A Full Guide to Getting a Money Transmitter License

Published: Mar 27, 2019
money transmitter license

 

Are you looking at the option of launching a money transmitter company in the U.S.? In order to start your business, you will need to obtain a money transmitter license on the state level, as well as on a federal.

The Code of Federal Regulations (CFR) classifies money transmitters as a money services business. As such, you will have to become licensed by the federal Financial Crimes Enforcement Network (FinCEN).

As for the state level, in almost all states, you will need a license that has been issued by the respective state. However, the rules are not uniform across all states, and so the licensing requirements and processes vary; as well as the specific name of the profession. Still, one of the typical criteria that you will have to satisfy in obtaining your license in your state, is to acquire a money transmitter bond.

Below you can find the general requirements that apply to most states, as well as the federal-level criteria that you have to fulfill to get your money transmitter license.

The main requirements for getting a money transmitter license

All money transmitters across the U.S. have to register with FinCEN as money services businesses. This is your first step to launching your transmitting business.  

The licensing requirements that money transmitters have to cover are different across states. Thus, you need to identify, first of all, which is the licensing body on the state level which regulates your trade. Then you have to consult the exact criteria that it imposes for money transmitters.

For most states, the actual procedure of applying for a license and providing the necessary paperwork is handled via the Nationwide Multistate Licensing System and Registry (NMLS). The process is streamlined and typically involves completing a company application form (MU1), and an individual form (MU2).

These documents should contain a set of detailed personal and company information. You will also need to provide the following, among others:

  • Disclosure information
  • Financial statements
  • Money transmitter business plan (as well as the management structure)
  • Business entity documents
  • Criminal background check for owners and main involved individuals
  • Proof of minimum net worth
  • Money transmitter surety bond

Once you’ve compiled all the necessary documents required by your state licensing authority, you can submit them via the NMLS website. Together with the application form,  you will need to pay an application or licensing fee in preset amount by your state. You may also need to cover other fees, depending on your location.

You can find a more detailed guide about licensing for some states in the list below.

California

Florida

New York

Texas

South Carolina

Getting your money transmitter bond

money transmitter license

In most states, you have to provide a surety bond as part of the licensing process in order to become a  money transmitter. The bond amount required varies greatly with each state. Depending on the amount you have to provide, your bond cost is set as a small percentage of it.

The exact premium depends also on the strength of your personal finances, as well as on a detailed review of your audited business finances. For applicants with solid financial profiles, the rates are usually between 1% and 5%.

For a list of the bonding amounts for some of the states, please consult the table below.

State Money Transmitter Bond Amount
Alabama $100,000-$5,000,000
Alaska $25,000-$125,000
Arizona $25,000
Arkansas $50,000-$300,000
California $250,000-$7,000,000
Colorado $250,000-$2 million
Connecticut $300,000-$1 million
Florida $50,000-$2 million
Georgia $100,000-$2,000,000
Illinois $100,000-$2,000,000
Indiana $300,000
Kansas $200,000-$1 million
Kentucky $500,000
Louisiana $25,000-$50,000
Maryland $150,000-$1 million
Massachusetts $50,000
Michigan $500,000-$1,500,000
Mississippi $25,000-$500,000
Missouri $100,000-$1 million
Nevada $10,000-$250,000
New Jersey $100,000-$1,000,000
New York $500,000
North Carolina $150,000-$250,000
Ohio $300,000-$2,000,000
Oklahoma $50,000-$500,000
Oregon $25,000-$150,000
Pennsylvania $1,000,000
Texas $300,000-$2,000,000
Utah $50,000
Washington $10,000-$550,000

 

Would you like to learn more about the process for obtaining your money transmitter bond? Don’t hesitate to contact our bonding experts at 877.514.5146.

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Victor Lance is the founder and president of Lance Surety Bond Associates, Inc. He began his career as an officer in the U.S. Marine Corps, serving two combat tours. As president of Lance Surety, he now focuses on educating and assisting small businesses throughout the country with various license and bond requirements. Victor graduated from Villanova University with a degree in Business Administration and holds a Masters in Business Administration (MBA) from the University of Michigan's Ross School of Business.

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