Money Transmission & AML

Tap into our attorneys’ experience in navigating state money transmitter laws and state and federal AML laws and regulations.

Money transmission in the United States is governed by both federal and state law.

Regarding federal law, money transmitters are regulated by multiple federal agencies, including the Financial Crimes Enforcement Network (“FinCEN”) and the Office of Foreign Assets Control (“OFAC”). One of FinCEN’s purposes is to combat money laundering and terrorist financing. Money transmitters/money services businesses are subject to certain requirements under the Bank Secrecy Act regulations, which generally require registration, an anti-money laundering program, reporting, and record-keeping requirements. Under federal law, violation of money transmitter laws, such as failure to be appropriately licensed, can be a civil and/or criminal violation. See 18 U.S.C. §1960. The Consumer Financial Protection Bureau and Federal Trade Commission also regulate consumer issues relating to money transmission.

A “money transmitter” is someone who provides money transmission services; “money transmission services” means the acceptance of currency, funds, or other value that substitutes for currency from one person and the transmission of currency, funds, or other value that substitutes for currency to another location or person by any means. 31 CFR §1010.100(ff)(5)(i)(A)-(B). A person still qualifies as a money transmitter if the form of value received and transmitted is different; moreover, the acceptance and transmission of value may occur in either order (i.e., a company could receive payment after transfer of funds).

States have their own money transmission laws, most of which require licensing of money transmitters located in or doing business in the state. Regulation by states is by state attorneys general and other specialized departments. Under the Money Transmitter Model Law, adopted in some form by many states, money transmission means: (1) Selling or issuing payment instruments, (2) Selling or issuing stored value, or (3) Receiving money for transmission.

Our firm offers a combination of experience with:

• Emerging Payment Systems

• Government Regulatory Compliance

• Investigations on the Topic of Money Transmission

We help companies navigate the complicated web of money transmission and AML laws and regulations. Here are some examples of how we help businesses:

Compliance: Provide compliance advisory packages: AML/BSA, UDAAP, PCI-DSS, GLBA, EFTA, state laws, etc.

Licensing: Guide clients through the money transmitter application and licensure process, including developing a national strategy to achieve compliance in any or all 50 states, as well as follow up work to maintain and renew licenses. We also obtain opinion letters and license exemptions from regulators so that our clients business can grow and thrive without the burden of unnecessary compliance;

Representation: Represent clients before state and federal regulators, including in response to inquiries, regulatory or enforcement actions, investigations, and routine examinations;

Banking: Guide clients through the process of obtaining an MSB banking relationship;

Business: Advise on optimal corporate and tax structure, draft governance documents, advise on transactions, and design of payment/fund flow ecosystem and implementation;

Emerging Business Models: We tackle complicated issues arising from new business models, including models that use emerging payment systems like decentralized virtual currencies and cryptocurrency, and models that use various forms of prepaid virtual cards.

See our developed packages that can assist with your Licensing and Compliance needs:

COMPLIANCE PACKAGE

This package contains the most common state requirements for applications to obtain state licensure.

• Comprehensive BSA/AML Program
• Suspicious Activity Report (SAR) filing procedures and internal controls
• Office of Foreign Asset Control (OFAC), Specially Designated Nationals and Blocked Persons List (SDN) Policy
• Graham-Leach-Bliley (GLBA) Policy
• Third-party Service Provider Due Diligence Policy
• Authorized Delegate Policy
• Customer Complaints and Dispute Resolution Policy
• Transaction Monitoring Policy
• Law Enforcement Request Policy
• Disaster Recovery and Business Continuity Policy
• Red Flags Rule
• Cybersecurity and Privacy Program

***Completion of multiple components of the COMPLIANCE PACKAGE listed above is required in order to obtain any components of the LICENSING PACKAGE below.

LICENSING PACKAGE

Firm will guide client in preparing and submitting necessary application components, those typically include:

• FinCEN Registration
• Corporate formation documents
• BSA/AML Program (separate service, see above)
• Independent Review of AML Program
• Financial statements (audited where required), and projected financial statements
• Background checks and reports of officers/owners
• Management and organization charts
• Flow of funds structure diagram
• Business plan
• Model customer receipts
• Model authorized delegate contracts
• Surety Bond
• Money transmission volume declaration

To discuss how we can help with your with your money transmission or AML compliance issues, please call us at 415-955-1155, ext. 120, or submit your matter online.