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.

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