We’ll just have to wait and see, but it looks like they might try. In a ‘guidance’ issued in February last year FinCEN believes that a business may qualify as a Money Services Business “based on its activities within the United States, even if none of its agents, agencies, branches or offices are physically located in the United States.”

Pelle of PayGlo.be spotted this ‘guidance’ titled “Foreign-Located Money Services Businesses” on FinCEN’s website.

Here is the important bit…

“An entity may now qualify as a money services business (MSB) under the Bank Secrecy Act (BSA) regulations based on its activities within the United States, even if none of its agents, agencies, branches or offices are physically located in the United States. The Final Rule arose in part from the recognition that the Internet and other technological advances make it increasingly possible for persons to offer MSB services in the United States from foreign locations.”

Pelle gives us some “unsubstantiated paranoid suggestions from a non lawyer programmer who doesn’t want to see anyone get in trouble.”

“So what constitutes doing business in the US? That is more complicated. In theory it could be any of the following:

The following are more serious and may require MSB:

  • Are any of your clients located in the US?
  • Are your servers hosted in the US?
  • Do you advertise in the US?
  • Are you providing an exchange between buyers and sellers both in the US?
  • Are you providing merchant services to US merchants with customers in the US?

The first may not count on their own, but together they may. The others are more serious. If you’re advertising in the US (eg. targeting US customers with Google AdWords) you are at risk of being a US MSB. The final 2 can obviously be interpreted as offering MSB services in the US.

MtGox are already registering in the US. Other non US businesses should start evaluating what to do.

Under the radar

My guess is that many smaller businesses will ignore the rules as they can slide under the radar.

I’d say if you run an exchange like my friend Lasse’s Bitcoin Nordic with a clear geographical target market outside the US that there isn’t too much to worried about.

Resident agent

If you do register one of the major hassles will be assigning an agent in the US.

‘The Final Rule requires each foreign-located MSB to appoint a person residing in the United States as an agent for service of legal process with respect to compliance with the BSA and its implementing regulations.’

I’m not sure how to solve this. My guess is a US law firm can handle it.”

“What to do?

This is a complex issue. I also don’t think there is a need to rush making a decission. But here are some unsubstantiated paranoid suggestions from a non lawyer programmer who doesn’t want to see anyone get in trouble.

Are you currently advertising in the US using Google AdWords or other geo targeted advertising networks? I would turn that off until there is better information/understanding about this.

Do you connect to the US banking system, through ACH/Dwolla or other US specific methods? If this is an important part of your business, you should start looking into getting a MSB license.

Do you have a large amount of exchange transactions between US customers? If this is important to you, you should start investigating getting a MSB license. If you don’t advertise in the US and host in the US you probably can wing it for a while.

Are your servers in the US? If you have any significant amount of customers in the US look into registering or moving hosting outside the US.

Are you paranoid and risk averse? You may want to implement IP address restrictions on the US. I hate seeing those kinds of things as they break the internet, but if it makes you sleep at night it may be an option.

Are you a small fish? You can probably carry on as usual.

Do you want to make a political stand? If you plan on doing civil disobediance on this and in a public way like Wiki Leaks and Piratebay have done? Good for you, we need brave people to fight unfair rules.

But it’s up to you to decide how important vacation/business trips are to the US for you (and your loved ones).

My guess is you will have to have a combination of a very good business and an extremely big mouth to worry about international arrest warrants.”

And naturally…

“If you have any doubt, try to find a lawyer with experience in these things.”

 

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