Money Service Business (MSB)... How Well Do We Know About Them?

[+ MysticMenace]

In my casual views on RentMasseur I came across this phrase on someone's profile... and I thought, for service providers, thought if this is something that you are aware of?

I do not personally follow any FinCEN updates or updates tied to MSBs, so someone here probably has all the information that they can share. For those that know and can confirm, if any, new federal regulations on MSBs, does anyone want to share what those are for the benefit of all service providers to be aware of? #TheMoreYouKnow

[+ ThroatCummer]

I know everything there is to know about MSBs. I'm deeply involved in that industry and can quote almost any Bank Secrecy Act (and its descendants like the USA PATRIOT ACT) law, rule, and/or guideline in my sleep. 

The answer: It's complicated. 

Part of that could be read as this person is considering themselves a MSB. That's also incorrect, they aren't. lol

There are no new federal regs or guidelines that came out recently about accepting payment in this context. There has been a big crackdown by the regulators on MSBs involved in certain high-risk industries like crypto that are making it really hard to operate a legit company in this environment. When you pay, you can pay cash, debit, credit, p2p payments (Paypal, Venmo, Cash App) or crypto.  Since he said only cash and crypto, that means they're probably worried about getting p2p payments and the 1099/taxability implications of incomes from those sources. That would be my guess. 

You want to know my advice to providers who read this:  Start accepting crypto. If you're worried about the ups and downs of the market, you can easily exchange it for a "stablecoin" that tracks the dollar that doesn't lose or gain value. Everyone should have a coinbase.com or kraken.com or gemini.com account and own a little bit. It'll be worth $1M or more in the blink of an eye, as sure as the sun rises and sets. It will do for finance what the internet did for information. It doesn't seem like it right now, but let's bookmark this post and link back to it in about five years, yea?  

 

Edited May 21, 2024 by ThroatCummer

[+ DrownedBoy]

The new law was watered down.

Originally, they wanted to flag people with $600 of income on a cash app. They raised it to $20K and 200 transactions as the warning sign.

I'd need a provider to tell me if that's dangerous.

[+ ThroatCummer]

That $600 was for 1099 reporting for taxes to the IRS, not for reporting to FinCEN for activity monitoring, but you're correct.  

If you want to use Cash App or Venmo or those for transactions keep it a personal account. You'll never get a 1099 or be reported.  If you switch to a business account, they'll 1099 you for all transactions no matter the amount each year. They don't tell you that upfront.  It sucks when you have only done like $5k in a year but get a 1099 and had a "business" account because you thought that was better. It isn't.