Enforcement Actions for Failure to Register as a Money Services Business

Certain money services businesses (MSBs) have been required to register with FinCEN since 1999, when the MSB regulations first went into effect. An entity acting as an MSB that fails to register as required is subject to civil money penalties and possible criminal prosecution. The registration of the MSB serves as a first step in establishing the compliance framework for applicable FinCEN regulations designed to help mitigate the risks of criminal abuse of MSBs for money laundering and terrorist financing as the MSB seeks to provide financial services to customers for legitimate purposes. There is no cost for registration, which is a simple procedure explained in detail on FinCEN's Web site at https://www.fincen.gov/money-services-business-msb-registration.

Unlike other financial institutions regulated by FinCEN that are subject to ongoing prudential regulation and supervision for safety and soundness purposes - such as banks, securities broker-dealers, and insurance companies - MSBs become subject to FinCEN regulations not because of their license or charter, but rather based on the activities they conduct. While generally understood today, in addition to the fact that MSBs have increasingly become subject to regulation at the State level, when FinCEN first issued its regulations with respect to MSBs, there was a need to identify and educate many of the entities that would be subject to the regulatory requirements.

FinCEN has engaged in longstanding, dedicated efforts to reach out to the MSB industry and educate MSB owners of the importance of mandatory registration and other regulatory requirements. FinCEN first established a public Web site dedicated to the MSB industry in 2002, which in 2009 was integrated into the reorganized and modernized FinCEN Web site. Some of the materials disseminated and outreach efforts include the following:

  • FinCEN has issued multilingual brochures to facilitate MSBs' ability to more easily comply with the requirements of the BSA.
  • FinCEN has issued guidance to explain the registration and renewal process.
  • FinCEN offers the MSB Registration Renewal Calculator as a means to determine informally an MSB's registration renewal date.
  • FinCEN has issued English AND Spanish versions of its Bank Secrecy Act/Anti-Money Laundering Examination Manual for Money Services Businesses.
  • FinCEN maintains Regulatory Helpline.
  • FinCEN offers educational pamphlets on the currency transaction reporting requirement that address questions regarding the BSA frequently asked by financial institutions' customers.
  • FinCEN conducted an outreach effort to large MSBs to better understand their businesses and how they perceive and understand the regulatory requirements under the BSA, and subsequently released a report on the outreach campaign.
  • FinCEN funds certain staff within the IRS Stakeholder Liaison Division to conduct outreach and education to MSBs across different parts of the country. FinCEN officials work closely with these outreach staff to ensure that the Federal Government is appropriately reaching the MSB industry.

The foregoing and other efforts over a period of many years have helped to increase the number of MSBs registered with FinCEN as well as overall compliance with BSA requirements by businesspersons seeking to provide needed financial services to their legitimate customers. There nonetheless remain some MSBs that continue to flout the law and ignore the basic registration requirements. In appropriate cases, FinCEN will seek to exercise its regulatory authority to issue civil money penalties for failure to register as an MSB. Law enforcement and regulatory authorities are encouraged to report to FinCEN persons suspected of being an unregistered MSB by contacting FinCEN through normal channels or by calling FinCEN's Regulatory Helpline at 1-800-949-2732.

Civil and Criminal Penalties for Operating an Unregistered Money Transmitting Business

Any person who fails to comply with any requirement of 31 U.S.C. 5330 or this section [31 CFR 103.41] shall be liable for a civil penalty of $5000 for each violation.BSA registration requirements, in an amount up to $5,000 for each day a registration violation continues.
[31 U.S.C. § 5330(e) and 31 C.F.R. § 103.41(e)]

Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both. 
[18 U.S.C § 1960(a)]

A money transmitting business which affects interstate or foreign commerce in any manner or degree and fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
[18 U.S.C § 1960(b)(1)(B)]

 

Enforcement Action Date Matter No. Industry Type
In the Matter of Kustandy Rayyan D/B/A Thriftway Food Mart 03-24-16 2016-02 Money Services Businesses
In the Matter of Lee’s Snack Shop, Inc. and Hong Ki Yi 06-26-15 2015-09 Money Services Businesses
In the Matter of King Mail & Wireless Inc., and Ali Al Duais 06-01-15 2015-06 Money Services Businesses
In the Matter of Ripple Labs, Inc. XRP Fund II, LLC Attachment A: Statement of Facts and Violations Attachment B: Remedial Framework 05-05-15 2015-05 Money Services Businesses
In the Matter of Aurora Sunmart Inc. and Jamal Awad 03-18-15 2015-04 Money Services Businesses
In the Matter of Thomas E. Haider 12-18-14 2014-08 Money Services Businesses
In the Matter of BPI, Inc. 08-28-14 2014-06 Money Services Businesses
In the Matter of Mian, Inc. d/b/a Tower Package Store 07-15-14 2014-04 Money Services Businesses
In the Matter of New Milenium Cash Exchange, Inc. and Flor Angella Lopez 04-23-14 2014-03 Money Services Businesses
In the Matter of Saleh H. Adam dba Adam Service 02-07-14 2014-02 Money Services Businesses
In the Matter of Sarith Meas 12-08-11 2011-10 Money Services Businesses
In the Matter of Mohamed Mohamed-Abas Sheikh 09-23-11 2011-9 Money Services Businesses
In the Matter of Altima, Inc. 09-07-11 2011-8 Money Services Businesses
In the Matter of Victor Kaganov 03-11-11 2011-2 Money Services Businesses
In the Matter of Mohamed Abukar Sufi d/b/a Halal Depot 03-02-11 2011-04 Money Services Businesses
In the Matter of Omar Abukar Sufi d/b/a Halal Depot 03-02-11 2011-03 Money Services Businesses
In the Matter of Baltic Financial Services, Inc. 12-16-10 2010-5 Money Services Businesses

 

Background

Under the authority of the BSA and regulations issued pursuant to that Act, FinCEN determines whether grounds exist to assess civil money penalties against MSBs. The Money Laundering Suppression Act of 1994 requires every MSB to be registered by an owner or controlling person of the MSB, and makes operating an unregistered MSB a Federal crime. Any person who fails to comply with the registration requirements may be liable for a civil penalty of up to $5,000 for each violation. Failure to comply includes the filing of false or materially incomplete information. Each day a violation continues constitutes a separate violation. In addition, the Secretary of the Treasury may bring a civil action to enjoin the violation. [See 31 CFR 103.41(e), 18 USC 1960.] FinCEN Form 107 must be completed and signed by the owner or controlling person and filed within 180 days after the date on which the MSB is established. Registration must be renewed every 2 years. Re-registration is required in limited circumstances. A copy of the filed registration form and other supporting documentation must be retained at a location in the United States for a period of 5 years. FinCEN's MSB Registration List, which is updated and posted on a monthly basis, contains entities that have registered as MSBs. Every May, FinCEN drops from the list any entities that have not renewed their registrations by the deadline.

In addition to enforcement actions for failure to register as an MSB, any MSB that fails to follow FinCEN's other regulatory requirements (just like any other financial institution) may be subject to civil money penalties. In a small number of egregious cases, some MSBs may seek to turn a blind eye to customers involved in activity that should raise suspicion of possible criminal behavior, or in some instances knowingly facilitate criminal activity. In such cases, FinCEN seeks to support its law enforcement partners in appropriate criminal investigations and prosecutions.