VIACHESLAV KUTUZOV, Esq.

New York Attorney and Counselor-at-Law

New York Financial Operations Licenses

My practices

New York State BitLicense (Virtual Currency)

New York State
Money Transmitter License

FinCEN Money Business License

Anti-Money Laundering Polices & Compliance

New York Money Transmitter License

A New York Money Transmitter License (NYMTL) is a valuable and highly sought-after license for businesses providing money transmission services. According to the New York Banking Law, no person can engage in the business of selling or issuing checks, or receiving and transmitting money, without a license from the Superintendent of the Department of Financial Services (DFS). This is a requirement not just in New York, but in most other states and the District of Columbia as well.

The license is necessary for businesses engaged in a variety of activities, including:

Issuing and selling money orders or traveler's checks.
Money transmission, which involves moving funds between individuals or locations.
Check cashing for at least $1,000 for any person on any day.
Currency dealing or exchange of more than $1,000 for any person on any day.
Providing and selling prepaid access or stored value.
Bill paying.

It is important to note that certain institutions are exempt from this licensing requirement, including banks, trust companies, savings banks, and credit unions. A NYMTL is specifically required for conducting these activities with

fiat currency.

Virtual Currency Business Activity License ("BitLicense")

The license is necessary for businesses engaged in a variety of activities, including:

Issuing and selling money orders or traveler's checks.
Money transmission, which involves moving funds between individuals or locations.
Check cashing for at least $1,000 for any person on any day.
Currency dealing or exchange of more than $1,000 for any person on any day.
Providing and selling prepaid access or stored value.
Bill paying.

fiat currency.

Federal Registration of Money Services Businesses (MSB)

In addition to state-level licensing, certain Money Services Businesses (MSB) are federally mandated under the Bank Secrecy Act (BSA) to register with the Financial Crimes Enforcement Network (FinCEN). This registration must be completed within 180 days of the MSB's establishment. Registered MSBs are also required to prepare and maintain a list of their agents, which must be updated annually.

An entity is considered an MSB and must register with FinCEN if it provides one or more of the following services:

Money Orders
Traveler's Checks
Money Transmission (regardless of the volume of activity)
Check Cashing (for a single person in an amount over $1,000 in any given day)
Currency Dealing or Exchange (for a single person in an amount over $1,000 in any given day)
Issuing, Selling, or Redeeming Stored Value (only if the business also provides other services listed above)

A key exception is an entity that operates exclusively as an agent of another MSB. Other exceptions include the U.S. Postal Service and government agencies.

Combined State and Federal Services

Obtaining a New York Money Transmitter License, a BitLicense (if applicable), and registering as a federal Money Services Business are distinct but interconnected processes. We can provide assistance with all of these, ensuring a seamless and comprehensive approach to regulatory compliance. Our services include company registration, drafting license applications, and preparing supporting documents such as AML/CFT policies. By handling both the state and federal requirements, we ensure your business is compliant and ready to operate in the complex financial landscape.

Our Process: A Step-by-Step Guide

Navigating the licensing and registration process for a financial institution can be complex, but with our expertise, you can confidently and efficiently launch your business. We will guide you through each stage, from initial preparation to final approval, ensuring every detail is handled correctly.

Step 1: Initial Consultation

We begin with a thorough consultation to understand your business model, services, and corporate structure. This crucial first step allows us to tailor our approach to your unique needs, identifying potential challenges and developing a strategic plan for success.

Step 2: Company Formation

Before we can proceed with the application, your business must be legally established. We assist with the necessary initial filings, including registering your entity with the New York Department of State (NYSDOS) to ensure it is legally authorized to do business in New York. This foundational step is critical for a smooth application process.

Step 3: Application Preparation and Documentation

The application for a New York Money Transmitter License and federal MSB registration requires extensive and meticulous documentation. We will work with you to prepare and organize all required forms and supporting documents, including:

Company Form (MU1): A detailed form outlining your business structure, ownership, and financial information.
Individual Form (MU2): Required for all control persons within the company, including officers, directors, and significant owners. This form details their background, financial history, and other relevant information.
Organizational Documents: We will help gather and prepare all necessary corporate documents.
Business Plan: A comprehensive plan detailing your business model, target market, and financial projections.
Biographical Statements: Detailed statements for all key individuals.
Financial Statements: Required for both the company and control persons.
Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) Program: We will assist in developing a robust AML/CFT program that meets both state and federal requirements.
Surety Bond: We will advise you on the requirement for a surety bond, which for a New York Money Transmitter License, is a minimum of $500,000.

Step 4: Submission and Regulatory Liaison

We manage the submission of your application through the Nationwide Multistate Licensing System and Registry (NMLS). The NMLS is the official system used by the New York Department of Financial Services (NYDFS) to process license applications. We will act as a liaison between your company and the regulatory authorities, responding to any inquiries and addressing any concerns that may arise during the review process.

Step 5: Final Approval and Ongoing Compliance

Once the NYDFS has reviewed and approved your application, your New York Money Transmitter License will be granted. Similarly, we will ensure your FinCEN registration is successfully completed. Our services don't end with approval; we can also advise on ongoing compliance requirements to ensure your business remains in good standing with both state and federal regulators.

Frequently Asked Questions

FAQs

What is a Money Transmitter License?

A Money Transmitter License (MTL) is a state-level license required for businesses that transmit money on behalf of others. This includes services such as wiring money, issuing money orders, and cashing checks above a certain threshold. In New York, this license is overseen by the Department of Financial Services (NYDFS).

What is the difference between a state license and federal registration?

A state license (like the NYMTL) authorizes your business to operate within that specific state and is granted by the state's financial regulator. Federal registration is a separate requirement under the Bank Secrecy Act (BSA) where certain money services businesses (MSBs) must register with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Treasury. Your business may need both to be fully compliant.

What is the NMLS?

The Nationwide Multistate Licensing System and Registry (NMLS) is an online platform used by state regulatory agencies to manage license applications and renewals. In New York, the NYDFS uses the NMLS to process applications for the Money Transmitter License.

Is a "BitLicense" the same as a Money Transmitter License?

No, a BitLicense is a specific license required in New York for businesses engaged in virtual currency activities. While a money transmitter license covers traditional forms of money, the BitLicense is an additional requirement for businesses that use, store, or transmit virtual currencies. Depending on your business model, you may need to obtain both.

What is the minimum capital requirement for a New York Money Transmitter License?

The minimum capital requirement varies. It is determined by the Superintendent of the NYDFS based on factors such as the volume of business, financial condition, and type of services offered. However, a surety bond is required with a minimum amount of $500,000.

What is the role of an AML/CFT program?

An Anti-Money Laundering (AML) and Counter-Financing of Terrorism (CFT) program is a mandatory set of policies, procedures, and internal controls designed to prevent your business from being used for illegal activities. Both the NYDFS and FinCEN require that your business have a comprehensive and well-documented AML/CFT program in place.

Documents & Compliance

New York State Money Transmitter License

Documents needed for licensure

Here’s the list of documents required for the New York Money Transmitter License application based on the checklist you provided:

Financial Statements – Two most recent years of audited financial statements (or initial statement for startups).
Other Trade Name Documentation – Authorization to do business under a trade/assumed name, if applicable.
Resident/Registered Agent Information – Listed in the MU1 form.
Non-Primary Contact Employees – Identified in MU1 for accounting, licensing, complaints, legal, and pre-exam contact.
FinCEN Registration Confirmation – Number and filing date.
Bank Account Information – Domestic and foreign bank details used for money transmission and credit facilities.
Chief Compliance Officer Documentation – Experience and training evidence; MU2 form for individual.
Credit Report – For required individuals.
Credit Report Explanations – Documentation for derogatory items, if applicable.
AML/BSA Policy – Detailed compliance program description.
IT Policy and Procedures – Cybersecurity and penetration/vulnerability testing documentation.
Business Plan – Including marketing, products, markets, structure, jurisdictions, pro forma financials, and assumptions.
Certificate of Authority / Good Standing – Dated within 60 days of application.
Agent and Correspondent Policies – Procedures for agents, contracts, and related documentation.
Document Samples – Customer agreements, operating agreements, receipts, money orders, etc.
Flow of Funds Structure – Narrative and diagram for transaction processing.
Formation Documents – Depending on entity type (Articles, By-Laws, Partnership Agreements, Trust Certificates, etc.).
Management Chart – Names and titles of directors, officers, managers; reporting lines.
Organizational Chart/Description – Ownership percentages, subsidiaries, affiliates, 10%+ owners.
Permissible Investments List – With book or market values.
Permissible Investments Affidavit – Compliance with Section 651 of the Banking Law.
Surety Bond – Minimum $500,000, mailed to NY-DFS.
Legal Name/Status Documentation – Driver’s license or passport for individuals.
Personal Financial Statement – For 10%+ owners, all officers, and certain indirect owners.
Authority to Release Information – Signed form for each control individual.
Restricted Words Approval – If applicable to company name.
Branch Location List – Address and contact for each branch.
Fingerprints for Control Individuals – As per NY-DFS instructions.
Foreign Control Person Background Reports – If control person lived outside the U.S. in past 5 years.

New York State BitLicense (Virtual Currency)

Documents needed for licensure

Here’s the list of documents required for the New York Virtual Currency Business Activity Company License from your checklist:

Financial Statements – Two most recent years of audited statements (or initial statement for startups; unaudited allowed with explanation).
Other Trade Name Documentation – Authorization to do business under assumed name, if applicable.
Resident/Registered Agent Information – Listed in MU1.
Non-Primary Contact Employees – For accounting, licensing, complaints, legal, and pre-exam contact.
FinCEN Registration Confirmation – Number and filing date.
Bank Account Information – Domestic and foreign accounts for VC business and credit facilities.
Direct Owners & Executive Officers – MU2 forms for each; includes chief compliance officer and AML/BSA officer qualifications.
Indirect Owners – MU2 forms for each.
Qualifying Individuals – MU2 forms if required by NY-DFS.
Credit Report – For required individuals.
Credit Report Explanations – Documentation for derogatory items, if applicable.
AML/BSA Policy – Most recent policy, implementing procedures, risk assessment, methodology, and independent review.
Business Plan – Detailed company and product info, fee schedule, valuation methods, insurance, third-party services, wallet structure, licensing status, projected financials, and assumptions.
Certificate of Authority / Good Standing – From formation state and NY, dated within 60 days.
Company Staffing & Internal Policies – Privacy & security, cybersecurity, vendor management, business continuity, consumer protection, anti-fraud, complaints, and related SLAs/agreements.
Ownership Itemization – List of all individuals/entities with direct or indirect ownership interests and percentages.
Document Samples – Disclosures, agreements, receipts, confirmations, etc.
Flow of Funds Structure – Narrative and diagrams for all transaction types (VC and fiat).
Formation Documents – Depending on entity type (Articles, By-Laws, Partnership Agreements, Trust Certificates, etc.).
Management Chart – Names/titles of directors, officers, managers, business units, and reporting lines.
Organizational Chart/Description – Ownership percentages, parents, affiliates, subsidiaries, 10%+ owners.
Surety Bond OR Trust Account Authorization – $500,000 minimum; proof mailed to NY-DFS.
Photo Identification – Government-issued ID for individuals.
Personal Financial Statement – For direct/indirect owners, executives, and qualifying individuals.
Authority to Release Information – Signed form for each direct/indirect/qualifying individual.
Verification of Experience – Resume or CV for each MU2 individual.
Restricted Words Approval – If applicable to company name.
Fingerprints for Control Persons – Per NY-DFS fingerprinting instructions.
Foreign Jurisdiction Background Reports – For MU2 individuals who have not resided in the U.S. in past 5 years; includes credit, criminal, employment, media, and regulatory history.

FinCEN Money Services Business Registration

Documents needed for registration

Federal registration as a Money Services Business (MSB) with the Financial Crimes Enforcement Network (FinCEN) is a distinct requirement from state licensing. While the primary submission is the registration form itself, FinCEN mandates the retention of specific supporting documentation for a period of five years. This information must be maintained at a location within the United States.

Here's a breakdown of the required documentation and information you must retain:

Registration Form: A complete copy of the FinCEN Form 107, "Registration of Money Services Business," as filed with the IRS Detroit Computing Center (DCC). This form is the core document for your federal registration.
Estimate of Business Volume: Documentation providing an estimate of your MSB's projected business volume for the upcoming year. This helps FinCEN understand the scale of your operations.
Ownership or Control Information: Detailed information regarding the individuals or entities that own or control your MSB. This typically includes identifying information for beneficial owners and those with significant control.
Agent List: A comprehensive listing of all agents that your MSB has authorized to sell or distribute its money services. This list must be updated annually and typically includes the agent's name, address, telephone number, types of services provided, gross transaction amounts, and the depository institution where they maintain a transaction account for MSB funds.

These requirements are outlined in 31 CFR 1022.380(b)(1)(iii) and (d), and in the instructions accompanying the FinCEN registration form. Our firm assists in ensuring you meet both the registration and record-keeping obligations to remain compliant with federal regulations.

Anti-Money Laundering Policies & Compliance

Regulatory compliance is a critical component of establishing and maintaining a financial institution. Our services include drafting and implementing the robust policies required to meet the stringent standards set by regulatory bodies such as the New York Department of Financial Services (NYDFS) and the Financial Crimes Enforcement Network (FinCEN). Our comprehensive approach ensures that your business not only gains licensure but also operates with a strong framework to combat illicit financial activities.

We provide drafting services for the following essential policies:

Anti-Money Laundering (AML) / Bank Secrecy Act (BSA) Policy: This foundational policy is designed to prevent your business from being used for money laundering and terrorist financing. It includes detailed procedures on customer due diligence, suspicious activity monitoring and reporting, and record-keeping, as required by both state and federal regulations. Our policies are tailored to your specific business model and risk profile, ensuring compliance with both New York's Part 416 regulations and the federal BSA.
Know Your Customer (KYC) Program: A KYC program is a core component of your AML framework. We will draft policies that establish procedures for verifying the identity of your customers, understanding the nature of their business, and assessing their risk profile. This includes procedures for identifying beneficial owners and conducting ongoing monitoring of customer accounts.
Transaction Screening and Filtering Program: This program, required by New York's Part 504 regulations, is designed to ensure that transactions are screened against sanctions lists, such as those maintained by the Office of Foreign Assets Control (OFAC). We will draft policies that outline the procedures for this screening and the steps to take when a potential match is found.
Information Technology (IT) Security Policy: A robust IT security policy is mandatory to protect sensitive customer data and your business's systems. This policy, which we draft to comply with New York's Part 500 regulations, covers key areas such as access control, business continuity management, incident response, and vendor management.
Agent and Correspondent Policies: For businesses that utilize agents or correspondents, we will draft detailed policies covering agent selection, contract procedures, record-keeping, remittance protocols, and compensation arrangements, as required by the NYDFS.
Flow of Funds Structure: We draft a clear and detailed description of your business's transaction flow, including a flowchart, which explains each step from the initial customer interaction to the final settlement of funds. This document clarifies the roles and liabilities of all parties involved in a transaction.