How many Money Transmitter Licenses do I require if I have to do business in the US?

Many people wrongly assume that only having one money transmitter license in the United States is good enough. It is not. If you intend you have customers signed up from all over the United States, then you needed licenses, in all the States. However, there is a caveat to this where you may require only ONE license.

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Hello my name is Faisal Khan. I am a banking and a payments consultant.

A question I got over a telephone call very recently is how many money transmitter licenses do we need to get. Can we just take one and get away with it? They didn’t quite understand getting away with it is not the thing here. But that in the United States there are fifty money transmitter…50 states and you require a money transmitter license for each state. There is one separate for Washington D.C. And then there are four separate for the four territories Guam, U.S. Virgin Islands, Puerto Rico etc.

So in the United States if you’re going to be doing, your transactions within the U.S. or internationally but picking up American customers or offloading to American customers within the U.S. you need a license.

If you want to be signing up a customer, a customer that will sign up. You know let’s say you sign up a customer from Florida. You need the license from Florida. If you have one customer in Maryland you need a license in Maryland. If you have one in California, Texas and Illinois you need licenses in all three states. So hence you can’t just take one license and be safe and be okay with it, no it doesn’t work that way. The license is issued for that state only. If you do business outside the state and you’re not licensed in that state then you are indeed breaking the law.

So, one license for every state is required. However there is a caveat to the statement. If you are bringing money into the United States and let’s say you are a distribution company or a distribution payments company and you know British Airways has to make payments to its employees all over the United States and you are licensed in Florida. So if British Airways sends you money to Florida, you can then disperse it out and you only need to be licensed in the state where you’re in. The reason is you are taking possession of money that doesn’t belong to you. You’re a financial intermediary hence you need to be licensed because you’re only doing business as yourself in Florida. You need to be licensed in Florida. When you push the money out to you know 10 – 20 – 30 different states you’re using the banking channel and because all the banking channels are already licensed, you don’t need to. Hence, you don’t need to be licensed. They’re simply delivering money on your behalf. So you don’t need a license in all 50 states. You just need a license in Florida to disperse money but to collect money because when they will be collecting money or collecting…Signing up clients to collect money then you need to have a license in all those states where the customer is being signed up for.

So, there is no such thing as one license and we can pick up customers from all over the United States. It doesn’t happen you need to have a license for every state from where your customer will sign up and then the inverse where you are distributing you only need to be licensed in the state where you yourself are present.

Needless to say, I would like to give a disclaimer here I am not a lawyer. This is my opinion, if you, please do not take this as legal advice. Go seek legal advice elsewhere from professionals, qualified professionals. Anyways, till next time, have a good one.