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The Uniform Money Services Act

The Uniform Money Services Act

The Uniform Money Services Act was implemented in order to
help regulate e-money systems and to help prevent their misuse, among other
goals, which include preventing money laundering. In order to do so, the
Uniform Money Services Act changed its language to use the term “monetary
value”, instead of just “money”.

“Monetary value” might apply to e-money, as it
is defined under the Uniform Money Services Act, and as such, an e-money
service would have to abide by the regulations under the Uniform Money Services
Act. The Uniform Money Services Act also uses the terms “stored
value” and “money transmitter” in new ways, so as to expand
definitions and ensure that money service businesses, especially of the
Internet, would be covered under these regulations.

“Stored value” would refer to monetary value
stored in an electronic record, and therefore
, would not refer to gift certificates or transit cards which can only be used with a single company or store. “Money
transmission” would refer to the sale or issue of any kind of payment
instrument, of store value items, or simply the act of receiving money for
later transmission to another entity. To qualify as an act of money
transmission, the transmitter would actually have to hold the money in
question, as opposed to simply acting as a clearing agent.

The Uniform Money Services Act, which was originally
drafted and adopted in 2000, was an attempt to exert more influence over all
money services, be they Internet
based or more
traditional. Monetary services in general were potential sources for fraud and
money laundering, as they were not well-defined under
the law, and therefore, might not have fallen under the purview of certain laws which would
otherwise have prevented wrongdoing.

Simplistically, for example, a money service business
would not accept deposits, and therefore
, would not
function as a bank
. As a result, not all rules applying to banks would necessarily apply to
monetary service businesses. This, of course, doesn’t even take into account
the problems that resulted when dealing with e-money as opposed to real money,
considering that using cards with a certain amount of money stored on them
electronically and making payments purely over the Internet through an e-money
service were both gray areas as far as the law was concerned.

The Uniform Money Services Act was a first attempt to start dealing with some of these problems. It
included several provisions which would regulate money service businesses,
including those that function only over the Internet with e-money. These
businesses were now required to obtain a license from the
State in order to continue operating, and money service businesses are
subject to annual examinations under the Uniform Money Services Act.

Those businesses that transmitted money, like e-money
payment services or wire transfer services, were considered significantly more
at-risk than more immediate services, such as those that only performed
immediate cashing of checks. This is because transmission services actually
held money given to them by a customer and were responsible for transferring
that money, instead of simply performing an instant exchange. This is
especially true for those money service businesses dealing with e-money, as an
e-money payment service would be given important financial information and
payment from a client and would
, therefore, be ripe for wrongdoing.