposit in the bank the capital and you need a CPA to audit that money, he will issue a report and that will mean that money is there and this report is attached to the MSB license application. If you have a company that has been doing business already you need to audit the financial statements by a CPA and attach that report to the MSB license application, once you have all this documentation you can submit the application to the finance commission of the state and then it will take at least 90 days for the application in addition to that some state require that you also post a bond which is like a guarantee that you give that you are able to provide the initial capital that is required that can go from 50 thousand to 1 million dollar.

When you have all this, you can submit the application, some states like Georgia and Tennessee have created like a joint application where you apply to one state and that application also works for other states and it can be done online. However, states like Florida don’t allow online application and has to be in paper and submitted some parts online. One final requirement is that you must appoint a compliance officer means that that person oversees enforcing the anti-money laundering and all the policies and procedures of the company which you also need to have to start the application. If the employee has experience in compliance and banking then that employee can work as the compliance offer otherwise you have to find one person who can do that, and that is a US Citizen.

What is the procedure to apply for an MSB license in the US and how long does this process take?

The second is to hire an employee, rent an office, get a telephone, and fax number, get a website and email address.

The third step it will be the deposit of the initial capital in the bank and after that you can start the application, then do the business plan, the anti-money laundering policy and policies and procedures for the company and attach that to the application. If the owner is in the US, then get the fingerprints, if the owner is outside of the US come to the US to get the fingerprints and have the initial capital audited by a CPA in the US. If the company already started activities, it would need an audit report as well. If it is required, get the bond or guarantee, get the compliance officer and put all that information there in the application and all this documents must be attached to the application to be submitted and then it will take 90 days, it might be that the finance department of regulation will require more information and they will call the office to make sure someone is there, and to his has to be real. Remember that this is a license, and you have to comply with the requirements and if you provide false information that will be a felony and can be indicted later on.

If I have an MSB license in a US state, can I do business with other states and receive clients from other states? What to do if I want to cover several states in the US?

Yes, you can but to not a create a false impression that you have a license in multiple states you have to show in big letters that your license is only in Florida so people know. You cannot advertise outside of Florida, and you cannot say that you’re authorize to do business in any other state but in Florida. If you have businesses in other states and want to take those clients, you need a license also in those states. The licenses are not for prestige, they are for protection of the public in the US, so when you are a licensee in any state is not for you only and the only way to protect the client from other states is to get a license in that state where you have clients receiving money from those clients.

What are the requirements and differences between using a credit card or an electronic Wallet for the transactions of my companies with MSB license in the US?

The MSB license will give you the authorization to do business with this electronic wallet for a third parties. Think similar to a bank account, in this case a electronic wallet doesn’t have the ability for example for accruing interest, so when you open a company you start implementing a system for the service of your clients where you offer this wallet that has crypto money and that money is transferred to a third party and you are doing the transfer, when that happens you need an addition level of policies and procedures to deal with this crypto transactions. The main difference between using a credit card and a electronic wallet is a that the credit card is accepted everywhere however the electronic wallet with crypto is currently not accepted in the US so you cannot pay with that, you would have to convert the money first and later on pay with your debit or credit card. So, the electronic wallet really is just a unit of accumulation you can accumulate money there, but you will not be able to use it in the US unless there is a business that will accept that kind of money specifically.