Regulations about Money Transfer Business

Regulations about Money Transfer Business

Money Transfer is an expanding business. Every year, the amount of remittances sent abroad increases. Millions and billions of pounds are sent across the world each year. International payments are an important part of the global economy – some of the developing countries’ economies benefit a great deal from the remittances sent into their country.

With increasing remittances, the number of money transfer businesses are increasing as well. The number of money transfer businesses have increased rapidly in the last few years. However, growing number of businesses also pose a risk of money laundering – a serious financial crime. Money laundering is very dangerous for the economy. Not only money laundering helps in transferring black money across, but it also encourages illegal businesses. To stop money laundering, all money transfer businesses in the UK and EU are required to follow rules that would help prevent money laundering. The rules and regulations could be different in different countries.

If you have a money transfer business then you are termed as ‘Payment Service Provider’ by the HMRC. All Payment Service Providers are required to comply with EU payments regulation. These regulations are set to prevent, detect and tackle money laundering. According to these rules, the money transfer businesses are required to send information about the payer (sender of payment). So if a sender needs to transfer money to another country then the money transfer businesses need to send the information about the sender with the funds. This also helps the government in tracing the money in order to ensure that the money is not used for the wrong means.

The funds can be transferred electronically from one account to another account by the money transfer businesses. The sender of the money can pay the money to the money transfer businesses in cash, by cheque or by a bank transfer. If payment service providers i.e. a money transfer businesses which send and receive money, are both in the EU then the sender’s information may not be required to send along with the transfers. The sender needs to give only the account number or other unique identity of the person receiving the funds. This does not apply to money sent to countries other than in the EU.

As stated above, the money transfer businesses need to have information on the sender. The information include money sender’s name, address or their place or date of birth, sender’s unique identity number and the payer’s account number. These are mandatory for the money transfer businesses to obtain when accepting to send money abroad. International payments hold particular importance in this regard as the sender’s information must be recorded. In some cases, money transfer businesses are required to verify the information presented by the sender. The information can be verified by asking for a passport copy of the sender, a photocard driving license or a document issued by the government as an identity.

Money transfer businesses that have regular customers (i.e. regular senders of money) are required to verify the information. Money transfer businesses often go into a business relationship with other businesses and hence, as per EU payment information rule, are required to verify the information provided by the businesses.

Regulation in money transfer business is extremely important. It helps tackle money laundering, which is a serious financial crime and weakens the economy. In addition, regulating money transfer businesses gives an inside information on the state of the economy, migrants, money sent abroad and other key macro economic variables.


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