According to the January 2006, U.S. Money Laundering Threat Assessment report, many money services businesses (MSBs) are not registering with the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) despite the fact that the law started requiring such registration in 2001. MSBs that fail to register, or to renew their registrations, may be subject to civil and criminal penalties under the Bank Secrecy Act.
Businesses that are considered MSBs for registration purposes are those that act in one or more of the following capacities: as an issuer, seller or redeemer of money orders or traveler’s checks; as a provider of check cashing services, or as a currency dealer or exchanger, and conduct more than $1,000 in money services business activity with the same person (in one type of activity) on the same day. In addition, all businesses that provide money transfer services in any amount are considered MSBs and are required to register.
A business that is an MSB solely because it serves as an agent of another MSB is not required to register. However, a business that is an MSB because it engages in MSB activities, both on its own behalf and as an agent of another MSB, must register for the services that it provides on its own behalf. In addition, a business that is an MSB solely as an issuer, seller, or redeemer of stored value is not required to register. Finally, the U.S. Postal Service and agencies of the United States, of any State, or of any political subdivision of any state, are not required to register.
Initial Registration
If an MSB was in business before December 31, 2001, it had to register by December 31, 2001. A business established after that date is required to register within 180 days after the date the business begins operating as an MSB. MSBs register by using FinCEN Form 107, Registration of Money Services Business (PDF), and must check box 1a for an initial registration.
Registration Renewal
The registration period begins January 1 of the year for which an MSB is required to be registered and ends December 31 of the second year. If a business continues to be an MSB, it must renew its registration by December 31 of the second year. Thereafter, the business must renew its registration every two years by December 31 for as long as the business continues to meet the definition of an MSB. MSBs indicate that they are renewing registrations by checking box 1b, renewal, when completing FinCEN Form 107.
MSBs that should have renewed their registrations, but fail to renew their registrations by the renewal deadline will no longer be deemed registered and could be subject to applicable penalties.
Businesses that no longer provide MSB services should not renew their registrations when they expire at the end of initial registration periods or subsequent renewal periods. Also, MSBs that did not register, and have implemented written policies and procedures to cease being defined as a MSB, should not register for their past performance as MSBs.
Penalties
The civil penalty for failure to meet the registration requirement is $5,000 for each violation. Each day that the violation continues represents a separate violation. Also, reporting false or materially incomplete registration information can trigger a civil penalty of $5,000 per day. Criminal penalties for willful violation of the law can include fines and imprisonment.
Filing FinCEN Form 107
MSBs should send completed FinCEN Forms 107 to the IRS Detroit Computing Center to the attention of Money Services Business Registration at P.O. Box 33116, Detroit, Michigan 48232-0116.
FinCEN Form 107 is available from the IRS Forms Distribution Center at
(800) 829-3676, or from the following Web sites: MSB.gov, FinCEN.gov, IRS.gov. The IRS Detroit Computing Center Hotline at (800) 800-2877 can provide assistance with completing the form.
Additional Resources
Further information regarding MSB registration and renewal requirements is available on FinCEN’s Regulatory Helpline at (800) 949-2732. In addition, FinCEN has issued guidance as of February 3, 2006, on its Web site concerning initial registration, registration renewal, and de-registration of money services businesses.
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