Money Service Business Checklist

Money Service Business Checklist

In today’s regulated environment, registration as a Money Service Business with U.S. FinCEN is an absolute must (and likely legal requirement) for the following cryptocurrency industry players:

  1. Peer to peer Bitcoin and other cryptocurrency traders on sites like LocalBitcoins.com and Paxful.com;
  2. Over-The-Counter and “institution” Bitcoin and other cryptocurrency traders;
  3. Cryptocurrency custodians and other service providers; and
  4. Token issuers launching Initial Coin Offerings, Initial Exchange Offerings and Security Token Offerings.

A common misconception with potential Money Service Businesses is that registration alone is legally sufficient. It is, in fact, not. FinCEN is a division of the Department of Treasury charged with the administration and enforcement of the The Currency and Foreign Transactions Reporting Act of 1970 – commonly known as the Bank Secrecy Act, and its enabling regulations, commonly known as Regulation X. The Bank Secrecy Act and its underlying regulations not only layout the legal framework for mandatory registration as a Money Service Business, but also the policies and procedures that each Money Service Business must have in place. This includes, among other matters, procedures to filing Currency Transaction Reports and Suspicious Activity Reports. Thus, registration, by itself is not legally sufficient.

The Bank Secrecy Act, Regulation X and best practices would require the following written policies and procedures to be implemented by a Money Service Business:

A. Anti-Money Laundering (“AML”) policy: a BSA-compliant AML policy and procedure is an absolute requirement. You can find a sample below:

B. Know-Your-Customer (“KYC”) policy: a BSA-compliant KYC policy details the procedure to identifying customers.

C. Compliance Manager Designation: a document identifying the organizations mandatory Compliance Officer(s) and the roles and responsibilities of that title. This is relevant insomuch that the Compliance Officer serves as the clearinghouse for all BSA-related inquiries from employees.

D. Audit Policy: every Money Service Business is subject to an independent audit at least once every 18 months. The audit policy details the procedures for the audit.

E. Document Retention Policy: every Money Service Business must retain certain records for a period of 5 years. The Document Retention Policy outlines this responsibility and what documents must be retained by the MSB.

F. Currency Transaction Report Policy: a document outlining the parameters for when and how a Currency Transaction Report must be generated and filed.

G. Suspicious Activity Report Policy: a document outlining the parameters for when and how a Suspicious Activity Report must be generated and filed.

H. Employee Guidance Policy: this document outlines the high-level procedures for BSA compliance for employees and the legal implication of a failure to adhere to such standards.

I. Employee Manual: this document outlines the full scope of BSA compliance and details the rights and responsibilities of each employee.

J. OFAC Compliance Policy: much like any business in the U.S., the Office of Foreign Asset Control promulgates controls and restrictions on certain foreign entities and individuals.

The foregoing documents, in conjunction with a validly filed and accepted Form RMSB through the BSA E-filing portal will make your Money Service Business legally formed and compliant. Best practices would suggest to execute each of the foregoing before a notary and maintain for records, and in the event of an audit.

As always, your questions and comments are welcome – Cheers, AT ([email protected])


A former professional rugby player, Adam S. Tracy brings over twenty years’ experience as an attorney, consultant and dealmaker with a particular focus on cryptocurrency, digital products, payments and immersive corporate structures. As an accomplished executive and advisor to high risk merchants and stakeholders, Adam has proven himself as a results oriented, decisive leader with proven success advising early market entrants, technology adapters, as well as established participants across a wide range of verticals. Adam Tracy’s attack-first personality allows him to excel in dynamic, demanding environments including complex corporate negotiations, distressed environments and regulatory investigations.

In addition, Adam S. Tracy also has a successful track record co-founding high risk industry ventures, building & leading cross-functional teams, and spearheading diverse corporate transactions. A serial entrepreneur, Adam has successfully started and created exits across a wide swath of markets, including various mobile SaaS ventures, nutraceuticals, peer-to-peer payment systems, and several telemarketing-based ventures. Moreover, as a recognized expert in the payments field, Adam Tracy has been a blockchain and digital currency evangelist and influencer since the early days of Bitcoin.

Utilizing his proprietary “Pre-Event Driven™” strategy for decision making, Adam S. Tracy further leverages his over twenty years’ experience to create cost-effective, value-add solutions for each client. A data-driven acolyte, Adam continually refines his strategies based on field studies and data collection. Moreover, Adam Tracy further augments his range of solutions by actively networking with regulators, liquidity providers, legal and compliance experts, deal-flow brokers, investors and management of leading high risk industry ventures.

Adam S. Tracy earned his Bachelor of Science in Computer Applications and Bachelor of Science in Finance from the University of Notre Dame. He subsequently earned his Masters in Business Administration from the DePaul Kellstadt Graduate School of Business, while concurrently earning his Juris Doctorate from the DePaul College of Law. Adam lives outside Chicago with his with his wife, four dogs, and two cats.

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