A money services business (MSB) is a legal term used by
financial regulators
Financial regulation is a form of regulation or supervision, which subjects financial institutions to certain requirements, restrictions and guidelines, aiming to maintain the stability and integrity of the financial system. This may be handled ...
to describe businesses that transmit or convert
money
Money is any item or verifiable record that is generally accepted as payment for goods and services and repayment of debts, such as taxes, in a particular country or socio-economic context. The primary functions which distinguish money are as ...
. The definition was created to encompass more than just
bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
s which normally provide these services to include
non-bank financial institution
A non-banking financial institution (NBFI) or non-bank financial company (NBFC) is a financial institution that does not have a full banking license or is not supervised by a national or international banking regulatory agency. NBFC facilitate b ...
s.
An MSB has specific meanings in different
jurisdictions, but generally includes any business that
transmits money or representatives of money, provides
foreign currency exchange
A bureau de change (plural bureaux de change, both ) (British English) or currency exchange (American English) is a business where people can exchange one currency for another.
Nomenclature
Although originally French, the term "bureau de chan ...
such as
Bureaux de change
A bureau de change (plural bureaux de change, both ) (British English) or currency exchange (American English) is a business where people can exchange one currency for another.
Nomenclature
Although originally French, the term "bureau de chan ...
, or cashes
cheques
A cheque, or check (American English; see spelling differences) is a document that orders a bank (or credit union) to pay a specific amount of money from a person's account to the person in whose name the cheque has been issued. The pers ...
or other money related instruments. It is often used in the context of
Anti Money Laundering
Money laundering is the process of concealing the origin of money, obtained from illicit activities such as drug trafficking, corruption, embezzlement or gambling, by converting it into a legitimate source. It is a crime in many jurisdictio ...
(AML) legislation and rules. Money services businesses are governed by their local regulators and have to adhere with record-keeping requirements to conduct customer due diligence if customers request for an amount of foreign currency that exceeds a certain threshold set to detect money laundering.
An MSB often provides an essential financial service to underdeveloped regions with limited or no banking services and may be a small organisation with outlets like grocery stores, drugstores, pharmacies or convenience stores. It may include regional networks of post offices, banks or agents.
See also
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Alternative financial services
An alternative financial service (AFS) is a financial service provided outside traditional banking institutions, on which many low-income individuals depend. In developing countries, these services often take the form of microfinance. In develo ...
*
Major MSB's
*
Hawala
Hawala or hewala ( ar, حِوالة , meaning ''transfer'' or sometimes ''trust''), also known as in Persian, and or in Somali, is a popular and informal value transfer system based on the performance and honour of a huge network of money ...
*
Suspicious activity report
References
Financial services organizations
Money
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