That was not entirely helpful, but is at least a starting point. Simply exchanging foreign currency does not automatically make you a money transmitter. To find out if you qualify as a money transmitter, you have to look up the regulations. I found an unofficial copy:
Electronic Code of Federal Regulations; Title 31: Money and Finance: Treasury; PART 1010GENERAL PROVISIONS; Subpart AGeneral DefinitionsThe relevant subsection is subsection (ff)
Selected quotes:
(ff) Money services business. A person wherever located doing business, whether or not on a regular basis or as an organized or licensed business concern, wholly or in substantial part within the United States, in one or more of the capacities listed in paragraphs (ff)(1) through (ff)(7) of this section. This includes but is not limited to maintenance of any agent, agency, branch, or office within the United States.
(1) Dealer in foreign exchange. A person that accepts the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more countries in exchange for the currency, or other monetary instruments, funds, or other instruments denominated in the currency, of one or more other countries in an amount greater than $1,000 for any other person on any day in one or more transactions, whether or not for same-day delivery.
.
.
.
(8] Limitation. For the purposes of this section, the term money services business shall not include:
...
(iii) A natural person who engages in an activity identified in paragraphs (ff)(1) through (ff)(5) of this section on an infrequent basis and not for gain or profit.
My reading of that is that you can set up a bitcoin ATM in your place of business with a $1000/day (global) limit with no problems and no KYC requirements.
If you want to sell more than $1000/day, you are allowed to do that too, all long as you don't make a business out of it (maybe one transaction every quarter).
Edit: I suppose I should look up the Canadian regulations too: I think that is where I pulled the quarterly limitation from.
Update: What I found linked
from the the FINTRAC website does not appear promising. The regulations can't be understood without reading the
Enabling Act.
While transactions less than $1000 do not need to be routinely reported, Canada has no minimum threshold where suspicious activity (were you suspect terrorist financing or money laundering) does not have to be reported. It appears the regulations are structured such that small businesses are expected to act as a franchisee under a larger MSB: where the larger business handles most of the reporting intecraceis.
There is also the issue where non-SWIFT transfers are supposed to have comprehensive information about the sender an recipient accompanying them (Bitcoin really does not support that in a secure/cheap way). Bitcoin is also border-less: the reporting requirements change for a "Foreign Politically Exposed Person" (probably why CaVirtex is Canada-only).