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Blog > Maintaining Regulatory and Compliance Adherence as a Money Transmitter

Maintaining Regulatory and Compliance Adherence as a Money Transmitter

VComply Editorial Team
November 22, 2023
3 minutes

As key players in the financial ecosystem, money transmitters navigate a complex regulatory landscape. Ensuring compliance is not just a legal obligation but a critical component for building trust and safeguarding financial transactions.

The Role of Money Transmitter Compliance

Money transmitter compliance holds paramount importance due to the intricate nature of financial services they provide, and the potential risks associated with money transmission. Stringent adherence to federal and state regulations, such as the Bank Secrecy Act and Anti-Money Laundering laws, is essential to prevent legal repercussions, fines, and regulatory sanctions. Beyond fulfilling legal obligations, compliance is crucial in safeguarding against money laundering, fraud, and illicit financial activities. It ensures consumer protection, fostering transparency, fair dispute resolution, and responsible business practices. Moreover, compliance contributes to national security by thwarting the transfer of funds for illegal purposes, including terrorism financing. Building trust with customers, partners, and regulatory authorities, compliance enhances credibility and reputation in the financial industry. Financial loss risks, business continuity, and the ability to stay competitive are also directly tied to robust compliance practices. Ultimately, money transmitter compliance is a strategic imperative for maintaining the integrity of financial transactions and upholding trust within the broader financial system.

Regulations that Impact Money Transmitters

First, let’s see the key regulations that money transmitters need to navigate for effective compliance management.

Bank Secrecy Act (BSA)

The cornerstone of anti-money laundering (AML) regulations, the BSA mandates that money transmitters establish and maintain robust AML programs. This includes thorough customer due diligence, suspicious activity reporting, and recordkeeping to detect and prevent illicit financial activities.

Anti-Money Laundering (AML) Laws

Money transmitters must comply with AML laws, implementing measures to identify and mitigate the risks of money laundering and terrorist financing. A comprehensive AML program should be tailored to the unique risks associated with the services provided.

FinCEN Registration

Money transmitters must register with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of the Treasury. FinCEN registration ensures adherence to federal regulations and provides a mechanism for tracking and combating financial crimes.

State Licensing Requirements

Each state has its own licensing requirements for money transmitters. Compliance teams must stay abreast of state-specific regulations, obtain the necessary licenses, and ensure ongoing adherence to state-level compliance obligations.

Consumer Financial Protection Bureau (CFPB) Regulations

Money transmitters are subject to CFPB oversight, requiring compliance with regulations that protect consumers in financial transactions. This includes transparent fee disclosures, dispute resolution processes, and fair treatment of consumers.

Office of Foreign Assets Control (OFAC) Sanctions

Money transmitters must screen transactions against OFAC’s list of sanctioned individuals and entities. Compliance with OFAC regulations is vital to avoid engaging in prohibited transactions that could result in severe penalties.

Payment Card Industry Data Security Standard (PCI DSS)

For money transmitters handling card payments, compliance with PCI DSS is crucial. Adhering to these standards ensures the secure processing, storage, and transmission of cardholder data, protecting both customers and the business.

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Electronic Fund Transfer Act (EFTA) and Regulation E

Money transmitters conducting electronic fund transfers must comply with the EFTA and Regulation E. These regulations outline consumer rights, disclosure requirements, and error resolution procedures for electronic transactions.

Steps Money Transmitters Should Take to Achieve and Maintain Compliance

In this section, we explore the essential steps money transmitters should take to achieve and maintain compliance.

Understand Regulatory Landscape

  • Gain a comprehensive understanding of federal and state regulations governing money transmission.
  • Stay informed about changes in regulations and industry best practices.

Establish Robust AML Program

  • Develop and implement a robust Anti-Money Laundering (AML) program.
  • Conduct thorough customer due diligence to identify and mitigate money laundering risks.

FinCEN Registration

  • Register with the Financial Crimes Enforcement Network (FinCEN) to comply with federal regulations.
  • Ensure accurate and up-to-date FinCEN registration to facilitate ongoing compliance.

State Licensing Compliance

  • Obtain and maintain necessary state licenses for money transmission services.
  • Stay vigilant about state-specific compliance requirements and updates.

Consumer Protection Compliance

  • Adhere to Consumer Financial Protection Bureau (CFPB) regulations.
  • Implement transparent fee disclosures, fair dispute resolution processes, and consumer-centric practices.

OFAC Screening

  • Screen transactions against the Office of Foreign Assets Control (OFAC) sanctions list.
  • Implement robust screening mechanisms to prevent prohibited transactions.

PCI DSS Compliance

  • If handling card payments, comply with Payment Card Industry Data Security Standard (PCI DSS).
  • Securely process, store, and transmit cardholder data to protect against data breaches.

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EFTA and Regulation E Adherence

  • Comply with the Electronic Fund Transfer Act (EFTA) and Regulation E for electronic fund transfers.
  • Ensure consumer rights, disclosure requirements, and error resolution procedures are followed.

Internal Controls and Policies

  • Establish and enforce internal controls and policies to align with regulatory requirements.
  • Conduct regular internal audits to identify and address potential compliance gaps.

Training and Awareness

  • Provide comprehensive training programs for employees on compliance regulations and industry standards.
  • Foster a culture of compliance awareness throughout the organization.

Continuous Monitoring and Updating

  • Implement continuous monitoring processes to track compliance on an ongoing basis.
  • Regularly update policies and procedures to reflect changes in regulations and industry dynamics.


VComply helps Money Transmitters by providing a comprehensive compliance management solution. Our platform facilitates streamlined regulatory adherence, automates risk management, ensures effective policy enforcement, and simplifies audit processes. With VComply, money transmitters can navigate complex compliance landscapes with confidence, ensuring a secure and efficient operation.

Explore what makes VComply a consistent G2 high performer in Compliance Management. Request your demo today and transform your approach.