Money Transmitter License Cost
One question that is often asked is How much will a money transmitter license cost ?
To answer this question, we have to break down certain things. First of all, the money transmitter license cost varies depending on the number of States and US territories you want to do business in.
The complete list of US States & Territories and the name of their financial regulators can be seen here.
In our weekly podcast Around The Coin we covered the topic of money transmitter license cost. The podcast can be accessed below:
Money Transmitter License Cost – Generally the number is between US$ 1.0-1.5 Million. The time period to acquire all the licensed can be approximately two years.
Here are some cost areas that you will have to pay when it comes to money transmitter license cost:
- Minimum Net Worth
- Surety Bonding
- Application Fees
- Audit Fees (financial, IT, compliance, etc.)
- Permissible investment
- Banking Limitations
- AML/KYC Compliance Program (including the requirement of having a dedicated AML Compliance Officer)
- Lawyer Filing Fees
- Internal Technology Team & Back-Office Support
- Subscriptions for various Databases for AML/KYC
- Software (Transaction Management / Monitoring System)
Nearly all the States have a surety bond requirement. It is important to note, most states will take bonding only from the list of approved surety bonding companies. Let us also highlight something that people don’t talk about: the surety bonding companies is a cartel. If you do too much shopping and turn it into a beauty contest, they will find out, discuss amongst themselves and then refuse to give you bonding. Even if you had a the cash and wanted to give the State(s) bonding in Cash – you cannot. Nearly all of them will force you to go back to these bonding companies.
Non-traditional MSBs such as Bitcoin/Cryptocurrency, et. al will have to pay x2 -to- x4 the premium versus the traditional MSBs. These bonding companies are nothing short of vultures. Be very cognizant of that.
Each state also has a minimum and maximum amount for the bonds. The maximum in most cases is US$ 2 Million (that’s the cap), the minimum varies from state to state. The amount applicable to you, is dependent on many factors, which the state examiner’s office will determine, based on your application.
- What is the financial condition (at present) of the applicant?
- What is your net worth?
- How much business did the company do in the previous year (if at all)?
- What is the projected volume/value of the business for the upcoming year?
Two great resources and an article that can be recommended for getting a ballpark figure on how much will the money transmitter license cost be are:
By Grimes Law PLLC
Provided by: Thomas Brown, Lecturer, UC Berkeley Law School and Partner, Paul Hastings LLP
By Marco Santori
In most cases you will discover it is not the cost per se that is an issue as most businesses who want to venture into the money transmission space will raise the adequate capital required to apply for money transmitter licenses. The issue is the time.
Applying for licenses can take a considerable time-frame before you have all the necessary licenses. Small states come within the 3-6 months period. States like Florida, Massachusetts, Illinois, New Jersey, Georgia, Maryland, Pennsylvania, etc. can take between 6-9 months, and then there are the big three states: New York, California and Texas. The Big 3 as they are affectionately called. Expect NY, CA and TX to take between 12 and 24 months.
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This page was last updated on January 16, 2020.