Money Orders and Travelers Checks
An issuer, seller or redeemer of money orders or travelers checks may be a money services business subject to compliance with the Bank Secrecy Act. Such entities must also typically obtain licensing from their state and comply with various requirements under state law dealing with their registration or licensing, documentation and record retention, bonding, requirements and restrictions on investment of funds pending disbursement, escheatment, et cetera.
An issuer is a business ultimately responsible for payment of traveler’s checks, money orders or stored value. An issuer of traveler’s checks or money orders who issues such checks or money orders in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions is an MSB subject to the Bank Secrecy Act.
Seller or Redeemer
A seller is a business that sells traveler’s checks or money orders to others. Such an entity may also be the issuer or it may be an agent of the issuer.
A redeemer is a business that accepts instruments in exchange for currency or other instruments for which it is not the issuer. For example, a hotel that provides a customer with $1,500 in cash in exchange for the customer’s $1,500 in traveler’s checks (issued by another MSB) is a redeemer. Note however that a business that accepts monetary instruments in exchange for goods or general services is not acting as a redeemer under the Bank Secrecy Act.
A seller or redeemer of traveler’s checks or money orders who sells or redeems such instruments in an amount greater than $1,000 in currency or monetary or other instruments to any person on any day in one or more transactions is an MSB subject to the Bank Secrecy Act. Again, additional regulations and requirements are typically imposed at the state level and must also be followed.