Helping Clients Navigate Through MTL Requirements and Challenges
With limited exceptions, any business that accepts and transmits funds, including digital currency, will be considered an MSB and require an MTL in each U.S. state where the business operates. Money transmitters are a part of a broader category of MSBs. So, the terms MTL and MSB are related and often used together.
While registration on the federal level is relatively straightforward, MSB legislation is not harmonized and almost all 53 states and territories have their own regulations, requirements and exceptions for money transmitter licensure. In addition, New York established a separate license for digital currency businesses, the so-called “BitLicense” – a license required to engage in any “virtual currency business activity”.
MTL requirements vary state-by-state but usually include registration with the Financial Crimes Enforcement Network (FinCEN), background checks, application fees, security (surety bond), maintenance of permissible investments, minimum net worth, business plan and a compliance program. MTL-related costs and processing times may differ significantly from state to state, especially compared to New York and California. The costs may exceed a $1 million, excluding legal fees, and the processing times may take from several months to 1-2 years.
Because of the lack of consistent regulation, companies tackling the U.S. MSB market must develop a comprehensive strategy to get MTLs. When obtaining MTLs, a business may choose to prioritize some states and apply first there but will be prohibited from operating in the states where it does not maintain an MTL.
Guiding Clients Through MTL Application Procedures in Every State
Our lawyers advise and assist clients throughout the MTL application process, including the following steps:
- Developing an MTL strategy nation-wide;
- Submitting applications in each of the 50 states (plus Washington, D.C. and U.S. territories);
- Preparing a business plan, summary of historical and current operations, financial statements, affidavits and other required documentation;
- Acquiring mandatory surety bonds;
- Completing FinCEN registration;
- Accomplishing necessary corporate actions, including local qualification of out-of-state companies, provision of registered agents, drafting/amending corporate governance documents;
- Developing anti money-laundering (AML) and other compliance programs;
- Representing clients in communications with the federal and state agencies;
- Maintaining and renewing MTLs.