Money transfer compliance refers to regulatory requirements and controls that money transmitters must follow. This includes Anti-Money Laundering (AML) regulations, KYC verification, OFAC screening, state licensing requirements (like NMLS registration), NACHA rules for ACH transactions, Bank Secrecy Act (BSA) reporting, and Consumer Financial Protection Bureau (CFPB) regulations.
Core Compliance Requirements
Anti-Money Laundering (AML)
- Transaction monitoring for suspicious patterns
- Reporting large or unusual transactions
- Maintaining comprehensive audit trails
KYC/OFAC Verification
- Identity verification before accepting customers
- Screening against sanctions lists
- Ongoing monitoring for watchlist updates
State Licensing
- Money transmitter licenses in applicable states
- NMLS (Nationwide Multistate Licensing System) registration: a central system that states use to manage licensing for financial services companies (like money transmitters, lenders, and mortgage companies). It’s basically the national registry for financial licenses.
- Surety bonds and net worth requirements
Federal Regulations
- Bank Secrecy Act (BSA) compliance and reporting: A federal law that requires financial institutions to help detect and prevent money laundering. It covers things like reporting suspicious activity and keeping certain records.
- NACHA rules for ACH transaction processing: The organization that sets the rules for ACH transfers in the U.S. They determine how ACH payments must be processed.
- CFPB regulations protecting consumers - A federal agency that protects consumers in financial transactions. They enforce rules to make sure companies treat customers fairly.
Hudson implements comprehensive money transfer compliance through SoCure integration for automated KYC/OFAC checks, maintains money transmitter licenses in required states with NMLS registration, monitors transactions for suspicious activity, and generates required BSA reports. This allows debt settlement companies using Hudson's platform to focus on serving clients while Hudson handles the complex compliance requirements.
Why Compliance Matters
- Legal Protection - Avoid criminal penalties and civil fines
- Banking Relationships - Banks require partners to be compliant
- Customer Trust - Demonstrates legitimate, professional operations
- Operational Continuity - Prevents regulatory shutdowns
