Being in the finance industry offers countless ways to earn a decent living. From payment processors to money transmitters, individuals and businesses working with money can create and sustain a profitable living. However, dealing with money, both traditional currency and virtual currency like Bitcoin presents some challenges when it comes to doing business in line with federal and state regulations.
Money transmitters – individuals or businesses who receive and transmit money for others – may be required to meet certain guidelines in order to operate a business legitimately. Getting a money transmitter license is often part of the process. A money transmitter license allows you to fulfill your purpose in your business after you and your company have met a certain set of criteria. Here’s what you need to do if you want to get your money transmitter license quickly.
Know the State Requirements
Each state has its own requirements for operating as a licensed money transmitter. While definitions of a money transmitter vary, generally, you qualify as a money transmitter if you do one or more of the following:
- Processing money orders
- Providing traveler’s checks
- Check cashing businesses
- Dealing or exchanging currency (potentially including virtual currency)
- Completing money transfers for customers
When your business completes these tasks in amounts of $1,000 total, you likely need a money transmitter license in your state. Getting your license may require you to provide detailed information about your business location and structure, any owners of the business, financial documentation, and a criminal or civil background check.
Understand Your Federal Responsibilities
In addition to the more comprehensive state money transmitter requirements, your business also needs to follow through with certain federal guidelines. In the United States, the Financial Crimes Enforcement Network (FinCEN) handles the regulations surrounding money transmitters and money service businesses. You will need to complete a brief registration as a money services business if you are required to have a license in your state. Fortunately, that process is short and easy, and it can be done online.
You will also need to have an anti-money laundering policy in place, per federal guidelines. An AML program should be written down, have a dedicated person or department in charge of the policy, and be updated periodically to ensure it is compliant with federal laws.
Organize Your Financials
The next step in getting your money transmitter license fast is to gather and organize your financial documentation. The state licensing application process involves a review of your finances, both personal and business, so it is a good idea to have certain information ready to deliver. A balance sheet, profit and loss statement, cash flow, and credit report may all be required. Take the time to locate and organize these important documents so you can get through the licensing process quickly.
Get Your Money Transmitter Bond
Nearly all states require money transmitters to have a surety bond as part of the licensing process. While the bond amount varies depending on the state where your business is located, the bond requirement acts as a protection to your customers and the state. If you fail to operate in a way that is in line with state and federal regulations, a claim against your bond may be made.
To get your money transmitter bond, you will need to provide similar financial documentation as mentioned above, the location of your business, and the bond amount required by your state. Work with your surety agency to understand the bond options you have available to you as a money transmitter, as well as the total cost of your bond based on these guidelines.
Recognize Net Worth and Business Minimums
Finally, getting your money transmitter license may mean you are required to meet certain business structure and net worth requirements, imposed by your state. Minimum net worth amounts vary for each location, but they can range from $10,000 up to $500,000. Your financial documents should be able to show you can meet this net worth minimum in order to get your money transmitter license.
Additionally, your state may have specific business requirements you need to meet. For instance, having information from all shareholders, business owners, or members of the business is often required, so have these details ready to submit with your application. Knowing these crucial details in advance will help you get your money transmitter license faster.
The process of obtaining a money transmitter license is not one that takes place overnight. However, you can speed up the process by knowing your state and federal requirements, having your personal and business financial records in order, and obtaining your money transmitter bond. Taking these steps will keep you from delays in securing your money transmitter license.
Eric Weisbrot is the Chief Marketing Officer of JW Surety Bonds. With years of experience in the surety industry under several different roles within the company, he is also a contributing author to the surety bond blog.
