Domestic collection, international payout: the MSB flow from ACH, EFT or agent cash-in to stablecoin payout

Domestic collection with international payout is the flow in which a money service business takes in funds at home, by ACH debit or credit, by Canadian EFT, or as cash at an agent counter, and delivers them abroad by settling the international leg in stablecoin and paying out through a partner in the destination country. The MSB verifies the sender, screens the destination, converts the currency, delivers on chain and manages a float on both sides. This article sets out each of those steps as an operating model, with the controls, the owners and the reconciliation that a FinCEN or FINTRAC examiner will test.

How does an MSB collect domestically, and what does each channel prove about the sender?

Each collection channel proves something different about the sender, and the MSB's controls should reflect that. An ACH credit pushed by the sender from their own bank account carries the sender's name and account from the originating bank and is the strongest evidence that the sender controls the funding source. An ACH debit pulled by the MSB under a WEB or PPD authorisation carries the same data but exposes the MSB to return risk for days, including unauthorised-debit returns with long windows, so the MSB should not pay out abroad before the return window it is prepared to accept has passed or before it has priced the risk. Canadian EFT behaves similarly through the Automated Funds Transfer system, and Interac e-Transfer gives faster confirmation against an email or mobile identifier.

Cash at an agent counter proves nothing about the funding source and everything about the presence of the sender, which is why cash-in carries the heaviest identification requirement. The agent captures identity documents, the amount and the declared purpose, and the MSB's system records the agent identifier and the till it came from. Cash-in above the recordkeeping thresholds triggers currency transaction reporting in the United States and large cash transaction reporting in Canada, at the thresholds set by FinCEN and FINTRAC respectively. The agent is the MSB's control point and the MSB, not the agent, is answerable for it.

For every channel the MSB records the collection reference, the channel, the funding source identifier, the amount, the timestamp and the agent or bank through which it arrived. That record opens the case file for the transfer, and everything that follows is written to it.

How is the sender verified before the money leaves the country?

Sender verification is identity, sanctions and behaviour. Identity is established at onboarding to the standard the MSB's programme sets for the tier, with government identification and, for higher tiers or amounts, proof of address and source of funds. Sanctions and PEP screening runs at onboarding and again at each transaction, on the sender and on the named beneficiary abroad. Behaviour is the transaction monitoring layer: velocity, structuring below reporting thresholds across agents or days, corridor changes, and relationships between senders who share a beneficiary.

The funds transfer rule and the Travel Rule both apply. For transfers at or above the applicable threshold the MSB must collect and retain originator and beneficiary information and pass it to the next institution in the chain. When that next institution is a VASP on the stablecoin leg, the information travels in IVMS101 form. The decision rule at this step is that no transfer proceeds to conversion without a complete originator record, a screened beneficiary and a monitoring result that is either clear or has been dispositioned by a named analyst.

How is the destination screened when the payout is on chain?

The international leg pays a partner abroad, or in some models the beneficiary directly, on chain. The destination address is screened before any stablecoin is sent, for direct and indirect exposure to sanctioned addresses, mixers, darknet markets and stolen funds, and is checked against the addresses the partner declared at onboarding. A payout to an address the partner did not declare is refused, however clean the address looks, because the partner relationship is the control.

The partner itself is onboarded under KYB: licence or registration in its jurisdiction, ownership, AML programme, the accounts it will pay into, and the corridors it serves. The MSB records the partner's declared payout addresses and the local clearing rails it uses for the last mile. Where the beneficiary is paid directly to a self-hosted wallet, which some corridors permit, proof of control is required before the first payout and the address is recorded against the beneficiary.

• Destination address screened for exposure before every payout, with the result and rule version on the case.
• Address checked against the partner's declared list from onboarding; undeclared addresses are refused.
• Partner KYB refreshed on a stated cycle, including its licence status and its own AML programme.
• Beneficiary name and account screened against sanctions and PEP lists before the payout instruction is released.
• Travel Rule data in IVMS101 form transmitted to the partner VASP before or with the on-chain transfer.
• Corridor limits per partner, with a daily payout ceiling that treasury can raise only with a logged approval.

How are FX and conversion handled between collection and payout?

The sender pays in dollars or Canadian dollars and the beneficiary receives local currency. The stablecoin is the bridge, and the MSB should decide whether it converts once or twice. In the single-conversion model the MSB settles the partner in a dollar stablecoin and the partner converts to local currency at the last mile, quoting the MSB a rate the MSB embeds in the price to the sender. In the double-conversion model the MSB converts Canadian dollars to a dollar stablecoin first, then the partner converts again, and the MSB carries two spreads and two rate risks. Canadian MSBs in particular should price this consciously.

The rate quoted to the sender is locked at the counter or in the app, and the MSB carries the movement between that moment and the partner's conversion. On a stablecoin rail that window is the time to complete screening and the on-chain transfer, usually well under an hour when the case is clean. The rate, the mark-up and the fee are disclosed to the sender in the manner consumer rules in the collection jurisdiction require, and the disclosed figures are stored on the case so that a complaint can be answered from the record.

A domestic-collection MSB is running two tills and one ledger. The domestic till fills during the day, the stablecoin till empties as payouts go out, and the ledger has to explain every hour in between.

How does the float model work when settlement is in stablecoin?

Stablecoin settlement changes the float model from pre-funding partners to holding a settlement inventory. Under correspondent settlement the MSB pre-funds a partner's account abroad, often days ahead, and the partner pays out from that balance. Under stablecoin settlement the MSB holds USDC in its own operating wallet and pays the partner per transfer or per batch, so the partner needs only a local fiat float for the last mile and the MSB needs only enough stablecoin for the day's payouts.

The MSB's float therefore has three parts. The domestic collection float is the balance at the MSB's bank or in agent tills that has been collected but not yet converted. The stablecoin inventory is the USDC in the operating wallet, replenished from the domestic float by purchase or minting on a schedule. The partner receivable is the amount the MSB has sent that the partner has not yet confirmed paid out. Each has a ceiling, an owner and a daily reconciliation. The operating wallet is a till funded for the day from a treasury wallet under separate approval; it should never hold more than the policy ceiling overnight.

Custody of the stablecoin inventory is the MSB's own responsibility. Key management, signing authority and the segregation between the treasury wallet and the operating wallet are controls an examiner will ask about, and a policy that names the individuals and the approval thresholds is the document to have ready.

How does the MSB reconcile and report?

Reconciliation runs daily across the three floats and the case files. Collections by channel, from bank statements and agent till reports, must equal the domestic float movement plus conversions. Conversions must equal the stablecoin inventory movement plus payouts on chain, matched by transaction hash. Payouts on chain must equal the partner's confirmed payouts plus the open partner receivable, matched by case reference. Any difference is an exception with a name and an age, and the exception list is reviewed by the compliance officer, not only by finance, because a persistent break is also a monitoring signal.

Reporting follows from the records. FinCEN registered MSBs file currency transaction reports and suspicious activity reports, and FINTRAC registered MSBs file large cash transaction reports, electronic funds transfer reports for international transfers at or above the threshold, large virtual currency transaction reports where the stablecoin leg meets the threshold, and suspicious transaction reports. An examiner reviewing the programme will select transfers and ask for the case file, the agent record, the screening results, the on-chain hash, the partner confirmation and the reports filed. Building the case file as the flow runs, rather than assembling it on request, is what makes that examination a routine event.

Where StableNet fits

StableNet, built by SpendTheBits, runs domestic collection and domestic-to-international payout as two of its nine settlement flows. Collection arrives over local fiat rails, ACH or EFT, and the international leg settles in USDC or USDT on public blockchains in minutes, with the MSB keeping custody of its operating and treasury wallets. KYB onboarding of payout partners, KYC of senders, KYT transaction monitoring, sanctions and PEP screening, wallet screening of destination addresses and Travel Rule data in IVMS101 form are built in, and every step is written to a tamper evident audit trail keyed to the UETR that also identifies the pacs.008 and the pacs.002 status report from the partner. The compliance workbench holds the exception and hold lists described above, and the B2B2B model lets an MSB extend the same flow to its agents and business clients. SpendTheBits is a Bank of Canada registered payment service provider and a named finalist in the Swift Hackathon 2026 Technical Challenge.