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December 7, 2018

WHEN & HOW TO RENEW YOUR MSB REGISTRATION

 

It’s that time again! Or is it?  Renewing your Money Service Business (MSB) registration is required every two years.  While it sounds simple, errors in the MSB registration form is a common flaw I see in my compliance work with MSBs.  Besides confusion on when to renew, errors include improperly designating the reason for the filing or listing the wrong number of branches or activities.  In the review of the renewal process below, keep in mind that the information provided assumes you are already registered as an MSB and are doing a routine renewal that is required every two years. Additionally, the information is geared toward a business that is registered as an MSB because it offers an MSB activity on its own behalf, such as check cashing.

KNOWING WHEN TO RENEW

First, let’s establish when you need to renew. This is the actual regulation 31 CFR 1022.380(b)(2) (formerly 103.41(b)(2)):  After an MSB completes its initial registration, the form to renew its registration must be filed by December 31 of the second calendar year preceding the 24-month renewal period and is accomplished by filing the Registration of Money Services Business Form, FinCEN Form 107. Thereafter, registration renewal must be filed every 24 months by December 31

To translate, the first year you registered, regardless of when in the year you did so, is year one.  You would have to renew your registration prior to the end of the following year (i.e. year two).  As an example, if you first registered in2015, the renewal would be required on, or before, Dec. 31, 2016.  Subsequent renewals will be due by Dec. 31stof every even year (e.g. 2018, 2020, etc.). Regulations do not specify a time frame to submit a renewal prior to the end of the second year.  I suggest a best practice is to submit your renewal sometime in November or December.

A LAPSE IN RENEWING CAN BE COSTLY

 But what if you discover you’ve gotten off your correct cycle?  My suggestion would be to renew your registration after only one year to put you back on the correct two-year cycle.  The main concern is not to allow your MSB registration to lapse beyond the required renewal period.  The penalty for operating as an MSB without being properly registered is up to $5,000 per DAY!!!.

START THE PROCESS TO RENEW

To renew your MSB registration, begin by going to https://bsaefiling.fincen.treas.gov/main.html and log in.  This is the site where you initially registered and where you would file Currency Transactions Reports (CTRs) and Suspicious Activity Reports (SARs). Once signed in and on the homepage, click on ‘Report 107-RMSB’ found in the menu options on the left side of the page.  Since this is a renewal, the last Form 107 you filed should be saved as a PDF file on your computer.  If so, click ‘Choose File’ under ‘Open an Existing Form’.  Find and open the last Form 107 you submitted.  Doing so, will enable you to simply review the prior renewal you submitted, make any changes, if necessary,and then submit.  If you can’t locate the prior renewal form, you will have to open a new form and fill out the entire Form107 from scratch.

STEP BY STEP THROUGH THE FORM

Whether filling out Form 107 from scratch or opening a prior Form 107 you filed, it is important to make sure you have completed the form correctly.  Let’s go through the form section by section to touch on some key points: 

Part I, Filing Information

  •  Since you are doing a renewal, ‘box b Renewal’ should be checked.  If, and only if, you are making any corrections to a prior report, such as a change in your MSB activities or in any branches you may have, you would also check ‘box C Correct/amend a prior report’. 

Part II, Registrant information

  • If you operate the MSB under an entity such as a corporation or LLC, then check the ‘if entity’ box and enter the corporate name in Line 3. If you do business under an alternate name, enter that name in Line 6.  For example, if your corporate name is “Greatest MSB Ever, Inc.”, enter such on Line 3. But, if you’re doing business as “XYZ Check Cashing”, you would enter “XYZCheck Cashing” as your dba on line 6.  However,if your corporate name is “XYZ Check Cashing, Inc.” and you operate under that same name, you would complete Line 3 and leave Line 6 blank.  If you are a sole proprietor, you would not check the ‘if entity’ box.  Your name would go in lines 3 – 5 and you would enter your DBA on Line 6. 
  • Lines 12 & 13 require your Taxpayer Identification Number (TIN) and type be entered.  If an entity, you would enter the entity’s Federal Employer Identification Number (EIN).  If a sole proprietor, you would enter your Social Security Number.

Part III, Owner or Controlling Person

  • If another entity owns the entity that is registered as the MSB, you would check the ‘if entity’ box and enter the parent entity’s information.  Otherwise, do not check the ‘if entity’ box and enter the information relative to the controlling person of the entity listed in Part II.  Part III does not have to be completed for sole proprietorships.

Part IV – Money Services and Product Information

  • Check the boxes for any and all states where your MSB operates. 
  • Record your number of branches in Line 35.  If the location in Part I is your only location, then you have zero branches.  Enter ‘0’ on line 35.  Branches are locations in addition to the location listed in Part 1. Therefore, if you have your main location plus two other locations, you would enter ‘2’ on Line 35.   
  • When noting your MSB activities in Line 36, pay attention to the difference between‘Seller’ and ‘Issuer’ or ‘Provider’.  For example, Western Union, Money Gram, Fidelity Express and Memo are ISSUERS of money orders.  If you are a check casher who is an agent of a money order issuer, then you are a ‘seller of money orders’ and you would only check that box.
  • Only a business that issues the prepaid access (e.g. prepaid debit cards), such  , NetSpend or NexsCard, as examples, would register as an ‘issuer of prepaid access’.  If you are an agent of an issuer of prepaid access, then you are a seller of prepaid access.  But whether you have to register as a seller of prepaid access gets a bit tricky and under some conditions you may not have to include seller of prepaid access as an activity.  Further information is available at: https://www.fincen.gov/resources/statutes-regulations/guidance/frequently-asked-questions-regarding-prepaid-access

If in doubt, I suggest you include seller of prepaid access as an activity if you do in fact offer debit cards as an agent of a prepaid access issuer.

  •  If you offer money transmissions as an agent of another principal MSB, such as Western Union or Money Gram, then you must include ‘money transmission’ as an activity
  • Unless you are an Issuer of Prepaid Access you do not complete questions 38-43
  • Complete lines 45 and 46.  Only principal MSBs that have agents, such as money order issuers or money transmitters, need to complete line 46

The rest of the form should be self-explanatory.  If you’re not sure how to answer a line, hold your cursor over the check box for that line and a popup window with detailed instructions will appear. 

Once the Form 107 is complete, you can name the file, save, and submit as you would any other report on the BSA E-File system.  It is a good idea to name your file something like “MSB renewal Dec. 2018” and to save it in your documents on your computer where you can locate it the next time you need to renew or, if necessary, to file a corrected report.

Legal Disclaimer:This information is generic in nature and provided for educational purposes only. Consult a qualified professional for advice for your specific situation.

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