Texas Money Transmitter License: Full Guide [2020 Update]
Do you wish to start a money transmission business in Texas? You need to go through a rigorous process in order to obtain a Texas money transmitter license. This is how state authorities ensure that all such professionals will work up to certain set standards, thus protecting the interests of citizens.
The Texas Department of Banking is the authority in the state that regulates the activities of money transmitters. However, you have to apply via the website of the Nationwide Multistate Licensing System and Registry (NMLS).
To get started with your licensing, you can delve into the sections below, where you can find detailed information about the process and the requirements.
Meet the Texas Money Transmitter License Requirements
The Texas Department of Banking is in charge of overseeing the activities of money services businesses (MSBs), which includes money transmitters. It requires licensing in order to ensure that your financial condition is satisfactory and that you have the ability to monitor transactions, so that you can prevent misuses such as money laundering, terrorist funding, or financial crimes. The criteria that you have to satisfy are detailed below.
The first step you need to take is to register your business entity. You can do so via the Business Services of the Secretary of State.
The other documents that you have to complete and provide include:
- Trade name (if applicable)
- Business plan
- Organizational chart
- Management chart
- Resident/Registered Agent information
- Disclosure questions
- Qualifying individual information
- Flow of funds structure
- Certificate of Authority/Good Standing Certificate
- FinCEN registration confirmation number
- Your Anti-Money Laundering (AML) and Bank Secrecy Act (BSA) policies
You can get further information about the requirements in the NMLS application checklist.
If you are planning to work with cryptocurrency, there are special requirements that you should comply with in addition that are set in Supervisory Memorandum – 1037 revised on April 1, 2019. Most notably, you should provide a third-party security audit of your relevant computer systems. You should thus file a copy of the security audit report with its scope and findings, together with attestations for meeting the criteria.
Provide a Surety Bond
All applicants for a Texas money transmitter license need to obtain a surety bond. Its purpose is to safeguard the interests of your customers. The bond ensures your legal compliance.
The Texas money transmitter bond amount can be between $300,000 and $2 million. It should be equal to one percent of your total yearly dollar volume of money transmission business in Texas, or your projected total volume of business for the first year of licensure. The commissioner may increase the bond amount if you intend to provide or are providing third party bill payments in conjunction with loan acceleration services, by multiplying the amount required by a factor of up to two. You need to provide the bond in the official form.
In order to get bonded, you have to pay a small fraction of the required bond amount, which is your premium. It is formulated on the basis of the strength of your personal and business financials. The most essential factors that determine it are your personal credit score, as well as your audited business finances. If your overall application is solid, you can expect bonding rates between 0.5% and 5%.
Want to see the exact cost of your Texas money transmitter bond? Fill in the short form below!
Criminal Background Check
Direct and indirect owners, executive officers, and qualifying individuals have to authorize an FBI criminal background check.
You need to provide your audited financial statement prepared by an independent Certified Public Accountant.
It should showcase that you meet the minimum net worth requirements. They are as follows:
- $100,000 for four or fewer locations and transmission is not conducted via the internet
- $500,000 for five or more locations, or for providing services or products over the internet, or offering a prepaid access card or similar product
At least 50 percent of the total net worth must be tangible net worth.
Complete the Texas Money Transmitter License Application
When you have ensured that you meet all requirements, you have to complete your application online via the NMLS and attach all relevant paperwork.
Some of the documents have to be mailed to the Department. The address is:
Texas Department of Banking
Corporate Activities Division
2601 North Lamar Blvd.
Austin, TX 78705-4294
License and Registration Fees
In addition to submitting your application, you have to cover the relevant application fee of $10,000.
Need more information about getting your license and bonding as a Texas money transmitter? Don’t hesitate to contact us at 877.514.5146.
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