Every state except Montana requires money transmitters and other money service businesses (MSB) to get a license before conducting business. While there are similarities in the licensing process, each state has its own requirements you must complete to get your license.
In this post, we will examine who needs a money transmitter license and provide an overview of steps needed to get licensed.
What is a money transmitter?
The US Department of Treasury defines money transmitters as any business that engages in accepting and transmitting funds denominated in currency through a financial institution or an electronic funds transfer network.
Similarly, most states define any person that receives money with the intent of sending it somewhere else as a money transmitter. This includes any means used to transmit money. Some of the common types of money transmitting activities
- Check cashing
- Currency dealing and exchanging
- Issuing traveler’s checks
- Processing money orders
- Payment instruments
Getting a money transmitter bond
Most states require money transmitters to post a surety bond before receiving a license. The
bonds help ensure that the licensee comply with all state and federal regulations. They also provide financial protection to the government and consumers in the event they are damaged by the money transmitter’s actions.
The required bond amount varies considerably depending on the state. Most states have variable bond amounts that increase with the size of the money transmission business. If your state does not have a fixed amount, you will need to work with the state regulatory authority to determine your bond requirement.
After you identify your exact bond requirement, you can apply for the bond through a surety company. The surety company will evaluate your creditworthiness, industry experience, and financial history to determine the premium for your bond. This is a small percentage of the total bond amount that you must pay to obtain the bond. The more qualified you are, the lower the premium amount is.
Below are the minimum bond amounts for each state:
- Alabama: $100,000
- Alaska: $25,000
- Arizona: $25,000
- Arkansas: $50,000
- California: $250,000
- Colorado: $250,000
- Connecticut: $300,000
- Florida: $50,000
- Georgia: $100,000
- Illinois: $100,000
- Indiana: $300,000
- Kansas: $200,000
- Kentucky: $500,000
- Louisiana: $25,000
- Maryland: $150,000
- Massachusetts: $50,000
- Michigan: $500,000
- Mississippi: $25,000
- Missouri: $100,000
- Nevada: $10,000
- New Jersey: $100,000
- New York: $500,000
- North Carolina : $150,000
- Ohio: $300,000
- Oklahoma: $50,000
- Oregon: $25,000
- Pennsylvania $1,000,000
- Texas: $300,000
- Utah: $50,000
- Washington: $10,000
Applying for a money transmitter license
Most states use the Nationwide Multistate Licensing System and Registry (NMLS) to handle the application process. You can browse the NMLS state licensing page to locate the money transmitter license in your state. There you will find the application form and checklist of all the requirements.
When submitting your application form, you will need to provide various supporting documents. The exact requirements will vary depending on the state. Here are some of the documents you should be ready to produce:
- Financial statements
- Credit report
- Business plan
- Certificate of Good Authority
- Fingerprints and background checks
- Surety bond
In addition to the application and documents, you must include payment for the licensing fee. Again, this varies by state but you expect to pay a few hundred dollars for the application fee.
If your state does not use NMLS to handle the licensing process, you will have to check with the appropriate regulatory authority to learn more about the application process.
Registering with the US Department of Treasury
If you run a money services business you will face federal regulatory requirements as well. All licensed money transmitters must register with the Financial Crimes Enforcement Network (FinCEN) of the US Department of Treasury.
You can complete the registration process online using the BSA e-filing system.
How EZ Surety helps you with your money transmitter license
When you’re ready to get your money transmitter license, EZ Surety can issue your money transmitter surety bond online. Applying is quick, easy, and many bonds can be issued instantly.
Find the bond you need or get in touch to learn more about the bonding process.