A Money Services Business is a financial industry business classification describing a business, or person acting as a business, that does any one of the following things:

  1. Operates as a currency dealer or exchange.
  2. Cashes checks.
  3. Issues traveler’s checks, money orders, or stored value.
  4. Sells or redeems traveler’s checks, money orders, or stored value.
  5. Operates as a money transmitter.

MSBs are heavily regulated because they transmit, convert, or exchange money.

The distinction was put in place mainly as a way of identifying individuals or businesses that could be operating money-related businesses illegally, without the proper business registration, licenses, and regulatory oversight from the Federal Government.

Centralized cryptocurrency exchanges (CEX) based in the U.S. are required to handle the registration of MSBs differently than other business account registrations due to their potential for illegal money-handling activities.

MSB regulation is part of a larger anti-money laundering (AML) program put in place by the U.S. Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN).