Money Transmitter License (MTL)
A 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.
Also called: money transmission licence · MTLs
A money transmitter license is issued by a state, reviewed by that state’s regulator, and valid only there. The usual conditions are a surety bond, a minimum net worth, a duty to hold customer funds in permissible investments, named compliance personnel, and background checks on owners and officers. Most applications are filed through NMLS, and the state-by-state requirements are set out in the money transmitter licensing guide.
The activity that triggers the requirement is defined by each state too, which is why two regulators can look at the same product and disagree about whether it needs a license at all.
In practice
There is no national money transmitter license. Coverage is assembled state by state, each with its own bond, net worth and permissible-investment rules, its own timetable and its own power to refuse — so a nationwide business is a portfolio of separate approvals, not one.
Commonly confused with
| Term | How it differs |
|---|---|
| Money Services Business | MSB is a federal status carrying AML duties; a money transmitter license is a state’s permission to do the activity at all. |
| FinCEN Registration | FinCEN registration is a notification to a federal agency; a state license is an approval that can be, and is, refused. |
See also
- 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.
- Authorized DelegateA 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.
- Surety BondA surety bond is a guarantee from a third-party surety company that a state regulator requires a money transmitter licensee to post, so consumers and the state can be paid if the licensee fails to meet its obligations. It is a guarantee the licensee buys, not money it sets aside.
- NMLSNMLS, the Nationwide Multistate Licensing System, is the shared online system through which US state regulators accept, process and renew money transmitter and other non-depository license applications. One company record serves every state the applicant selects.
- Permissible InvestmentsPermissible investments are the categories of asset a licensed US money transmitter may count against its outstanding money transmission obligations. Under the model law states have been adopting, the licensee must hold permissible investments worth at least the whole of what it owes customers, and the eligible list runs wider than cash and government securities.