Faisal Khan & Company - Solutions - License & Regulatory Coverage

Licensing & Regulatory Coverage

If you are going to be moving money, accepting deposits, or lending out money as an intermediary, no matter where in the world you are, chances are you need to be licensed.

In the olden days, the custodians of all things banking and payments were always chartered banks. Today, things are changing. With the rapidly advancing society, technology, communication, and social models, we are attacking the traditional services offered by banks on a more elementary scale.

Fintechs and entrepreneurs are taking their ideas and building innovative financial services solutions for the end customer. The likes of which, in many cases, we have not seen before.

Where Can We Help You With Licensing?

We can help you in getting a license in various geographies. You can read more about licensing in various parts of the world by clicking through the links below:

How To Get Licensed?

So the basic question is, how do you get licensed? The long and short is, that you have essentially five options when it comes to licensing and they are as follows (do note options will vary from geography to geography).

  1. Applying for your own license
  2. Becoming an Authorized Delegate (Registered Agent) of an existing license holder
  3. Being Sponsored by an existing license holder
  4. Being white-labeled by an existing license holder
  5. Or receiving an exemption (extremely rare)

Your licensing needs and what route you ought to take can depend on a lot of factors. Short term goals? Long term goals? Budget? Resources? Your understanding of the regulatory environment?

Some Basic Understanding Of Licensing

As has been cited before, working in the financial services industry mandates that you get licensed by the appropriate financial regulator in your designated territory.

Understanding and navigating the confusing labyrinth of licensing can be extremely overwhelming. Our goal is to simplify this for you and present it to you in plain English. 

  • Flow of Funds: Regardless of which territory you apply for a license, you will have to have a very good graphical depiction of your flow of funds. If you have never seen one or made one, you might want to check out our Flow of Funds page.
  • Worldwide Money Transfer License: A lot of startups and incumbents alike ask us, if there is a universal license that provides global coverage. Please read this article to understand more regarding Worldwide Money Transfer License.
  • Money Transfer License Application: This article summarizes what sort of information goes into a Money Transfer License Application brief.

Owning Vs. Renting-A-License?

An example we usually cite, (and just to sound off an analogy), if you were to launch a taxi service in a particular city, and the need was to get 51 Taxis (equivalent to the 51 licenses to operate nationwide in the United States), what would you plan of action be?

  1. Build from scratch your own taxi.
  2. Go to a dealership and buy 51 cars to serve as taxis.
  3. Go to a dealership and lease 51 cards to serve as taxis.

Chances are, you will opt for option (3). Leasing or renting a taxi is the fastest and most economical method of going to the market. Once you have determined the viability of the project after say one year, you can then make a decision to either continue leasing or starting buying your own fleet of taxis or even perhaps build your own taxi.

Google did this with servers when starting out. They ‘leased’ servers. Later on, they started buying servers and when they were large enough, they developed their own bespoke servers for their datacenter.

Your licensing approach should also be the same. You ought to be able to rent a license (albeit, admittedly, we do not like using that word ‘rent’, you know, regulators and all frown upon it). But the truth of the matter is, you have an idea. You want to go to the market fast. You probably have either an incumbent business or are a startup and either way, resources are limited.

Renting-a-license (or as we would like to put it, getting ‘sponsored’ by a principal license holder), is perhaps the best (read: fastest and most economical) approach to go to market in this highly competitive world we live in.

Not only can we aid you in getting sponsored, we can also help you become an authorized delegate (i.e. a registered agent) of an existing license holder.

Our recommendation always to our clients is as follows:

  1. Sponsorship, easiest to get, and should be a starting point.
  2. Authorized Delegate (Registered Agent), next logical step after sponsorship.
  3. Own License, the final step.

To discuss your licensing needs, please fill out the form below.

Need Regulatory License Coverage?

Learn how we can provide you with money transmitter licenses cover for your project.

This page was last updated on December 8, 2020.

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