Glossary term
Money or Value Transfer Service (MVTS)
Subject: Financial Crime, Money Laundering, Typologies and Asset Recovery
A money or value transfer service is a business that accepts cash or other value in one place and pays a matching sum to someone elsewhere, by message, transfer or a network it belongs to.
Explanation
MVTS covers money transmitters, remittance companies and their agents, and informal operators such as hawala brokers. The customer pays the provider, which arranges payout through an agent, a partner or a settlement arrangement in the destination. Many customers are migrant workers who send money to relatives, and the service is a lifeline in places with few bank branches. Because transactions are frequent, short, often in cash and cross-border, providers carry a high laundering and terrorist financing risk. International standards require providers to be licensed or registered, to follow customer due diligence rules, to keep records, to report suspicious activity and to monitor their agents. Banks that serve MVTS customers treat them as higher risk and often limit services, which is one cause of de-risking. Whether a business counts as an MVTS decides if it needs a licence, must keep records and faces monitoring of its agents.
Example
A remittance company with 300 agents asks a mid-sized bank for an account to hold settlement funds. The bank asks to see its licence, its anti-money laundering policy, its agent oversight and its transaction records. It agrees to open the account with strict monitoring and a lower daily limit while it reviews activity.
Not to be confused with
- Bank
- A bank holds deposits and lends. An MVTS only moves value for customers and normally does not hold their savings.