Hey Compliance Nerd!
I would like to serve customers in the USA, but I don’t plan to have staff or offices there (we’re based in Canada). I’ve tried reading through the New York Bitlicense and other money transmitter rules, but it seems complicated and expensive. Basically, I’d like to know if all of that is really necessary if all of our transactions take place online. I don’t want to get arrested or hit with a crazy fine, but I also don’t want to jump through these hoops unless it’s absolutely necessary.
Hey America’s Hat!
Doing business with customers in the USA can be complicated. When it comes to financial transactions, your location doesn’t matter as much as your customer’s location. If you’re dealing with customers in the USA, you should be ready to either comply with their rules or risk penalties (which tend to be much more punitive than their Canadian counterparts).
While it can be tempting to think about serving “just a few” customers based in the USA, it’s useful to know that law enforcement agencies have been known to pose as customers in sting operations set up to catch unlicensed money remitters. If that doesn’t give you the shivers, the dollar value of related penalties in the US can be quite high – for instance, the $700,000 USD fine against Ripple Labs earlier this year.
Ultimately, as a business owner, you need to do what’s best for your business, but there probably aren’t many business owners that will knowingly take this type of risk to serve a few customers in the USA. If you choose to serve American customers, you should consider both the federal requirements, including registering with the Financial Crimes Enforcement Network (FinCEN) – they’re basically the American FINTRAC, as well as adhering to the state–by-state requirements.
Unfortunately, in some states this translates to “go big or stay home” since it would not be profitable for smaller, or even mid-sized, companies to meet these requirements.
Amber D. Scott, MBA, CIPP, CBP, CAMS
Founder & Chief AML Ninja, Outlier Solutions Inc.
Amber is a long time, self-described “compliance nerd”. Amber is a firm believer in the idea that good compliance can enable good business. Find out how at www.outliercanada.com or reach out to her directly at [email protected].