Definition of Money Services Business (Money Transmitter/Currency Dealer or Exchanger)

Dear [ ]:
This letter responds to your request for an administrative ruling with respect towhether your client, [ ], is required to register with FinCEN as a Money ServicesBusiness (“MSB”) pursuant to 31 C.F.R. § 103.41. Pursuant to 31 CFR § 103.82,FinCEN declined to provide [ ] with such a ruling in light of an ongoing proceeding inwhich [ ] was engaged with another department of the federal government relating tothe subject of the request. Upon notification of termination of that proceeding, FinCENresponded to [ ]’s request by letter dated October 28, 2003, explaining that [ ] had notprovided sufficient information to enable FinCEN to make a definitive ruling as towhether [ ] is an MSB. By letters dated December 9, 2003, and February 23, 2004, assupplemented on June 15, 2004, you provided additional information about the servicesoffered by [ ]. Based on the representations contained in your letters, FinCEN hasdetermined that [ ] is not an MSB for BSA regulatory purposes to the extent it engagesin international courier operations that originate or terminate in the United States, orarmored truck transportation services to and from U.S. financial institutions for local U.S.customers, described in your letters. However, to the extent that [ ] engages in transshipmenttransactions through the United States as described below, FinCEN would deem[ ] a money transmitter as defined at 31 CFR § 103.11(uu)(5).
Background
According to your representations, [ ] is located in Florida, and provides worldwidetransportation of currency, monetary instruments, and other valuables for financialinstitution clients, such as domestic and foreign banks and currency exchange houses.[ ] engages in the following activities:

• International courier operations in which [ ] either transportsvaluables from a U.S. financial institution to a foreign-locatedbusiness, or from a foreign-located business to a U.S. financialinstitution. In some cases, [ ] is hired to transport funds forexchange, and to return new, or differently-denominated, currency tothe original sender.¹


• Local armored truck transportation of valuables for U.S. customerssuch as local governments and merchants, to and from the customers’ local banks. Each of these local armored truck deliveries either originates, or terminates, with U.S. banking institutions subject to BSA regulation.


 

Your original ruling request indicated that [ ] engaged in the trans-shipment of currencybetween foreign-located banks or currency exchange houses, through a U.S. airport. Inthe course of trans-shipment transactions, currency was flown into the U.S. for purposesof making travel connections, and in some cases, [ ] took the currency out of the U.S.airport’s international terminal to recount and repackage the currency. Your letter ofFebruary 23, 2004 represents that [ ] is no longer engaged in this activity. You haverepresented that, to the extent [ ] may conduct trans-shipments through the UnitedStates in the future, [ ]’s couriers will remain in the international terminal until they cantransfer to connecting flights departing the United States.
Analysis
Money services businesses, a category of financial institution for purposes ofregulations implementing the Bank Secrecy Act (“BSA”), are defined at 31 CFR103.11(uu) and include currency dealers and exchangers, check cashers, issuers, sellers,and redeemers of traveler’s checks, money orders, or stored value, money transmitters,and the United States Postal Service. Among the BSA provisions to which MSBs (otherthan issuers of stored value, and agents of an MSB) are subject is the requirement toregister with FinCEN. Based on the representations contained in your letters, the MSBcategories into which [ ] could potentially fall include money transmission and currencydealing/exchange.
For BSA regulatory purposes, the term “money transmitter” is defined at 31 CFR103.11(uu)(5). Subparagraph (B) of the definition, “[a]ny other person engaged as abusiness in the transfer of funds,” is broad enough to encompass various types of moneytransmission including physical transportation of funds. Whether a person falls withinthis subparagraph is a fact-based determination. As explained in my October 28, 2003letter, FinCEN does not treat as a money transmitter an armored car business that solelyengages in providing secure transport services, including currency and other valuables,for the Federal Reserve, the U.S. Mint, banks, and private companies, so long as thearmored car business cannot be viewed as participating, or having a stake, in a financialtransaction.² Factors that FinCEN would consider in determining whether an armored carbusiness has participated, or had a stake, in a financial transaction include: whether the currency is transported for and/or to an entity that falls within the definition of financialinstitution for purposes of BSA regulations (31 CFR 103.11(n)), the beneficiary of thefunds, and the nature and extent of the services provided by the armored car business.
In my October 28, 2003 letter, I explained that, to the extent that [ ] contractswith a U.S. financial institution to transport currency, [ ] is not a money transmitter forpurposes of the BSA.³ To enable FinCEN to determine whether [ ] is a moneytransmitter with respect to transportation of currency other than for a U.S. financialinstitution, we requested additional information including whether [ ] transportscurrency other than to a U.S. financial institution subject to BSA regulations, and whether[ ] has knowledge that the beneficiary of the funds it transports is a person(s) other thanthe person with which [ ] has contracted to transport the funds.
Your letter of December 9, 2003 states that, with respect to its internationalcourier operations that originate, or terminate, in the United States, [ ] will onlyoriginate or terminate transactions at a U.S. financial institution. In regard to ourquestion whether [ ] ever transports currency to or for a third-party beneficiary, yourletter states that [ ]’s services are offered only to domestic and foreign banks andcurrency exchange houses, and that [ ] does not knowingly transport any of the funds itreceives for deposit into the account(s) of any person or entity other than the entity thatprovided the funds, or requested their transportation. According to your letter, [ ] doesnot provide its courier services to third-party beneficiaries, including of financialinstitutions. Rather, [ ]’s courier services are exclusively limited to the domestic andforeign banks and currency exchange houses with which it contracts to transportcurrency. Based on your representations that [ ] does not transport funds on behalf ofthird-party beneficiaries, FinCEN would not deem [ ] a money transmitter by virtue ofits international courier operations originating, or terminating, at a U.S. financialinstitution.
With respect to [ ]’s transportation of funds for non-financial institution U.S.customers such as local governments and merchants, to and from the customers’ localbanks, your supplemental letter of June 15, 2004, contains representations that [ ] doesnot engage in transportation of funds for third-party beneficiaries. FinCEN would notdeem [ ] a money transmitter by virtue of physically transporting currency for a U.S.customer, to and from the customer’s U.S. financial institution, on the customer’s ownbehalf. Thus, to the extent that [ ]’s local currency transportation consists oftransactions either originating, or terminating, with a U.S. financial institution, and thatare not conducted for third-party beneficiaries, FinCEN would not deem [ ] a moneytransmitter by virtue of such transportation.
By letter dated February 23, 2004, you have represented that [ ] no longerengages in trans-shipment through the U.S. as described above. Therefore, we have notconsidered this activity in making the determination that [ ] is not a money transmitter under our rules. However, the definition of money transmitter at 31 CFR 103.11(uu)applies to each “agent, agency, branch, or office within the United States of any persondoing business” as a money transmitter. As explained above, this definition is broad, andapplies to the physical transportation of currency. FinCEN would treat as a moneytransmitter a U.S. business that engages in trans-shipment as described in your letters.The relevant factor in this analysis is not whether or not the money that is trans-shippedby the U.S. business leaves the international terminal, but rather the fact that a U.S.business is engaged in the business of money transmission. Therefore, to the extent that[ ] engages in trans-shipment transactions, FinCEN would deem [ ] a moneytransmitter, subject to all applicable BSA requirements, including the requirement toregister with FinCEN
In order for FinCEN to make a determination whether [ ] is a currency dealer orexchanger under 31 CFR 103.11(uu)(1), we requested a more complete description of theextent of the currency exchange services that [ ] provides beyond mere physicaltransportation of currency (including involvement in determining the place and date ofexchange, having a financial stake in the transaction based on the rate of exchangeobtained, and any other involvement in a currency exchange transaction). According tothe representations contained in your December 9, 2003 letter, when transporting moneyfor the purpose of currency exchange, [ ]’s only role is the physical delivery of currencyto the destination designated by its client, and the return of new currency or currency of adifferent country, to the original sender. [ ] does not select the place or date ofexchange, and does not have any financial stake based on the rate of exchange obtained.Based upon your representations, FinCEN would not deem [ ] a currency exchangerbecause in physically transporting currency for exchange, [ ] does not participate in, orhave a stake, in a financial transaction, and therefore is not engaged in the business ofcurrency exchange within the meaning of our rules.
In arriving at our decision, FinCEN relied upon the accuracy and completeness ofthe representations made in your letters. Nothing precludes FinCEN from seeking furtheraction should any of this information prove inaccurate or incomplete. Should you haveany questions about this letter, please telephone Christine Del Toro of my staff at (703)905-3590.

/Signed/
Judith R. Starr
Chief Counsel
cc: William D. Langford, Jr., Associate Director, Regulatory Policy, Programs, andEnforcement