How to setup a money transfer business

In this article, we look at how to go about setting up a money remittance or an online money transfer business.

1. Establish your business model

Before setting up a money transfer business, you should have an idea of which countries you wish to enable your customers to send money to and from. You should also consider whether you will focus on cash remittance or electronic transfers, as the former option presents a higher risk as far as money laundering is concerned and therefore the ability to obtain a bank account, both for your business and segregating client monies. You should have an understanding of your pricing strategy as well as your customer acquisition and growth strategy.

2. Company formation

The next step is to form your company with Companies House. This is a fairly straight forward step and should take you no longer than 1-2 days to set up. We can help you with if required.

3. HMRC registration

You will be required to register with HMRC for Fit and Proper certification as well as money laundering regulations (MLR). This is a fairly straight forward procedure and involves providing HMRC with some information about yourself and your company and what you intend to offer by way of business services. The fee for Fit and Proper certification is £50 per person. The fee for MLR registration is £100.

4. Register as a Small Payment Institution (SPI) with the FCA

We recommend that you apply for SPI registration at the same time as your HMRC registration. The application will require details about your directors, shareholders, business model, payment flow, safeguarding measures and information security, to name a few. Please note that client fund safeguarding (keeping your client money separate from your day to day money is optional for SPIs.

5. Choosing a software partner

The above will enable you to operate a money service business. From here on, you can speak with software providers to enable you to operate a digital remittance business. In relation to choosing a software provider, you should ask them about their functionality, in particular with AML, KYC and CTF.