Information on the money transmitter industry in the United States, detailing the key statutes and regulations, licensing requirements, licensing fees, licensing forms, minimum net worth and surety bond requirements and list of licensees in each state can be accessed through this interactive map.
Money transmitters operating or planning to operate in the U.S. must comply with federal and state legislation. This means dealing with different supervisory authorities and licensing requirements which depend on the states in which the money transmission activity takes place.
In an effort to apply a consistent approach to money transmission services, the Uniform Money Services Act, a model law drafted by the National Conference of Commissioners on Uniform State Laws, proposes to define “money transmission” as “selling or issuing payment instruments, stored value, or receiving money or monetary value for transmission.” As of October 2016, Alaska, Arkansas, Iowa, New Mexico, Puerto Rico, South Carolina, Texas, Vermont and Washington have followed the Uniform Money Services Act, adopted in 2010, as the outline for their statutes.
At the federal level, money transmitters must be registered with the Financial Crimes Enforcement Network (FinCEN), a bureau of the U.S. Department of Treasury, with few exceptions. FinCEN regulates money transmitters, among other money service businesses in accordance with the Bank Secrecy Act (BSA). Money transmitters must put in place anti-money laundering (AML) programs with know your customer (KYC) and recordkeeping measures, and file currency transaction reports and suspicious activities reports.
At the state level, a money transmitter must obtain a license in each state in which it plans to do business, if its regulation requires it. Money transmitters with multiple licenses must, consequently, deal with different legal approaches to their services and observe diverse compliance requirements which, if breached, may lead to the imposition of pecuniary sanctions. State financial regulators usually regulate and license money transmitters. As such, they are generally members of the Money Transmitter Regulators Association (MTRA), a national organisation dedicated to the efficient regulation of money transmission in the U.S., and which implemented the initial framework for coordination and cooperation among state money transmitter regulators.
Some regulators use the Nationwide Multistate Licensing System (NMLS), a nationwide licensing system, to manage money transmitter licensees and applicants. This system allows money transmitters to centralize their different licenses in one single location. Not all U.S. states participate in the NMLS with respect to money service businesses.
Concerning state statutes, every state (except Montana) regulates money transmissions and mandates money transmitters to be licensed as such. Both New Mexico and South Carolina very recently passed laws regulating money transmissions (the first one in March 2016, the second one in June 2016), which will be effective in 2017.
Although the licensing requirements are different in each state, money transmitter laws at the state level usually mandate the payment of fees such as application fees, license fees, and license renewal fees, among others. There is also a common requirement for licensees to submit with their application and maintain throughout the licensing period evidence of having a minimum net worth and provide a surety bond (or other similar security device) to assure the observation of their legal commitments.
Money transmitters in the U.S. face important regulatory challenges.
Money transmitters experience considerable differences between licensing requirements from state to state, and they have to be familiar with all the legal systems of states in which they plan to do business. Professionals from the money transmitter industry consider the U.S. system to be inefficient as the lack of uniform licensing requirements leads to uncertainty, thereby increasing the legal risk of money transmitter companies.
As a result of this uncertainty, prospective licensees in one or several U.S. states experience high search costs when trying to determine which laws and requirements apply to them.
To cut through this uncertainty, PaymentsCompliance has been conducting research into the 50 U.S. states and the District of Columbia and Puerto Rico, to collate information on the money transmitter industry, in particular detailing the key statutes and regulations, the licensing requirements, licensing fees, licensing forms and list of licensees in each state.