Legal Definitions - money service business

A money service business is a company that helps people manage their money without operating as a traditional bank. These businesses primarily enable individuals to send money, exchange currency, or obtain cash in exchange for various payment instruments. Crucially, they do not accept customer deposits or provide loans, which distinguishes them from conventional banks.

Here are a few examples to illustrate how money service businesses operate:

• International Money Transfer Service: Imagine someone needs to send funds to their family living in another country, and the recipient does not have a bank account. They might visit a local storefront that specializes in international wire transfers. This business facilitates the transfer of money across borders, allowing the sender to make a payment and the recipient to receive cash, all without being a bank that accepts deposits or issues loans. This service directly fulfills the function of a money service business by providing a mechanism for people to make payments.

• Prepaid Debit Card Provider: Consider a company that sells reloadable prepaid debit cards. Customers can purchase these cards and load them with funds to use for shopping, bill payments, or online purchases, often as an alternative to a traditional bank account. This provider is a money service business because it offers a way for individuals to make payments using stored value (the money loaded onto the card) and operates outside the banking system by not taking deposits or extending credit.

• Airport Currency Exchange Kiosk: A traveler arriving in a new country might need to convert their home currency into the local currency for immediate expenses. They would typically go to a currency exchange kiosk located in the airport. This kiosk acts as a money service business by allowing the traveler to obtain local currency (cash) in exchange for their foreign currency, without engaging in core banking activities like accepting deposits or making loans.