In the world of money services businesses (MSBs), “renting a license” typically refers to a practice in which an individual or company obtains the right to use another entity’s money transmitter license. This allows the individual or company to operate under the umbrella of the licensed entity, effectively utilizing their regulatory compliance to offer money transmission services without obtaining their own license.

This arrangement can be beneficial for smaller businesses or startups that do not have the resources or expertise to navigate the complex regulatory landscape associated with money transmission. The licensed entity usually charges a fee for the service, which can be a fixed amount, a percentage of the revenue, or a combination of both.

However, the legality of renting a license is not straightforward and depends on the jurisdiction and specific regulatory requirements. In some countries, renting a license may be allowed if certain conditions are met, such as proper due diligence and reporting requirements. In others, it may be considered a violation of regulatory compliance, potentially leading to fines, penalties, or other legal consequences.

It is crucial for any business looking to engage in renting a license to consult with legal experts in the relevant jurisdictions to ensure compliance with all applicable laws and regulations. Additionally, both the licensed entity and the company renting the license must maintain robust compliance programs to minimize potential risks associated with money laundering, terrorist financing, or other illicit activities.

This page was last updated on May 29, 2023.

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