Federal Register / Vol. 74, No. 90 / Tuesday, May 12, 2009 / Proposed Rules 22129 

1 31 CFR 103.11(uu)(1)–(6). 

inspecting the fuselage front posts, repairing 

any corrosion found and replacing pads 

made of foam rubber by pads made of 

Neoprene to prevent water ingression. 

Actions and Compliance 

(f) Unless already done, do the following 

actions: 

(1) Within 12 years from date of 

manufacture or within the next 2 months 

after May 18, 2009 (the effective date of AD 

2009–09–04), whichever occurs later, inspect 

the fuselage front posts for signs of corrosion 

following paragraph 6.A. of EADS PZL 

‘‘Warszawa-Oke ̨cie’’ S.A. Mandatory Bulletin 

No. 10409036, dated March 18, 2009. 

(2) If corrosion or any corrosion damage is 

found during the inspection required in 

paragraph (f)(1) of this AD, before further 

flight, repair or replace any parts where 

corrosion or corrosion damage was found in 

accordance with an FAA-approved repair 

solution obtained from EADS–PZL 

‘‘Warszawa-Oke ̨cie’’ S.A., Aleja Krakowska 

110/114, 00–971 Warszawa, Poland; 

telephone: +48 22 577 22 11; fax: +48 22 577 

22 03; e-mail: eadsplz@plz.eads.net. 

(3) Within 12 years from date of 

manufacture or within the next 2 months 

after May 18, 2009 (the effective date of AD 

2009–09–04), whichever occurs later, replace 

the rear glass padding following paragraph 

6.C. of EADS PZL ‘‘Warszawa-Oke ̨cie’’ S.A. 

Mandatory Bulletin No. 10409036, dated 

March 18, 2009. 

(4) Within 2 months after the effective date 

of this AD, amend the approved operator’s 

airplane maintenance program to incorporate 

the applicable tasks as described in PZL–104 

Wilga 80 Maintenance Manual, pages 5–4 

and 25–10, dated April 7, 2009. 

FAA AD Differences 

Note: This AD differs from the MCAI and/ 

or service information as follows: No 

differences. 

Other FAA AD Provisions 

(g) The following provisions also apply to 

this AD: 

(1) Alternative Methods of Compliance 

(AMOCs): The Manager, Standards Office, 

FAA, has the authority to approve AMOCs 

for this AD, if requested, using the 

procedures found in 14 CFR 39.19. Send 

information to Attn: Doug Rudolph, 

Aerospace Engineer, FAA, Small Airplane 

Directorate, 901 Locust, Room 301, Kansas 

City, Missouri 64106; telephone: (816) 329– 

4059; fax: (816) 329–4090. Before using any 

approved AMOC on any airplane to which 

the AMOC applies, notify your appropriate 

principal inspector (PI) in the FAA Flight 

Standards District Office (FSDO), or lacking 

a PI, your local FSDO. 

(2) Airworthy Product: For any requirement 

in this AD to obtain corrective actions from 

a manufacturer or other source, use these 

actions if they are FAA-approved. Corrective 

actions are considered FAA-approved if they 

are approved by the State of Design Authority 

(or their delegated agent). You are required 

to assure the product is airworthy before it 

is returned to service. 

(3) Reporting Requirements: For any 

reporting requirement in this AD, under the 

provisions of the Paperwork Reduction Act 

(44 U.S.C. 3501 et seq.), the Office of 

Management and Budget (OMB) has 

approved the information collection 

requirements and has assigned OMB Control 

Number 2120–0056. 

Related Information 

(h) MCAI European Aviation Safety 

Agency (EASA) AD No.: 2009–0072, dated 

March 31, 2009, EADS PZL ‘‘WarszawaOke ̨cie’’ S.A. Mandatory Bulletin No. 

10409036, dated March 18, 2009; and PZL– 

104 Wilga 80 Maintenance Manual, pages 5– 

4 and 25–10, dated April 7, 2009, for related 

information. 

Issued in Kansas City, Missouri, on May 6, 

2009. 

Scott A. Horn, 

Acting Manager, Small Airplane Directorate, 

Aircraft Certification Service. 

[FR Doc. E9–11028 Filed 5–11–09; 8:45 am] 

BILLING CODE 4910–13–P 

DEPARTMENT OF THE TREASURY 

31 CFR Part 103 

RIN 1506–AA97 

Financial Crimes Enforcement 

Network; Amendment to the Bank 

Secrecy Act Regulations—Definitions 

and Other Regulations Relating to 

Money Services Businesses 

AGENCY: Financial Crimes Enforcement 

Network (FinCEN), Department of the 

Treasury. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Financial Crimes 

Enforcement Network (‘‘FinCEN’’), a 

bureau of the Department of the 

Treasury (‘‘Treasury’’), is proposing to 

revise the regulations implementing the 

Bank Secrecy Act (‘‘BSA’’) regarding 

money services businesses (‘‘MSBs’’) to 

clarify which entities are covered by the 

definitions. Specifically, we are 

reviewing the MSB regulatory 

framework with a focus on providing 

efficient and effective regulation for the 

industry, as well as improving the 

ability of regulators, law enforcement, 

and FinCEN to safeguard the U.S. 

financial system from the abuses of 

terrorist financing, money laundering, 

and other financial crime. 

The proposed changes are intended to 

more clearly delineate the scope of 

entities regulated as MSBs, so that 

determining which entities are obligated 

to comply will be more straightforward 

and predictable. This rulemaking 

proposes to amend the current MSB 

regulations in the following ways: By 

ensuring that certain foreign-located 

MSBs with a U.S. presence are subject 

to the BSA rules; by updating the MSB 

definitions to reflect past guidance and 

rulings, current business operations, 

evolving technologies, and merging 

lines of business; and by combining all 

of stored value into one category, 

without substantively changing the 

existing definition, so that issuers of 

stored value and sellers or redeemers of 

stored value are in the same category. In 

addition, this rulemaking solicits 

comments on stored value to assist 

FinCEN with a future rulemaking 

proposing a revised definition of stored 

value and revising related regulations. 

DATES: Written comments on the notice 

of proposed rulemaking must be 

submitted on or before September 9, 

2009. 

ADDRESSES: You may submit comments, 

identified by RIN 1506–AA97, by any of 

the following methods: 

• Federal e-rulemaking portal: http:// 

www.regulations.gov. Follow the 

instructions for submitting comments. 

Refer to Docket number TREAS– 

FinCen–2009–0002. 

• Mail: FinCEN, P.O. Box 39, Vienna, 

VA 22183. Include RIN 1506–AA97 in 

the body of the text. 

Inspection of comments: Comments 

may be inspected, between 10 a.m. and 

4 p.m., in the FinCEN reading room in 

Vienna, VA. Persons wishing to inspect 

the comments submitted must request 

an appointment with the Disclosure 

Officer by telephoning (703) 905–5034 

(Not a toll free call). 

FOR FURTHER INFORMATION CONTACT: 

Regulatory Policy and Programs 

Division, FinCEN (800) 949–2732 and 

select option 1. 

SUPPLEMENTARY INFORMATION: 

I. Introduction 

The term MSB, as currently defined in 

the BSA regulations, refers to each of 

the following distinct categories of 

financial service providers: (1) Currency 

dealer or exchanger, (2) check casher, 

(3) issuer of traveler’s checks, money 

orders, or stored value, (4) seller or 

redeemer of traveler’s checks, money 

orders, or stored value, (5) money 

transmitter, and (6) the United States 

Postal Service.1

MSBs play a critical role in providing 

financial services to, among others, a 

segment of the population that generally 

does not maintain bank accounts. Law 

enforcement, FinCEN, and other federal 

regulators have repeatedly stressed the 

need to prevent transactions that 

typically flow through these businesses 

from going underground, which would 

diminish transparency with respect to 

these transactions. Because MSBs 


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22130 Federal Register / Vol. 74, No. 90 / Tuesday, May 12, 2009 / Proposed Rules 

2Coopers and Lybrand LLP, ‘‘Non-Bank Financial 

Institutions: A Study of Five Sectors’’ (Feb. 28, 

1997). 

3 KPMG 2005 Money Services Business Industry 

Survey Study (Sept. 26, 2005), available on 

FinCEN’s Web site, http://www.fincen.gov. 

4See Section IV, below. 

5 31 U.S.C. 5311. 

6See Treasury Order 180–01 (Sept. 26, 2002). 

7 31 U.S.C. 5312(a)(2)(J), (K), (R), (V), and (Y). 

8See 31 CFR 103.125. 

9See 31 CFR 103.22. 

10See 31 CFR 103.20. Check cashers and 

transactions solely involving the issuance, sale or 

redemption of stored value are not covered by the 

SAR requirement. See 31 CFR § 103.20(a)(1), (5). 

11See 31 CFR 103.29. 

12See 31 CFR 103.37. 

13See 31 CFR 103.33(f)–(g). 

14See 31 CFR 103.41. 

15 31 CFR 103.56(b)(8). 

16These public meetings were held in Vienna, 

Virginia, on July 22, 1997; New York, New York, 

on July 28, 1997; San Jose, California, on August 1, 

1997; Chicago, Illinois, on August 15, 1997; and 

Vienna, Virginia, on September 3, 1997. The 

discussions focused on how businesses operate and 

how best to regulate them. Discussion regarding 

whether a definitional threshold was warranted and 

if so, how to arrive at one, provided invaluable 

information to FinCEN. 

17 Definitions Relating to, and Registration of, 

Money Services Businesses, 64 FR 45438 (Aug. 20, 

1999) (‘‘1999 Rulemaking’’). 

18FinCEN conducted the meeting through the 

Non-bank Financial Institutions and the 

Examination Subcommittees of the Bank Secrecy 

Act Advisory Group (‘‘BSAAG’’). BSAAG is an 

advisory group created by Congress consisting of 

industry, regulatory, and law enforcement 

participants for the purpose of engaging in open 

dialogue related to the protection of the U.S. 

financial system from money laundering, terrorist 

financing, and other abuses. BSAAG uses a variety 

of permanent and ad hoc subcommittees to identify 

and analyze relevant issues. 

19Provision of Banking Services to Money 

Services Businesses, 71 FR 12308 (March 10, 2006). 

20These comments are available in files dated 

March 10 and May 15, 2006 at http:// 

www.fincen.gov/statutes_regs/frn/ 

reg_proposal_comments.html. 

provide needed financial services to 

numerous communities throughout the 

country and often facilitate the 

transmission of money to those in 

foreign countries, they are vital to both 

domestic and foreign economies. 

In drafting this rulemaking, FinCEN 

reviewed past industry survey studies 

that were conducted to gain perspective 

on the size, revenue, geographic 

distribution, and other characteristics of 

the various service sectors of MSBs. The 

industry has grown in size and 

operational complexity since FinCEN 

first proposed MSB regulations in 1997. 

A 1997 study estimated that the MSB 

industry population (both principals 

and agents) was around 158,000, and 

provided approximately $200 billion 

annually in financial services.2 The 

study estimated that fewer than ten 

large businesses accounted for the bulk 

of MSB activity (involving money 

transmissions, money orders, traveler’s 

checks, and check cashing and currency 

exchange) conducted within the United 

States. The financial services were 

provided primarily through systems of 

agents. 

In 2005, FinCEN again studied the 

MSB population and services provided 

and determined that the industry had 

grown to approximately $284 to $305 

billion annually in financial services.3

The increase reflected a growth rate for 

the MSB industry of about 50% over the 

previous decade. The study found that 

approximately 50% of all MSBs offered 

both check cashing and money order 

services. 

This rulemaking proposes to amend 

31 CFR 103.11(uu) by revising the MSB 

definitions. In addition to discussing 

our rationale for such revisions, we have 

asked questions of the general public to 

assist us with understanding the impact 

that the proposed changes may have on 

the affected businesses, as well as on 

law enforcement and regulatory efforts. 

These questions are asked both 

throughout the document and again in 

section IV with additional specific 

requests for comments. 

In drafting this rulemaking, we have 

proposed folding all of stored value into 

one category so that issuers of stored 

value and sellers or redeemers of stored 

value are in the same category, without 

making any substantive changes to the 

definition of this category. We have 

determined that a separate, 

comprehensive proposal is warranted 

for stored value and will make such a 

proposal at a later date. To facilitate this 

process, we urge interested parties to 

respond to the requests for comments 

about stored value that we have 

included within this rulemaking.4

II. Background 

A. Statutory and Regulatory Background 

The BSA, Titles I and II of Public Law 

91–508, as amended, codified at 12 

U.S.C. 1829b, 18 U.S.C. 1951–1959, and 

31 U.S.C. 5311–5314 and 5316–5332, 

authorizes the Secretary of the Treasury 

(the ‘‘Secretary’’) to issue regulations 

requiring financial institutions to keep 

records and file reports that the 

Secretary determines ‘‘have a high 

degree of usefulness in criminal, tax, or 

regulatory investigations or proceedings, 

or in the conduct of intelligence or 

counterintelligence matters, including 

analysis, to protect against international 

terrorism.’’ 5 The Secretary’s authority to 

administer the BSA and its 

implementing regulations has been 

delegated to the Director of FinCEN.6

FinCEN has interpreted the BSA 

through implementing regulations 

(‘‘BSA regulations’’ or ‘‘BSA rules’’) that 

appear at 31 CFR Part 103. 

The BSA defines the term ‘‘financial 

institution’’ to include, in part: A 

currency exchange; an issuer, redeemer, 

or casher of travelers’ checks, checks, 

money orders, or similar instruments; 

the United States Postal Service; a 

person involved in the transmission of 

funds; and any business or agency 

which engages in any activity which is 

determined by regulation to be an 

activity which is similar to, related to, 

or a substitute for these activities.7

The Director of FinCEN, through 

delegated authority, has implemented 

regulations under the BSA interpreting 

the recordkeeping, reporting, and other 

requirements of the BSA. Like other 

financial institutions under the BSA, 

MSBs must implement anti-money 

laundering (AML) programs, make 

certain reports to FinCEN, and maintain 

certain records to facilitate financial 

transparency. MSBs are required to: (1) 

Establish written AML programs that are 

reasonably designed to prevent the MSB 

from being used to facilitate money 

laundering and the financing of terrorist 

activities; 8 (2) file Currency Transaction 

Reports (CTRs) 9 and Suspicious 

Activity Reports (SARs) 10 and (3) 

maintain certain records, including 

those relating to the purchase of certain 

monetary instruments with currency; 11

relating to transactions by currency 

dealers or exchangers; 12 and relating to 

certain transmittals of funds.13 Most 

types of MSBs are required to register 

with FinCEN 14 and all are subject to 

examination for BSA compliance by the 

Internal Revenue Service (IRS).15

B. Past Public MSB Meetings 

In 1997, FinCEN held public meetings 

to give members of the financial services 

industry an opportunity to discuss the 

proposed MSB regulations and any 

impact they might have on operations.16

In drafting the final rules defining the 

MSB categories,17 FinCEN relied on the 

contributions from these public forums. 

On March 8, 2005, FinCEN held a 

fact-finding meeting in Washington, DC 

on the provision of banking services to 

MSBs.18 MSBs recounted their 

challenges in obtaining and maintaining 

banking services due to the perception 

that their businesses posed a high risk 

of money laundering and terrorist 

financing. In 2006, FinCEN issued an 

advance notice of proposed rulemaking 

seeking input on how to address these 

challenges,19 and received 142 

comments in response, which have 

informed this rulemaking.20


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21 1999 Rulemaking, supra note 17, at 45438. 

22See Definition and Registration of Money 

Services Businesses, 62 FR 27890, 27890 (May 21, 

1997) (‘‘1997 Proposal’’). 

23FinCEN has expressed its view that not all 

MSBs pose the same level of risk and will not 

require the same level of due diligence. See, e.g., 

FFIEC Manual (2007) at 277 (Non-bank Financial 

Institutions—Overview—Providing Banking 

Services to Money Services Businesses) and 

‘‘Interagency Interpretive Guidance on Providing 

Banking Services to Money Services Businesses 

Operating in the United States’’ (April 26, 2005) 

(‘‘[t]he range of products and services offered, and 

the customer bases served by money services 

businesses, are equally diverse * * * while they all 

fall under the definition of a money services 

business, the types of businesses are quite 

distinct’’). We also have communicated this 

message at compliance schools for banking 

examiners, on public panels, and at other speaking 

engagements. 

24See 31 U.S.C. 5330(d)(1). 

25The Internal Revenue Service examines these 

businesses only for compliance with the BSA. It is 

not a ‘‘functional’’ regulator of MSBs. 

26The 1997 open forums on MSBs included 

discussions on whether to create definitions based 

on the type of institution involved or instead based 

on the activity or function performed by an entity 

regardless of the type of institution. Ultimately, 

FinCEN determined that changes in the industry 

over time may make relying on the type of 

institution problematic while creating definitions 

based on the underlying activity would enable the 

regulations to account for new technologies, 

services, and products. 

27 1999 Rulemaking, 64 FR 45438 (Aug. 20, 1999). 

28This statistic comes from a review of requests 

for guidance from our Regulatory Helpline. 

29FinCEN Ruling 2002–2 (Definition of Check 

Casher (Payday Lenders)), (Feb. 5, 2002). 

30FinCEN Guidance 2006–G005 (Frequently 

Asked Questions—Businesses Cashing Their Own 

Checks) (March 31, 2006). 

31 Id. 

32 Id. 

33FinCEN Ruling 2007–R001 (Whether a Publicly 

Traded Company that Cashes its own Checks Issued 

to Loan Customers is a Money Services Business) 

(Jan. 8, 2008). 

C. The Term ‘‘Money Services 

Businesses’’ 

In 1999, FinCEN added ‘‘money 

services business’’ to the definition of 

‘‘financial institution’’ in the BSA 

regulation.21 The term MSB was created 

to: (1) clarify statutory language in a 

way that effectively captured industry 

operations and (2) refine a subset of 

non-bank financial institutions that are 

not subject to federal functional 

regulation at the federal level. We 

substituted the term ‘‘money services 

business’’ for the statutory term ‘‘money 

transmitting business’’ to avoid using a 

general term that could too easily be 

confused with ‘‘money transmitter,’’ 

which was being proposed as a specific 

category of MSB.22

Over the years, MSBs have asserted 

that using a single term to identify 

actors engaging in particular diverse 

activities is inadequate for assessing 

money laundering and terrorist 

financing risks. Furthermore, industry 

has argued that the use of the term MSB 

has adversely affected their access to 

banking services. For these reasons, 

industry has asked us to eliminate the 

term ‘‘money services business’’ to 

describe this particular group of nonbank financial institutions and describe 

the businesses as ‘‘non-bank financial 

institutions.’’ 

It would be ineffective and confusing 

to use the broader term ‘‘non-bank 

financial institution’’ to describe the 

subset of ‘‘MSBs.’’ Even in the late 

1990s, the term ‘‘non-bank financial 

institutions’’ encompassed brokerdealers in securities and casinos, as well 

as those businesses currently 

incorporated within the term MSB. The 

term is even less helpful now, as there 

are more types of non-bank financial 

institutions subject to BSA regulations, 

such as mutual funds, insurance 

companies, credit card system 

operators, dealers in precious metals, 

stones, and jewels, and futures 

commission merchants. 

Despite the diverse risks posed across 

and even within MSB industries,23

MSBs share certain qualities. In 

particular, these businesses offer 

financial services that Congress grouped 

together in the BSA.24 MSBs provide a 

range of financial services to many 

people without bank accounts similar to 

those services offered by banks to their 

customers. FinCEN therefore sees the 

continuing utility in the general term 

‘‘MSB’’ as a concise way to refer to 

certain non-bank financial institutions 

that are without a federal functional 

regulator; 25 that offer specific services 

(often in combination), and that have 

similar BSA requirements. 

D. Genesis of the Proposed Revisions 

In June 2007, FinCEN adopted its BSA 

efficiency and effectiveness initiative, 

which includes as one of its initial 

provisions, clarifying the scope of the 

MSB definitions. The initiative makes it 

a priority for FinCEN to review, and 

revise if appropriate, the MSB 

definitions in light of the money 

laundering risks posed. 

We believe the current MSB 

regulatory definitions should be revised 

to describe with greater particularity the 

types of activity that would subject a 

business to the BSA rules.26 For 

example, under the current regulations, 

to be deemed a check casher, a business 

only has to cash checks in amounts 

greater than the definitional threshold. 

The regulatory language does not 

provide insight, for instance, into the 

types of instruments a check casher may 

accept and does not detail what may be 

redeemed and whether it could be a 

combination of items (e.g., currency, 

another instrument, or a combination of 

instruments). The intent in clarifying 

the definitions is to resolve such 

ambiguities in the regulations so that 

the rules can be applied with more 

certainty by potential MSBs, the banks 

who maintain accounts for them, law 

enforcement, and regulators. The 

rationale for our proposed changes is 

provided in the section-by-section 

analysis below. 

E. Need for Review and Updates 

Nearly ten years have passed since 

FinCEN issued the BSA regulations 

defining the categories of MSBs.27 Since 

that time, FinCEN has received 

numerous requests to clarify the 

application of the MSB regulations to 

particular businesses. Over one-third of 

these requests came from persons 

inquiring whether or not they were an 

MSB.28 Some of these requests for 

guidance reflect significant 

technological advances such as the 

online provision of financial services, as 

well as new financial products 

developed after the publication of our 

current rules such as stored value 

products and electronic currency. All of 

these developments have changed the 

nature of the MSB industry. Where 

possible, we have provided guidance to 

the industry on how to interpret and 

apply the regulations. 

With respect to check cashers and 

money transmitters in particular, we 

have developed a large body of guidance 

in the years since the issuance of the 

final MSB regulations. For check 

cashers, FinCEN’s guidance and rulings 

provide several examples of activities 

that do not meet the regulatory 

definition of a check casher, though 

they may involve check activity in 

amounts exceeding the regulatory 

threshold. Examples of businesses that 

are not check cashers include: (1) A 

payday lender that holds checks as 

collateral for repayment of the loan by 

the customer and does not deposit or 

negotiate the checks; 29 (2) a business 

cashing its employees’ payroll checks; 30

(3) a business cashing its own checks 

issued as payment for goods or services 

provided by non-employees; 31 (4) a tax 

preparer cashing its own refund 

anticipation loan checks for taxpayers 

for whom it has prepared tax returns; 32

and (5) a consumer finance company 

cashing its own loan checks to 

borrowers.33

Similarly, over the years, FinCEN has 

issued guidance and administrative 

rulings that provide examples of 


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34FinCEN Ruling 2003–8 (Definition of Money 

Transmitter (Merchant Payment Processor)) (Nov. 

19, 2003). 

35FinCEN Ruling 2004–4 (Definition of Money 

Services Businesses (Debt Management Company)) 

(Nov. 24, 2004). 

36FinCEN Ruling 2008–R005 (Whether Certain 

Reloadable Card Operations are Money Services 

Businesses) (March 10, 2008) (Merchants and ATMs 

associated with a network of banks were not 

deemed money transmitters). 

37FinCEN Ruling 2008–R006 (Whether an 

Authorized Agent for the Receipt of Utility 

Payments is a Money Transmitter) (May 21, 2008). 

38See 1999 Rulemaking, 64 FR 45439. 

39 Id. 

40 31 CFR 103.11(uu) (emphasis added). 

41 Id. 

42See 1999 Rulemaking, 64 FR at 45446 (the 

threshold attempts to eliminate treating certain 

businesses as MSBs, like grocery stores and hotels, 

which cash checks and exchange currency as an 

accommodation to customers otherwise buying 

goods and services). 

43The final rule also indicated that many MSB 

transactions regularly occur in amounts greater than 

activities that do not meet the regulatory 

definition of a money transmitter, even 

though entities engaged in such 

activities may be involved in accepting 

and transmitting funds, such as: (1) 

Payment processing businesses that 

only provide merchants with a portal to 

financial institutions with access to the 

ACH system for the receipt of payments 

for goods and services already 

provided;34 (2) debt management 

companies, with respect to their 

submission of payments to creditors on 

behalf of debtors in conjunction with a 

debt management plan;35 (3) merchants 

and ATMs associated with a network of 

banks that accept and transmit funds 

that will become stored value used 

through the network, but that do so only 

as a conduit between individual banks 

and their customers;36 and (4) 

businesses that only accept payments on 

behalf of the utilities with which they 

have contracted, and that decline to 

accept and transmit funds for any other 

purpose.37

Given the nature and scope of these 

important interpretative rulings, we 

think it is appropriate to update, 

streamline, and clarify the MSB 

regulations by incorporating these 

interpretations into the proposed 

regulatory revisions and extending them 

where appropriate. The proposed 

regulations also reflect proposed policy 

changes, on which we also seek 

comment. 

III. Section-by-Section Analysis 

Pursuant to FinCEN’s authority to 

interpret the provisions of 31 U.S.C. 

5312, this document proposes to amend 

31 CFR Part 103, primarily by revising 

the definitions of ‘‘money services 

business.’’ These proposed changes 

would affect multiple categories of 

MSBs by: (1) Removing the ‘‘doing 

business’’ language in the definition of 

MSB merely for purposes of removing 

unclear language without broadening 

the application of the regulation beyond 

its present scope and (2) revising the 

general language to ensure that activity 

within the United States that does not 

involve the physical presence in the 

United States of an MSB’s agent, agency, 

branch or office is directly regulated. 

The proposed changes are more fully 

discussed below. 

A. Meaning of the Term ‘‘Money 

Services Business’’ 

In issuing the current MSB 

regulations in 1999, FinCEN was 

responding to a growing need to apply 

effective BSA regulation to a relatively 

little known or little understood part of 

the financial sector in the United 

States.38 FinCEN’s regulations 

established broad definitions for each 

enumerated MSB activity. This had the 

effect of capturing national and 

multinational MSB operations as well as 

the small enterprises that competed 

with them. It also captured businesses 

that exclusively provided MSB services 

as well as businesses that provided both 

financial services and unrelated 

products or services.39

Since the issuance of these 

regulations, FinCEN has continued to 

seek input on defining the categories of 

MSBs appropriately and establishing 

appropriate dollar thresholds for 

activity with the goal of covering those 

businesses that are significantly engaged 

in providing products and services that 

are legitimate subjects of regulatory 

interest. FinCEN is now in a position to 

tailor the 1999 definition in a number of 

ways. 

Doing Business 

The current regulatory definition of 

MSB includes ‘‘[e]ach agent, agency, 

branch, or office within the United 

States of any person doing business, 

whether or not on a regular basis or as 

an organized business concern, in one 

or more of the capacities listed in 

paragraphs (uu)(1) through (uu)(6) of 

this section.’’ 40 Banks and persons 

registered with, and regulated or 

examined by, the Securities and 

Exchange Commission or the 

Commodity Futures Trading 

Commission have been excluded from 

the MSB definitions.41

Whether a person is doing business as 

an MSB depends on all of the facts and 

circumstances. We use the term ‘‘doing 

business’’ to mean the activity in which 

the person is engaged, rather than any 

status that the entity has either taken on 

itself or been assigned, such as a 

business licensed by a state. In this 

proposed rulemaking, FinCEN 

continues to regulate an MSB by its 

activity and the context in which the 

activity occurs and not simply its status. 

Whether a person is a business in any 

formal sense should not be 

determinative of whether it is subject to 

the MSB definitions, absent statutory 

requirements to the contrary. 

To avoid confusion that might result 

from the focus on the status of an entity 

and not its activity and the context in 

which the activity occurs, we have 

revised the language in the MSB 

definition in section 103.11(uu) by 

deleting the ‘‘doing business’’ language 

and replacing it with ‘‘engaged in 

activities * * *’’ ‘‘Doing business’’ had 

caused uncertainty which we expect 

will be alleviated with this change. By 

removing the phrase ‘‘doing business,’’ 

however, we do not intend to broaden 

the application of the regulation beyond 

its present scope. To the extent that a 

person engages in one or more of the 

enumerated activities listed in the 

definition, it is an MSB; to the extent 

that a person does not engage in such 

activities, it is not. 

Dollar Threshold 

The regulation currently includes an 

activity threshold of $1,000 for any 

person in any one day. This threshold 

applies to all MSB categories, except 

money transmitters which do not have 

any activity threshold, and was 

established to exclude certain activities 

under that dollar amount from the BSA 

requirements.42

The issue of a dollar threshold was 

discussed at FinCEN’s publicly-held 

meetings in 1997 with the industry to 

vet issues arising from the originally 

proposed rules. During the meetings, 

various methods of arriving at a dollar 

threshold were discussed. Certain 

members of the industry proposed a 

threshold based on total gross fee 

income. FinCEN did not favor that 

approach because it allowed for 

potential manipulation on the part of a 

business seeking to avoid the 

registration requirement by not 

collecting a fee and obtaining payment 

for the service in some other way. Some 

participants also recommended tying 

the threshold to an economic indicator, 

like the minimum for social security 

payments or the federal minimum wage, 

which was ultimately rejected. In the 

final rule, FinCEN doubled the 

originally proposed threshold of $500 in 

part based on input received from the 

industry.43


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the originally proposed definitional threshold of 

$500. See 1999 Rulemaking, 64 FR at 45446. 

44See FinCEN Ruling 2004–1 (March 29, 2004). 

Guidance (Definition of Money Services Business) 

(Foreign-Located Currency Exchanger With U.S. 

Bank Account) (A foreign-located currency 

exchanger whose only presence in the U.S. was a 

bank account was not deemed an MSB when the 

currency exchange transactions occurred solely in 

a foreign country for foreign-located customers and 

the use of the U.S. bank account was limited to 

issuing and clearing dollar-denominated monetary 

instruments.) 

45See Section II.A of this rulemaking above for 

MSB compliance obligations. 

46See 1999 Rulemaking, 64 FR at 45441 (‘‘A 

money services business is not required to keep 

records required by section § 103.41 in a centralized 

location so long as the records are maintained in 

the United States’’). 

47 31 CFR 103.20(d). See also FinCEN Form 107 

(Registration of Money Services Business) (Jan. 

2005), which allows for the registration of a foreign 

located MSB in Part III. 

48 31 CFR 103.56–103.57. 

49The practical issues that may arise in enforcing 

these requirements are distinct from the legal issues 

as to whether FinCEN has the authority to impose 

these requirements on foreign-located MSBs, and 

whether federal courts have the authority to impose 

sanctions for the failure of a foreign-located MSB 

to comply with these requirements. MSB activity 

wholly or substantially within the United States is 

an economic activity substantially affecting 

interstate commerce, and it is therefore clearly 

amenable to federal regulation. See United States v. 

Morrison, 529 U.S. 598, 609–610, 120 S.Ct. 1740, 

1749–1750 (2000). As noted, the BSA authorizes 

FinCEN to regulate action within the United States 

without reference to the actor’s physical presence 

in the United States. See 31 U.S.C. § 5312(b)(1). 

Finally, the nature of MSB activity is such that a 

Continued 

Although FinCEN does not propose 

amending the current threshold in this 

rulemaking, we are considering the need 

for a separate rulemaking to make 

possible adjustments to the threshold. A 

lower threshold may increase the 

amount of information available to law 

enforcement by expanding the scope of 

entities subject to BSA requirements, 

but would also add additional entities 

that conduct incidental and low-value 

MSB activities in which the benefits of 

regulation many not outweigh the costs. 

Moreover, the effect on the clients 

whom these MSBs serve would need to 

be carefully studied. Conversely, a 

higher threshold may remove from the 

scope of the BSA entities that conduct 

incidental and low-value MSB activities 

in which the benefits of regulation many 

not outweigh the costs. 

Questions for Comment 

• We seek information on the average 

daily transaction amount for the 

different MSB services offered: check 

cashing; money orders; money 

transmission; foreign exchange; stored 

value; and traveler’s checks. 

• We specifically seek comment from 

law enforcement on how adjusting the 

threshold higher or lower would impact 

their investigations and prosecutions. 

• We specifically seek comment from 

community groups on how adjusting the 

threshold higher or lower would impact 

the clients who utilize MSB firms. 

Foreign-Located MSBs 

The BSA authorizes us to define a 

domestic financial institution without 

reference to its physical presence in the 

United States. 31 U.S.C. 5312(b)(1) 

states that the term ‘‘domestic financial 

institution’’ applies to an action in the 

United States, not to the physical 

location of the financial agency or 

institution taking the action. Thus, it is 

within FinCEN’s authority to write 

regulations establishing that a foreignlocated business that meets the 

definition of a ‘‘financial institution’’ 

and is conducting business in the 

United States in such a capacity is a 

‘‘domestic financial institution.’’ 

We propose to use this authority to 

amend the regulatory language 

implementing 31 U.S.C. 5312(a)(2)(J), 

(K), and (R)—the provisions on which 

our regulatory definition of MSBs is 

based—to ensure that certain foreignlocated entities engaging in MSB 

activities in the United States are 

subject to the requirements of the BSA. 

We propose to do this by revising our 

MSB definition to state that an entity is 

defined as an MSB by the activity it 

conducts within the United States, and 

not exclusively by the physical presence 

of one or more of the entity’s agents, 

agencies, branches or offices within the 

United States. Accordingly, we propose 

the following text: ‘‘The term ‘‘money 

services business’’ shall include a 

person wherever located engaged in the 

activities that take place wholly or in 

substantial part within the United 

States, in one or more of the capacities 

listed in paragraphs (uu)(1) through 

(uu)(6) of this section, whether or not on 

a regular basis or as an organized 

business concern. This includes but is 

not limited to maintenance of any agent, 

agency, branch, or office within the 

United States.’’ 

Technological advances make it 

increasingly possible for MSBs to offer 

financial services through mechanisms 

other than ‘‘brick and mortar’’ locations. 

Foreign entities can and do offer 

services in the U.S. through other 

instrumentalities, such as the Internet or 

a U.S.-based bank account. Under this 

rulemaking, we seek to ensure that a 

foreign-located entity engaging in 

activities in the United States in one of 

the capacities listed in 31 CFR 

103.11(uu)(1)–(5) is regulated as an 

MSB. We intend to include an entity 

that has a presence in the U.S. by means 

of the internet or similar mechanism, or 

by means of an account with a U.S. 

financial institution and who, for 

instance, is transmitting money through 

the account with U.S. customers or 

recipients. Establishing the degree to 

which the activities of a foreign-located 

MSB occurs within the United States 

depends on all the facts and 

circumstances and whether U.S. 

customers or recipients are involved in 

the activities.44 If a foreign-located 

business is an MSB according to our 

regulations, then it will have the same 

reporting and recordkeeping and other 

requirements as an MSB with a physical 

presence in the United States, with 

respect to its U.S. activities.45

FinCEN seeks to ensure that our AML 

regulations apply equally to all persons 

engaging in activities in the United 

States as MSBs. The U.S. system is not 

fully protected when some MSB 

transactions are covered and others are 

not. We are concerned that mechanisms 

such as the Internet increasingly can be 

used to conduct business within the 

United States from a foreign 

jurisdiction. Use of such mechanisms 

may avoid both our regulations and the 

regulations of the foreign jurisdiction. 

This undermines the legitimate interest 

of the United States in protecting its 

own financial system from abuse. 

Effectively regulating the use of the 

U.S. financial system by all actors, both 

domestic and foreign, is consistent with 

the efforts to establish an international 

community designed to help countries 

and other jurisdictions work in concert 

to protect the inextricably intertwined 

global financial system. These efforts in 

turn help support the efforts of 

individual countries to prevent their 

financial systems from being used as 

conduits for financial crimes. 

We seek comment on the effectiveness 

of the proposed text changes regarding 

the application of the MSB definition to 

certain foreign-located MSBs. In 

addition, we request input on the 

effectiveness of examining and 

enforcing such entities’ compliance 

with BSA requirements, such as the 

requirement that a foreign-located MSB 

maintain registration records in the 

United States that are readily available 

at the request of FinCEN or any 

appropriate law enforcement agency.46

Moreover, we seek comment on the 

implications of requiring a foreignlocated MSB to file SARs with respect 

to transactions taking place within the 

United States and the ability to enforce 

the confidentiality and safe harbor 

provisions of the SAR,47 or to enforce 

the issuance of a civil money penalty 48

on such an MSB.49 We seek comment 


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foreign-located MSB engaging in such activity 

wholly or substantially within the United States is 

making a conscious decision to do so and is aware 

of where the activity is taking place. It should 

therefore be possible to identify a federal judicial 

district with which the foreign-located MSB has 

sufficient minimum contacts that the maintenance 

of a suit against the foreign-located MSB does not 

offend due process or traditional notions of fair play 

and substantial justice, see International Shoe Co. 

v. Washington, 326 U.S. 310, 316, 66 S.Ct. 154, 158 

(1945), either because the suit arises out of the 

MSB’s specific contacts with the district and the 

MSB has purposefully directed its efforts towards 

residents of the district, see Burger King v. 

Rudzewicz, 471 U.S. 462, 476, 105 S.Ct. 2174, 2184 

(1985), or because the MSB has maintained 

continuous and systematic general business 

contacts with the district, see Helicopteros 

Nacionales de Colombia v. Hall, 466 U.S. 408, 416, 

104 S.Ct. 1868, 1873 (1984). It should therefore be 

possible for a federal court to assert personal 

jurisdiction over the MSB on either a general 

jurisdiction or specific jurisdiction theory, 

notwithstanding the MSB’s lack of physical 

presence in the United States. See Gator.com Corp. 

v. L.L. Bean, Inc., 341 F.3d 1072, 1079 (9th Cir. 

2003) (federal district court has personal 

jurisdiction over defendant lacking physical 

presence in district because defendant’s ‘‘highly 

interactive’’ website operates as ‘‘virtual store’’ in 

district), Gorman v. Ameritrade Holding Corp., 293 

F.3d 506, 512–513 (D.C.Cir. 2002) (federal district 

court may have personal jurisdiction over 

defendant lacking physical presence in district 

because residents of district ‘‘use its website to 

engage in electronic transactions with the firm’’); 

see also Glencore Grain Rotterdam B.V. v. Shivnath 

Rai Harnarain Co., 284 F.3d 1114, 1123–1126 (9th 

Cir. 2002) (federal district court may have personal 

jurisdiction over defendant notwithstanding 

defendant’s lack of physical presence in the United 

States), United States v. Swiss American Bank, Ltd., 

274 F.3d 610, 619–625 (1st Cir. 2001) (same). 

50 31 CFR 103.175(h). 

51See 37 FR 6912 (April 5, 1972) (defining 

‘‘financial institution’’ to include ‘‘a person who 

engages as a business in dealing in or exchanging 

currency as, for example, a dealer in foreign 

exchange or a person engaged primarily in the 

cashing of checks’’). 

52See 51 FR 30233, 30234 (Aug. 25, 1986) 

(proposing to define ‘‘financial institution’’ to 

include ‘‘a currency dealer or exchanger, including 

a check casher,’’ with no notice that this change in 

language would constitute a change in the scope of 

the definition); 52 FR 11436, 11439–11440 (Apr. 8, 

1987) (adopting the proposed language changes). 53 31 U.S.C. 5312(a)(2). 

from law enforcement on how such 

changes may impact their work if 

certain foreign businesses were 

regulated as MSBs. Alternatively, we 

solicit comment on whether we should 

expand the definition of ‘‘foreign 

financial institution’’ 50 in the foreign 

correspondent account rule to include 

check cashers and issuers and/or sellers 

of traveler’s checks and/or money 

orders. 

B. Meaning of the Term ‘‘Dealer in 

Foreign Exchange’’ 

Pursuant to FinCEN’s authority to 

interpret the provisions of 31 U.S.C. 

5312, this section proposes to amend 31 

CFR Part 103 by amending the 

regulation implementing 31 U.S.C. 

5312(a)(2)(J), which defines ‘‘a currency 

exchange’’ as a financial institution and 

31 U.S.C. 5312(a)(2)(Y) and (Z), which 

permit the Secretary to designate as a 

financial institution ‘‘any business 

* * * which engages in any activity 

* * * which is similar to, related to, or 

a substitute for any activity in which 

any business [defined to be a financial 

institution] is authorized to engage [or] 

any other business whose cash 

transactions have a high degree of 

usefulness in criminal, tax, or regulatory 

matters.’’ 

Currently, 31 CFR 103.11(uu)(1) 

defines a ‘‘currency dealer or 

exchanger,’’ as ‘‘[a] currency dealer or 

exchanger (other than a person who 

does not exchange currency in an 

amount greater than $1,000 in currency 

or monetary or other instruments for 

any person on any day in one or more 

transactions).’’ The proposed changes 

would revise 31 CFR 103.11(uu)(1) to 

state: ‘‘Dealer in Foreign Exchange. A 

person who accepts the currency, or 

other monetary instruments, funds, or 

other instruments denominated in the 

currency, of one or more countries in 

exchange for the currency, or other 

monetary instruments, funds, or other 

instruments denominated in the 

currency, of one or more other countries 

in an amount greater than $1,000 for any 

other person on any day in one or more 

transactions, whether or not for sameday delivery.’’ 

The term ‘‘dealer in foreign exchange’’ 

can be found in the first BSA 

regulations published in 1972.51

Although the term later was deleted 

from the regulations, the deletion and 

subsequent changes were not intended 

to change the meaning of the category.52

The use of the word ‘‘dealer’’ in the 

proposed definition is intended to 

include both dealers (persons taking one 

side of a position and seeking to earn a 

spread) and brokers (persons bringing 

the buyers and sellers together for a 

commission and who, like a dealer, will 

conduct the transaction on its books and 

through its accounts). ‘‘Dealer’’ is 

intended to include all persons who are 

in the business of engaging in 

transactions involving the current or 

future acquisition or disposition of 

funds denominated in a particular 

currency by exchanging them for funds 

denominated in another currency. 

We have removed the word 

‘‘currency’’ from the name of the 

category to make clear that businesses 

that meet this definition may be 

exchanging not only currency, but also 

other monetary instruments, funds, or 

other instruments that are denominated 

in currency. Although the statute uses 

the language ‘‘currency exchange,’’ 53 we 

believe the language was intended to 

capture the underlying activity involved 

in foreign exchange services and that 

our interpretation is consistent with the 

original intent and current industry 

practices. We seek comment on the 

name change of this category of MSB 

and whether the revision is consistent 

with current practices. 

The insertion of the word ‘‘foreign’’ 

clarifies our consistent position that any 

exchange that occurs in the United 

States could be covered by this 

definition, even if it does not involve 

U.S. dollars. Therefore, if all other 

requirements are fulfilled, and a 

business exchanges currency, other 

monetary instruments, funds or other 

instruments denominated in a currency 

other than U.S. dollars for currency, 

other monetary instruments, funds or 

other instruments denominated either in 

dollars or in another non-U.S. currency, 

we would consider the business a dealer 

in foreign exchange for purposes of our 

rules. Though such a transaction may 

not involve U.S. dollars, the potential 

use of a dealer in foreign exchange to 

launder money, finance terrorism, or 

carry out other illicit activity 

nevertheless would impact the U.S. 

financial system and should be subject 

to regulation. 

This proposed clarification also 

reflects the reality of the international 

nature of money laundering and 

terrorist financing as well as the 

jurisdictional responsibility of the U.S. 

Government to safeguard the financial 

system against those risks. Although 

U.S. dollars are considered an attractive 

medium for money laundering and 

terrorist financing because of the 

worldwide acceptance of the dollar as a 

means of payment, failing to capture 

exchanges within the United States of 

two foreign (non-U.S. dollar) currencies 

or of payment instruments denominated 

in two foreign currencies would leave a 

significant class of potentially 

vulnerable transactions that occur 

within the United States unregulated. 

The proposed definition also clarifies 

that dealing in foreign exchange is not 

limited to the physical exchange of the 

currency of one country for the currency 

of another country. The phrase 

‘‘currency, or other monetary 

instruments, funds, or other 

instruments’’ clarifies which mediums 

of exchange are included under the 

current rule’s phrasing ‘‘currency or 

monetary or other instruments.’’ Our 

current rules and existing body of 

administrative rulings make clear our 

determination that a person that 


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54See FinCEN Ruling 2008–R003 (Whether a 

Person That is Engaged in the Business of Foreign 

Exchange Risk Management is a Currency Dealer or 

Exchanger or Money Transmitter) (May 9, 2008); 

FinCEN Ruling 2008–R002 (Whether a Foreign 

Exchange Dealer is a Currency Dealer or Exchanger 

or Money Transmitter) (May 9, 2008); and 31 CFR 

103.37(b)(6). 

55The addition of ‘‘one or more other countries’’ 

is intended to capture the fact that some foreign 

currencies are used by multiple countries. For 

instance, the Euro is used by the member states of 

the European Union. Accordingly, a dealer in 

foreign exchange may accept funds of one or more 

other countries in exchange for funds of one or 

more other countries. 

56See, e.g., FinCEN Ruling 2003–9, (Definition of 

Money Services Business (Money Transmitter/ 

Currency Dealer or Exchanger)) (October 20, 2003). 

See also, FinCEN Ruling 2004–3, (Definition of 

Money Services Business (Money Transmitter/ 

Currency Dealer or Exchanger)) (Aug, 17, 2004). 

57The terms of a spot, forward, or futures contract 

typically will permit either delivery of the 

underlying foreign currency or settlement of the 

contract in the local currency. As the option of 

delivering the foreign currency always exists, these 

contracts cause the contracting parties to fall under 

the dealer in foreign exchange definition. 58 31 CFR 103.11(uu). 59 7 U.S.C. 1a(13). 

60FinCEN does not interpret ‘‘redeem’’ to include 

payment instruments or mechanisms taken in 

exchange for goods or services. See 1999 

Rulemaking, 64 FR at 45441–45443. 

converts funds denominated in the 

currency of one country to funds 

denominated in the currency of another 

country is a currency dealer or 

exchanger.54 ‘‘Other instruments’’ is 

intended to capture those types of 

payment instruments that do not fall 

precisely into one of the other 

categories, but nevertheless are readily 

recognizable as payment instruments. 

The addition of the phrase ‘‘of one or 

more other countries’’ 55 to the text of 

the definition signals a proposed policy 

clarification, which we believe better 

comports with a more common 

understanding of the business of 

exchanging currency. This phrase 

indicates that a person would no longer 

be considered a dealer in foreign 

exchange when converting currency, 

other monetary instruments, funds or 

other instruments denominated in U.S. 

currency for currency, other monetary 

instruments, funds or other instruments 

also denominated in U.S. currency. 

Similarly, if a person were to accept 

currency, other monetary instruments, 

funds or other instruments denominated 

in a particular foreign currency in 

exchange for currency, other monetary 

instruments, funds or other instruments 

denominated in that same foreign 

currency, that person would not be 

considered an MSB. By way of example, 

a person accepting a traveler’s check 

denominated in Mexican pesos in 

exchange for Mexican pesos in currency 

form would not be considered a dealer 

in foreign exchange. 

The proposed language ‘‘for any other 

person’’ was inserted into the definition 

to explicitly reflect the interpretation 

that a person is not a dealer in foreign 

exchange ‘‘[t]o the extent that [he is] 

exchanging * * * and transporting [his] 

own money on behalf of [him]self.’’ 56

We added the phrase ‘‘whether or not 

for same-day delivery’’ to account for 

the potential time difference between 

the date on which the exchange rate is 

agreed and the date of the exchange. 

Common settlement terms in foreign 

exchange markets include: (1) Same-day 

or cash—where the parties both agree to 

an exchange of currency and conclude 

the exchange on the same working day; 

(2) spot—where the parties agree to an 

exchange of currency on one date, with 

the exchange taking place two working 

days thereafter; (3) cash forward—where 

the parties agree to an exchange of 

currency on one date, with the exchange 

of currency deferred until an agreedupon date in the future; and (4) future— 

where the parties agree to an exchange 

of currency on one date, with settlement 

to occur in an agreed upon delivery 

period in the future typically by 

payment of an amount reflecting the 

change in the foreign currency rate 

between the time of the agreement and 

delivery. A contract for future delivery 

of currency may also be settled with the 

delivery of currency, resulting in the 

exchange of the currencies underlying 

the futures contract. 

The subject definition would apply 

only to exchanges of currency in the 

over-the-counter markets.57 Exchangetraded contracts and the persons who 

intermediate them are regulated by the 

Commodity Futures Trading 

Commission, and therefore are excluded 

from the definition of dealer in foreign 

exchange.58 However, currency is an 

‘‘excluded commodity’’ under the 

Commodity Exchange Act,59 and foreign 

exchange futures may be traded overthe-counter in limited circumstances, 

Consequently, this discrete category of 

futures contracts would fall within this 

definition. 

Requests for Comment 

• Does limiting this definition to only 

dealers in foreign exchange increase the 

risk for money laundering? How? We 

especially seek input from law 

enforcement. 

• Does the definition appropriately 

include the mediums of exchange that 

are used to effect these transactions? 

• Should all categories of MSB be 

required to maintain and retain 

additional records on customers similar 

to those of currency dealers and 

exchangers in 31 CFR § 103.37? 

C. Meaning of the Term ‘‘Check Casher’’ 

Currently, under 31 CFR 

§ 103.11(uu)(2), a check casher is 

defined as ‘‘a person engaged in the 

business of a check casher (other than 

a person who does not cash checks in 

an amount greater than $1,000 in 

currency or monetary or other 

instruments for any person on any day 

in one or more transactions).’’ FinCEN 

is proposing to amend 31 CFR 

103.11(uu)(2) to clarify the meaning of 

the term ‘‘check cashing’’ by splitting 

the existing regulatory definition into 

two subsections—one defining check 

cashing activity and one excluding 

certain activity from that definition. 

The proposed revision would change 

the definition of check cashier to state 

(in part): ‘‘A person who accepts checks 

(as defined in the Uniform Commercial 

Code [U.C.C. Article 3—Negotiable 

Instruments § 3–104]) or monetary 

instruments (as defined in 

§ 103.11(u)(1)(ii), (iii), (iv) and (v)) in 

return for currency or a combination of 

currency and other monetary 

instruments or other instruments in an 

amount greater than $1,000.’’ 

‘‘In return’’ has been added to the 

definition to more accurately describe 

the activity that occurs when cashing a 

check or redeeming a monetary 

instrument. The Uniform Commercial 

Code reference has been added in order 

to provide a clear definition of ‘‘check.’’ 

A reference to the definition of 

‘‘monetary instruments’’ has also been 

provided. ‘‘Other instruments’’ is 

intended to capture those types of 

payment instruments that do not fall 

precisely into one of the other 

categories. The term is meant to capture 

those instruments that are readily 

recognizable as payment instruments— 

an instrument such as a stored value 

card that is treated in commerce as a 

cash equivalent—without capturing 

goods or services that may be purchased 

with a check or monetary instrument. 

For the sake of efficiency, this 

proposed definition would also 

incorporate the redeeming of monetary 

instruments into the definition of check 

casher. Given its similarity to check 

cashing, we believe it is unnecessary to 

treat this activity separately from check 

cashing.60 Accordingly, under this 

proposal, a person engaged in 

redeeming monetary instruments 

(including traveler’s checks and money 

orders) would be a check casher if it 

redeemed checks for currency or a 

combination of currency and monetary 

or other instruments. Our intent in this 

revision is not to capture activity that is 

tantamount to merely exchanging one 


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61We are proposing to define closed-loop stored 

value as stored value that is limited to a defined 

merchant or location (or set of locations), such as 

a specific retailer or retail chain, a college campus, 

or a subway system. Cf., Federal Reserve Board, A 

Summary of the Roundtable Discussion on StoredValue Cards and Other Prepaid Products (Nov. 12, 

2004) available at http://www.federalreserve.gov/ 

paymentsystems/storedvalue/. 

62See FinCEN Guidance FIN–2006–G005 

(Frequently Asked Questions—Businesses Cashing 

Their Own Checks) (March 31, 2006). 

63FinCEN Ruling 2002–2 (Definition of Check 

Casher (Payday Lenders)), (Feb. 5, 2002). 

64FinCEN has never held that a business that 

provides goods or services in exchange for payment 

in the form of money orders or traveler’s checks is 

an MSB. See 1999 Rulemaking, 64 FR at 45447. 

Accordingly, only a business that redeems these 

instruments for currency, or exchanges them for a 

combination of currency and monetary or other 

instruments would be considered an MSB, 

specifically a check casher, under the proposed 

rule. 

monetary instrument for another 

monetary or other instrument and 

accordingly, the proposed rule would 

require currency to be included in the 

redeeming. 

The proposed revision also would 

clarify what activities would not be 

subject to the check casher definition. 

The proposed definition also would 

include the following: ‘‘Whether a 

person is a check casher as described in 

this section is a matter of facts and 

circumstances. The term ‘check casher’ 

shall not include: a person that sells 

closed loop stored value 61 purchased 

with a check, monetary instrument or 

other instruments as referenced above in 

this definition; a person that redeems its 

own checks; 62 or a person that only 

holds a customer’s check as collateral 

for repayment by the customer of a 

loan.63 These businesses are being 

excluded from the definition of check 

casher because of their limited purpose 

and low risk.’’ 

Finally, under the current regulations, 

redeemers of traveler’s checks and 

money orders currently have SAR 

obligations while check cashers do not. 

As we are proposing to combine these 

two current categories of MSB, we seek 

comment on whether FinCEN should 

amend its regulations in a future 

rulemaking to require check cashers to 

report suspicious activity to FinCEN 

under the BSA. Would such a 

requirement be necessary, considering, 

for example, that issuers of traveler’s 

checks and money orders will continue 

to have SAR reporting requirements 

with respect to the instruments that they 

issue? 

Requests for Comment 

• Should there be an exemption or 

other relief for certain types of lower 

risk checks (e.g., federal, state, or local 

government entitlement checks)? 

• Should check cashers be subject to 

a SAR requirement? 

• Should there be any other 

exceptions or limitations on the check 

casher definition? 

• FinCEN invites comment on the 

impact of the proposed changes, if any, 

on current business practices. 

• We specifically seek comment from 

law enforcement on how the proposed 

changes may affect their investigations 

and prosecutions. 

D. Meaning of the Term ‘‘Issuer or Seller 

of Traveler’s Checks or Money Orders’’ 

FinCEN proposes to replace existing 

sections 103.11(uu)(3), ‘‘issuer of 

traveler’s checks, money orders, or 

stored value’’ and 103.11(uu)(4), ‘‘seller 

or redeemer of travelers checks, money 

orders, or stored value’’ with new 

section 103.11(uu)(3), ‘‘issuer or seller 

of traveler’s checks or money orders.’’ 

This proposed new section defines an 

issuer or seller of traveler’s checks or 

money orders as ‘‘[a] person that (i) 

issues traveler’s checks or money orders 

that are sold in an amount greater than 

$1,000 for any person on any day in one 

or more transactions or (ii) sells 

traveler’s checks or money orders in an 

amount greater than $1,000 for any 

person on any day in one or more 

transactions.’’ 

The proposed rule eliminates the 

‘‘redeemer’’ language that is contained 

in our current definitions. Although the 

current rules include those who 

‘‘redeem’’ traveler’s checks and money 

orders, traveler’s checks typically are 

redeemed by their issuers, making a 

separate redemption category redundant 

in such circumstances. Moreover, 

redeeming a traveler’s check or money 

order by a non-issuer is close enough to 

the activity of a check casher that we 

think it can be incorporated into that 

definition with little difficulty.64

Accordingly, we are removing the 

‘‘redeemer’’ provision from the 

proposed rule. 

The proposed rule defines an issuer 

by virtue of the amount at which its 

monetary instruments or travelers 

checks are sold, as opposed to the 

amounts at which they are issued. For 

example, we contemplate the amount of 

the sale including the face value of the 

monetary instruments plus any fees. 

Because money orders are not issued in 

round dollar increments like traveler’s 

checks, but are rather sold either 

directly by the issuer or by its agent to 

a customer who specifies the exact 

amount, a business must look at this 

activity to determine whether its 

transactions exceed the definitional 

threshold per person per day. Similarly, 

although traveler’s checks are usually 

issued in large round amounts (e.g., $20, 

$50, or $100), the definition is linked to 

the aggregate amount at which those 

checks are sold, either directly by the 

issuer or at the agent level, to a 

customer in a single day. 

Requests for Comment 

• Is it appropriate to link the 

definitional threshold for an issuer to 

the value at which the money orders 

and traveler’s checks are sold? 

• In light of the proposed definition 

of a check casher, is the ‘‘redeemer’’ 

provision no longer necessary for 

traveler’s checks and money orders? 

E. Meaning of the Term ‘‘Stored Value’’ 

Under the current rules, FinCEN 

addresses traveler’s checks, money 

orders, and stored value under two 

separate definitions: issuers and sellers 

or redeemers of those products. FinCEN 

proposes to group issuers, sellers, and 

redeemers of stored value together. Our 

intent in the proposed new section is 

not to change the regulatory definitions 

regarding issuers, sellers, or redeemers 

of stored value in this rulemaking but 

simply to group such providers of stored 

value together in one category. 

Accordingly, the new section would be 

revised as follows: ‘‘A person who (1) 

issues stored value (other than a person 

who does not issue such stored value in 

an amount greater than $1,000 to any 

person on any day in one or more 

transactions) or (2) sells or redeems 

stored value (other than a person who 

does not sell or redeem such stored 

value for an amount greater than $1,000 

from any person on any day in one or 

more transactions).’’ 

Although FinCEN does not intend to 

substantively amend the category of 

issuers, sellers, or redeemers of stored 

value in this rulemaking, we are 

reviewing the current status of the 

stored value regulatory regime, and we 

are considering possible future 

revisions. In 1999, FinCEN issued a 

final rulemaking deferring certain 

requirements for the stored value 

industry based on the complexity of the 

industry and the desire to avoid 

unintended consequences with respect 

to an industry then in its infancy. 

Mindful of these continuing issues, 

FinCEN is deferring the proposal of a 

new rulemaking regarding issuers, 

sellers, and redeemers of stored value at 

the present time. FinCEN will continue 

to study the nature and the risks of this 

emerging industry before proposing a 

separate future rulemaking. At this 

point, FinCEN is not proposing to revise 

the definition of stored value found at 

31 CFR 103.11(vv). 


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65 31 U.S.C. 5330 uses the language ‘‘any business 

that provides * * * money transmitting or 

remittance services.’’ 

66This proposed rulemaking largely reserves the 

discussion of stored value for a future date. As 

previously stated, FinCEN intends to issue a 

separate rulemaking proposing a revised definition 

of stored value and revising related regulations. 

67 ‘‘An ‘informal value transfer system’ refers to 

any system, mechanism, or network of people that 

receives money for the purpose of making the funds 

or an equivalent value payable to a third party in 

another geographic location, whether or not in the 

same form.’’ FinCEN Advisory Issue 33 (Informal 

Value Transfer Systems) (March 2003). Hawala is an 

alternative remittance system that operates outside 

of, or parallel to, ‘‘traditional’’ banking or financial 

channels. 

68 Id. 

69 31 CFR 103.11(uu)(i)(b). 

70 31 CFR 103.11(uu)(5)(ii). 

F. Meaning of the Term ‘‘Money 

Transmitter’’ 

We propose to revise the regulation 

interpreting 31 U.S.C. 5312(a)(2)(R), 

which defines funds transmission under 

the BSA as ‘‘a licensed sender of money 

or any other person who engages as a 

business in the transmission of funds, 

including any person who engages as a 

business in an informal money transfer 

system or any network of people who 

engage as a business in facilitating the 

transfer of money domestically or 

internationally outside of the 

conventional financial institutions 

system.’’ 

The implementing regulation, 31 CFR 

103.11(uu)(5), currently defines a 

money transmitter as ‘‘Any person, 

whether or not licensed or required to 

be licensed, who engages as a business 

in accepting currency, or funds 

denominated in currency, and transmits 

the currency or funds, or the value of 

the currency or funds, by any means 

through a financial agency or 

institution, a Federal Reserve Bank or 

other facility of one or more Federal 

Reserve Banks, the Board of Governors 

of the Federal Reserve System, or both, 

or an electronic funds transfer network; 

or any other person engaged as a 

business in the transfer of funds.’’ 

The proposed definition of money 

transmitter would read in part, ‘‘a 

person who provides money 

transmission services. The term ‘‘money 

transmission services’’ means the 

acceptance of currency, funds, or other 

value that substitutes for currency from 

one person AND the transmission of 

such currency, funds, or the value to 

another location or person by any 

means. ‘‘Any means’’ includes through 

a financial agency or institution; a 

Federal Reserve Bank or other facility of 

one or more Federal Reserve Banks, the 

Board of Governors of the Federal 

Reserve System, or both; or an 

electronic funds transfer network.’’ 

The current regulation additionally 

contains a facts and circumstances 

limitation that excludes from the money 

transmitter definition persons that are 

engaged in the business of money 

transmission as an integral part of the 

execution and settlement of the 

transaction. Integral includes entities 

that could not engage in their businesses 

without engaging in the transmission of 

funds. In retrospect, it has been difficult 

for potential money transmitters to 

apply this exemption. We are proposing 

to clarify the limitations to the 

definition by using concise exceptions 

and by removing phrases that have been 

difficult to interpret. 

The proposed definition of money 

transmitter is ‘‘a person who provides 

money transmission services.’’ This 

language is consistent with existing 

language in the BSA.65 The proposed 

definition removes the phrase ‘‘engages 

as a business’’ as FinCEN continues to 

regulate an MSB by its activity and the 

context in which the activity occurs and 

not by its status. The removal of 

‘‘engages as a business’’ is not intended 

to broaden the regulation beyond its 

present scope. 

The proposed definition also removes 

the phrase ‘‘whether or not licensed or 

required to be licensed.’’ While this 

phrase reflects language in 31 U.S.C. 

5312, we find the phrase to be 

unnecessary because it does not add 

substantive value to the meaning of 

money transmitter. 

Consistent with the current definition 

of money transmitter, the proposed 

language defines ‘‘money transmission 

services [as] the acceptance of currency, 

funds, or other value that substitutes for 

currency from one person AND the 

transmission of such currency, funds, or 

the value to another location or person 

by any means.’’ The proposed regulatory 

definition of money transmission 

services includes the phrase ‘‘or other 

value that substitutes for currency’’ to 

state that businesses that accept stored 

value or other currency equivalents as a 

funding source and transmit that value 

are providing money transmission 

services.66

By including the transmission of 

value, the current and proposed 

regulatory definitions of money 

transmitter are worded to include 

informal value transfer systems, 

including hawalas.67 Such activity is 

money transmission, and the providers 

are money transmitters subject to the 

requirements of the BSA.68

The proposed regulatory definition of 

money transmission services also adds 

the phrase ‘‘to another location or 

person.’’ Although this phrase is not in 

the statutory definition of money 

transmitting service, it is implicit in the 

statutory definition’s use of the word 

‘‘transmitting.’’ Transactions involving 

the acceptance of currency from one 

person at one location and the return of 

that currency to that same person at the 

same location would not be considered 

a money transmission service. The 

addition of the phrase ‘‘to another 

location or person,’’ will explicitly 

convey our interpretation. 

The phrase ‘‘any means’’ is defined in 

the old rule to include transmission 

‘‘through a financial agency or 

institution; a Federal Reserve Bank or 

other facility of one or more Federal 

Reserve Banks, the Board of Governors 

of the Federal Reserve System, or both; 

or an electronic funds transfer 

network.’’ We moved the phrase ‘‘any 

means’’ to a different part of the 

definition only to increase reader 

comprehension, and the change in 

placement of the phrase has no 

substantive effect on the meaning of the 

definition. 

The current regulations also include 

in the definition, ‘‘Any other person 

engaged as a business in the transfer of 

funds.’’ 69 This phrase has led to 

confusion making it difficult for a 

person to assure themselves that they do 

not fall under the definition. Therefore, 

we have removed the phrase from the 

proposed definition to minimize 

confusion. As noted above, our 

intention is that hawalas be covered by 

other language in this definition. The 

deletion of this language is not intended 

in any way to lessen the applicability of 

our definition of ‘‘money transmitter’’ to 

hawalas. 

As mentioned above, the current 

regulation provides for facts and 

circumstances, or limitations regarding 

the definition of a money transmitter, 

and states ‘‘whether a person ‘engages as 

a business’ in the activities described in 

paragraph (uu)(5)(i) of this section is a 

matter of facts and circumstances. 

Generally, the acceptance and 

transmission of funds as an integral part 

of the execution and settlement of a 

transaction other than the funds 

transmission itself (for example, in 

connection with a bona fide sale of 

securities or other property), will not 

cause a person to be a money 

transmitter within the meaning of 

paragraph (uu)(5)(i) of this section.’’ 70

The proposed regulation also has a 

facts and circumstances limitation that 

incorporates existing interpretations of 

the current limitation by adding explicit 

language reflecting policy developed 

through administrative ruling letters 


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71FinCEN Ruling 2003–R008 (Definition of 

Money Transmitter) (Nov. 19, 2003). 

72See supra note 63. 

73See FinCEN Ruling 2003–R004 (Definition of 

Money Transmitter/Stored Value (Gift Certificates/ 

Gift Cards)) (Aug. 15, 2003) (FinCEN does not 

currently interpret the definition of stored value to 

include closed system products such as a mall-wide 

gift card program). 

74See 31 U.S.C. 5330(d)(1)(C), 31 CFR 103.11(uu). 

75FinCEN Ruling 2004–R003 (Definition of 

Money Services Business) (Aug. 17, 2004). See also 

FinCEN 2003–R007 (Definition of Money 

Transmitter) (Oct. 28, 2003). 76 Id. In such instance, the armored car is merely 

a conduit or vehicle and has no control over the 

financial transaction. 

77The ‘‘custodial’’ language is intended to replace 

the language from past rulings ‘‘stake in the 

transaction’’ for purposes of clarifying the armored 

car limitation. 

and guidance. The proposed limitation 

language reads, ‘‘whether a person is a 

money transmitter as described in this 

section is a matter of facts and 

circumstances. The term ‘money 

transmitter’ shall not include a person 

that only * * *’’ engages in the 

following activity: 

‘‘Provides the delivery, 

communication, or network access 

services used by a money transmitter to 

support money transmission services. 

* * *’’ We find that institutions that are 

used by money transmitters solely for 

the purpose of providing a medium of 

communication or transportation of 

information between money services 

businesses and their agents, financial 

institutions, or service providers should 

not fall under the definition of money 

transmitter. 

‘‘Acts as a payment processor to 

facilitate the purchase or payment of a 

bill for a good or service through a 

clearance and settlement system by 

agreement with the creditor or seller 

* * *.’’ Although payment processors 

may provide a money transmission 

service, the service is ancillary to their 

primary business of coordinating 

payments either from a debtor to a 

creditor or, if operating at the point-ofsale, from a purchaser to a merchant.71

A payment processor could not provide 

the primary service of coordination 

without providing ancillary money 

transmission services, but because the 

money transmission services are 

ancillary, and because they are generally 

low risk, we think it appropriate for 

entities engaged in this activity to be 

excluded from the definition. Note, 

however, that this limitation only 

applies to transmission services by 

payment processors on behalf of the 

creditor or seller and not the debtor or 

buyer. We believe that a contractual 

agreement for transmission services 

between the creditor or seller and the 

money transmitter is a relatively 

controlled flow of money that poses 

little money laundering risk, provided 

that the funds are transmitted only to 

the creditor or seller with whom the 

payment processor has contracted and 

not to another location or person. 

‘‘Operates a clearance and settlement 

system or otherwise acts as an 

intermediary solely between BSA 

regulated institutions. This includes but 

would not be limited to the Fedwire 

system, electronic funds transfer 

networks, certain registered clearing 

agencies regulated by the SEC, and 

derivatives clearing organizations, or 

other clearinghouse arrangements 

established by a financial agency or 

institution. * * *’’ We view persons 

who solely provide a clearance and 

settlement system or act as 

intermediaries between BSA regulated 

institutions and do not provide other 

types of money transmission services as 

mere instrumentalities that the financial 

institutions use to process their 

transfers. Therefore, these 

instrumentalities should not be 

included in the definition of money 

transmitter. 

‘‘Provides closed loop stored value.’’ 

We also are proposing to exclude a 

person who provides closed loop stored 

value from the definition of money 

transmitter. Generally, a closed loop 

system refers to stored value that is 

limited to a defined merchant or 

location or set of locations.72

We do not want the language of the 

proposed money transmitter definition 

to be so broad as to include a person 

that issues a closed loop stored value 

card, such as most gift cards. For 

example, we do not want a department 

store that sells gift cards that only may 

be used at that department store, or a 

mall operator who sells gift cards that 

may only be used within the confines of 

the mall operator’s locations, to be 

subject to the MSB rules as a money 

transmitter. 

In addition to not being a money 

transmitter under this proposed rule, 

FinCEN previously determined that a 

person solely issuing, selling, or 

redeeming closed loop stored value is 

not an ‘‘issuer, seller or redeemer of 

stored value’’ and is therefore not 

subject to BSA regulation as an MSB 

under that MSB category either.73 The 

fact of this exclusion, however, should 

not be read to imply that all persons 

who provide open loop stored value are 

money transmitters. In part, this is 

because a significant amount of the 

open loop stored value issued within 

the U.S. is issued by or through a 

depository institution, a category of 

financial institution that expressly is 

excluded from the definition of MSB by 

statute and regulation. 74 Further 

discussion of open loop stored value 

will be included in a forthcoming 

rulemaking. 

‘‘Physically transports currency, other 

monetary instruments, other 

commercial paper, or other value that 

substitutes for currency as a person 

engaged in such business from one 

person to the same person at another 

location or to an account belonging to 

the same person at a financial 

institution, provided that the person 

engaged in physical transportation has 

no more than a custodial interest in the 

currency, other monetary instruments, 

other commercial papers, or other value 

at any point during the transportation;’’ 

This limitation encompasses past 

armored car rulings. We previously 

ruled that although armored car services 

may fall within the definition of a 

money transmitter, to the extent that 

they deliver currency on behalf of BSA 

regulated institutions, they should not 

be treated as money transmitters when 

they cannot be viewed as participating, 

or having a stake in the financial 

transaction that they are conducting on 

behalf of the BSA regulated 

institution.75 We additionally 

determined that an armored car is not a 

money transmitter when it moves 

currency on behalf of a private party to 

an account or another location of the 

same party without taking a financial 

stake in the transaction.76

In this proposed exclusion, the person 

engaged in physical transportation 

cannot have more than a custodial 

interest in what is being moved at any 

point during the transportation.77 Thus, 

the limitation would not apply to such 

a person if it deposited currency or 

monetary instruments that it was 

transporting into its own operating 

account at a bank, regardless of the 

identity of the ultimate recipient of the 

funds represented by the currency or 

monetary instruments. The limitation 

would also not apply to such a person 

if it actually purchased a monetary 

instrument, and then transported the 

monetary instrument. We solicit 

comment on whether our use of the 

phrase ‘‘no more than a custodial 

interest’’ adequately encapsulates a 

meaningful distinction between a 

person that merely transports items of 

monetary value on behalf of another and 

a person that takes title or ownership. 

This proposed exclusion would apply 

to transport initiated by any person, not 

only to transport initiated by a BSAregulated institution. Additionally, 

when transport is initiated by a bank, a 

broker-dealer or other SEC-regulated 


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78FinCEN Ruling 2004–R004 (Definition of 

Money Services Business) (Nov. 24, 2004). 

79See 1997 Proposed Rule, 62 FR at 27893. (The 

Department of the Treasury stated that businesses 

that operate systems that permit the transmission of 

stored value are within the statutory definition of 

money transmitting services and specifically within 

the regulatory definition of money transmitter.) See 

also, 1999 Rulemaking, 64 FR at 45446. (FinCEN 

determined not to exclude ‘‘stored value’’ from the 

definition of ‘‘money transmitter’’ but rather treated 

it as a subclass so that it could be excluded from 

the operation of certain substantive rules, in 

particular MSB registration and suspicious activity 

reporting requirements). 

financial institution, or a futures 

commission merchant or other CFTCregulated institution, a transport 

business such as an armored car would 

not be a money transmitter, regardless of 

whether the transport is to another 

location or person. In such 

circumstances, when the transport 

business does not take title or 

ownership or the items do not in any 

manner convert, the transport business 

merely is acting as an extension of the 

bank or the SEC- or CFTC-regulated 

financial institution, all of which are 

exempt from the proposed definition of 

money services business at paragraph 

(uu)(7). We solicit comment on the use 

of ‘‘custodial’’ language to convey that 

title or ownership or items do not 

convert during physical transport like 

armored car services. 

‘‘Accepts and transmits funds only 

integral to the sale of goods or the 

provision of services, other than money 

transmission services, by the person 

who is accepting and transmitting the 

funds.’’ 

Similar to circumstance (B), we view 

persons that sell goods or provide 

services other than money transmission 

services, and only transmit funds as an 

integral part of that sale of goods or 

provision of services, not to be money 

transmitters. For example, brokering the 

sale of securities, commodity contracts, 

or similar instruments is not money 

transmission notwithstanding the fact 

that the person brokering the sale may 

move funds back and forth between the 

buyer and seller to effect the 

transaction. The person who is 

accepting and transmitting the funds 

simply offers a service other than money 

transmission services. Also, this 

limitation would include a debt 

management company that, unlike in 

circumstance (B), contracted with a 

debtor as a medium to provide payment 

to its creditors.78 This circumstance is 

similar to circumstance (B), but uses 

broader language to encompass those 

persons who operate under facts and 

circumstances similar to those stated 

herein. 

Requests for Comments 

• Should intermediaries of money 

transmission services acting between 

two BSA regulated entities be removed 

from the definition of money 

transmitter? 

Related Regulations— 

G. Service of Legal Process 

There currently is no provision within 

31 CFR part 103 that requires foreignlocated MSBs to designate an agent to 

accept service of legal process in the 

United States. In order to enhance the 

ability of U.S. law enforcement and 

regulatory agencies to reach these MSB 

registrants, we are proposing the 

following additional language to 31 CFR 

§ 103.41: ‘‘Each foreign-located person 

engaged in activities in the United 

States as a money services business 

shall designate the name and address of 

a person who resides in the United 

States and is authorized, and has agreed 

to be an agent, to accept service of legal 

process with respect to compliance with 

this part, and shall identify the address 

of the location within the United States 

for records pertaining to (b)(1)(iii) of this 

section.’’ 

IV. Request for Comments 

FinCEN invites comments on all 

aspects of the proposal to revise the 

MSB definitions and related regulations. 

If you are currently an MSB, please 

indicate in your response which MSB 

service(s) you offer and whether you 

offer the services in an agent capacity. 

We specifically invite comment on the 

above-referenced Request for 

Comments, as well as the following: 

Funds—Is there a need to define the 

term ‘‘funds’’ for purposes of the BSA? 

We use ‘‘funds’’ to refer to money held 

in bank accounts and ‘‘value of funds’’ 

to denote something different from 

money actually held in a bank account, 

such as the value reflected on a stored 

value card in a chip-based product. 

MSB Regulations— 

• Aggregating MSB Services. Should 

transactions involving multiple MSB 

services be aggregated for purposes of 

determining whether definitional 

thresholds have been met? 

• Stored Value. FinCEN intends to 

issue a separate rulemaking proposing a 

revised definition of stored value and 

revising related regulations. However, 

we seek your input on stored value 

generally, and specifically on the 

following: 

Æ Definition of stored value: We seek 

input on refining the current definition 

of ‘‘stored value’’ in 31 CFR 103.11(v). 

In doing so, we would like your 

comment on the appropriateness of a 

definition that would be based upon the 

following principles: 

• Definition should be 

technologically neutral and consistent 

with actual use of stored value within 

the economy. 

• Definition should be neutral in 

regards to the type of entity that 

provides/issues the stored value. 

For purposes of this request for 

comment, please provide your 

comments and suggestions on how to 

better define the term ‘‘stored value’’ 

given the following two existing legal 

definitions: 

• Current definition in 31 CFR 103.11 

(vv). ‘‘Funds or monetary value 

represented in digital electronics format 

(whether or not specially encrypted) 

and stored or capable of storage on 

electronic media in such a way as to be 

retrievable and transferable 

electronically.’’ 

• Uniform Money Services Act 

definition of stored value as ‘‘monetary 

value that is evidenced by an electronic 

record’’ where ‘‘record’’ is ‘‘information 

that is inscribed on a tangible medium 

or that is stored in an electronic or other 

medium and is retrievable in 

perceivable form’’ and ‘‘monetary 

value’’ is ‘‘a medium of exchange, 

whether or not redeemable in money’’ 

and ‘‘money’’ is ‘‘a medium of exchange 

that is authorized or adopted by the 

United States or a foreign government. 

The term includes a monetary unit of 

account established by an 

intergovernmental organization or by 

agreement between two or more 

governments.’’ 

• Alternatively, we seek comment on 

this potential definition: ‘‘electronic 

monetary value that is generally 

accepted as a medium of exchange, 

whether or not redeemable for currency 

or funds.’’ 

Æ Treatment of stored value as money 

transmission. Some states already have 

started to include stored value within 

their money transmission laws. We have 

recognized, moreover, that some stored 

value is a subset of our definition of 

money transmitter.79 For purposes of 

this request for comment, we would 

request input on the following: 

• How would treating all forms of 

stored value as a form of money 

transmission impact the needs of 

industry, law enforcement, or 

regulators? 

• Should open loop stored value be 

regulated differently from closed loop? 

If so, how? 

• Should only certain uses or types of 

value transfers involving stored value be 

considered money transmission? If so, 

please describe or explain. 

• If stored value were excluded 

completely from being considered a 


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22140 Federal Register / Vol. 74, No. 90 / Tuesday, May 12, 2009 / Proposed Rules 

80This amendment to 31 CFR 103.11 and 103.41 

makes explicit that certain foreign MSBs that 

conduct operations in the U.S. must register with 

FinCEN as an MSB and will be subject to certain 

BSA recordkeeping and reporting requirements. 

form of money transmission, how would 

that affect the industry, law 

enforcement, or regulators? 

Æ Treatment of stored value players 

and products 

• Should we regulate only issuers of 

stored value or also sellers and 

redeemers as well? Why? How should 

we define them? Should there be a 

threshold for determining whether an 

entity is an issuer, seller, or redeemer of 

stored value? What should the threshold 

be? Should the definitional threshold be 

consistent with the other categories of 

MSBs that are subject to thresholds? 

• Should regulatory requirements 

vary depending on whether the stored 

value product is in bearer form or not? 

Should regulatory requirements vary 

depending on whether the stored value 

product is anonymous versus tied to an 

identifiable account holder? 

• Should memory chip products be 

regulated differently from magnetic 

stripe products? 

• Are the distinctions between open 

and closed loop stored value systems 

still meaningful? FinCEN recognizes 

that modern closed loop stored value 

systems operate internationally. As a 

result, these international closed-loop 

systems may pose additional money 

laundering risks when compared with 

the shopping mall-wide stored value 

systems that we have previously 

determined are not stored value for 

purposes of the BSA rules. 

• What other issues or questions 

should be considered in developing the 

appropriate regulatory framework for 

stored value in light of the actual risks 

of money laundering and terrorist 

financing associated with these 

systems? 

• Foreign-located MSBs 

Æ Should foreign MSB principals 

engaged in MSB activities with U.S. 

persons or residents through U.S. agents 

or through a U.S. bank account, be 

subject to the BSA rules? 

Æ Would adding check-cashers and 

issuers, sellers or redeemers of money 

orders and/or traveler’s checks to 31 

CFR 103.175(h), making them each 

foreign financial institutions that are 

subject to special due diligence by 

banks, broker-dealers, and other 

financial institutions that are obligated 

to comply with our rule implementing 

the correspondent account provisions of 

the USA PATRIOT Act, be a sufficient 

alternative? What would the 

consequences be? 

Æ Would U.S.-based MSBs move 

offshore if foreign MSBs are excluded? 

Æ How should domestic agents of 

foreign-located principals be treated if 

foreign-located principals are excluded 

from registration? 

• Thresholds 

Æ For ease of compliance, should the 

regulatory threshold remain uniform for 

the categories of MSBs that have a 

threshold or should the threshold differ 

among the types of businesses to 

distinguish between the risks of certain 

types of activities? How would this 

affect the operations of businesses 

providing multiple MSB services? 

V. Proposed Location in Chapter X 

As per the Federal Register Notice of 

November 7, 2008, FinCEN is separately 

proposing to remove Part 103 of Chapter 

I of Title 31, Code of Federal 

Regulations, and add Chapter 1000 to 

1099 (Chapter X). As such and if 

finalized, the proposed changes herein 

would be reorganized according to the 

changes proposed in the Notice of 

Proposed Rulemaking (NPRM) for 

Chapter X. The planned reorganization 

will have no substantive affect on the 

proposed regulatory changes herein. 

The proposed regulatory changes of this 

specific NPRM would be renumbered 

according to the proposed Chapter X as 

follows: 

(a) 103.11(h) would be moved to 

1010.100(m). 

(b) 103.11(uu) and its parts would be 

moved to 1010.100(gg) 

(c) 103.41(a)(2) would be moved to 

1022.380(a)(2). Current sections 

103.41(a)(2) and (a)(3), proposed to be 

redesignated, would be renumbered 

therein as 1022.380(a)(3) and (a)(4) 

respectively. 

(d) 103.175(h)(3) would be moved to 

1010.605(f)(3). 

VI. Regulatory Flexibility Act 

Pursuant to the Regulatory Flexibility 

Act (RFA) (5 U.S.C. 601 et seq.), FinCEN 

certifies that these proposed regulation 

revisions will not have a significant 

economic impact on a substantial 

number of small entities. This 

rulemaking imposes no new 

recordkeeping or reporting requirements 

on the MSB. In large part, the proposed 

rule updates the MSB definitions to 

integrate past guidance and rulings into 

the regulatory text. Incorporating 

existing interpretations into the 

regulatory text would have no impact on 

small entities that have been aware of 

these interpretations for years. In 

addition, the proposal combines all of 

stored value into one category, without 

substantively changing the existing 

definition, so that issuers of stored value 

and sellers or redeemers of stored value 

are in the same category. This structural 

proposal would not impact small 

entities. Accordingly, a regulatory 

flexibility analysis is not required. 

VII. Paperwork Reduction Act Notices 

The reduction of the recordkeeping 

requirement contained in this proposed 

rule is being submitted to the Office of 

Management and Budget for review in 

accordance with the Paperwork 

Reduction Act of 1995 (44 U.S.C. 

3507(d)). Since we are making 

requirements clearer for foreign entities, 

there is a potential that certain foreignlocated MSBs conducting business in 

the United States may see an increase in 

the collection and reporting of 

information. However, any such 

potential may likely be offset by the 

corresponding exceptions we have made 

explicit regarding the type of business 

activity that would make a business an 

MSB. Comments on the issue of possible 

foreign reporting and other questions 

should be sent to the Desk Officer for 

the Department of Treasury, Office of 

Information and Regulatory Affairs, 

Office of Management and Budget, 

Paperwork Reduction Project (1506), 

Washington, DC 20503 with a copy to 

the Financial Crimes Enforcement 

Network by mail or comments may also 

be submitted by e-mail to 

oira_submission@omb.eop.gov with a 

copy to regcomments@fincen.gov. 

Please submit comments by one method 

only. Comments are welcome and must 

be received by September 9, 2009. 

This proposed rulemaking does not 

impose any new reporting or 

recordkeeping requirements. Instead, it 

seeks to clarify the scope of the existing 

MSB definitions and related rules. To 

the extent that we have eliminated any 

uncertainty or ambiguities with this 

proposal and to the extent that we 

narrow the scope of businesses subject 

to reporting or recordkeeping 

requirements, we will have reduced 

regulatory obligations.80

Amendment to the Bank Secrecy Act 

Regulations—Definitions and Other 

Regulations Relating to Money Services 

Businesses 

In accordance with requirements of 

the Paperwork Reduction Act of 1995, 

44 U.S.C. § 3506(c)(2)(A), and its 

implementing regulations, 5 CFR 1320, 

the following information concerning 

the collection of information of the 

Amendment to the Bank Secrecy Act 

Regulations—Definitions and Other 

Regulations Relating to Money Services 

Businesses is presented to assist those 

persons wishing to comment on the 

information collection. 


tjames on PRODPC75 with PROPOSALS
Federal Register / Vol. 74, No. 90 / Tuesday, May 12, 2009 / Proposed Rules 22141 

81 Id. 

FinCEN anticipates that this proposed 

rule, if enacted as proposed, would 

result in no additional forms to be filed 

annually.81 This is an estimate, based on 

a projection of the size and volume of 

the industry. 

Description of Affected Financial 

Institutions: Money Services Businesses 

as defined in 31 CFR 103.11(uu). 

Estimate Number of Affected 

Financial Institutions: 42,000. 

Estimate Average Annual Burden 

Hours per Affected Financial 

Institution: The estimated average 

decrease in burden associated with the 

recordkeeping requirements in this 

proposed rule is one hour per affected 

financial institution. 

Estimated Total Annual Burden: 

minus 42,000 hours. FinCEN 

specifically invites comment on the 

accuracy of FinCEN’s estimate of the 

reduction in burden on respondents and 

any other aspects of our PRA estimates. 

Comments are specifically requested 

concerning: 

Whether the proposed collection of 

information is necessary for the proper 

performance of the functions of FinCEN, 

including whether the information will 

have practical utility; 

The accuracy of the estimated burden 

associated with the proposed collection 

of information; 

How the quality, utility, and clarity of 

the information to be collected may be 

enhanced; and 

How the burden of complying with 

the proposed collection of information 

may be minimized, including through 

the application of automated collection 

techniques or other forms of information 

technology. 

VIII. Executive Order 12866 

It has been determined that this 

proposed rule is not a significant 

regulatory action for purposes of 

Executive Order 12866. 

IX. Unfunded Mandates Act of 1995 

Statement 

Section 202 of the Unfunded 

Mandates Reform Act of 1995 

(‘‘Unfunded Mandates Act’’), Public 

Law 104–4 (March 22, 1995), requires 

that an agency prepare a budgetary 

impact statement before promulgating a 

rule that may result in expenditure by 

state, local, and tribal governments, in 

the aggregate, or by the private sector, of 

$100 million or more in any one year. 

If a budgetary impact statement is 

required, section 202 of the Unfunded 

Mandates Act also requires an agency to 

identify and consider a reasonable 

number of regulatory alternatives before 

promulgating a rule. FinCEN has 

determined that it is not required to 

prepare a written statement under 

section 202 and has concluded that on 

balance the proposals in the Notice of 

Proposed Rulemaking provide the most 

cost-effective and least burdensome 

alternative to achieve the objectives of 

the rule. 

List of Subjects in 31 CFR Part 103 

Authority delegations (government 

agencies), Banks and banking, Currency, 

Investigations, Law enforcement, 

Reporting and recordkeeping 

requirements. 

Proposed Amendments to the 

Regulations 

Accordingly, 31 CFR part 103 is 

proposed to be amended as follows: 

PART 103—FINANCIAL 

RECORDKEEPING AND REPORTING 

OF CURRENCY AND FINANCIAL 

TRANSACTIONS 

1. The authority citation for part 10 is 

revised to read as follows: 

Authority: 12 U.S.C. 1829b and 1951–1959; 

31 U.S.C. 5311–5314, 5316–5332; title III, 

secs. 311, 312, 313, 314, 319, 326, 352, Public 

Law 107–56, 115 Stat. 307. 

2. Section 103.11 is amended as 

follows: 

a. Adding paragraph (i); 

b. Revising paragraph (uu) 

introductory text; 

c. Revising paragraph (uu)(1); 

d. Revising paragraph (uu)(2); 

e. Revising paragraph (uu)(3); 

f. Revising paragraph (uu)(4); 

g. Revising paragraph (uu)(5); 

h. Adding paragraph (uu)(7). 

§ 103.11 Meaning of terms. 

* * * * * 

(i) Closed loop stored value. Stored 

value that is limited to a defined 

merchant or location (or set of 

locations), such as a specific retailer or 

retail chain, a college campus, or a 

subway system. 

* * * * * 

(uu) Money services business. The 

term ‘‘money services business’’ shall 

include a person wherever located 

engaged in activities that take place 

wholly or in substantial part within the 

United States, in one or more of the 

capacities listed in paragraphs (uu)(1) 

through (uu)(6) of this section, whether 

or not on a regular basis or as an 

organized business concern. This 

includes but is not limited to 

maintenance of any agent, agency, 

branch, or office within the United 

States. 

(1) Dealer in foreign exchange. A 

person who accepts the currency, or 

other monetary instruments, funds, or 

other instruments denominated in the 

currency, of one or more countries in 

exchange for the currency, or other 

monetary instruments, funds, or other 

instruments denominated in the 

currency, of one or more other countries 

in an amount greater than $1,000 for any 

other person on any day in one or more 

transactions, whether or not for sameday delivery. 

(2) Check casher—(i) In general. A 

person that accepts checks (as defined 

in the Uniform Commercial Code 

[U.C.C. Article 3—Negotiable 

Instruments § 3–104]), or monetary 

instruments (as defined at 

§ 103.11(u)(1)(ii), (iii), (iv), and (v)) in 

return for currency or a combination of 

currency and other monetary 

instruments or other instruments, in an 

amount greater than $1,000. 

(ii) Facts and circumstances; 

Limitations. Whether a person is a check 

casher as described in this section is a 

matter of facts and circumstances. The 

term ‘‘check casher’’ shall not include: 

(A) A person that sells closed loop 

stored value purchased with a check, 

monetary instrument or other 

instruments as referenced above in this 

definition; 

(B) A person that solely accepts 

monetary instruments as payment for 

goods or services other than check 

cashing services; 

(C) A person that engages in check 

cashing for the verified maker of the 

check who is a customer otherwise 

buying goods and services; 

(D) A person that redeems its own 

checks; or 

(E) A person that only holds a 

customer’s check as collateral for 

repayment by the customer of a loan. 

(3) Issuers and sellers of traveler’s 

checks or money orders. A person that: 

(i) Issues traveler’s checks or money 

orders that are sold in an amount greater 

than $1,000 for any person on any day 

in one or more transactions; or 

(ii) Sells traveler’s checks or money 

orders in an amount greater than $1,000 

for any person on any day in one or 

more transactions. 

(4) Issuer, seller, or redeemer of stored 

value. A person that: 

(i) Issues stored value (other than a 

person that does not issue such stored 

value in an amount greater than $1,000 

to any person on any day in one or more 

transactions); or 

(ii) Sells or redeems stored value 

(other than a person that does not sell 

or redeem such stored value for an 

amount greater than $1,000 from any 

person on any day in one or more 

transactions). 


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22142 Federal Register / Vol. 74, No. 90 / Tuesday, May 12, 2009 / Proposed Rules 

(5) Money transmitter—(i) In general. 

A person that provides money 

transmission services. The term ‘‘money 

transmission services’’ means the 

acceptance of currency, funds, or other 

value that substitutes for currency from 

one person AND the transmission of 

such currency, funds, or the value to 

another location or person by any 

means. ‘‘Any means’’ includes through 

a financial agency or institution; a 

Federal Reserve Bank or other facility of 

one or more Federal Reserve Banks, the 

Board of Governors of the Federal 

Reserve System, or both; or an 

electronic funds transfer network. 

(ii) Facts and circumstances; 

Limitations. Whether a person is a 

money transmitter as described in this 

section is a matter of facts and 

circumstances. The term ‘‘money 

transmitter’’ shall not include a person 

that only: 

(A) Provides the delivery, 

communication, or network access 

services used by a money transmitter to 

support money transmission services; 

(B) Acts as a payment processor to 

facilitate the purchase or payment of a 

bill for a good or service through a 

clearance and settlement system by 

agreement with the creditor or seller; 

(C) Operates a clearance and 

settlement system or otherwise acts as 

an intermediary solely between BSA 

regulated institutions. This includes but 

would not be limited to the Fedwire 

system, electronic funds transfer 

networks, certain registered clearing 

agencies regulated by the SEC, and 

derivatives clearing organizations, or 

other clearinghouse arrangements 

established by a financial agency or 

institution; 

(D) Provides closed loop stored value; 

(E) Physically transports currency, 

other monetary instruments, other 

commercial paper, or other value that 

substitutes for currency as a person 

engaged in such business from one 

person to the same person at another 

location or to an account belonging to 

the same person at a financial 

institution, provided that the person 

engaged in physical transportation has 

no more than a custodial interest in the 

currency, other monetary instruments, 

other commercial papers, or other value 

at any point during the transportation; 

or 

(F) Accepts and transmits funds only 

integral to the sale of goods or the 

provision of services, other than money 

transmission services, by the person 

who is accepting and transmitting the 

funds. 

* * * * * 

(7) Limitation. For the purposes of 

this section, the term ‘‘money services 

business’’ shall not include: 

(i) A bank; 

(ii) A person registered with, and 

functionally regulated or examined by, 

the Securities and Exchange 

Commission or the Commodity Futures 

Trading Commission. 

* * * * * 

3. Section 103.41 is amended by 

redesignating paragraphs (a)(2) and 

(a)(3) as paragraphs (a)(3) and (a)(4) 

respectively, and adding new paragraph 

(a)(2) to read as follows: 

§ 103.41 Registration of money services 

businesses. 

(a) * * * 

(2) Foreign-located money services 

business. Each foreign-located person 

engaged in activities in the United 

States as a money services business 

shall designate the name and address of 

a person who resides in the United 

States and is authorized, and has agreed 

to be an agent to accept service of legal 

process with respect to compliance with 

this part and shall identify the address 

of the location within the United States 

for records pertaining to paragraph 

(b)(1)(iii) of this section. 

* * * * * 

Dated: May 5, 2009. 

James H. Freis, Jr., 

Director, Financial Crimes Enforcement 

Network. 

[FR Doc. E9–10864 Filed 5–11–09; 8:45 am] 

BILLING CODE 4810–02–P 

DEPARTMENT OF HOMELAND 

SECURITY 

Coast Guard 

33 CFR Part 100 

[Docket No. USCG–2009–0252] 

RIN 1625–AA08 

Special Local Regulation for Marine 

Event; Temporary Change of Dates for 

Recurring Marine Event in the Fifth 

Coast Guard District 

AGENCY: Coast Guard, DHS. 

ACTION: Notice of proposed rulemaking. 

SUMMARY: The Coast Guard proposes to 

temporarily change the enforcement 

period of special local regulations for a 

recurring marine event in the Fifth 

Coast Guard District. These regulations 

apply to only one recurring marine 

event that conducts ‘‘workboat races’’. 

Special local regulations are necessary 

to provide for the safety of life on 

navigable waters during the event. This 

action is intended to restrict vessel 

traffic in a portion of the York River, 

VA, during the event. 

DATES: Comments and related material 

must be received by the Coast Guard on 

or before June 11, 2009. 

ADDRESSES: You may submit comments 

identified by docket number USCG– 

2009–0252 using any one of the 

following methods: 

(1) Federal eRulemaking Portal: 

http://www.regulations.gov. 

(2) Fax: 202–493–2251. 

(3) Mail: Docket Management Facility 

(M–30), U.S. Department of 

Transportation, West Building Ground 

Floor, Room W12–140, 1200 New Jersey 

Avenue, SE., Washington, DC 20590– 

0001. 

(4) Hand delivery: Same as mail 

address above, between 9 a.m. and 5 

p.m., Monday through Friday, except 

Federal holidays. The telephone number 

is 202–366–9329. 

To avoid duplication, please use only 

one of these four methods. See the 

‘‘Public Participation and Request for 

Comments’’ portion of the 

SUPPLEMENTARY INFORMATION section 

below for instructions on submitting 

comments. 

FOR FURTHER INFORMATION CONTACT: If 

you have questions on this proposed 

rule, call Dennis Sens, Project Manager, 

Fifth Coast Guard District, Prevention 

Division, at 757–398–6204 or e-mail at 

Dennis.M.Sens@uscg.mil. If you have 

questions on viewing or submitting 

material to the docket, call Renee V. 

Wright, Program Manager, Docket 

Operations, telephone 202–366–9826. 

SUPPLEMENTARY INFORMATION: 

Public Participation and Request for 

Comments 

We encourage you to participate in 

this rulemaking by submitting 

comments and related materials. All 

comments received will be posted 

without change to http:// 

www.regulations.gov and will include 

any personal information you have 

provided. 

Submitting Comments 

If you submit a comment, please 

include the docket number for this 

rulemaking (USCG–2009–0252), 

indicate the specific section of this 

document to which each comment 

applies, and provide a reason for each 

suggestion or recommendation. You 

may submit your comments and 

material online (via http:// 

www.regulations.gov) or by fax, mail, or 

hand delivery, but please use only one 

of these means. If you submit a 


tjames on PRODPC75 with PROPOSALS