Beyond the statutory floor: What the MTRA’s Examination Manual means for money transmitters

The Money Transmitter Regulators Association (MTRA), the national nonprofit association of state money transmission regulators, has published its Money Transmitter Examination Manual (the Manual), together with a standard examination entry letter and document request list.¹ The publications give industry participants an unusually detailed view into the procedures, benchmarks, and supervisory expectations that state examiners may apply in upcoming examinations and a practical roadmap for testing examination readiness before the entry letter arrives.

Two framing points are important. First, the Manual expressly disclaims binding effect. It describes itself as internal guidance that “should not be relied upon as a legal reference or authority,” creates no “rights, benefits, or defenses,” and sets only “baseline guidance” that examiners may expand based on a licensee’s risk profile. Second, notwithstanding that disclaimer, the Manual’s work-program instructions distinguish between violations, which should be supported by a statutory or regulatory citation in the Report of Examination (ROE), and OFRs, meaning other findings or recommendations.² In practice, the Manual contemplates supervisory criticism that may not be tied to a cited violation of law. The message for licensees is straightforward: The statute is the floor, and exam readiness increasingly depends on whether governance, controls, documentation, and operational testing can withstand examiner scrutiny.

What the Manual reveals

The Manual follows the MTRA work program (January 2026 version) section by section, covering preexamination planning, agent supervision, financial condition, management, compliance, information technology and information security, and business-model-specific reviews for prepaid access, virtual currency, and commercial foreign exchange. Four themes stand out.

1. The financial review goes well beyond the statutory tests.

The Money Transmission Modernization Act, the model law now enacted in whole or in part by a majority of states, includes the familiar prudential requirements of tangible net worth, surety bonding, and permissible investments.³ The Manual layers a broader financial-condition review on top of those requirements. Examiners are directed to evaluate profitability, return on average assets and equity, leverage, budget-to-actual performance, and break-even projections, and for licensees reporting significant losses, to calculate a monthly burn rate and the resulting “runway” until the licensee falls below regulatory requirements or runs out of cash.⁴

Liquidity receives particular and repeated attention. Examiners are instructed to assess the current ratio and working capital, review multiyear trends in both metrics, evaluate the licensee’s ability to repay short-term obligations, and trace liquidity through the bank-account, investment-portfolio, and permissible-investments reviews. The Manual’s ratio appendix states that a current ratio of at least 1.0:1 indicates “good financial health,” while a ratio below that level suggests potential cash-flow issues.⁵ A licensee could therefore satisfy its express statutory net worth and permissible-investments requirements and still face supervisory scrutiny, or potentially an OFR, based on its liquidity position, profitability, or financial trends.

The Manual also flags how ordinary financing arrangements can become examination issues. Assets covered by a lender’s blanket security agreement are to be excluded from the permissible-investments calculation unless the licensee holds documentation from the lender carving those assets out of the collateral.⁶ Similarly, where intercompany receivables make up a significant portion of the licensee’s assets, examiners will test whether the parent or affiliate can repay them within established timeframes, and a receivable may be reclassified as intangible – and excluded from tangible net worth – if the affiliate does not appear financially capable of repaying it.⁷

2. Examiners may apply bank-style governance and accounting expectations.

The management review goes well beyond confirming that control persons and corporate changes were timely reported. Examiners are instructed to consider whether the licensee has a “complete” C-suite (the Manual lists chief executive officer, chief financial officer, chief operations officer, chief technology officer, chief information security officer, and chief compliance officer (CCO) roles), whether management vacancies create risk, whether staffing and succession planning are adequate for the licensee’s size and risk profile, whether internal audit reports directly to the board, and where the CCO sits within the management and board-reporting structure.⁸

The Manual also states flatly that redacted board minutes and board packets are “not acceptable” because they prevent a thorough examination.⁹ The Manual does not resolve how applicable attorney-client privilege and work-product protections should be handled, but the instruction previews a likely point of friction. One practical response is to separate routine compliance and operational reporting from requests for, and provision of, legal advice where practicable. Doing so can reduce the need for broad redactions when board materials are requested and allow the licensee to articulate more precisely the basis for withholding any privileged or protected material.

The accounting procedures are similarly prescriptive. Examiners are told to verify that the general ledger is closed and locked within 30 to 45 days after month’s end to prevent back-posting, to verify that each regulated transaction is posted to the ledger daily rather than aggregated in bulk month-end entries, and to note a deficiency where those benchmarks are not met.¹⁰

3. Bank Secrecy Act (BSA)/Anti-Money Laundering Act (AML) and sanctions are central, and some expectations may exceed Financial Crimes Enforcement Network’s (FinCEN) own guidance.

The Manual treats BSA/AML and sanctions as core examination workstreams, not as discrete legal check-the-box items. The Compliance section includes 17 steps focused primarily on federal BSA/AML, including the following:

• FinCEN Money Services Business (MSB) registration
• Agent-list recordkeeping
• The written AML program
• Foreign-agent and counterparty due diligence
• Currency Transaction Report (CTR), Currency or Monetary Instruments Report, Foreign Bank and Financial Accounts Report, and Suspicious Activity Report (SAR)
• Recordkeeping and internal controls
• 314(b) voluntary information sharing
• Independent review
• Information systems
• Training
• Office of Foreign Assets Control (OFAC) compliance
• Remittance-transfer disclosures

The same focus appears outside the Compliance section¹¹:

• Agent-supervision procedures review agent risk assessments, AML policies, OFAC checks, and agent BSA/AML training
• Virtual-currency procedures address know your customer/enhanced due diligence, funds-transfer information, blockchain monitoring, and wallet-address screening
• Foreign-currency procedures review customer identity and due diligence under the licensee’s BSA/AML and OFAC programs

That framing matters because several of the Manual’s BSA/AML expectations are operationally specific and in some respects more prescriptive than FinCEN’s own guidance. The Manual describes an independent BSA/AML review every 12 to 18 months as both a best practice and “the regulatory expectation.” FinCEN’s guidance, by contrast, provides that the scope and frequency of the independent review should be commensurate with the risk of the financial services the MSB provides, and expressly recognizes that an annual review may not be necessary in every case. The Manual also asks whether the licensee has procedures to ensure that continuing-activity SARs are filed every 90 days and whether it maintains a file for transactions reviewed and determined not to require a filing.¹² In October 2025, however, FinCEN and the federal banking agencies issued joint FAQs clarifying that the 90-day continuing-activity cadence is not mandatory, that institutions need not conduct a separate post-SAR review to determine whether suspicious activity has continued, and that there is no requirement or expectation under the BSA to document a decision not to file a SAR.¹³ The Manual, published after those FAQs, nonetheless uses the older formulations. Licensees should be prepared to explain where their BSA/AML governance, alert handling, SAR decisioning, and independent-testing cadence are risk-based and supported by documented rationale.¹⁴

4. Written policies will not substitute for actual compliance.

The Manual repeatedly instructs examiners to test how programs actually run, not merely how they read. Examiners are told to request demonstrations of the licensee’s transaction-monitoring systems and to probe analyst headcount against average daily alert volumes, the size of the alert backlog awaiting review, and the average number of days alerts sit in the queue.¹⁵ The sanctions implications are particularly practical: An OFAC policy that states the licensee screens against sanctions lists may not be enough if the licensee cannot show who owns the vendor relationship, who can adjust screening settings and update cadence, and how a) “fuzzy logic” thresholds are set, b) cleared-name lists are controlled, c) list updates are tested, d) potential matches and false hits are resolved, e) blocking and rejection decisions are escalated and reported, and f) screening reaches owners, officers, directors, employees, and covered transactions.¹⁶

Cybersecurity will be part of every examination. The Manual’s CORE IT/IS procedures are designed to be completed on every exam and are used in lieu of the FULL IT/IS section when a full IT assessment is not warranted or when an IT/IS specialist is not part of the exam team.¹⁷ For virtual-currency licensees, the Manual goes a step further: An examiner may also ask the company to transfer a specified amount of virtual currency between its wallets and then verify the transfer on a public block explorer, a real-time demonstration of control over the relevant wallet addresses.¹⁸

Implications for the industry

The statute is the floor, not the ceiling: Publication of the Manual gives licensees an unusual opportunity to prepare for the categories of inquiry and supervisory benchmarks that examiners may use. At the same time, the Manual remains nonbinding: It is not a safe harbor, examiners may expand or depart from it, and a licensee’s deviation from a Manual benchmark is not necessarily a violation of law. When responding to an examination finding – particularly in BSA/AML and sanctions, where the Manual often probes control design, governance, and execution – counsel should distinguish among an express legal requirement, a safety-and-soundness concern, the licensee’s own policy, and a supervisory benchmark or preference. That distinction should shape how the issue is characterized in the ROE and how the licensee responds.

What licensees should do now: Money transmitters should treat the Manual and accompanying document request list as a mock-examination checklist, including procedures that are not framed as legal requirements, and complete that exercise before an examiner does. Where practices differ from MTRA’s stated benchmarks, licensees should decide deliberately whether to remediate or to document a risk-based rationale for an alternative approach so the answer is ready when the question is asked. For BSA/AML and sanctions, the mock exam should be evidence based. Confirm that:

• Board and management reporting is documented
• The BSA officer has sufficient authority and resources
• Transaction-monitoring alerts are reviewed and escalated within defensible timeframes
• SAR and CTR decisions are supported and retained
• OFAC screening settings and list updates are tested
• Agent and foreign-counterparty due diligence is current
• Training records show role-specific coverage

Licensees relying on secured credit facilities or significant intercompany balances should confirm now that their documentation supports the permissible investments and tangible net worth treatment they report. Finally, boards and senior management should be briefed on governance expectations – including reporting lines, minutes, and board packets – well before the entry letter arrives.

The Manual is also a useful diligence framework for acquirers and investors. Parties evaluating a money transmitter, whether through an acquisition, minority investment, or material strategic partnership, can use the Manual and accompanying document request list to benchmark the target against many of the financial, governance, and compliance areas state examiners may review. Diligence should include:

• Liquidity and capital trends
• Outstanding supervisory findings
• Management and compliance staffing and reporting lines
• Ledger-close and reconciliation practices
• BSA/AML and sanctions governance
• Agent and counterparty oversight
• Transaction-monitoring capacity
• OFAC screening configuration and change control
• Virtual-currency wallet-screening and blockchain-monitoring controls where relevant
• The scope and cadence of independent BSA/AML reviews

Those findings can inform valuation, risk allocation, representations and warranties, closing conditions, interim operating covenants, remediation plans, and post-closing integration priorities.

If you have questions concerning this client alert or its subject matter, please contact your McDermott Will & Schulte lawyer or one of the authors.

¹ Money Transmitter Regulators Association (MTRA), Money Transmitter Examination Manual (June 2026), https://www.mtraweb.org/mtra-exam-manual-june-2026/.

² MTRA, Manual, 5.

³ See “CSBS Money Transmission Modernization Act,” Conference of State Bank Supervisors (February 26, 2026), https://www.csbs.org/csbs-money-transmission-modernization-act-mtma.

⁴ MTRA, Manual, 16–18.

⁵ MTRA, Manual, 16, 53–54.

⁶ MTRA, Manual, 16.

⁷ MTRA, Manual, 15.

⁸ MTRA, Manual, 20–21.

⁹ MTRA, Manual, 21.

¹⁰ MTRA, Manual, 14.

¹¹ MTRA, Manual, 11–12, 23–33, 45–48, 50.

¹² MTRA, Manual, 28.

¹³ Financial Crimes Enforcement Network, Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency, Frequently Asked Questions Regarding Suspicious Activity Reporting Requirements, Financial Crimes Enforcement Network (October 9, 2025), https://www.fincen.gov/system/files/2025-10/SAR-FAQs-October-2025.pdf.

¹⁴ Financial Crimes Enforcement Network, Frequently Asked Questions: Conducting Independent Reviews of Money Services Business Anti-Money Laundering Programs, Financial Crimes Enforcement Network (September 22, 2006), https://www.fincen.gov/system/files/shared/Guidance_MSB_Independent_Audits9-21.pdf.

¹⁵ MTRA, Manual, 30–31.

¹⁶ MTRA, Manual, 32–33.

¹⁷ MTRA, Manual, 43.

¹⁸ MTRA, Manual, 46–48.