Montana MSB – Where can I offer services?

Montana MSB and other Jurisdicions

We sometimes get asked by clients and leads where they can offer services with a specific financial license. In most cases there is of course no list of countries where you can offer your services without further licensing and no list of countries where you cannot (except for of course sanctions lists). Another exception would be for example a EU Electronic Money License or Payment Institution License which could be ‘passported’ to conduct business in all 27 EU member states. In addition to that, they are by no means restricted from taking a non EU customer onboard, but more on that below.

As with any license, if you target a specific jurisdiction with targeted marketing or if you can be considered to be soliciting customers in that jurisdiction in some other way, you are likely to trigger regulatory requirements there regardless of where you were incorporated and licensed. Operating with a physical presence within a jurisdiction would be another potential trigger regardless of where the customers are located.

Look at for example international financial licenses, often referred to as offshore licenses or Class II/B licenses. Say you obtain an international bank license from Puerto Rico (could be Bahamas, Dominica, Panama or any other) which lets you offer services to residents of any jurisdiction except Puerto Rico. In exchange for not offering services to the local population (which the regulators are tasked with protecting) you are subject to lower capital requirements and regulatory requirements in general. If the mere fact that having a customer in a certain jurisdiction would require you to also obtain a bank license there, this would clearly render the Puerto Rico license completely useless and with the legal capacity of offering services in a grand total of zero jurisdictions. This is of course not the case. However, if your Puerto Rico Bank would start advertising in say UK media, running TV and newspaper ads, soliciting deposits specifically from the UK investor public, you will quite quickly hear from the UK Financial Conduct Authority (FCA) and other regulators. The mere circumstance of having UK customers on your books would not necessarily trigger UK regulation, but actively soliciting UK customers and deposits specifically would.

So this logic of course applies to any financial license. You can have a Canada MSB registered with FINTRAC, a Montana MSB registered with FINCEN, a fully licensed bank in Lithuania, the same applies. Targeting a specific jurisdiction where you are not regulated would likely trigger local regulatory and licensing requirements regardless of where you are incorporated and licensed. Also, for MSBs operating in multiple US states, the lack of a license requirement in Montana might not offer any advantage. These businesses would still need to obtain licenses in other US states where they operate.

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