FinCEN Registration Process

FinCEN Registration Process

The Bank Secrecy Act (BSA) requires certain businesses to register with the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN). Money services businesses (MSBs) must comply with the BSA requirements applicable to financial institutions as well as the specific requirements applicable to MSBs, including FinCEN registration.

FinCEN Registration Process: Who Needs to Register with FinCEN?

A business that meets the definition of an MSB because it provides one or more of the following products or services must register with FinCEN unless an exception applies:

• Money orders
• Check cashing
• Traveler’s checks
• Currency dealing or exchange
• Money transmission

An activity threshold of greater than $1,000 per person per day in one or more transactions applies to the following: currency dealer or exchanger; check casher; issuer of traveler’s checks, money orders or stored value; and seller or redeemer of travelers’ checks, money orders or stored value. There is no activity threshold for money transmitters, and, thus, registration is required regardless of transmission activity.

The definition of MSB expressly excludes banks and entities registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission. Additionally, not all MSBs are required to register. For example, a person that is an MSB solely because that person serves as an agent of another MSB is not required to register. Registration is required, however, if a person engages in MSB activities on its own behalf and as an agent of another MSB.

What Does FinCEN Registration Involve?

To register, an MSB must file a completed form, FinCEN Form 107, Registration of Money Services Business. E-filing via the BSA E-Filing System is mandatory.

Registration of an MSB is the responsibility of the owner or controlling person of the MSB. For corporations, a duly authorized officer of the owner-corporation may sign the form on behalf of the owner-corporation. If more than one person owns or controls the MSB, the owning or controlling persons may enter into an agreement designating one of them to register the business. Notably, the failure of the designated person to register the MSB does not relieve any of the other persons who own or control the business of the liability for the failure to register the MSB.

Registration must be completed within 180 days after the date on which the MSB is established. One form is required regardless of the number of branches or branch offices. Similarly, only one form is needed regardless of the number of agents the MSB has authorized to sell or distribute its MSB services. However, the number of branches and/or agents must be reported on the form.

Agent Lists

MSBs that have agents must also prepare and maintain a list of their agents, which must be updated annually. Generally, the list must include:

• Name: The name of the agent, including any trade names or doing-business-as names.
• Address: The address of the agent, including street address, city, state, and ZIP code.
• Telephone Number: The telephone number of the agent.
• Type of Services: The type of MSB services the agent provides on behalf of the MSB maintaining the list.
• Gross Transaction Amount: A listing of the individual months in the 12 months immediately preceding the date of the agent list in which the agent’s gross transaction amount for financial products or services issued by the MSB maintaining the agent list exceeded $100,000.
• Depository Institution: Name and address of any depository institution at which the agent maintains a transaction account for any of the funds received in or for the MSB services the agent provides on behalf of the MSB maintaining the list.
• Year Became Agent: The year in which the agent first became an agent of the MSB.
• Branches: The number of branches and sub-agents the agent has, if any.

Record Retention

Registrants must retain all supporting documentation at a location in the United States for a period of five years. Supporting documentation includes a copy of the filed registration form, an estimate of the business volume of the MSB for the coming year, and information with regard to the ownership or control of the MSB.

Renewal

Registration must be renewed every two years. After an MSB completes its initial registration, the form to renew its registration must be filed by December 31 of the second calendar year preceding the 24-month renewal period. Thereafter, registration renewal must be filed every 24 months by December 31. Renewal is accomplished by filing FinCEN Form 107.

What Happens If You Fail to Register with FinCEN?

It is unlawful to conduct business without complying with the registration requirement, and you could face significant penalties. Failing to comply with FinCEN registration requirements can result in a civil penalty of up to $5,000 for each violation, and each day a violation continues constitutes a separate violation. Additionally, the Secretary of the Treasury may bring a civil action to enjoin the violation. In some cases, a criminal fine and/or imprisonment for up to five years may be imposed.

Consult With an Experienced Financial Services Lawyer

Payment services, blockchain and virtual currency companies, and other MSBs must comply with both the general obligations that apply to all financial institutions, as well as the specific obligations that apply to MSBs. Partnering with a Scarinci Hollenbeck financial services lawyer can help ensure that you meet all of your compliance obligations, from navigating the FinCEN registration process to satisfying the BSA’s anti-money laundering requirements.