My question is regarding a business model where a website resells prepaid gift cards for example amazon, prepaid Visa gift, Mastercard, PSN etc.

  • All cards are non-reloadable some of them are closed loop like amazon and others are open loop like Visa - Mastercard - Amex gift cards.
  • The largest available value for closed loop is $2000 USD per card. While the largest value for open loop cards like Visa is $1000 USD.
  • This business model depends mainly on anonymity and privacy so users mainly pay using crypto and get their virtual cards by email.
  • Customers only provide an email to purchase any of these cards without any kind of KYC.
  • Operator of this business model can source all of these cards anonymously too using crypto.

If the business is operated from outside the USA but it may offer services to US customers:

  • Is this business model legal or not?
  • Does this business model needs to register with FinCEN as a Money Service Business (MSB)?
  • Is it ok to have ZERO KYC?

1 Answer 1


According to FinCen's website:

The term "money services business" includes any person doing business, whether or not on a regular basis or as an organized business concern, in one or more of the following capacities:

(1) Currency dealer or exchanger. (2) Check casher. (3) Issuer of traveler's checks, money orders or stored value. (4) Seller or redeemer of traveler's checks, money orders or stored value. (5) Money transmitter. (6) U.S. Postal Service.

An activity threshold of greater than $1,000 per person per day in one or more transactions applies to the definitions of: currency dealer or exchanger; check casher; issuer of traveler's checks, money orders or stored value; and seller or redeemer of travelers' checks, money orders or stored value. The threshold applies separately to each activity -- if the threshold is not met for the specific activity, the person engaged in that activity is not an MSB on the basis of that activity.

No activity threshold applies to the definition of money transmitter. Thus, a person who engages as a business in the transfer of funds is an MSB as a money transmitter, regardless of the amount of money transmission activity.

Notwithstanding the previous discussion, the term "money services business" does not include:

A bank, as that term is defined in 31 CFR 1010.100(d) (formerly 31 CFR 103.11(c)), or A person registered with, and regulated or examined by, the Securities and Exchange Commission or the Commodity Futures Trading Commission. For the complete regulatory definition of "money services business", see 31 CFR 1010.100(ff) (formerly 31 CFR 103.11(uu)).

Note: Each money services business (MSB) is a financial institution. For the regulatory definition of "financial institution," see 31 CFR 1010.100(t) (formerly 31 CFR 103.11(n)).

Based upon this definition, the business described in a money services business because it sells stored value in an amount of $1,000 or more per seller per day.

This business must be licensed as an MSB to do business with customers in the U.S. and is not a legal business model. It probably meets the legal definition of criminal money laundering. The source of the gift cards is also an MSB and a participant in criminal money laundering.

MSBs are required to have an appropriate anti-money laundering program in place and to know, at least, the identity of their customers although not to the same level of detail as securities brokers. Dealing with anonymous customers with "zero KYC" in the context of this business model is not legal. See generally the FinCen guide for MSBs.

While this question has primarily evaluated the legality of the business from a U.S. law perspective, it would constitute illegal money laundering under the laws of most countries, not just the U.S.

  • So now I'm confused basically because on July 26, 2011, FinCEN issued the Final Rule from my understanding the business model mentioned in my original question would be exempt. Also it is mentioned that the allowed for this model is $10,000 per customer per day. To be clear I'm looking for the correct information on how to adapt this business model to stay legal, avoid FinCEN and avoid KYC all way keeping it simple. Commented Jan 4 at 14:25
  • @user3509046 Trying to avoid KYC is a key point of what makes it money laundering and a 2011 rule is probably old news.
    – ohwilleke
    Commented Jan 4 at 17:28

You must log in to answer this question.

Not the answer you're looking for? Browse other questions tagged .