Are you thinking of starting a money transmitter business in California? Financial professionals in the state who want to conduct such activities need to get a California money transmitter license, so that they can operate legally.

Even if you’re not planning to open your operations in California, it’s worth exploring the rules that govern the industry in the state. A number of other states have similar procedures or may adopt such in relation to virtual currency regulation and similar new fields.

The licensing ensures transmitters are qualified to execute their tasks in the best interest of their clients. As a part of the process, applicants need to meet a number of criteria, including to comply with the money transmitter bond requirement.

Let’s look at the steps you need to undergo, so that you obtain your money transmitter license in California with ease.

Get acquainted with the California money transmitter license requirements. The California Department of Business Oversight is the licensing authority that oversees the activities of money transmitters in the state. Money transmitting in California is regulated by the California Money Transmission Act, and the DBO ensures money transmitters’ compliance.

Some of the most important licensing requirements that you have to meet include:

Complete the Company Form (MU1)

Provide financial statements completed by a CPA

Upload a list of Authorized Agents

Give information about your business entity

Include a Registered Agent and Primary Contact Employees

Provide your bank account details

Complete the Control Person Attestation Form (MU2)

Allow credit reports for all control persons

Prepare and upload your Anti-Money Laundering (AML) / Bank Secrecy Act (BSA) Policy and your business plan

Provide a Certificate of Authority or a Good Standing Certificate

Submit a Flow of Funds Structure description

Upload your management chart

Obtain a money transmitter bond

Money transmitters need to obtain a surety bond with an amount between $250,000 to $7,000,000. It is determined on the basis of your average outstanding obligations for money transmission in a day. The bond you post must be greater than this amount, but within the set limits.

Even if you’re not planning to open your operations in California, it’s worth exploring the rules that govern the industry in the state. A number of other states have similar procedures or may adopt such in relation to virtual currency regulation and similar new fields.

The purpose of the money transmitter bond is to provide an extra layer of security for your customers. It guarantees your compliance with relevant state laws. In case of non-compliance, you can face a bond claim, which can provide financial compensation to any affected parties.

Meeting each of these requirements will involve additional steps that will vary depending on your business structure and plans.

Complete the application form via the NMLS. As of January 2016, applicants have to follow the procedure through the Nationwide Multistate Licensing System and Registry (NMLS). NMLS is the system used for licensing a number of financial professionals across the country. The DBO is still the authority that issues the licenses, but it has transferred the actual handling and information storage to the NMLS.

Money transmitter applicants need to fill in all application forms via the NMLS Website. You also need to attach all additional documents there. For a part of the paperwork, you will need to enter the information in the NMLS forms, while for other documents, you will just need to upload the scanned versions.

To make sure you have not missed anything in your application, you can consult the CA-DBO Money Transmitter License New Application Checklist.

Mail a list of documents to the California DBO. Besides the paperwork that has to be submitted electronically to the NMLS, money transmitter applicants also need to send a list of documents to the California DBO.

You should prepare and mail the following:

Signed DBO Form 5025

Signed DBO Form 2

Signed DBO Form 550

Signed DBO Form 4030

Board authorizations from your board of directors

Banking references

Information about your branches and agents

Pro forma financial statements and regular financial statements

OFAC compliance information

Fingerprints and background checks

Pay the application fees. Besides filling in the application form and attaching all needed paperwork, you need to cover the application fee. It is collected by the California Department of Business Oversight.

You need to pay a $5,000 fee, as well as a $15 fee for credit reports for each control person in your company. These fees are not refundable, and you cannot transfer them to another applicant.

Todd Bryant is the president and founder of Bryant Surety Bonds. He is a surety bonds expert with years of experience in helping business owners get bonded and stay compliant.

Websites

We are not responsible for the content of external sites

Topics