Eternity Law International News Getting a Money Transfers License in USA

Getting a Money Transfers License in USA

February 2, 2022

All work processes are directly related to money and the performance of various operations with them. People buy, sell, invest and change something, using money every day. Over time, organizations appeared that independently manage these processes: they assist in the transfer of money from one person to another, from one bank to another, between businesses, and so on. If your company is somehow connected with such activities, then you can classify your business, as an MSB firm, however, a necessary document for such operations is a money transfers license in USA.

All processes that take place in your business must comply with certain requirements and rules that must be followed, both at the local and national levels. The money transfer licensing regulation exists to clarify some issues that relate to the concept in general, and what is the work of the money transfer operator in particular. In addition, the relevant regulations explain what is needed to obtain a license and provide information about all the requirements that are important to fulfill. First, let’s figure out what a money transfer is and what operations are included in this group.

MSB Commercial Essence

Initially, you need to understand what kind of enterprises provide money services (MSB). They will need to obtain a money transfer operator license. According to the regulator, an MSB is an individual or company that operates in one of the following areas.

  • As a currency dealer or exchanger

If you carefully study the legislation, we can conclude that not all organizations whose work is related to financial services are considered organizations that carry out money transfers. Do you need to transfer money locally, abroad or from others? This means that the work of your company is completely connected with the receipt or transfer of money. Moreover, in order to freely conduct such a business, you need to have the appropriate license.

In some legal regulations, the definition of a money transfer operator differs from each other. It is this difference that is misleading when the question is whether a license is needed or not for a particular business plan. However, in most cases, every person who receives money to transfer them in any direction is the sender of money. Other organizations that transfer through the telegraph, fax, electronic transfers, and payment instruments are also considered to be the money operator. They also need to be licensed.

Nevertheless, there are exceptions in which the regulatory authorities do not oblige the enterprise to obtain a license to transfer money. This includes some companies that work with digital currency. Therefore, the first thing you need to do is to contact the regulator and familiarize yourself with the business practices related to crypto asset transactions in order to understand if you are considered a cash operator if your business is related to digital currency.

What Structures Can Be Qualified As Operators of Monetary Assets?

All transactions over $1,000 on the same day are treated as a money transfer if the transaction meets the following categories:

  • cashing a check;
  • sale of currency and its exchange;
  • financial transaction services (for any amount);
  • traveler’s checks;
  • financial transfers.

It is in these cases that your company acts as a money transfer operator and is required to have a license to conduct transparent and legal activities.

How to Get a Money Transfers License in USA?

The procedure for obtaining a license can take quite a long time, but in principle, it all depends on the geographical coverage of services and the requirements of the regulator in the territory where the work will be done.

Today, in almost every state, except Montana and South Carolina, there are some rules and requirements that you must comply with in order to obtain a license. These requirements, depending on the state, are slightly different from each other, but there are common ones for everyone.

  1. Application for the purchase of a license, which includes the following information: address, tax identification number, social security number and name of the business owner.
  2. Statement of capital and certificate of impeccable reputation of your organization.
  3. Minimum equity requirement.
  4. End of consideration of biographical data.
  5. Application and license fees.
  6. Form of security, most often a guarantee.

Therefore, having collected all the necessary documents for obtaining a license to transfer funds, you send it all to the licensing organization of the state.

Guaranteed Reliability of the Cash Operator

As mentioned above, one of the necessary documents in the licensing procedure is a form of security, most often a guarantee. It is this document that will ensure that you have the appropriate license, which is issued in the state where your business is located, and that you agree to follow all the rules and requirements in the money transfer industry.

Next, you will need to collect all the data about your organization and go through the credit check procedure to be sure that your candidacy is impeccable. If you have credit issues, you can still be approved, but you will have to pay a little more.

What Is Required to Apply for a Money Transfers License in USA?

  • Detailed plan of your business

It is the business plan that is the guide for each company, because it contains all the data on the work and financial position of the business now and in the future. Therefore, be prepared to submit a detailed report that should describe the location of the business, its main goals and objectives, interaction with other companies and directly with clients, and the source of funding.

  • Applicant’s financial report and financial statements of directors and major shareholders

Financial reporting documents are among the most important documents for obtaining a license. These documents include information about assets, equity, cash flows and liabilities, and in some cases personal assets and liabilities. This information must be accurately verified before being sent. Details of major shareholders and regulators about their assets, capital, powers, and other work processes that are part of the application process related to your business should be included with financial information.

  • Background check

The next step in the remittance licensing process is a background check that includes various issues (criminal or civil). This procedure is necessary in order to be sure of your reliability and the cleanliness of your activities in the future with clients.

Compliance Policy: AML Program

Every company that wants to obtain a license for money transfers and further carry out them must comply with strict rules to combat illegal circulation of funds. The Financial Crimes Enforcement Authority (FinCEN) requires organizations that deal with financial transfers and MSBs to have a money-stopping program that follows the following principles:

  • the policy should be in writing and designed to prevent money laundering and terrorist financing;
  • the organization must have certain governance, policies and procedures in place to comply with the AML law;
  • it is necessary that policies and procedures be in place to verify the identity of customers;
  • it is important to have accountability and ways to save records;
  • There must be a designated person to manage and oversee compliance with all requirements.

If you want to start operating in this field, recommend you to consider ready licenses for sale. We will help you completely and give you professional advice. Contact us in the way the most convenient for you.

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