Glossary · Regulation & Compliance
Money Services Business (MSB)
Also: MSB, money services business registration, money transmitter
Published
Money Services Business (MSB) — A money services business (MSB) is a category of non-bank financial business, defined under U.S. Bank Secrecy Act regulations and under Canada's proceeds of crime legislation, that must register with FinCEN or FINTRAC respectively and maintain anti-money-laundering programs. Businesses that exchange or transmit convertible virtual currency fall within it.
The United States
Under FinCEN's regulations and its 2019 guidance on convertible virtual currency, a business that accepts virtual currency from one person and transmits it to another, or exchanges it for funds, is a money transmitter and therefore an MSB. Registration with FinCEN is required, along with a written anti-money-laundering program, recordkeeping, and reporting obligations such as suspicious activity reports. State money transmitter licenses are a separate matter and vary by state.
Canada
FINTRAC registers money services businesses under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act. Businesses dealing in virtual currency are covered and must register, verify client identity, keep records, and report prescribed transactions. Registrations can be verified through FINTRAC's public registry.
What Registration Means for a Counterparty
Registration establishes the compliance obligations a provider operates under and gives an institution a status it can verify with the regulator. It is not an endorsement, a guarantee of solvency, or a license to conduct securities or derivatives business. Institutions record a counterparty's registrations as one input to due diligence.