Navigating the Money Transmitter Licensing Process

Determining if you are a money transmitter and then navigating the licensing requirements can be a daunting task. This guide is meant to ease the pain of that process with some helpful tips as well as great resources.

What is a Money Transmitter?

Essentially, anyone who operates a money services business (MSB) that moves money from one business to another or one person to another is a money transmitter. According to the Financial Crimes Enforcement Network (“FinCEN”), a money transmitter is anyone who transmits money over certain thresholds for others as a normal part of doing business. This may include individuals or business that:

• Process traveler’s checks
• Exchange or deal in currency, potentially including virtual currencies
• Cashing checks
• Process money orders
• Transmit money in other ways

Money transmitters are a part of the broader category of MSBs.

What does the State Licensing process involve?

While registration with FinCEN is straightforward, state licensing requirements have been found to be extremely difficult to navigate. 

The details of the money transmitter license process vary from state to state. Below is a list of common requirements in many states:

• Complete state’s license application(s)
• Provide personal and business financial statements
• Provide proof of meeting a given net worth requirement
• Agree to a background check
• Pay application and license fees
• Provide business plan
• Provide compliance program
• Obtain surety bonds
• Other state-specific requirements

Do virtual currency businesses need a license?

The short answer is maybe. The best way to know for certain is to obtain a legal analysis. State requirements vary, and one wrong mistake can result in conducting unlicensed money transition. 

The current regulatory framework relating to cryptocurrency is still a gray and rapidly evolving area for both regulators and businesses.

It can be difficult to determine if certain licensing requirements extend to virtual currency companies because laws have yet to be updated or are being created. Additionally, one aspect of the business may require a license but not another.

Additional Resources

Below is a list of helpful resources as you start your journey into money transmitter licensing or maintenance of your existing licenses.

• FinCEN https://www.fincen.gov/resources/financial-institutions/money-services-businesses
• NMLS https://www.nmlsconsumeraccess.org/
• CorCom, LLC https://corcomllc.com/resources/

How Bates Helps

Our consultants advise and assist clients throughout the application process.  Some areas in which we provide assistance include:

• Developing a licensing strategy (including possible rollout plan)
• Obtaining strategic partners such as:
  • Attorneys
  • Banking partners
  • Technology partners
  • Surety bond company, etc.
  • Registered agent
• Assisting with state business registrations
• Handle your application submission process
• Coordinating critical requirements gathering such as fingerprints, financial disclosures
• Preparing and/or revising business documents (i.e., business plan, flow of funds, etc.
• Develop your anti-money laundering compliance program and applicable compliance related policies; and procedures such as Office of Foreign Assets Control (OFAC)
• Act as liaison with state regulators
• License renewal and maintenance

Contact

For more information about Bates Group’s Money Transmitter Licensing and Maintenance services, please contact:

Brandi B. Reynolds, CAMS-Audit, Manging Director, MSB, Fintech and Cryptocurrency

breynolds@batesgroup.com | 864-809-7718