Can Banks Sponsor Money Transmitter Licenses?

bank

Renting a license is never a good idea. However, bank sponsorship is a different. Yes, banks can sponsor your money transmitter license. In this setting, banks will handle the money movement and channeling on your behalf.

Essentially, the bank will act as the program manager. Under bank sponsorship, you will be relieved of all banking needs as well as the need to obtain a license. All funds will be handled by the bank under FBO (for benefit of) account.

In addition to this, there are a few additional conditions set out by the bank. If you agree to these, the bank will take the deal forward.

Here’s a great guide to help you find out more about these conditions and how you can find a partner bank: Can a US bank sponsor my company to provide money transmitter license?

Who Needs a Money Transmitter License in NY

Money Transmitter License in NY

Businesses and companies who need a money transmitter license in NY or New York are fully described on the Department of Financial Services website.

A money transmitter is a business that issues and sells traveler’s checks and money orders, and transmits money on behalf of the public by any means including transmissions within this country or abroad by wire, check, draft, facsimile or courier. Generally, a money transmitter markets its services through a network of agents.
Money transmitters are regulated and licensed under Article XIII-B of the Banking Law.

New York State Department of Financial Services

Can my Business Make Do Without a License?

No, it cannot. It is illegal to operate a money transmitter service without a license for the state of New York. You may be liable to huge fines if you try. This answer provides more information: As a new fintech startup, how do I get over the money transmitter license hurdle with a limited budget?

Is it Easy to Get a NY Money Transmitter License?

It is not easy, but it is not impossible either. The New York license is considered one of the most difficult licenses to get in all the states. However, by following the guidelines and having patience, you will get there.

Can I Rent a License?

It is not a good idea to rent or lease a money transmitter license.

How Do I Apply for a Money Transmitter License in NY?

In July 2017, the NY DFS started using the NMLS for its licensing like many other states had already been doing. This page provides resources for how to access and proceed to getting your money transmitter license in NY.

The NY DFS has provided a simple checklist(PDF) that helps keep you on track as you gather all the necessary information and documents.

Money Transmitter License Rental – Is it a Good Idea?

Have money transmitter license rental services been offered to your business? Remember that renting a license is never a good idea.

For startups and payment companies in the money transfer business, it is essential to get licensed in the countries and US states they wish to work in to comply with regulations. However, due to the high cost of licensing and the various complicated procedures involved in this task, many companies had started to opt for paying a rental fee to licensed money transfer companies in order to use their coverage.

This is not only a method that could incur you large fines but is also a sure way of getting your business blacklisted forever. Money transmitter license rental services are a scam and you should not fall for them. This video goes into a deeper explanation of this and how you can get licensed or your business.