Do you need a money transmitter license?

It reconstructs your flow of funds and then runs the tests that flow implicates. Not a keyword quiz: the questions adapt to what you tell us, so a payroll business is never asked about private keys and a non-custodial wallet is never asked about biller agreements.

The conclusions come from a deterministic rules engine, not from a language model. Each rule points at a published authority — the Code of Federal Regulations, FinCEN guidance, an administrative ruling, or a state statute — and the results page shows you the fact, the legal issue and the effect for every conclusion it reaches. Where an exemption fails, it names the condition that failed.

Your answers stay in your browser. Nothing is sent to us unless you ask for a copy of your assessment at the end, and the assessment never asks for account numbers, customer names or documents.

Where the verified data does not resolve a jurisdiction, the result says so rather than guessing. Five of the fifty-one jurisdictions, and several state-level exemptions, are marked as needing review in this release — that is honest, and it is visible in the output.

The most expensive misunderstanding in this area is treating them as one. Federal law makes you a money services business and brings registration with FinCEN, an anti-money-laundering programme, suspicious activity reporting and recordkeeping. State law decides whether you need a licence to conduct the activity at all — granted state by state, under fifty-one statutes with their own definitions, exemptions, net worth requirements and surety bonds.

Registering with FinCEN satisfies no state. Holding a state licence satisfies nothing federal. And an exclusion from the federal definition does not create a state exemption — the tests ask different questions, which is why this assessment reports them separately and never collapses them into a single verdict.

Thirty-one states have now enacted the Money Transmission Modernization Act in whole or in part, which is slowly reducing the variation. It has not removed it.

Substance beats labels, every time. Calling a service software, escrow, a payment processor, a marketplace, a Merchant of Record or an agent does not make it so. What matters is where the money goes, who owes whom, who can redirect a payment, and who is out of pocket when something fails.

The four traps this assessment is built to catch: a “payment processor” whose users can send arbitrary transfers; an “escrow” that is really a spendable balance; a “software company” that can redirect a payout or holds the keys; and a “Merchant of Record” that sells nothing and merely collects another seller’s money.

It also refuses the opposite error. Touching money is not automatically money transmission. Moving only your own funds, supplying genuine network access, a real transaction escrow, a properly structured agency and a payment that meets every condition of the processor exclusion are all real positions — and the assessment will tell you when your answers describe one.

What is a money transmitter?

Under the federal definition, a money transmitter accepts currency, funds, or other value that substitutes for currency from one person and transmits it to another person or another location. Both halves matter: accepting money that belongs to somebody else, and sending it onward. The rule also reaches "any other person engaged in the transfer of funds", and FinCEN treats the question as a matter of facts and circumstances rather than a checklist.

Is there a minimum transaction size before the rules apply?

No. Several other money services business categories carry a $1,000-a-day threshold — dealing in foreign exchange and check cashing among them — but money transmission does not. FinCEN said so plainly when it rewrote the definitions: an entity that engages in money transmission in any amount is subject to the Bank Secrecy Act rules.

Does a marketplace need a money transmitter license?

It depends on facts that have nothing to do with the word "marketplace". Does the platform receive the buyer's money before the seller does? Can it decide where that money goes? Is the buyer's obligation to the seller discharged when the platform is paid? Two separate tests apply — the federal payment processor exclusion and, state by state, the agent-of-payee exemption — and they ask different questions, so a platform can satisfy one and fail the other.

Does using Stripe or a similar processor mean we do not need a license?

Not on its own. The federal payment processor exclusion is narrow: it requires the payment to facilitate the purchase of goods or services or the payment of a bill, settlement through a clearance and settlement system that admits only Bank Secrecy Act regulated financial institutions, a formal agreement, and that agreement to be with at minimum the seller or creditor who provided the goods and receives the funds. Your processor's status does not transfer to you, and the exclusion has to fit your own arrangement.

What is the agent-of-payee exemption?

A state-law exemption for a business appointed in writing by a seller to collect payments owed to that seller. Its conditions vary, but the operative one is usually that receipt by the agent counts as receipt by the payee — so the buyer's debt is discharged and the buyer is not left exposed if the agent fails to pass the money on. It exists only where a statute creates it, so it is never available nationwide by default.

Does an FBO account mean we are not holding customer money?

No. An account labelled "for benefit of" your customers describes whose money it is, not who controls the account. If your company can instruct movements from it, delay a payment or redirect one, that is control — and control is what the analysis turns on. The same goes for omnibus accounts and processor balances: "it never touches our operating account" is not the same as "we cannot direct it".

Is cryptocurrency money transmission?

It can be. FinCEN treats convertible virtual currency as value that substitutes for currency, so accepting and transmitting it can be money transmission on the same terms as dollars. But not every crypto activity qualifies. The line is control: a hosted wallet provider with total independent control over customer assets is an account-based money transmitter, while a provider of non-custodial software is supplying a tool. Mining or validating alone is a different position again.

Does registering with FinCEN replace state licenses?

No, and the reverse is equally untrue. These are separate regulatory layers. Federal registration with FinCEN and a Bank Secrecy Act compliance programme are obligations under federal law; money transmitter licences are granted state by state, under fifty-one different statutes, with their own definitions, exemptions, net worth and bonding requirements. Satisfying one does nothing for the other.

Can we operate as the agent of a licensed money transmitter instead?

Often, yes — it is a genuine pathway rather than a workaround. Note the distinction though: a person who is a money services business solely because it acts as another's agent is relieved of the separate FinCEN registration filing, but is still engaged in money transmission and still carries its own Bank Secrecy Act obligations. The arrangement also only helps where the principal really does carry the transmission obligation and is licensed in every state you serve.

Is this assessment a legal opinion?

No. It applies published federal rules and a verified state dataset to the facts you enter, and it shows you which rule produced each conclusion so you can check the reasoning. It has not read your contracts, and money transmission determinations turn on those. Treat it as a preliminary classification and a well-organised set of questions for a specialist, not as advice you can rely on.

Federal rules are applied from 31 CFR 1010.100 and 31 CFR 1022.380, FinCEN’s guidance on convertible virtual currencies (FIN-2019-G001), and published FinCEN administrative rulings. State baselines come from NMLS-published licensing documents, the CSBS Money Transmission Modernization Act and its legislative tracker, and individual state statutes where those were read directly. Every authority used in a result is listed on that result with the date it was last verified.

Known gaps in this release: five jurisdictions (Alabama, Arizona, Montana, New Mexico and Oklahoma) lack a verified baseline; state agent-of-payee, payment-processor and authorised-delegate provisions are not yet verified state by state; and Montana’s widely-reported absence of a money transmitter licence could not be confirmed from a primary source, so it is reported as unresolved rather than as an exemption.

This assessment provides general information based on the facts you enter. Money transmission determinations depend on specific facts, contracts, jurisdictions and current law. The result is not a legal opinion and does not authorise you to conduct regulated activity.