MY PRACTICES
BUSINESS STRUCTURING
PAYMENT LICENSING
BANKING & CONTRACTS
PAYMENT COMPLIANCE
DESIGNING THE LEGAL FRAMEWORK FOR YOUR PAYMENT SERVICE
Before investing in a payment platform or committing to a banking partner, a business needs to understand whether its proposed service can operate lawfully and what legal arrangements it requires. The analysis begins with the movement and control of funds: who receives the money, where it is held, who can direct its transfer, and when the customer’s payment obligation is discharged. We examine the proposed product, customer base, account structure, settlement process, and intended markets to identify the responsibilities of each participant and the issues that must be resolved before launch.
A payment service may involve several independent companies even when the customer experiences a single transaction. A platform may collect payment instructions, a licensed provider may receive funds, a bank may maintain the accounts, and another institution may complete delivery to the recipient. We help clients define these relationships, evaluate the legal implications of alternative structures, and determine which functions the business can perform itself and which require an appropriately authorized partner. Particular attention is given to customer ownership of funds, authority over accounts, refunds, failed transfers, and responsibility for losses.
Our work also addresses established businesses adding payment functions to their existing services. A marketplace collecting money for sellers, a software platform introducing a wallet, or a company arranging payouts to contractors may assume obligations beyond those associated with its original business. We assess how the proposed functionality changes the company’s legal position and help management determine what must be addressed before implementation. For foreign-founded businesses, this review can include the role of a U.S. entity, intercompany relationships, and related corporate and tax issues within the agreed scope.
DETERMINING AND OBTAINING THE REQUIRED AUTHORIZATIONS
A payment business needs a clear assessment of whether its activities require registration, licensing, or another form of authorization. The answer depends on the actual functions performed, the jurisdictions involved, and the legal relationships among the company, its customers, and its partners. Describing a business as a software platform, payment gateway, or processing service does not by itself determine its regulatory status. We assess federal money services business status, FinCEN registration requirements, and applicable state money-transmitter licensing obligations, including New York requirements.
Where relevant, we examine payment-processing exclusions, agent-of-payee provisions, and other potential grounds for operating without a particular license. We also evaluate arrangements in which the client proposes to act through a bank or licensed payment provider, identifying the activities covered by the relationship and any obligations that remain with the client. Federal registration, state licensing, and contractual approval by a payment partner are separate questions, and our analysis addresses each applicable requirement.
Our services include written regulatory assessments, jurisdiction-specific licensing plans, application preparation, and responses to regulatory requests. For businesses planning a phased launch, we help identify the requirements associated with the initial product and markets, followed by those triggered by expansion. We also advise on licensing implications arising from changes in ownership, business activities, payment flows, or operating arrangements so that management can evaluate proposed changes before implementing them.
ESTABLISHING AND PROTECTING ESSENTIAL PAYMENT RELATIONSHIPS
A payment business depends on agreements that allow it to receive funds, process transactions, maintain accounts, and complete settlement. Those agreements also determine what happens when a provider imposes additional reserves, delays settlement, identifies a compliance concern, or decides to terminate the relationship. We review and negotiate contracts with banks, payment processors, licensed money transmitters, merchant-service providers, and other participants in the payment chain, with attention to provisions that affect operational continuity and access to funds.
Our review addresses settlement timing, transaction limits, reserves, refunds, chargebacks, indemnities, audit rights, data access, and the allocation of compliance responsibilities. We examine the circumstances in which a counterparty may suspend services, change commercial terms, withhold money, or require corrective action. Where customer funds are held in accounts maintained by a partner, we review the contractual arrangements governing ownership, access, reconciliation, and the treatment of funds if the relationship ends.
We also assist with legal and compliance materials requested during banking and partner due diligence. These may include a description of the business model and funds flow, the basis for the company’s regulatory status, and an explanation of how compliance responsibilities are allocated. Customer terms, merchant agreements, and payment authorizations are considered alongside the underlying provider contracts so that the business understands whether its promises to customers match the services and protections available from its partners.
When a banking or processing relationship deteriorates, we advise on settlement holds, reserve increases, termination notices, and allegations of contractual or compliance failures. Our work may include examining the stated basis for the action, preparing responses to information requests, negotiating the release of funds or remediation terms, and evaluating available claims and defenses. Where a transition to another provider is necessary, we address the contractual issues affecting customer obligations, outstanding transactions, records, and remaining balances.
SUPPORTING DOMESTIC OPERATIONS AND CROSS-BORDER EXPANSION
Payment businesses need compliance procedures that reflect their actual products, customers, transaction patterns, and geographic exposure. Applicable legal obligations depend on the company’s status and activities, while banks and payment partners may impose additional contractual requirements. We help clients identify those obligations and develop policies that assign responsibility for customer review, transaction monitoring, escalation, recordkeeping, and reporting. The objective is to establish procedures that correspond to how the business operates and can be implemented by the personnel and providers responsible for compliance.
Our services include the development and review of applicable AML, KYC, customer due diligence, and OFAC sanctions procedures. We examine how customers and counterparties are reviewed, how potentially problematic transactions are identified, and how decisions are escalated and documented. Where multiple companies participate in providing the service, we help clarify which party performs each function, what information must be exchanged, and how the client can assess whether its partners are fulfilling their contractual responsibilities.
For international payment arrangements, we evaluate U.S. sanctions issues affecting counterparties, ownership structures, financial institutions, and proposed payment routes. We also advise on the treatment of blocked or rejected transactions and the legal implications of entering additional markets or changing settlement partners. Foreign-law questions are coordinated with appropriately qualified counsel, while the U.S. analysis is considered alongside the requirements of the banks and processors needed to support the proposed arrangement.
Customer protection and payment documentation form another part of the compliance review. Depending on the product, our work may address electronic fund transfers, consumer remittances, commercial payment obligations, fee disclosures, error-resolution procedures, and relevant payment-network requirements. For operating businesses, we assist with banking-partner inquiries, regulatory requests, identified policy deficiencies, and compliance questions arising from new products or changes in the business model.
DISCUSS YOUR PAYMENT BUSINESS
An initial review begins with the proposed or existing service, the parties involved, the intended customers and markets, and the way funds move through the arrangement. Relevant materials may include a business description, funds-flow diagram, existing licenses or registrations, partner agreements, and correspondence identifying a regulatory or banking concern. These materials allow us to define the principal legal questions and recommend an appropriate scope of work.
An engagement may begin with a focused legal assessment and proceed to licensing, contracts, compliance documentation, or ongoing counsel. Defined assignments may be structured on a flat-fee basis, with further implementation stages agreed after the initial requirements are understood. Contact Kutuzov & Associates, P.C. to discuss the legal support needed to launch, operate, or expand your payment business.
Viacheslav Kutuzov
VIACHESLAV KUTUZOV, Esq.
New York Attorney & Counselor-at-Law (6192033)
admitted to practice before the IRS (No.00144810-EA)
55 Broadway, Floor 3, New York, New York 10006
Phone: +1 646 8374669
We apply international standards of confidentiality
ISO / IEC 27001 Information security management
