Supporting Money Transmitter Compliance for an MSB’s U.S. Crypto Operations
A global financial technology company engaged InnReg to support critical aspects of its US money transmitter compliance program. Through its US entities, the company operates under federal Money Services Business requirements and maintains state money transmitter and virtual currency licenses where applicable.
The engagement focused on the regulatory infrastructure required to operate and maintain a crypto-related money transmission business in the United States. This included state license maintenance, regulatory reporting, permissible investment reviews, surety bond monitoring, regulatory examinations, AML testing, KYC and AML platform validation, and NYDFS readiness.
This case study focuses specifically on InnReg’s work supporting the client’s US money transmitter operations. It does not cover InnReg’s work with other regulated entities within the broader corporate group.
Objective
The client wanted to strengthen the compliance infrastructure supporting its US money transmitter and virtual currency operations. The engagement focused on recurring state licensing obligations, regulatory reporting, AML testing, KYC and AML platform validation, regulatory examinations, and remediation workstreams.
A key priority was managing the state-by-state licensing lifecycle for a complex money transmitter footprint. This included regulatory calendars, annual license renewals, MSB call reports, permissible investment reports, annual financial statement submissions, authorized agent reporting, advanced change notices, surety bond changes, and regulator communications.
Another priority was preparing for New York operational readiness. This included support for NYDFS Part 504-related remediation, transaction monitoring and sanctions filtering controls, model validation planning, certification support, data governance, and documentation of system logic and case evidence.
Because the client operates in a crypto-related money transmission environment, the engagement required coordination across compliance, finance, legal, data, technology, operations, and audit stakeholders. InnReg’s role was to help convert regulatory requirements into specific filings, testing workstreams, documentation practices, data review processes, and remediation activities.
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Challenges
The client operates under overlapping federal MSB requirements, state money transmitter laws, virtual currency rules, AML expectations, and NYDFS standards. The compliance program needed to address traditional money transmission requirements while also accounting for crypto activity, wallet operations, blockchain analytics, Travel Rule expectations, and virtual currency transfer monitoring.
State licensing maintenance created a significant operational burden. Each jurisdiction maintained its own reporting cadence, filing method, permissible investment standard, surety bond requirement, renewal process, and regulator inquiry pattern. The client needed a structured process to manage renewals, quarterly and annual reporting, state-specific disclosures, and regulator follow-ups without losing visibility into deadlines or data dependencies.
Regulatory reporting also depended on the quality and traceability of financial and transaction data. For money transmitter reporting, inconsistencies in crypto transaction data, fiat balances, wallet activity, liabilities, or permissible investment calculations can create regulator questions and remediation work. The client needed support reconciling source data to regulatory reporting outputs and documenting the basis for filings submitted through NMLS or state portals.
NYDFS readiness presented additional complexity. The client needed to address expectations around transaction monitoring, sanctions filtering, testing, data governance, personnel documentation, annual certification support, and evidence of how alerts are generated, reviewed, escalated, and resolved. This required not only policy-level analysis, but also detailed review of systems, data flows, testing scripts, threshold logic, and case documentation.
The client was also managing examination and remediation work involving financial reporting, customer liabilities, virtual currency activity, transaction controls, and prior regulatory findings. These workstreams required coordination among internal stakeholders, auditors, outside counsel, data teams, and regulators.
InnReg's Solution
InnReg provided compliance management support across license maintenance, regulatory reporting, examination support, AML testing, KYC and AML platform validation, NYDFS readiness, and data governance. The work was tailored to the client’s role as a US MSB and state-licensed money transmitter operating in a crypto-related environment.
InnReg supported maintenance of the client’s money transmitter licenses by managing regulatory timelines, annual license renewals, regulatory filings, MSB call reports, permissible investment reports, annual financial statement submissions, authorized agent reporting, advanced change notices, and surety bond changes and renewals.
InnReg also supported state-specific reporting and remediation work, including:
Responding to permissible investment inquiries and deficiencies
Reviewing outstanding transmission liabilities against unrestricted permissible investments
Rebuilding average daily transaction liability reporting for certain jurisdictions
Managing state-specific annual revenue and security device calculations
Preparing renewal packages and state-specific filing materials
Tracking the impact of Money Transmitter Modernization Act changes on net worth and bond requirements
Supporting license applications and related filings where applicable
For New York readiness, InnReg supported remediation work tied to transaction monitoring, sanctions filtering, model validation, data governance, certification support, and documentation of monitoring logic. This included drafting user acceptance testing scripts for the client’s blockchain analytics and transaction monitoring platforms, developing a model validation plan, supporting the creation of a regulatory impact register, and organizing personnel documentation relevant to transaction monitoring and sanctions compliance.
InnReg helped build compliance documentation designed to improve consistency and exam readiness. This included work on a policy inventory, call report policies and procedures, record retention requirements, state reporting matrices, licensing file organization, and a centralized regulatory dictionary to track state-specific reporting and renewal obligations.
InnReg also supported data integrity and traceability between internal source systems and regulatory reporting outputs. This included coordinating with internal data teams, reviewing data lineage, supporting development of data inventories and data flow diagrams, and helping preserve raw transaction data used to support state filings and regulator responses.
For AML and KYC oversight, InnReg performed annual independent AML compliance program testing and reviewed the configuration of platforms used to support KYC and AML requirements. The work included review of thresholds, alerts, data inputs, screening logic, case evidence, escalation processes, and supporting documentation.
InnReg also supported regulatory examination and remediation work, including responses to examination findings, document request coordination, audit support, and analysis of regulatory concerns involving customer liabilities, accounting treatment, transfer thresholds, Travel Rule implementation, and documentation of compliance controls.
Client Results
The engagement supported the client in managing complex money transmitter compliance obligations across federal MSB requirements, state licensing regimes, crypto-related regulatory expectations, and NYDFS readiness workstreams.
InnReg helped the client maintain a more structured process for license renewals, call reports, permissible investment reports, annual financial statements, state-specific calculations, surety bond reviews, regulator inquiries, and license maintenance obligations.
The work also strengthened the connection between regulatory filings and underlying data. By supporting data inventories, data flow diagrams, raw data preservation, reporting matrices, and reconciliation processes, InnReg helped create clearer links between internal systems, financial records, transaction data, and reports submitted to regulators.
For New York-related readiness, InnReg supported remediation activities around transaction monitoring, sanctions filtering, model validation, personnel documentation, certification support, and evidence of alert handling. These workstreams helped the client organize the documentation and testing structure needed to address heightened regulatory expectations for virtual currency and money transmission activity.
InnReg’s support also helped the client respond to examination findings and regulator inquiries involving permissible investments, outstanding transmission liabilities, accounting treatment, transfer thresholds, Travel Rule implementation, and AML controls. The engagement provided practical execution support across compliance, finance, data, legal, audit, and operations teams.
Overall, the engagement reflects InnReg’s ability to support a large money transmission and digital asset platform where state licensing, regulatory reporting, AML testing, KYC/AML systems, data integrity, NYDFS readiness, and regulatory remediation intersect.
How Can InnReg Help?
InnReg helps money transmitters and digital asset companies manage licensing, regulatory reporting, AML testing, and ongoing compliance obligations. If you need support with your US money transmitter compliance program, fill the form below out.
