Money Transmitter License (MTL) for Money Transfer Companies

7 mins
April 24, 2023
Money Transmitter License (MTL) for Money Transfer Companies | Machnet Technologies

Money Service Businesses (MSB) that are classified as money transmitters are required to register for Money Transmitter License (MTLs). Having a Money Transfer License (MTL) allows money transfer companies (aka money transmitters) to legally provide money transfer services to customers. Such companies may be engaged in domestic or international money transfers. Companies that provide remittance services fall under this classification.

Examples of companies that are registered as MSB and licensed money transmitters

  • Square and Venmo: peer-to-peer wallets that collect money and transfer money in the US only.
  • Stripe and Paypal: online payment gateways for e-commerce, small businesses 
  • Transferwise, Moneygram, Remitly: companies that facilitate cross-border money transfer from US to  other countries. 

In certain cases, some businesses may not directly engage in transferring funds, but their programs are sponsored by banks or MTL providers. Though these businesses do not directly control or participate in the actual transfer of funds, they may still be required to register with FinCEN to comply with legal regulations.

Applying for Money Transmitter License (MTL)

It's important to note that Money Transmission laws can vary widely between states.  Depending on state laws, there are also some exceptions to who is considered a money transmitter. Businesses should always consult with legal and regulatory experts to ensure compliance with all applicable laws and regulations. 

In general applying for an MTL is a very complex and challenging process. It can very time consuming and expensive to say the least.  

Here is how applying for MTL in the state of New York looks like: 

New York is one of the most heavily regulated states for MSBs, and businesses must obtain a money transmitter license in order to operate legally. The New York State Department of Financial Services (NYDFS) plays a vital role in protecting consumers and supporting financial service providers. The department regulates various financial service providers, including banks, credit unions, money transmitters, etc.  It's important to understand NYDFS regulations if you're in the business of money transfers.

The application process for a money transmitter license in New York includes several requirements, including

  • Filing an application with the New York Department of Financial Services (NYDFS)
  • Paying an application fee
  • Submitting fingerprints and background checks for all control persons
  • Providing financial statements and other documentation
  • Maintaining a minimum net worth requirement

By requiring businesses to obtain a license, New York can monitor and regulate MSBs to ensure compliance with state and federal regulations.

State-wise information for MTL 

If you're entering the money transfer industry, the table below provides valuable information on key states. For a more in-depth understanding, we recommend referring to Faisal Khan's blog.

State Regulatory Agency License Fee Other Information License Required
Alabama Alabama Securities Commission $1,000 Surety bond, background check Yes
Alaska Alaska Division of Banking and Securities $1,500 N/A Yes
Arizona Arizona Department of Financial Institutions $500 N/A Yes
Arkansas Arkansas Securities Department $5,000 Surety bond, background check Yes
California California Department of Financial Protection and Innovation $5,000 N/A Yes
Colorado Colorado Division of Banking $5,000 N/A Yes
Connecticut Connecticut Department of Banking $1,000 - $5,000 Background check Yes
Delaware Delaware Office of the State Bank Commissioner $500 - $1,000 Surety bond Yes
District of Columbia Department of Insurance, Securities and Banking $2,500 Surety bond, background check Yes
Florida Florida Office of Financial Regulation $375 - $2,500 Surety bond Yes
Georgia Georgia Department of Banking and Finance $1,500 - $2,500 Background check Yes
Hawaii Hawaii Division of Financial Institutions $2,000 Background check Yes
Idaho Idaho Department of Finance $500 Surety bond, background check Yes
Illinois Illinois Department of Financial and Professional Regulation $3,500 Background check Yes
Indiana Indiana Department of Financial Institutions $1,000 N/A Yes
Iowa Iowa Division of Banking $1,000 - $1,500 Surety bond, background check Yes
Kansas Kansas Office of the State Bank Commissioner $750 - $1,500 Background check Yes
Kentucky Kentucky Department of Financial Institutions $1,000 Surety bond Yes
Louisiana Louisiana Office of Financial Institutions $2,000 - $5,000 Background check Yes
Maine Maine Bureau of Consumer Credit Protection $1,000 - $5,000 Surety bond Yes
Maryland Maryland Department of Labor, Licensing and Regulation $1,500 Background check Yes
Massachusetts Massachusetts Division of Banks $1,000 - $10,000 Surety bond, background check Yes
Michigan Michigan Department of Insurance and Financial Services $1,000 - $5,000 Background check Yes
Minnesota Minnesota Department of Commerce $1,000 - $5,000 Background check Yes
Mississippi Mississippi Department of Banking and Consumer Finance $1,000 Surety bond Yes
Missouri Missouri Division of Finance $1,500 Surety bond Yes
Montana Montana Division of Banking and Financial Institutions $1,000 - $5,000 Background check Yes
Nebraska Nebraska Department of Banking and Finance $1,000 - $5,000 Background check Yes

Regulations and requirements for MSBs can change frequently and it's important for individuals to verify the most up-to-date information by checking the relevant state agency's website or consulting with a legal professional. The information provided in the table above is for informational purposes only and should not be considered legal advice.

Getting started

For start-ups and businesses that are looking to get into the money transfer business, applying for an MTL and getting MTL can be a cumbersome and lengthy process. The best approach for such companies would be to find a partner that can support your use case for money transfer and provide a fully compliant API stack.  

This would allow companies to focus on brand building and customer acquisition right with speed rather than spend time and money on legal, compliance, and other operational overheads. Time-to-market is critical for startups, and partnering with a trusted provider can help accelerate the process.

Get in touch with our team to understand how you can build your money transfer product with Machnet’s Program.

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