What Is an MSB? Categories & Activities
A Money Services Business (MSB) is a regulated category of financial service provider covering activities that move or convert money outside the traditional banking system. The term originated in US Bank Secrecy Act (BSA) regulations but has been adopted (with variations) in Canada and the UK as well.
In the United States, FinCEN defines MSBs to include: money transmitters (domestic and cross-border), currency dealers and exchangers, check cashers, issuers of traveler's checks and money orders, and — since 2013 — administrators and exchangers of "convertible virtual currencies" (cryptocurrencies). Any crypto exchange that accepts fiat or converts between crypto assets for customers is a money transmitter MSB.
In Canada, FINTRAC's MSB definition under the Proceeds of Crime (Money Laundering) and Terrorist Financing Act (PCMLTFA) covers foreign exchange dealing, remittance, and virtual currency dealing. The FINTRAC MSB registration is mandatory for all entities providing these services to the public.
In the UK, HMRC supervises MSBs under the Money Laundering Regulations 2017 (MLR 2017). UK MSBs must register with HMRC if they provide money service activities including currency exchange, money transmission, and cashing cheques. Crypto exchange businesses must separately register with the FCA for AML supervision under the MLRs, though HMRC supervises the payment-adjacent activities.
USA vs Canada vs UK MSB Comparison
| Feature | USA (FinCEN) | Canada (FINTRAC) | UK (HMRC) |
|---|---|---|---|
| Legal basis | Bank Secrecy Act / 31 CFR 1022 | PCMLTFA | Money Laundering Regulations 2017 |
| Registration cost | Free (federal) | Free | £300/year |
| State licences | Required (50 states) | N/A | N/A |
| Crypto included | Yes (since 2013) | Yes (since 2020) | Yes (FCA registration) |
| AML reporting | CTR ($10K+), SAR | LCTR (C$10K+), STR | SAR to NCA |
| Min capital | State-level only | None federal | None federal |
FinCEN MSB & State Money Transmitter Licences
FinCEN MSB registration is the first step for any US payment or crypto company. The federal registration itself is free, completed online at MSB Registrant Search (FinCEN.gov), and takes 1–2 weeks. However, it is critical to understand that FinCEN registration does not authorise money transmission operations at the state level.
The vast majority of US states require separate Money Transmitter Licences (MTLs) for companies transmitting money within or through that state. New York requires a BitLicense for virtual currency activities — one of the most stringent in the country. States like Wyoming and Montana are significantly more friendly. A national rollout typically requires licences in 40–50 states, costing $200,000–$500,000+ in aggregate fees, surety bonds, and legal/compliance work.
The Money Transmission Modernization Act (MTMA) is being adopted by states to create more uniformity, but as of 2025, the patchwork of state requirements remains the biggest compliance burden for US payment firms. Most early-stage companies start with a subset of states before pursuing nationwide coverage.
Key point: Crypto exchanges operating in the US must register with FinCEN as MSBs and comply with BSA requirements (AML programme, CTR/SAR filing, recordkeeping). Operating without FinCEN MSB registration is a federal crime with significant penalties.
FINTRAC MSB & Virtual Currency Dealing
Canada's FINTRAC requires all MSBs — including virtual currency exchange businesses (VCEBs) — to register before commencing operations. The FINTRAC MSB registration covers the entire country; there is no provincial equivalent (unlike US state MTLs). Registration is free and completed online via FINTRAC's portal.
As of June 2020, FINTRAC expanded its MSB definition to explicitly include virtual currency dealing platforms. This means all crypto exchanges serving Canadian customers must be FINTRAC-registered MSBs, maintain an AML compliance programme, file Large Cash Transaction Reports (LCTRs) for transactions of C$10,000+ in cash, and submit Suspicious Transaction Reports (STRs) to FINTRAC.
Canada's MSB framework is regarded as relatively straightforward compared to the US state MTL maze. However, FINTRAC has stepped up enforcement — penalties for non-compliance have increased significantly since 2020, with major fines issued against crypto platforms for AML failings.