Money Transmitter License Information for all States and Fintech Law Resource

2013-06-06T09:57:00.066-04:00

information portal to access legal services from

New York licensed crypto and fintech.law attorney serving payments and currency businesses since before Bitcoin.

Adam Atlas, Esq.

514-842-0886
atlas@adamatlas.com
Follow @AdamAtlas

Last updated July 17, 2026

As a law firm advising US payments businesses on fintech law issues, we thought it would be helpful to provide some open-source general information concerning the money transmitter licensing and virtual currency business licensing regimes. We have advised hundreds of clients across almost all business models new and old. This site is not legal advice; it is information only. You should obtain qualified legal advice prior to operating any money services business (MSB) or virtual currency business (VCB).

Payments trade shows (from the before-times):

Money 2020 along with these very interesting payments influencers.

Becoming an MSB

Here is a link to a short book on becoming an MSB.

Quick Guide on becoming a US MSB.

MSBs come in many forms. Here are some MSB and non-MSB payments startups that might help jog your creativity www.paymentsbusinessideas.com site.

We are proud to lead a preeminent open-source payments law practice where sharing information related to payments regulation is one of our core principles. By way of example, here is what we learned at a recent Emerging Payments conference in Washington, D.C.

The Atlas Payments Data Vault, a treasure trove of information on regulators, laws, banks, lawyers, consultants, MSBs, VCBs, surety bonders and everything else you are likely to need in getting your payments business going. Adam was perhaps the first lawyer to accept Bitcoin as a form of payment.

Visite también nuestro latinoamericano blog de empresa de servicios financieros aquí: Centros Cambiarios y Transmisores de Dinero.

Want to pick up the jargon quickly? Try our fintech, crypto and DeFi glossary.

MSBStatus.com

Ever wonder how a fintech manages to operate a BAAS or other setup? Use MSBStatus.com to sort that out in a flash.

U.S. Federal Registration of Money Services Businesses (MSB) with FinCEN

With few exceptions, each money services business (MSB) must register with the Department of the Treasury. Virtual currency businesses (VCB) may also be MSBs requiring registration. Note that failure to register when required to do so or obtain necessary state licensed, can lead to jail time. A person that is an MSB solely because that person serves as an agent of another MSB is not required to register. US Federal registration is done through the Financial Crimes Enforcement Network of the United States Department of the Treasury (FinCEN). Registering with FinCEN is very easy, takes about 20 minutes and can be done through the BSA E-Filing System, described below. Here is the contact information for FinCEN:

FinCEN

Tel: 800-767-2825

Email: frc@fincen.gov

Also, in 2026, FinCEN created a confidential whistleblower portal to report money laundering and sanctions violations.

FinCEN BSA E-Filing System

Entities that are registered with FinCEN are required to maintain and AML program and make filings with FincEN under the US Bank Secrecy Act. Such filings must be electronic and made through the BSA E-Filing System. If you are an MSB, you must register with FinCEN.

New to FinCEN?

If you are an MSB (to be confirmed by advice from a lawyer) after registering a supervisory user, through BSA E-Filing System, you will have to complete a Form RMSB - Form 107. Its hard to find that form on the FinCEN website, so we have provided one here so you can actually read it before completing it online.

The online version of FinCEN's Form 107 is not the same as the one cited above. Here are instructions on how to complete the 'real' online version of Form 107.

Other reports that must be filed through this system include, but are not limited to:

Currency Transaction Report (FinCEN Form 104) (CTR)
Designation of Exempt Person (FinCEN Form 110)
Suspicious Activity Report (Form TD F 90-22.47) (SAR)
Suspicious Activity Report by the Securities and Futures Industries (FinCEN Form 101)
Suspicious Activity Report by Money Services Business (FinCEN Form 109, formerly 90-22.56)
Suspicious Activity Report by Casinos and Card Clubs (FinCEN Form 102)
Currency Transaction Report by Casinos (FinCEN Form 103, formerly 8362)
Registration of Money Services Business (FinCEN Form 107)
Report of Foreign Bank and Financial Accounts (Form TD F 90-22.1)

Discussion of these forms are available here.

Bank Secrecy Act (BSA)

Money services businesses (MSBs) and other financial institutions serving the United States are regulated, in part, by the Federal Bank Secrecy Act (BSA) and its regulations, Chapter X--Financial Crimes Enforcement Network of the United States Department of the Treasury. The Federal Deposit Insurance Corporation (FDIC), maintains a useful set of links to 31 CFR Chapter X. Here is another set of the same US Federal regulations. Here is a handy set of tools for getting your BSA-compliant AML program in order.

Not sure if your MSB complies with the BSA? Find out by using the BSA/AML Examiner's Manual.

FinCEN Rulings and Guidance

FinCEN has a collection of published administrative rulings that give us an understanding of some of the rules concerning which kinds of businesses should and which need not register as MSBs with FinCEN.

Our firm has published a summary of most of FinCEN's guidance if you are interested.

Bureau of Consumer Financial Protection (BCFP)
(f.k.a. CFPB)

The BCFP is a U.S. government agency that makes sure banks, lenders, and other financial companies treats consumers fairly.

The BCFP requires that as of February 7, 2013, all providers of international remittances issue to the senders thereof receipts that contain certain prescribed information.

Payments businesses should monitor BCFP regulation as it may creep into areas of payments that were previously unregulated.

State MSB Licensing

Here is a map with basic information for all state MSB regulators.

Most states require money services businesses operating within their territory to be licensed with the state banking department. Note that many states also require registration of foreign MSBs that transact with their residents. For example, money transmitters with no physical presence in New York that transact with residents of New York must be licensed in the State of New York.

The Nationwide Mortgage Licensing System (NMLS) offers a portal through which many states are cooperating to provide a single portal through which applications for money services businesses may be made. Here is the way to find which states participate in the NMLS system for money transmitter applications.

Looking for guidance on whether your model requires licensure or not? CSBS has this handy tool that helps you sort through state guidance by state and topic.

Adam Atlas Attorney at Law maintains a 50-state database on the rules applicable in each state related to MSBs. State regulators remain the arbiters of which entities may be licensed within the state. Below are links to the various state regulators:

State Regulators and other useful state information

Alabama
Alaska
Arizona
Arkansas
California: Great memo on current CA issues, CA Licensees or Atlas List, there are only about 86. Note that the California DBO site invites potential applicants to arrange for a pre-filing interview. The site is silent on the fact that prior to that interview, the proposed applicant must first submit answers for certain pre-file questions, that are not posted on the site. So, as a first step in California, remember to ask for the latest version of the 'pre-file questions' otherwise it will not likely be possible to schedule the pre-filing meeting.
Colorado
Connecticut
Delaware
Florida, FL Licensees, and Guidance
Georgia
Hawaii
Idaho - Apply through NMLS Virtual currency interpretation in Idaho
Illinois, IL Licensees
Indiana
Iowa
Kansas - Apply through NMLS (soon, not live as of April 2014)
Kentucky - Apply through NMLS
Louisiana
Maine
Maryland - Apply through NMLS, MD Licensees
Massachusetts, Memo Re Foreign Correspondents
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire - Apply through NMLS
New Jersey, NJ Licensees
New Mexico
New York, NY Regs, NY Licensees (DFS) or Atlas List, there are only about 86
North Carolina
North Dakota Apply through NMLS
Ohio
Oklahoma - Apply through NMLS
Oregon - OR Licensees
Pennsylvania PA Guidance Letters - Apply through NMLS
Rhode Island - Apply through NMLS
South Carolina - yes you need a license here now.
South Dakota
Tennessee, TN Licensees
Texas, TX Licensees, TX Law and Guidance, TX DOB on Bitcoin
Utah
Vermont - Apply through NMLS
Virginia
Washington - Apply through NMLS
West Virginia
Wisconsin
Wyoming

MSB Status

The status of a business as an MSB or not is a question of law under at least 51 jurisdictions: the Federal Bank Secrecy Act and also each of the banking laws of each state. Good public sources of information on payments businesses include the following:

FinCEN
NMLS
CFPB
FACTA
US Safe Harbor
FINTRAC and other sources.

Payment Processor Exemption to MSB Status. If you are wondering about the difference between a payment processor and a money transmitter, please see this chart we did to help explain, The payment processor exemption does not work in all states and does not work for all processor models.

Quick guide FAQ on becoming a US payment processor withouts state money transmitter licenses.

Not sure who owns which US payment processor, check out this handy US payment processor family tree.

MSB and AML Compliance Associations

U.S.

Conference of State Bank Supervisors (CSBS) - founded in 1902

Money Transmitter Regulators Association (MTRA)
Multi-State MSB Examination Taskforce (MMET)
Money Services Business Association (MSBA) - founded 2015, featuring legislative updates provided by Adam Atlas Attorney at Law
Digital Asset Transfer Authority (DATA)
The Association of Money Services Compliance Officers (AMSCO)
Association of Certified Anti-Money-Laundering Specialists (ACAMS)
The Association of Certified Financial Crime Specialists (ACFCS)
The National Money Transmitters Association (NMTA), merged into MSBA in 2018
Aquarian Advocacy Group, founded 2019 to stop CA Bitlicense.

International

European Payments Council
Association of UK Payment Institutions
International Payments Framework Association
Global Payments Forum, a NACHA International Payment Forum
International Compliance Association
International Association of Money Transmitter Networks
Canadian MSB Association
ABRACAM Brazil
International Fund for Agricultural Development (IFAD) - UN

Am I an MSB?

Your MSB status or VCB status is a matter of Federal and State law, and should be ascertained by advice from a qualified lawyer.

We maintain www.paymentsbusinessideas.com that we hope will jog your creativity and see some models that are MSBs and some that are not.

Marketplaces (many of which we list here), being more the norm and less disruptive, are asking themselves if they are MSBs or not on account of their handling money for their participants. Depending on how they are structured, the result will be MSB status or not.

Is an E-Wallet a Money Transmitter?

Most likely, yes.

FinCEN has finally published guidance on this very issue.

This is the single most frequently asked question in MSB compliance today. Some e-wallets are categorized as providers of prepaid access within the meaning of the FinCEN Prepaid Access Final Rule, which is summarized here, while others are registered with FinCEN as money transmitters. The definitive answer to this question lies in the applicable federal and state law in each of the states in which you propose to operate your e-wallet. That said, the ability to: (i) load real currency into an e-wallet; (ii) maintain a balance; (iii) transfer e-currency between users; and (iv) unload e-currency and convert it to real currency, together, would most often fall within what state regulators would characterize as a prepaid access provider or money transmitter. Given that the definition of a prepaid access provider is relatively new (2011), we have only seen a handful of entities claim that that is their primary activity, most of which are classic prepaid branded card issuers or sellers.

We recently published an article on the MSB status of e-wallets in the E-Finance and e-Payments Law and Policy.

Lists of MSBs, VCBs and Other Payments Businesses

Entities Registered with FinCEN

Atlas list of money transmitters licensed in New York and California, there are only about 87 in each of those two states. This list is a bit out of date.

Here is a list of the 33,000 financial institutions that are registered with the IRS under FATCA (loads of fun here).

There are about 38,859 MSBs registered with FinCEN, but that number includes many duplicate registrations for multiple entities each with common ownership or a common brand. Below are examples of entities that have had multiple money transmitter licenses. For fun, we provide links to the MSB license disclosure for each entity:

Facebook Payments Inc, Money Transmitter Licenses
Square Money Transmitter Licenses
Google Wallet Money Transmitter Licenses (hard to find in one place). Held by Google Payments Corp.
Skrill Money Transmitter Licenses
Microsoft Payments Money Transmitter Licenses
Amazon Payments Money Transmitter Licenses
PayPal Money Transmitter Licenses
Money Network / Integrated Payment Services (IPS) / First Data Money Transmitter Licenses
Xoom Money Transmitter Licenses

FinCEN maintains a list of all US registered MSBs, that can be searched here.

P2P Payment Platforms

Here are a sampling of some of the many P2P payment platforms:

Payfacs / PSPs / TPPs That Became MSBs

The Payment Facilitator or Payment Services Provider were created by the payment networks, like Visa and MasterCard, to expedite the boarding of smaller merchants. Payfacs contract with the merchant (payee) not so much with the customer (payer). The model, however, proves to be of limited value to some who want to offer customers more flexibility. We have therefore seen an evolution of payfacs into MSBs in the following examples:

PayPal
Square Cash
Stripe
Facebookpay
ApplePay ? (not yet, but with a P2P payments patent, it can't be long). Technically ApplePay is just a data gateway for the moment.

Payments Business Ideas

The best place for a survey of new payments ideas is www.paymentsbusinessideas.com. A lot of models have already been thought of. That said, payments businesses usually succeed on sales and marketing, not on the idea alone. Of a hundred people with the same idea, perhaps only one will make it profitable.

Crypto / Virtual Currencies / Digital Currencies

Virtual currency business (VCB) is the term used way back in July of 2014 by the NY DFS to describe businesses operating in the virtual currency space, and it is a term that we believe is likely to stick. A VCB may or may not be an MSB, depending on which law you are interpreting.

Banks, investors and consumers are not wasting their time in learning about virtual currencies. Some believe that virtual currency will completely displace traditional 'real currency' issued by sovereign states. While that scenario is far flung for now, it is not hard to imagine a near future where a substantial portion of world economic activity takes place through virtual currency. Communication and commerce are international and instantaneous, banking is not. The contemporary disconnect between the reality of peoples personal and consumer lives, that are essentially instantaneous, and their banking activity that is subject to delays and fees that bear no connection to the cost of the underling service (transfer of digital value) sets the scene for virtual currency to now take deep root in the economy of the world.

Crypto Toolbox

Everything you wanted to know but couldn't didn't want to waste time finding:

Virtual Currencies Virtual Currency Wallets Virtual Currency Exchanges

Our firm also has a subscription service through which clients can obtain an MSB risk assessment of various crypto models in all 50 states, updated monthly.

Note that virtual currencies, such as Bitcoin have also been associated with substantial and very serious criminal activity, as in the case of SilkRoad, accessible through the anonymous browser Tor, as reported in the New York Times. The most popular virtual currency is Bitcoin.

Bitcoin

Bitcoin (比特币) is the leading virtual currency and is thought to be invented by a mysterious Japanese mathematician by the name of Satoshi Nakamoto. Bitcoin is a virtual currency that is more or less anonymous and de-coupled from traditional banking. Bitcoin is created by using CPU time and energy. The algorithm by which it exists dictates that there shall be no more than 21 million Bitcoin when all mining is complete - which has not yet occurred. This makes some believe that it is destined for a monumental and colossal leap in value as the supply comes to a definite halt. Bitcoin operates, de facto, largely in the unlicensed arena. Here is a site that helps explain Bitcoin. The Bitcoin marketplace is interesting from an academic perspective, because it serves as a nexus for interesting debates between libertarians, anti-statists, statists, privacy advocates and others. The efficiency of Bitcoin, being a means for the free and secure exchange of value, poses challenging questions for (a) traditional banking that offers the same service, but at enormously higher costs; and (b) law enforcement that has a legitimate right to oversee suspicious activity in the financial system. There are competing visions for the future of Bitcoin. Some see it replacing ordinary currency, others see it as simply another currency destined to be mined for fees interest etc... like existing currencies. Like all forms of exchange, Bitcoin has value only because people believe that it does.

Watch Bitcoin traded live and in real time here.

Bitcoin Investment Vehicles

Bitcoin Payment Processors

A Bitcoin payment processor often allows a merchant's customer to make payment in Bitcoin and then settles to the merchant in Bitcoin or real currency, such as USD.

Bitcoin Vending Machines

Bitcoin Charts and current exchange rate

Bitcoin 'Malls' and Directories

Coinmap
BitDazzle
BitcoinYellowPages
Bitcoinstore
Bitgazetteer
WeUseBitcoins
SpendBitcoins
RealWorldShops
Bcchanger.com
Bitcoin Map
Bitcoin.local
Bitcoin.travel
Bitcoinlocator
Bitimap.net

Bitcoin Casinos

The Federal Reserve wrote in 2014 that most small value Bitcoin transactions are for online gambling. Here is a list of Bitcoin Casinos.

Virtual Currencies Other than Bitcoin

Here is a list of the most active virtual currencies

Altcoins.com

Green Virtual Currency

VEN and HubCulture - Backed by carbon credits

Stellar

Stellar is a non-profit common financial platform, designed to be open and accessible to everyone and supported by one of PayPal's founders Keith Rabois.

Ripple

On December 22, 2020, the SEC determined that Ripple is a security.

live Ripple network graph

Virtual Currency Exchanges

We maintain a list of some of the hundreds of potential virtual currency exchanges.

Crypto / Digital Asset Media

CoinDesk
Cointelegraph
Altcointoday
Bravenewcoin
Cryptoarticles
CoinFire
thebitcoinchannel.com
Reddit / Bitcoin
Bitcoin Magazine
Virtual Currency Today
NewsBTC
CurrencyScene
Short Book on Becoming and MSB by Atlas (yes, this really is shameless self-promotion)

FinTech and Digital Banking Blogs (not just virtual currency)

Crypto Standards / Certification / Associations / Advocacy

Center for Technology Policy (built by crypto skeptics)
Bitcoin Mining Council (BMC)
Crypto Rating Council (CRC)
Crypto Council for Innovation (CCI) - Jack Dorsey
Crypto Open Patent Alliance (COPA)
Digital Dollar Foundation with former CFTC Chair
Association For Digital Asset Markets (ADAM)
Crypto Asset Trading Platform Alliance (CATPA)
Virtual Commodities Association
Fellowship of Ethereum Magicians
CoinCenter
Bitcoin Foundation
Chamber of Digital Commerce
Digital Currency Council
Digital Asset Transfer Authority (DATA)
Bitcoin Association
Digital Finance Institute
The Crypto Private Investor Group (CPIG)
Coalition of Automated Legal Applications (COALA)
Blockchain & Crypto Mining Association (BCMA)
The Association of Cryptocurrency Journalists and Researchers (ACJR).

Crypto Lenders / Borrowers

Is it legal to buy Bitcoin under U.S. law? Simple question answered here:

DeFi

DeFi or Decentralized Finance are distributed protocols that allow providers of assets, also known as liquidity providers (LPs) to lock-in assets, such as Ethereum (ETH) and receive rewards in exchange. Here is a list of the leading DeFi platforms.

NFTs

The law of non-fungible tokens (NFT) is being crafted right now. Nono-fungible tokens are digital assets that represent a unique creative or other work. One popular marketplace for NFTs is Opensea; but that is just a drop in the ocean, so to speak. Many NFTs are tokens on the Ethereum blockchain, but other blockchains are being used to host them, including EOS and others. You can use off-the-shelf tools to make NFTs such as Rarible, Mintbase, Cargo and Mintable.

Banks That Take Bitcoin or Other Virtual Currency

Two parts wishful thinking, one part fact: www.banksthattakebitcoin.com.

FinCEN on Crypto

OCC on Crypto

IRS on Crypto

IRS says virtual currency is property and subject to capital gains etc...

CFPB on Cryto

Risk to consumers posed by virtual currencies, CFPB, August 2014.

Federal Reserve on Bitcoin

October 7, 2014: Bitcoin: Technical Background and Data Analysis by Federal Reserve

U.S. Department of Justice on Bitcoin

US DOJ Speech on Prosecution of Bitcoin and Other Virtual Currency Cases, June 26, 2015

U.S. Senate Hearings on Crypto

U.S. Senate Committee on Homeland Security and Governmental Affairs held hearings on November 18, 2013 under the heading 'Beyond Silk Road Potential Risks, Threats and Promises of Virtual Currencies

cash is still probably the best medium to launder money [and not Bitcoin];
FinCEN does not know who should decide what Bitcoin is - as between real currency, a commodity or something else;
Bitcoin itself is more or less neutral;
Innovation is very important in the payment system; and
IRS to provide guidance as to tax treatment of Bitcoin.

The chair of the committee, Senator Tom Carper (D-Delaware), concluded by quoting Einstein in saying that in adversity lies opportunity.

U.S. State Law on Crypto

U.S. state law on crypto is an ever-evolving paint-by-number matrix. However, states tend to fall into one of two key categories. States like New York and Washington require licensure for most crypto-related activities, even 2- party buy-sell transactions, while other states do not treat crypto as equivalent to money and tend to require licensure for only instances where the entity in question also takes custody of fiat, like any other money transmitter requiring licensure.
NCSL maintains a neat list of pending crypto bills here.
Note that to serve persons in any given state, an entity must comply with the local state laws, as well as the BSA and FinCEN.

California Department of Business Oversight on Virtual Currency Business Licensing

New York DFS on Virtual Currency Business Licensing (VCB) or Bitlicense

June 3, 2015 New York BitLicense Regulations - Final Text **
May 7, 2015 itBit Trust Co. granted a license by NYDFS.
December 2014 new revised NYDFS BitLicense / VCB regulations.
December 18, 2014: NYDFS says miners, gift, merchants and people who buy to invest in Bitcoin don't need Bitlicenses.
December 2014 NYDFS publishes all 3,700 comments received on its draft BitLicense regulations.
July 17, 2014 NYDFS announces proposed BitLicense regulatory framework for virtual currency firms.
March 11, 2014 NYDFS agrees to accept license applications for virtual currency exchanges, being the first state to expressly do so.
January 28-29, 2014 NYDFS public hearing on the regulation of virtual currencies: (i) Link to archive of webcast, January 28-29 2014 NYDFS Public hearings on virtual currency and Bit License. (ii) Summary of NYDFS Virtual Currency Hearings Jan 28-29, 2014. (iii) New York times article Re January 28-29, 2014 NYDFS hearings on virtual currency.
November 14, 2013 NYDFS announces the possibility of a BitLicense as an MSB license tailored to virtual currency businesses.
August 12, 2013 NYDFS issues a notice of inquiry into virtual currencies, that optimistically speaks to both the opportunities and risks of virtual currencies, such as Bitcoin and also hints at the possibility of a dedicated set of rules applicable to only virtual currencies.
August 12, 2013 Bloomberg article that lists some of the entities possibly under review by NYDFS.

Atlas list of money transmitters licensed in New York.

California Department of Business Oversight (DBO) on Virtual Currency Business Licensing

December 8, 2014: CADBO announces through an interview that it will regulate Bitcoin.

In Florida, Bitcoin is not Money

July 22, 2016: FL v. Espinoza: Selling Bitcoin in Florida is not money laundering or MSB activity.

Massachusetts on Bitcoin

May 12, 2014: Mass DOB Guidance on Bitcoin ATMs, produced for Adam Atlas Client.

Central Bank Digital Currencies (CBDC)

Why should startups and speculators have all the fun? Central banks are getting into the digital currency issuing business. Here is a tracker for them.

Regulation of Virtual Currency Business Law - Selected International News Items

ICO

Initial Coin Offering (ICO), Initial Token Offering (OTP) are like an IPO, but without the regulatory compliance of securities laws. It's very easy to raise money with an ICO and there are hundreds of ICOs. The legality of a given ICO depends on a number of factors including whether the buyers expect a return on their investment.

Is an ICO legal? Check our our ICO legal hit or miss list here to see how some of them are doing.

Many ICOs are either securities or MSBs providing prepaid access. In order to escape one of those two classifications, quite a lot of legal thought needs to go into the piece.

Staking in Cryptocurrency

Staking cryptocurrency means locking it away for a period of time in exchange for the expectation of more cryptocurrency in exchange. It's like interest. Neo has been doing this for years and Ethereum is baking this into its 2020 upgrade to Ethereum 2.0. We expect the SEC and other regulators to study these investment vehicles closely.

Crypto Skeptics

Is crypto the biggest bubble of all? Not everyone is carried away by the promise of Bitcoin and other crypto currencies. Here are some leading skeptics:

Amy Castor - takes a 'real' journalistic approach to trashing crypto

David Gerard - works with Amy and is now the funniest crypto skeptic

Peter Schiff - a gold bug who eyes a crypto crash

Nouriel Roubini - a professor who sees crypto as a ponzi scheme

Trolly McTrollface - a crypto skeptic blog but has switched to being mostly anti-Russia

Cryptocriticscorner Podcast - think of this as the yin to Clubhouse's maxi yang

Crypto Blunders - Large

It's hard to keep up with all the freezing of crypto loans so we made this table help track the frozen assets in Celsius, Voyager Digital, 3AC, CoinFLEX, LUNA, Vauld and MtGox for historical context.

Neobanks

Here is a handy market survey of the current popular neobank solutions, including Synapse, Dwolla, Bitgo and BBVA.

Neobanks are small banks, bank-like services or resellers of limited bank services which present an alternative to traditional big-bank banking with annoying fees, like overdraft fees etc... Some examples of neobanking players include:

Chime
Empower
Simple
Moven
Monzo
Revolut
Aspiration
Robinhood

Is a neo-bank a regular bank with a better UI or something else entirely? Time will tell. Note that use of the term 'bank' or 'banking' is legally restricted to entities that are actually banks, so tread lightly with those terms.

FedNow

The U.S. Federal Reserve Bank announced on August 5, 2019 a plan to develop a new round-the-clock real-time payment and settlement service to support faster payments. Fednow.law can provide advice on the applicable laws.

Real Time Payments - RTP

The Clearing House (fka NACHA) has built a network enabling real time payments between US accounts and is working on integrating with foreign payment networks, including the EU and elsewhere.

Accessing RTP is always completed through a member financial institution (e.g. a bank).

Here are the RTP Rules and other key documents.

Office of the Comptroller of Currency (OCC)

The OCC charters, regulates, and supervises all national banks and federal savings associations as well as federal branches and agencies of foreign banks. The OCC is an independent bureau of the U.S. Department of the Treasury.

Banks that open bank accounts for MSBs have to prove to the OCC that they have adequate AML / CIP / KYC and risk mitigation programs in place to provide banking services to MSBs. The OCC's Bank Supervision Process Comptroller's

OCC Special Purpose National Bank Charters for Fintech Companies

Why become an MSB with the need to be licensed in 49 states when you can get a single special purpose national bank charter? This is the opportunity presented by the Office of the Comptroller of Currency on December 2, 2106.

For full instructions on how to get one of these charters, see the Comptroller's Licensing Manual.

The basic requirements for a special purpose national bank charter for a fintech company are:

National Bank Act Charter
Robust, well-developed business plan
Good governance structure
Capital commensurate with the risk and complexity of the proposed activities (including on- and off-balance sheet activities). Because these banks do not make loans or rely on deposit funding, the OCC typically requires them to hold a specific minimum amount of capital, which often exceeds the capital requirements for other types of banks.
Liquidity. In assessing the liquidity position of a proposed bank, the OCC considers a proposed bank’s access to funds as well as its cost of funding. Some key areas of consideration include projected funding sources, needs, and costs; net cash flow and liquid asset positions; projected borrowing capacity; highly liquid asset and collateral positions (including the eligibility and marketability of such assets under a variety of market environments); requirements for unfunded commitments; and the adequacy of contingency funding plans.
Compliance Risk Management.
Financial Inclusion. These principles include “encouraging” the national bank “to provide fair access to financial services by helping to meet the credit needs of its entire community” and “promoting fair treatment of customers including efficiency and better service.”
Revery and exit strategies.
Internal audit systems.

The OCC is welcoming comments on the proposal until January 15, 2017 at specialpurposecharter@occ.treas.gov.

Lots of discussion of this OCC proposal from American Banker, WSJ, Bloomberg and NYT, December 2, 2016.

Cyber Security Program (CSP)

As financial institutions and gateways to the financial infrastructure, MSBs are expected to make appropriate provisions for cyber security. Most U.S. states will wish to see an MSB taking security seriously, but some have gone further and mandated that the MSB have a Cyber Security Program that meets certain prescribed criteria.

New York DFS on Cyber Security Program

New York is the first state in the U.S. to adopt an explicit requirement for MSBs to have a Cyber Security Program:
March 1, 2017: New York MSBs must have a Cyber Security Program.

Getting a Bank Account for an MSB

Once licensed, the hardest task for a new MSB is to obtain a commercial bank account.

If a bank refuses to bank you because you are an MSB, show them this guidance from FinCEN saying that banks are not supposed to reject clients just because they are MSBs.

We believe that the following banks have, on some occasions, provided banking services to MSBs, you'll have to ask them to find out for sure.

Key Bank
Mellon Trust of New England
Sterling Savings Bank
US Bank
Wells Fargo Bank
TwinStar Credit Union
Bank of America
Mountain Pacific Bank
West Coast Bank
South Sound Bank

These banks have attended the National Money Transmitters Association events and they are familiar with transmitters:

We do not have any referral relationships with any banks, but if you call the above banks, please mention where you learned about them.

Autonomous Cars Self-Driving Cars and Payments

As cars start to drive themselves, there will emerge an economy of time that will be served by automated car-to-car payments.

Marijuana Payments Law

It is a U.S. federal crime to process payments in the U.S. related to marijuana because marijuana is restricted under the U.S. Federal Controlled Substances Act, at Schedule I. Our firm does not advise on marijuana payments law.

FinCEN has published guidance setting out the specific kinds of due diligence and risk assessments required of financial institutions that wish to service marijuana businesses. This is just the beginning of an evolving body of law that navigates between Federal and state law related to marijuana.

Marijuana Payments in the News

January 13, 2016: The Fourth Corner Credit Union banned from US banking system.
January 15, 2015: Colorado Fourth Corner Credit Union specializes in servicing the cannabis industry.
December 18, 2014: Congress passes bill to prevent government spending on MMJ prosecutions in states where it is legal.

US State Sales Tax for Online Sales

It has become common for US merchants and marketplaces that service US buyers and sellers to collect US state sales tax and remit it to US state departments of revenue. There have been various efforts in the U.S. Congress to adopt national legislation on this topic, but none are yet in effect. Retailers and marketplaces, however, are not waiting as the penalties for non-compliance can be very substantial.

A leading, automatic and free solution for this issue is TaxCloud.

International Money Services Business Regulations

Some of the key national regulators are listed here.

Mexico and Latin America

Visite también nuestro latinoamericano blog de empresa de servicios financieros aquí: Centros Cambiarios y Transmisores de Dinero.

The Federal Mexican AML agency is Unidad de Inteligencia Financiera(UIF).

Canada Federal FINTRAC MSB Registration

Here is a quick guide and FAQ on becoming an MSB in Canada.

Handbook sets out these requirements. All OCC enforcement actions can be obtained here.

The regulatory framework for MSBs (money services businesses) in Canada is much simpler than in the United States. With some exceptions, there are few provincial licensing requirements. There is, however, a Federal agency called Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) that requires registration of certain MSBs.

Here are links to all of Canada's MSB regulators and laws.

Financial Consumer Agency of Canada

The FCAC (like its US counterpart, the CFPB) was created to bolster regulation of consumer financial services, but its mandate has gone further into merchant-facing credit card payment processing, in part through the Code of Conduct for the Credit and Debit Card Industry in Canada.

Payments businesses operating in Canada, should monitor CFPB regulations as they may creep into previously unregulated payments markets.

RPAA Bank of Canada Registration

All Canadian MSBs and other payment services providers are required to register with the Bank of Canada under the Retail Payment Activities Act (RPAA). Here is an explainer on the RPAA.

Canadian Provincial MSB Licensing

In Canada, government has effectively outsourced protection of the financial system to banks. It is relatively easy to become registered with FINTRAC and licensed in the one Canadian province that requires MSB licensing, Quebec. Opening a bank account for an MSB, which is necessary for its operation, is however, very difficult. Be weary of Canadian banks that put MSBs through long account-opening procedures, sometimes lasting as much as a year, only to close the account because it is for an MSB.

FINTRAC

The Financial Transactions and Reports Analysis Centre of Canada (FINTRAC) is the Canadian equivalent of U.S. FinCEN.

FINTAC has published some very handy guidance here.

Quebec publishes regulations on the licensing of virtual currency exchanges.

Quebec has become the first the ten Canadian provinces to enact MSB licensing requirements. As of January 1, 2013, all Quebec MSBs will require a license from the L’Autorité des marchés financiers - Quebec MSB Regulator to operate an MSB in Quebec. Other Canadian provinces have yet to enact similar legislation.

Virtual Currency in Canada

Canadian crypto law explainer here.

Virtual currency businesses need to register with Fintrac obtain a Quebec MSB license and, most importantly, register with Canadian securities regulators such as the OSC.

EU

Not sure if someone has an EU license? Use this handy portal to search EU payment institutions, EMIs and more.

In order to increase efficiency in the licensing of financial services in the European Union, the European Commission has enacted directives concerning financial services within the EU. For example, the EU E-Money Directive (2009/110/EV) (EMD) provides for the licensing of electronic money institutions and issuers which licenses are recognized throughout the EU.

EU FAQ concerning AML.

SEPA B2B Mandate Forms. These are the EU equivalent of a business ACH consent. They aren't specific to payment institutions, but they are new in 2014 and frequently asked for.

United Kingdom

The Financial Conduct Authority (FCA) is the competent authority for most aspects of money services businesses in the UK under the Payment Services Regulations (PSR) of the Payment Services Directive (PSD). The UK implemented the PSD through the Payment Services Regulations 2009 (PSRs), which came into effect on 1 November 2009.

The FCA is creating the Professional Body Anti-Money Laundering Supervision (OPBAS) to bring coherence to AML rules.

Search entities registered with the FCA here.

The following are some key categories of entities of particular interest in the UK:

Small Payment Institution (Small PI): < €3million in payment transaction volume;
Authorised Payment Institution (Authorised PI): > €3million in payment transaction volume and/or entity wishes to passport into other EU States.

Rather than a surety bond (as required in US states) the FSA requires that the payments business have a certain minimum capitalization:

€20,000: capital required for authorization as a money transmitter;
€50,000: capital required for authorization as a paperless money transmitter; and
€125,000: capital required for authorization as another payment service.

Application for registration in the U.K. is pursuant to the The Payment Services Regulations 2009.

One of the looming questions is what will happen to FCA-registered PI's after Brexit. Many payments businesses are not waiting to find out and are applying for registration in EU-member Ireland.

Singapore

Singapore must be included in any serious discussion of international payments. As Southeast Asia's banking and commercial hub, Singapore has specifically catered to FinTech.

The Singapore Stored Value Facility (SVF) regulated by the Monetary Authority of Singapore, can be used as the banking host for an international e-wallet. Here are some examples of Singapore Stored Value Facilities:

Paypal Singapore Stored Value Facility
Ripple Singapore Stored Value Facility
Citibank Singapore Stored Value Facility
SmoovPay Singapore Stored Value Facility
Paylink Singapore Stored Value Facility

The Singapore SVF is astonishingly easy to setup thanks to the efficacy of the MAS. That said, if you have an SVF and take on customers in the US, EU, Canada or other countries that license MSBs, make sure the entity is compliant with the local MSB / payment institution licensing and registration requirements. Getting ewallet banking in one jurisdiction does not make compliance with AML laws in other jurisdictions disappear.

(p.s. As an alumnus of the National University of Singapore, it's nice to see Singapore leading in supporting Fintech innovation.)

France

Here is some analysis of the various payment systems in France that we have published.

Here is an article in a French law journal about Adam Atlas being one of the first lawyers who accepts Bitcoin.

Brazil

Money transmission in Brazil is regulated by Conselho de Controle de Atividades Financeiras - Council for Financial Activities Control (COAF) which has promulgated an interesting COAF - RESOLUTION Nº 006, OF JULY 2, 1999, requiring independent sales organizations to comply with record-keeping and reporting requirements of MSBs within Brazil. (Ironically, the COAF site does not have a trusted internet security certificate.)

China (中国汇款，支付服务) (Money Transfer, Payment Service in China)

On 18 March 2018, China’s lawmaker, the National People's Congress approved a reform plan for
the institutional organizations of the State Council. According to the Reform, the regulator of banking industries and the regulator of insurance industry will be merged into China Banking and Insurance Regulatory Commission (CBIRC).

Key financial regulators in China are:

Financial Stability and Development Commission (FSDC) - reform and development
Peoples Bank of China (PBOC) - monetary policy, regulation of financial industry
China Banking and Insurance Regulatory Commission (CBIRC) - market supervision, risk
China Securities Regulatory Commission (CSRC) - securities regulation

The China Banking Regulatory Commission (CBRC) 中国银监会 used to regulate banks in China.
One of the challenges in dealing with money transmission in and out of China (中国) are the strict
restrictions on remittances (汇款) in and out of China.

One popular provider of international remittance from China is ICBC (工商银行) . 欢迎中国的汇款 / 支付公司向 Adam Atlas 进行法律咨询。(Welcome Chinese MSB / Payment companies to Adam Atlas Attorney at Law firm site.)

Rest of the World

The Bank for International Settlements, that is like the Fed for the world, has a handy list of national banking regulators.

Payments Business Modelling

When planning a payments business, it's important to have a clear understanding of the flow of funds and who is taking risk on the loss of funds at each moment. Here is a sample 3D model to jog your imagination. You can also check out our www.paymentsbusinessideas.com.

MSB Compliance and Civil Cases: Notable U.S. Cases

Payments business operators should make no mistake about the seriousness of U.S. law enforcement of MSB laws, such as the Bank Secrecy Act or state MSB licensing laws. Whether or not your payments business is an MSB, you should be aware of recent enforcement actions against MSB and non-MSB entities alike to see that you are not the target of this kind of case. Here is the language of the Federal law that makes it a crime to transmit money in the U.S. without the necessary Federal registration and state licenses. Anyone who is new to the payments industry should read this section:

Title 18 U.S.C. ß 1960
(a) Whoever conducts, controls, manages, supervises, directs, or owns all or part of a business, knowing the business is an illegal money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.
(b) As used in this section -
(1) the term "illegal money transmitting business" means a money transmitting business which affects interstate or foreign commerce in any manner or degree and -
(A) is intentionally operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law; or
(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or
(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to promote or support unlawful activity;
(2) the term “money transmitting” includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and
(3) the term “State” means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States.

With the benefit of the above bit of law, you can now read the following civil, criminal or other regulatory enforcement cases of interest. The list below does not cover ICO legal hits and misses; they get their own list here.

2023

2022

So much has gone upside-down in crypto in 2022, that it gets a page of its own here.

2021

BlockFi:

2020

2019

Coinflux CEO to be extradited from Romania to US on money laundering and other charges, January 5, 2019.

2018

2017

Munchee, Inc. ICO MUN deemed investment contract by SEC, December 11, 2017
SEC concludes DOA ICO Tokens are securities, July 25, 2017. See FinCEN Notice.
BTC-e, Russian Bitcoin Exchange shut down for money laundering, July 26, 2017.
AlphaBay, largest online 'Dark Market' shut down by US DOJ, July 20, 2017.
Coin.mx principal gets 5 years in jail for illegal unlicensed MSB, June 28, 2017.
FinCEN and SDNY settle claim against MoneyGram Chief Compliance officer for $250,000, May 4, 2017. This is an important case because it sets a new precent in the personal liability of CCOs.
Merchants Bank of California, N.A. assessment of civil money penalty by FinCEN for $7,000,000, February 16, 2017.

2016

2015

2014

2013

2011

QPay Consent Order in New Hampshire for transmitting without a license, December 2011

LibertyReserve

May 28, 2013. Liberty Reserve is reported in the New York times as being accused of being responsible for laundering billions of dollars, conducting 55 million transactions that involved millions of customers around the world, including about 200,000 in the United States. Principals were charged with conspiracy to commit money laundering, conspiracy to operate an unlicensed money-transmitting business, and operating an unlicensed money-transmitting business. The money laundering count carries a maximum sentence of 20 years in prison, and the other two charges carry a maximum of 5 years each.

May 28, 2013 FinCEN published a Notice of Proposed Rule Making concerning Liberty Reserve seizing its accounts and prohibiting other financial institutions from dealing with Liberty Reserve.

Dwolla / MtGox / Mutum Sigillum / Bitcoin

2013 was a big year in virtual currency law enforcement. You might say, VCBs earned their stripes in that year. On May 15, 2013, the U.S. Department of Homeland Security seized some assets of Dwolla, a popular payment processor for Mt.Gox, the world's largest Bitcoin exchange which is based in Japan. The amount of this seizure is reported to be $2,900,000. Here is the seizure affidavit: Mt Gox Dwolla Warrant 5-14-13.

You can also reach us through www.moneyservicesbusiness.lawyer or www.law.money.

Here are some notes from a recent payments regulation conference.

The best place for fintech law. And we are carbon-neutral.

fintech.law ® is a registered U.S. trademark of Adam Atlas Attorney at Law.

____________________________________________________

Money Transmitter Licensing

Money Transmitter License Information for all States and Fintech Law Resource

information portal to access legal services from

Real Time Payments - RTP

Autonomous Cars Self-Driving Cars and Payments

Rest of the World