VMTO - Virtual Money Transfer Operator

© 2017. All Rights Reserved. Faisal Khan & Co. https://faisalkhan.com

Virtual Money Transfer Operator

How does the vMTO relationship work in the US?

https://faisalkhan.com


What is a Virtual Money Transfer Operator (vMTO)?



A Virtual Money Transfer Operator is essentially a relationship where a white labeled money transfer operation is provided by a licensed MSB.



This platform is leased by an affiliate, who then works as a Virtual Money Transfer Operator.



Client onboarding, AML/KYC, transaction ownership, funds flow, etc. are all handled by the actual licensed MSB and never by the Virtual MTO



What does it include?



The BasicsWhat is provided for?

● White-label platform

● Transaction Processing

● Licensing

● Funds Handling

● Compliance

● Correspondent Banking



White-Label Platform



A completely hosted white-label platform is provided by the Licensed MSB to the vMTO.

The SaaS platform is owned and operated by the Licensed MSB.

The platform integrates directly with the Licensed MSBs backoffice.

All control, limits, specs, hosting, parameters, etc. are controlled by the Licensed MSB.



Transaction Processing



All transaction processing, be it ACH, Credit or Debit cards or even Wire-Transfers, has to be handled by the Licensed MSB and their associated processing companies.

A well-connected Licensed MSB would have alliances with the right payment processors or might be one themselves.



Licensing



As the licenses belong to the MSB, they have two avenues of approach towards the making of an Virtual Money Transfer Operator:

● Authorized Delegate● ISO/Affiliate.

The Authorized Delegate route is an expensive, time-consuming, subject to approval route.

The preferred method is the ISO/Affiliate route.



In this approach, the product essentially belongs to the Licensed MSB. They own the customer and the transactions.

For a State Regulator the arrangement would show that the Licensed MSB has launched their own product. Which they have in every legal aspect.

You simply have an affiliate agreement with the Licensed MSB.



As per your ISO/Reseller Agreement:

For every client that would sign-up via the portal (for example: www.some-domain-name.com) the Licensed MSB would guarantee you some portion of the income for the perpetual life of the client.

So if the client is being charged $5/transaction. The MSB takes $2, the difference $3 is your income.

At no point are you touching the funds during the transaction.


http://www.some-domain-name.com


Be sure to choose your licensing partner with care. At the very minimum your Licensed MSB must have licenses for New York, Texas and California.

If they don’t - you could potentially be losing out on 70% to 90% of your target market.

No NY, TX and CA licenses. Walk away!



Funds Handling



As an ISO/Affiliate, the funds are NOT handled by you.

The entire flow of funds is such, that they are handled ONLY by Licensed entities such as Banks or Licensed MSBs.

As you do not touch the funds, you are not deemed to be a money services business &/or a money transmitter in any manner.

As long as you don’t touch the funds and the money is handled by licensed entities, the entire setup is kosher



Compliance



The Compliance Program (all aspects) are handled by the Licensed MSB. As it is their license, they set the baseline rules (in conjunction with their banks) and these are what your customers would have to adhere to.

There is no by-passing this. A solid compliance program is the root foundation of a well-designed project.

As an ISO/Affiliate, you don’t have to worry about this. Just have to adhere to it.



Correspondent Banking



A money transfer has to have access to the other half of the transaction, i.e. the cross-border piece. This is where a Licensed MSB may go into direct correspondent agreements with beneficiary Banks or Licensed MTOs.

Alternatively, the US based Licensed MSB can opt to connect to an international settlement network, where with one contract, they can terminate remittances in 100s of other countries.



Becoming a Virtual Money Transfer Operator is not that difficult.



Interested?

Get in touch: [email protected]


VMTO - Virtual Money Transfer Operator

Business

Transcript of VMTO - Virtual Money Transfer Operator