Anti-money laundering compliance for your LLC: what you need to know

10,000 USD trigger an automatic CTR at your bank: BSA, KYC, CTR, SAR, FATCA and CRS are the acronyms that define AML compliance for any US LLC. Here is the plain-English read.

The US AML regime (Bank Secrecy Act, 1970, plus the Patriot Act of 2001) requires Mercury, Wise and Relay to run documentary KYC processes before processing the first transfer.

Anti-Money Laundering (AML) regulations are increasingly strict worldwide. Understanding how they affect your LLC helps you operate without problems. If you have a US LLC, these regulations affect you directly, even though your business is completely legitimate.

The good news: complying with these regulations is straightforward if you understand what's expected and maintain good practices from day one.

Why AML regulations exist

The global financial system needs mechanisms to prevent illegal activity. AML rules require financial institutions to:

  • Verify customer identities (KYC. Know Your Customer)
  • Monitor transactions for suspicious patterns
  • Report suspicious activity to authorities (SARs. Suspicious Activity Reports)
  • Maintain records of all transactions for a required period (minimum 5 years)

How AML affects your LLC

1. Bank account opening

When you open a Mercury account, the bank conducts AML due diligence: identity verification, business description review, source of funds inquiry. This is a protective measure for both parties. Mercury uses Column NA (FDIC insured) and must comply with all federal banking regulations.

2. Ongoing transaction monitoring

Your bank continuously monitors transactions. If patterns seem unusual compared to your stated business, they may request clarification, not an accusation, just routine verification. This is normal and expected.

3. Regulatory reports

Depending on the volume and type of transactions, your bank may be required to file reports with FinCEN (Financial Crimes Enforcement Network). This doesn't mean you're under investigation. it's a routine procedure.

The Bank Secrecy Act (BSA)

The BSA is the US federal law establishing financial compliance obligations. Key requirements:

Currency Transaction Report (CTR)

Generated automatically for cash transactions over $10,000 in a single day. For most digital businesses, this isn't relevant. your transactions are electronic.

Suspicious Activity Report (SAR)

Filed by banks when they detect potentially suspicious activity. You're not notified when this happens. it's an internal bank process. The bank files it with FinCEN.

Record-keeping

Banks must maintain records of certain transactions for at least 5 years.

Good practices for AML compliance

1. Maintain business consistency

Your banking activity should match what you declared when opening the account. If your business evolves (you start billing more, enter new markets), update your profile with the bank proactively.

2. Document everything

Each significant transaction should have supporting documentation: contracts, invoices, receipts, emails. This is good for compliance AND simplifies your accounting.

3. Avoid cash transactions

Digital businesses practically don't handle cash. Keep all your transactions digital and documented. Mercury, Stripe, and Wise create automatic records.

4. Never structure transactions

Structuring. deliberately breaking a large transaction into multiple smaller ones to avoid reporting thresholds, is illegal. It's a federal crime under 31 USC §5324. If you need to make a large payment, make it directly.

5. Respond promptly to bank requests

If your bank asks for additional information, respond with transparency and within 24-48 hours. It's a routine process that demonstrates your professionalism.

6. Keep your LLC documentation current

Active Registered Agent, filed Form 5472, current BOI Report. all of these signal to banks and regulators that you're operating legitimately.

BOI Report and AML

The Beneficial Ownership Information (BOI) Report you file with FinCEN is part of the global anti-money laundering effort. By reporting who actually owns your LLC (with government ID verification), you contribute to corporate transparency. The BOI Report database is not public. it's only accessible to law enforcement and authorized entities.

FATCA and CRS: information exchange

FATCA (Foreign Account Tax Compliance Act)

US law requiring foreign financial institutions to report accounts of US citizens/residents to the IRS. As a non-resident, this doesn't directly apply to you, but it affects the global financial infrastructure you operate within.

CRS (Common Reporting Standard)

The OECD's global standard for automatic tax information exchange between 100+ countries. Important: the US doesn't participate in CRS, but your home country may receive information about foreign accounts through other bilateral mechanisms.

What this means for you

Your Mercury account (US-based) is not automatically reported through CRS. But your Wise account (which operates in CRS-participating jurisdictions) may be. Regardless, you should always declare your foreign assets as required by your country of residence.

Your LLC as a compliance signal

Paradoxically, having a well-formed LLC with impeccable compliance positions you as a serious professional with banks and financial institutions. Problems typically arise with informal, undocumented operations, not with properly structured business entities.

Your LLC, with its EIN, filed returns, and dedicated Mercury account (Column NA, FDIC, everything in order), is exactly what the system expects to see from a professional operating internationally.

At Exentax we ensure all your compliance is impeccable from day one: IRS filings (Form 5472 + 1120), BOI Report, banking documentation. all in perfect order. You focus on your business, we make sure every filing is correct.

The AML compliance checklist for your LLC

Use this checklist to ensure your LLC maintains impeccable compliance:

The fintech stack from a compliance perspective

Each tool in your financial stack creates documentation that helps you maintain compliance. When your bank asks "where does this money come from?", you can point to Stripe payment records, client invoices, and Mercury statements that tell a clear, consistent story.

Legal and regulatory references

This article relies on rules currently in force. Main sources for verification:

  • United States. Treas. Reg. §301.7701-3 (entity classification / check-the-box); IRC §882 (tax on foreign income effectively connected with a US trade or business); IRC §871 (FDAP and withholding on non-residents); IRC §6038A and Treas. Reg. §1.6038A-2 (Form 5472 for 25% foreign-owned and foreign-owned disregarded entities); IRC §7701(b) (tax residency, substantial presence test); 31 U.S.C. §5336 (Corporate Transparency Act, BOI Report to FinCEN).
  • Spain. Law 35/2006 (LIRPF), arts. 8, 9 (residency), 87 (income attribution), 91 (CFC for individuals); Law 27/2014 (LIS), art. 100 (CFC for companies); Law 58/2003 (LGT), arts. 15 (anti-abuse) and 16 (simulation); Law 5/2022 (Form 720 penalty regime after CJEU C-788/19 of 27/01/2022); RD 1065/2007 (Forms 232 and 720); Order HFP/887/2023 (Form 721 crypto). And if a notice does land, at Exentax we keep the dossier ready so you reply in hours, not weeks.
  • Spain–US treaty. BOE of 22/12/1990 (original DTT); Protocol in force since 27/11/2019 (passive income, limitation on benefits).
  • EU / OECD. Directive (EU) 2011/16, amended by DAC6 (cross-border arrangements), DAC7 (Directive (EU) 2021/514, digital platforms) and DAC8 (crypto-assets); Directive (EU) 2016/1164 (ATAD: CFC, exit tax, hybrid mismatches); OECD Common Reporting Standard (CRS).
  • International framework. OECD Model Convention, art. 5 (permanent establishment) and Commentaries; BEPS Action 5 (economic substance); FATF Recommendation 24 (beneficial ownership).

Applying any of these rules to your specific case depends on your tax residency, the LLC's activity and the documentation you keep. This content is informational and does not replace personalized professional advice.

Banking and tax facts worth clarifying

Fintech and CRS information evolves; here is the current state:

Before going further, put numbers on your case: the Exentax calculator compares, in under 2 minutes, your current tax bill with what you would carry running a US LLC properly declared in your country of residence.

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Notes by provider

  • Mercury operates with several federally chartered partner banks and FDIC coverage via sweep network: mainly Choice Financial Group and Evolve Bank & Trust, with Column N.A. still in some legacy accounts. Mercury is not itself a bank; it is a fintech platform backed by those partner banks. If Mercury closes an account, the balance is typically returned by paper check mailed to the account holder's registered address, which can be a serious operational problem for non-residents; keep a secondary account (Relay, Wise Business, etc.) as contingency.
  • Wise ships two clearly different products: Wise Personal and Wise Business. For an LLC you must open Wise Business, not the personal account. Important CRS nuance: a Wise Business held by a US LLC sits outside CRS because the account holder is a US entity and the US is not a CRS participant; the USD side operates via Wise US Inc. (FATCA perimeter, not CRS). In contrast, a Wise Personal opened by an individual tax-resident in Spain or another CRS jurisdiction does trigger CRS reporting via Wise Europe SA (Belgium) on that individual. Opening Wise for your LLC does not bring you into CRS through the LLC; a separate Wise Personal in your own name as a CRS-resident individual does report.
  • Wallester (Estonia) is a European financial entity with an EMI/issuing-bank licence. Its European IBAN accounts are within the Common Reporting Standard (CRS) and therefore trigger automatic reporting to the tax administration of the holder's country of residence.
  • Payoneer operates through European entities (Payoneer Europe Ltd, Ireland) that are also in scope for CRS for clients resident in participating jurisdictions.
  • Revolut Business: when paired with a US LLC, it operates under Revolut Technologies Inc. with Lead Bank as its US banking partner. The account delivered is a US account (routing + account number); no European IBAN is issued to a US LLC. The European IBANs (Lithuanian, Belgian) belong to Revolut Bank UAB and are issued to European clients of the group. If you are offered a European IBAN tied to your LLC, confirm exactly which legal entity holds that account and which regime it reports under.
  • Zero tax: no LLC structure delivers "zero tax" if you live in a country with CFC/tax transparency or income attribution rules. What you achieve is no double taxation and correct reporting at residence, not elimination.

Legal & procedural facts

FinCEN and IRS reporting requirements moved recently; the current state is:

  • BOI / Corporate Transparency Act: your LLC is NOT required to file (a competitive advantage). After FinCEN's March 2025 interim final rule, the BOI Report obligation was narrowed to "foreign reporting companies" (entities formed OUTSIDE the US and registered to do business in a state). A US-formed LLC owned by a non-resident does NOT file the BOI Report: one fewer filing on your calendar, less paperwork, and a cleaner structure than ever. If your LLC was formed before March 2025 and you already filed BOI, keep the acknowledgement. The regulatory status can change again: we monitor FinCEN.gov on every filing and, if the obligation comes back, we handle it at no extra cost. Current status verifiable at fincen.gov/boi.
  • Form 5472 + pro-forma 1120. For a Single-Member LLC owned by a non-resident, the final regulations of Treas. Reg. §1.6038A-1 (in force since 2017) treat the LLC as a corporation for 5472 purposes. Procedure: pro-forma Form 1120 (header only: name, address, EIN, tax year) with Form 5472 attached. It is filed by certified mail or fax to the IRS Service Center in Ogden, Utah, not e-filed via standard MeF. Due date: April 15; extension via Form 7004 to October 15. Penalty: $25,000 per form per year, plus $25,000 per additional 30 days of non-filing after IRS notice.
  • Substantive Form 1120. Only applies if the LLC has filed a check-the-box election to C-Corp (Form 8832): it then pays 21 % federal corporate tax and files a substantive 1120. A standard disregarded LLC does not file a substantive 1120 and does not pay federal corporate tax.
  • EIN and notice. Without an EIN you cannot file 5472 or BOI. The IRS does not warn before imposing penalties; you find out when an EIN is flagged or a later filing is rejected. This is where Exentax steps in: we file the form, archive the receipt and, if the authority asks, your answer is already on the desk.

Anti-money-laundering compliance and your LLC: what the bank sees and why it can close your account

Mercury, Wise, Relay, Brex and virtually every US bank opening to non-residents operate under FinCEN/Patriot Act AML/KYC rules. They are not your enemy: they comply with a law that obliges monitoring, reporting and, if needed, closing accounts. Understanding which signals trigger AML systems is the difference between three years of clean operation and losing the account in two weeks.

  • The KYC triangle at opening. Beneficial owner identity (passport + personal address with utility bill), source of funds (contract/invoice/statement showing real prior activity), and consistency of declared activity with website and flows. Saying "advisory" but receiving payments from 50 different crypto wallets triggers alert.
  • Five red flags triggering immediate review. Circular movements (send 10k to personal and return), transfers to/from high-risk jurisdictions (Iran, North Korea, DRC and other FATF list), structuring under reporting thresholds (multiple 9,500$ payments to avoid the 10k$ CTR), unjustified activity spikes, and discrepancy between declared and real activity.
  • The SAR and why they never warn you. When the bank detects suspicious activity it files a Suspicious Activity Report with FinCEN and by law CANNOT inform you (tipping-off is a criminal offence). What you see: account closed with 30 days to withdraw, no explanation. The #1 closure reason we see.
  • How to protect your LLC. Exhaustive client documentation (signed contracts, invoices, address and country), real monthly bookkeeping with bank reconciliation, avoid moving money to personal without clear concept ("draw" or "loan to member" identified), do not use the account for friends/family, and never operate from sanctioned-country IPs.

What we are asked the most

Is receiving crypto in my LLC problematic? Depends. Crypto from regulated exchanges (Coinbase, Kraken) with documented KYC is acceptable; from anonymous wallets or mixers is immediate AML signal. Keep on-chain traceability and declare origin.

If Mercury closes me can I open Wise? Usually yes, AML systems are not shared between providers. But closure reasons persist: if closed for real activity, others will close too. The cause must be fixed.

At Exentax we structure AML compliance for non-resident LLCs (KYC pack, traceable bookkeeping, source-of-funds policy) and mediate when a bank requests information - so you are not closed for a documentary misunderstanding.

Legal and procedural facts

Read this section as a checklist with teeth: each point flags a real failure mode we have seen in cross-border LLC files. Skip none of them - most reassessments and account closures we clean up later trace back to one of these items.

On the same topic

What if HMRC, the IRS or my local tax authority asks about my LLC?

It's the question every client raises in the first consultation, and the short answer is: your LLC isn't opaque, and a properly declared structure closes any inquiry in standard forms. Your tax authority can request the state Certificate of Formation (Wyoming, Delaware or New Mexico), the EIN issued by the IRS, the signed Operating Agreement, the Mercury or Wise statements for the year, the Form 5472 plus pro-forma 1120 you filed, and the bookkeeping that reconciles income, expenses and movements. If all of that exists and is delivered in order, the inquiry doesn't escalate.

What tax authorities do pursue, and rightly, is sham ownership (nominees, paper residency) and undeclared foreign accounts. A well-structured LLC is the opposite: you appear as beneficial owner in the BOI Report when applicable (verifiable at fincen.gov/boi), you sign the bank accounts and you declare the income where you actually live. The structure is registered with the state Secretary of State, with the IRS and, when European banks are involved, inside the CRS perimeter of the OECD standard.

The mistake that really sinks an inquiry isn't having an LLC; it's not attributing the income correctly in your domestic return, not declaring foreign accounts when the year-end balance exceeds the local threshold (€50,000 in Spain via Modelo 720; the equivalent FBAR / Form 8938 in the US for residents; T1135 in Canada), and not documenting related-party transactions between the member and the LLC. Those three fronts are worth closing before any request arrives, not after.

## What an LLC does NOT do

- It does not exempt you from tax in your country of residence. If you live in Spain, France, Germany or Portugal, you are taxed there on worldwide income. The LLC organises your US side (zero federal tax for non-resident SMLLC pass-through, absent Effectively Connected Income); it does not switch off your domestic taxation. The income tax is computed on the attributed profit, not on the dividends actually paid.

- It is not an offshore vehicle or a BEPS scheme. It is a US entity recognised by the IRS, registered in a specific state with physical address, registered agent and annual informational filings. Classic offshore jurisdictions (BVI, Belize, Seychelles) leave no public trace; an LLC leaves a trace in five different places.

- It does not protect you if you commingle funds. The pierce the corporate veil doctrine kicks in as soon as a judge sees the LLC and the member behaving as the same wallet: mixed accounts, personal expenses paid from the LLC, no signed Operating Agreement, no bookkeeping. Three suspicious transactions are enough.

- It does not save you social security contributions at home. If you are self-employed in Spain, France or Germany, your monthly social contribution remains identical. The LLC handles the trading side with international clients; your personal contribution is independent.

- It does not exempt you from declaring foreign accounts. Spain residents file Modelo 720 / 721; UK residents, the SA106; Portugal residents, the Anexo J of Modelo 3 IRS; Germany residents, the Anlage AUS. Those obligations belong to the individual, not to the LLC.

At Exentax we cover those five fronts every year alongside the US federal calendar (Form 5472, pro-forma 1120, FBAR, state Annual Report and BOI Report when applicable). The goal is that no inquiry finds a loose end and that the structure withstands a 5-to-7-year retroactive review.

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