PROHIBITED AND RESTRICTED BUSINESSES

PROHIBITED BUSINESSES

Prohibited businesses are industries that cannot legally operate in the United States under federal, state, or local law. These businesses are not eligible to be supported through Firstbase services.

Businesses may be prohibited due to concerns related to legality, public safety, national security, sanctions enforcement, or anti-money laundering regulations. Prohibited businesses are unable to complete registration, obtain an EIN, or open a U.S. bank account.

Examples of prohibited activities include:

• Illegal drugs under U.S. federal law (e.g., cocaine, heroin)
  Note: Cannabis remains illegal at the federal level, even if permitted under certain state laws
• Human trafficking, forced labor, or illegal prostitution-related activities
• Counterfeiting currency, securities, or branded goods
• Terrorist-related activities or organizations

• Certain weapons manufacturing or sales without proper federal licensing (e.g., automatic firearms)

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RESTRICTED BUSINESSES

Restricted businesses are legal to operate, but only if the company obtains the required licenses, approvals, and complies with ongoing regulatory obligations. These businesses can often be incorporated; however, additional steps are required before they can legally operate or access banking and payment services.

Approval for banking or financial services is not guaranteed for restricted businesses, as financial institutions apply their own risk assessments and regulatory requirements.

Restricted industries commonly include:

-Financial and money-related services:

• Banks and credit unions
• Money services businesses (e.g., money transmitters, remittance services)
• Crypto exchanges and custodial services
• Investment advisors and broker-dealers

These businesses may require registration with FinCEN, the SEC, FINRA, and applicable state regulators, as well as the implementation of AML and KYC programs.

-Healthcare and life sciences:

• Medical practices and clinics
• Telehealth platforms
• Pharmacies
• Medical devices and biotechnology companies

These businesses are regulated by agencies such as the FDA, DEA, and state medical boards.

-Alcohol, tobacco, and firearms:

• Alcohol manufacturing, distribution, and sales
• Tobacco and vaping products
• Firearms and ammunition manufacturing or sales

These activities are regulated by the ATF and relevant state authorities.

-Gambling and gaming:

• Online casinos
• Sports betting platforms
• Lottery-related services

Legality and licensing requirements vary significantly by state.

-Insurance:

• Insurance carriers and brokers

Insurance businesses require state-by-state licensing and regulatory approval.

-Transportation and logistics:

• Freight brokers
• Aviation services
• Maritime shipping

These businesses may require registration with agencies such as the DOT, FAA, or FMC.

BUSINESSES THAT MAY FACE BANKING RESTRICTIONS

Some industries are legal but are frequently flagged by banks and payment processors due to elevated risk profiles. While Firstbase may support company formation for these businesses, approval for banking or payment processing is not guaranteed.

Examples include:

• Adult content or entertainment platforms
• Dating and social networking applications
• Crypto and Web3 startups
• Forex and high-risk trading platforms

• Nutraceuticals and dietary supplements

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FIRSTBASE COMPLIANCE OBLIGATIONS

As a company formation and compliance services provider, Firstbase is required to comply with U.S. and international regulations, including anti-money laundering (AML), Bank Secrecy Act (BSA), FinCEN, and sanctions requirements.

As a result:

• We cannot support prohibited businesses
• For restricted businesses, we cannot guarantee banking approval, or payment processor access
• Financial institutions may apply additional requirements based on their own internal policies

We also have a responsibility to prevent the use of our services for activities that are likely to result in harm or unlawful violence. Firstbase maintains a strict prohibition against supporting businesses that engage in or promote unlawful violent activity.

Firstbase reserves the right to decline or discontinue support for businesses that are prohibited, restricted, or unable to meet applicable compliance requirements.

This article is for informational purposes only and does not constitute legal or tax advice. Laws and regulations vary by jurisdiction and are subject to change.