Fintech 19 March 19

Regulation readiness: the ongoing challenge for money service businesses

Matt Rowntree
By: Matt Rowntree
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North American Money Service Businesses (MSBs) are often focused on moving and sharing payments across international borders. But building a successful business that secures trust with customers – and builds market share as a result – is a key objective as they look to expand on a global basis.

There are several layers of regulation MSBs need to be aware of when expanding operations across the United States. First, they must comply with both US state and federal laws and regulations. Second, they must register with the Financial Crimes Enforcement Network (FinCEN) and be reviewed by the Internal Revenue Service (IRS).

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Third, they must make themselves aware of different regulations within the other countries in which they operate. Depending on the complexity of the business and the number of countries targeted, this can be a challenging task.

In fact, remaining compliant with rapidly changing regulatory regimes in multiple jurisdictions is a full-time job. It’s also one that’s been made more difficult by challenges such as AML failures, which have damaged trust between correspondent banks and MSBs.

On top of all this, the cost of doing business globally, including money transmitter licensing (MTL) application fees, continued regulation renewal, and reporting fees, are further obstacles to success. Regulatory inefficiencies such as the complications involved in developing a banking network and getting FBOs and IBANs make it extremely difficult to expand internationally.

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Achieving compliance as a steady state

MSBs don’t always have the resources and skills in-house to devote to the vicissitudes of the regulatory landscape. But restricting a business model to a single state or country will clearly curtail any planned international growth. So, they need to find ways to achieve full compliance without devoting the whole team’s time to staying on top of global regulations.

An increasingly popular way for MSBs to remain ‘regulation ready’ is to build an established FX payments platform into their own systems. This way, the headaches involved in keeping an eye on regulatory changes in multiple markets can be looked after by specialists who focus on this area as their only day job, not one of many.

By working with a respected FX payments platform provider like Currencycloud, MSBs can be confident that they are operating within the latest strictures of the law, while leaving team members free to concentrate on higher value processes, such as customer services or business development.

Securing scalability

MSBs can also ensure that they are being as transparent as possible with pricing while enabling customers to be fully compliant as well. A further benefit is that a plug-in, cloud-based platform is highly scalable, which means that it suits every shape and size of MSB, from plucky start-up to established international market leader.

Staying competitive relies on expansion into global markets and improved operational efficiency. The burden associated with the need to remain compliant with regulations is unlikely to recede. In fact, all the signs show that individual countries will continue to introduce their own regulations to protect domestic markets. If this pans out, the reasons to partner with an experienced, trusted FX platform – rather than attempt to go it alone – become even more compelling.

Find out more about how Currencycloud can help your business.

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Matt Rowntree
By: Matt Rowntree

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