Anti-Money Laundering Policies are required by the Financial Crimes Enforcement Network (FinCen) of Money Service Businesses (MSB).  Often lenders to consumer finance companies and installment sellers assume that these borrowers are MSBs, even when they are not.  Now, convincing your lender that you are not an MSB is not always an easy thing to do.  But, here are the facts.

In a recent blog, Back to Basics, Continued—the Financial Crimes Enforcement Network (FinCen) and the Bank Secrecy Act, I discussed the elements that constitute activities of MSBs.  The last item that I mentioned was conducting the business of being a “money transmitter.”  Several readers have asked for more explanation of what constitutes being a money transmitter.

FinCen's definition of the term money transmitter—“a person. that provides money transmission services,” or “any other person engaged in the transfer of funds”—is not particularly helpful.

Fundamentally, a money transmitter is a business that transfers money for profit.   This includes any business that issues money orders, traveler's checks, or other types of monetary value.

Money transmitters also engage in the act of receiving currency from one party to transfer it to another party.  Receipt of loan payments by your customers is not passing currency to another party.  Payments are being received for yourself.

When a consumer finance company engages in none of the activities of a money transmitter identified above—nor the four other MSB identified services of:

1. currency dealing or exchanging,
2. check cashing,
3. issuing traveler’s checks, money orders or stored value cards, or
4. selling or redeeming traveler’s checks, money order or stored value cards,

then it is not engaged in the business of an MSB.  And, consequently, it does not need to have an Anti-Money Laundering Policy in place.  

"And now," as Paul Harvey used to say, “you know the rest of the story.” 

Please Note: This is the two hundred-twenty-fifth blog in a series of Back to Basics blogs, in which relevant and resourceful information can be easily accessed by clicking Dentons - Consumer Finance Report.