Authorized Delegate
A company authorized to conduct money transmission on behalf of a licensed principal, operating under that principal’s money transmitter license rather than holding one of its own. Most US states call this an authorized delegate; some call it an agent.
Also called: authorised delegate · agent of a licensee · AD
Money transmission in the United States is licensed state by state, and the licensing statutes let a licensee designate other companies to transmit on its behalf. The delegate is reported to the regulator by the principal, acts only within the scope of a written contract with it, and is covered by the principal’s license and bond in the states where the appointment is recorded. It cannot appoint sub-delegates of its own.
This is the legal spine of most license sponsorship arrangements, and it is fast compared with applying for licenses. It is also not a license. The authorized delegate holds no permission in its own name, and its authority ends the day the principal terminates the appointment or the principal’s own license is suspended, revoked, surrendered or expires.
Nor does the appointment move the delegate’s own obligations onto the principal. A delegate must operate in full compliance with the money transmission law itself. Federally, a business that is a money services business only because it acts as another’s agent does not have to register separately with FinCEN — but it is still a money services business, and while principal and agent can agree who writes the anti-money-laundering policies, each remains solely responsible for implementing them.
In practice
The principal owes continuing duties to the regulator for the arrangement — written policies designed to keep its delegates compliant, a risk-based background investigation before appointment, a written contract, and reporting each delegate — and a regulator can suspend a designation or make the principal terminate it. That is not the same as the principal being automatically liable for whatever the delegate does, and it does not displace the delegate’s own obligations: it must comply with the money transmission law itself and implement its own AML program. Holding no license, it also has nothing to fall back on when the appointment or the principal’s license ends.
Example
A remittance startup signs on as the authorized delegate of a licensed money transmitter covering twelve states. Customer funds move under the principal’s licenses and surety bonds, the startup’s compliance program is written to the principal’s standard, and examiners hold the principal answerable for its conduct. If the principal exits a state, the startup loses that state the same day.
Commonly confused with
| Term | How it differs |
|---|---|
| Money Transmitter License | A license is authority held in a company’s own name; delegate status is permission borrowed from someone else’s license and revocable by them. |
| Agent of the Payee | An authorized delegate transmits money under a license, while an agent of the payee is exempt because, in states recognizing it, no transmission occurs at all. |
See also
- Principal MSBA principal MSB is the licensed entity whose authority an authorized delegate operates under. The principal remains answerable to regulators for the delegate’s transactions, AML program and reporting, and for keeping the delegate inside the scope it was appointed to work in.
- Money Transmitter LicenseA money transmitter license is permission granted by a US state for a company to receive money from the public in that state and pay it, or its value, to someone else. Each state licenses separately.
- License SponsorshipLicense sponsorship is an arrangement under which one business conducts regulated activity using a license held by another, instead of obtaining its own. In US money transmission it is normally implemented by appointing the sponsored business as an authorized delegate.
- Money Services BusinessA money services business is a category in US federal law under the Bank Secrecy Act, covering seven capacities: dealer in foreign exchange, check casher, issuer or seller of money orders or traveler’s checks, provider of prepaid access, seller of prepaid access, money transmitter, and the US Postal Service.