Starting a Money Service Businesses (MSBs) Business?


Tango AML

Remittance businesses offer a solid opportunity for aspiring business owners. Money Service Businesses (MSBs) services emerged and continuously grew due to the ever increasing need of the diaspora to send money back to their families and the digital age transforming financial transactions. Here are a few considerations before starting a MSB:

Understand what remittance business is and how it works

Remittance businesses play a crucial role in the global economy, enabling the seamless movement of funds across borders and providing a secure and efficient means for people working in one country to send money to their families or loved ones in another country. 

A remittance business also known as Money Transfer Operator (MTO) or Money Services Business (MSB), is essentially a financial service that facilitates the transfer of money from one location to another, including or not the cross-border/international service.

Cross-border money transfers involve transferring different currencies between countries. Funds are collected from the sender and delivered to a beneficiary. This process typically offers multiple channels for transferring money, such as bank transfers, online platforms, mobile applications, and physical cash pick-up locations. 

Money Service Business (MSB) or Money Transfer Operator (MTO)?

When considering venturing into the remittance business, whether through a Money Service Business (MSB) or as a Money Transfer Operator (MTO), it's essential to understand the nuances and benefits of each model. Both MSBs and MTOs play integral roles in facilitating international money transfers, but they operate with distinct characteristics and regulatory frameworks. The differences between the two and weigh the factors to consider when deciding which path to pursue:

One of the primary distinctions between MSBs and MTOs lies in their Regulatory Compliance obligations. MSBs encompass a broader spectrum of financial services beyond money transfers, such as currency exchange, prepaid cards, and bill payment services. Consequently, MSBs must adhere to comprehensive regulatory requirements governing their entire suite of offerings. On the other hand, MTOs focus specifically on facilitating money transfers, which often entails complying with specialized regulations tailored to remittance businesses.

Both MSBs and MTOs face inherent risks associated with financial transactions, including fraud, money laundering, and regulatory non-compliance. Implementing risk management and compliance frameworks is imperative for safeguarding the integrity and stability of your business operations. MSBs must adopt comprehensive risk mitigation measures across all service lines, whereas MTOs concentrate on mitigating risks specific to money transfer activities, such as transaction monitoring, identity verification, and fraud detection.

Secondly, understanding the services offered is important. MSBs offer a wide range of financial solutions beyond remittances, appealing to different customer needs. This flexibility helps MSBs attract more customers and make money in various ways. On the other hand, MTOs focus solely on money transfers, using their expertise to provide efficient service. Depending on your goals and the market, you might choose the versatility of an MSB or the expertise of an MTO.

In addition, the Remittance Market is very competitive, with many players trying to get ahead. MSBs have an advantage because they offer a variety of services and reach more customers, allowing them to stand out. Meanwhile, MTOs concentrate on specific areas like pricing and reliability to attract and keep customers. It's crucial to study the competition and find what makes your business unique to succeed in this market.

Essential steps to implement the remittance business:

  1. Regulatory Compliance: Get familiar with local and international rules and regulations related to remittance services and obtain the necessary licenses and approvals to operate legally in the chosen area.
  2. Technology and Infrastructure: Choose a reliable and secure remittance platform or software that meets your business needs to be able to set up the required infrastructure for straightforward and hassle-free transactions and excellent and reliable customer support. Tango remittance system supports seamless integration with payment gateways, banks, and compliance systems including robust APIs for pay-in and payout methods, as well as a robust KYC (Know Your Customer) system to adhere to regulatory standards. Tango AML can provide the technology and infrastructure an MSB needs, offering a comprehensive suite of solutions tailored to the unique requirements of money service businesses. With Tango AML's secure and advanced remittance platform, you can leverage cutting-edge technology to streamline transaction processing, enhance security measures, and ensure compliance with regulatory standards. Tango AML technology is designed to enable remittance businesses to scale up quickly.
  3. Partnerships and Banking Relationships: Establish partnerships with banks and financial institutions in target countries to facilitate seamless money transfers and currency conversions. Tango AML can provide partnerships and banking relationships through its existing partner ecosystem, ensuring that MSBs have access to a wide network of trusted financial institutions. Through these partnerships, MSBs can leverage our established relationships to streamline their operations, access competitive exchange rates, and navigate regulatory compliance requirements effectively.
  4. Pricing and Fees: Determine competitive and transparent pricing for your remittance services and consider fees, exchange rates, and any additional charges that will be added to any transaction.
  5. Customer Onboarding: Create a user-friendly and hassle-free onboarding process that should include identity verification and customer due diligence to comply with AML/KYC regulations.
  6. Customer Support: Provide efficient and systematic customer support to address inquiries, issues, and concerns promptly. providing excellent service, your business will build trust and loyalty with your clients.
  7. Security Measures: Implement security measures to protect customer data and financial transactions from potential cyber threats. It is essential to protect customer data, financial transitions and overall business operations and create a secure environment that will instill trust in your customers. Tango AML's Core system provides a secure infrastructure that employs advanced encryption protocols, multi-factor authentication, and real-time monitoring to safeguard sensitive information and mitigate cybersecurity risks effectively.





Elena Borta