A Complete Guide to California Money Transmitter License Application

Money transmitters in California continue to evolve and reap the rewards of a thriving industry. In 2017, the NMLS Money Services Businesses Industry Report reveals that money transmitters in the country handled $1.24 trillion worth of transmissions.

With the development of new payment transfers that includes innovative value-added services, that amount might continue to increase each year.

If you’ve been thinking of joining this booming industry, read on. Below is a comprehensive guide in obtaining a California money transmitter license.

 

Know the Law

California money transmitter license applicants are encouraged by the California Money Transmitter Division of Department of Business Oversight (DBO) to read the Money Transmission Act before applying for a license.

It is also wise to read the federal laws that pertain to money transmitters as well. This is to have a clear understanding of your legal obligations once licensed.

These legal obligations will all be part of your surety bond condition, so it’s best to know early on what you can and cannot do to avoid future problems.

 

Money Transmitter License Application

The application process itself involves several steps that the applicant must follow. Here are the said steps:

• Schedule a pre-filing meeting
• Complete the money transmitter application forms
• Pay the necessary application fees
• Obtain a surety bond

1. Pre-filing meeting
   The money transmitter license applicant must schedule a pre-filing meeting with a Money Transmitter Division staff via email or telephone call. They will explain to you the regulations involved and how to apply for a license in a timely manner. Here are the current Money Transmitter Division personnel that you can schedule a pre-filing meeting with along with their email addresses and telephone numbers:
   Mr. Oscar Lumen
   Email: Oscar.lumen@dbo.ca.gov 
   Telephone No.: (415) 263-8577Mr. Jonathan Lee
   Email: Jonathan.Lee@dbo.ca.gov
   Telephone No.: (213) 435-3921
2. Complete the California money transmitter application forms and pay the filing fee
   Applicants can conveniently complete the forms through the Nationwide Multistate Licensing System and Registry (NMLS). Here are the steps in completing the required forms:
   • Create an NMLS account by filling out the Company Account Request Form. You can find this in the “Getting Started” section. Be sure to identify a Primary Account Administrator and a Secondary Account Administrator.
     Once the Primary Account Administrator has received the NMLS login information—usually after 3 days—the said person will be able to access the system and start completing the forms.
   • Complete the Company Application by clicking the Company (MU1) from the sub-menu. These forms must be completed and submitted by licensed companies.
   • Complete the Biographical Statement and Consent Form. An Individual MU2 form is a sub-form of the Company (MU1) and Branch (MU3) forms. This must be completed and submitted by licensed companies for each Control Person such as, but not limited to, the following:
     • Executive officer
     • Board members
     • Owners of 10% or more of the licensee

     You can access the MU2 form by clicking the Company (MU1) or Branch (MU3).

   • You must complete a Uniform Authorized Agent Reporting (UAAR) form as well. This will be used for filing authorized agents or authorized delegates’ reports.
3. Pay the California money transmitter filing fee
   The filing fee is $5,000. This non-refundable fee must be paid directly to the California Money Transmitter Division of Department of Business Oversight (DOB).
4. Obtain a California money transmitter bond
   You can easily APPLY FOR THIS BOND HERE.

 

A surety bond is an important requirement when acquiring a money transmitter license. In fact, a money transmitter license will not be issued without a bond.

A bond guarantees the faithful performance of the money transmitter to the DOB.

A bond will cover any claim that will be made against the bond that is due to the bonded violations of the money transmitter. The surety (surety bond provider) will verify the claim first before settling it.

The California money transmitter license bond amounts according to Section 2037 of the Money Transmission Act are as follows:

Bond Amounts

$500,000 to $2,000,000 – Money transmitters that sell or issue payment instruments or stored value

$250,000 to $7,000,000 – Money transmitters that engage in receiving money for transmission

The DOB will determine your bond amount. It will be based on the average daily outstanding payment instrument and stored value obligations in California or the average daily outstanding obligations for money received for transmission in California.

Bond Premium

You don’t need to pay the entire bond amount in order to get a money transmitter license bond. You only need to pay a small percentage of it. This will be your bond premium.

Since surety bonds are credit transactions, a money transmitter’s bond premium will depend on his or her credit score.

In short, a good credit score means a cheaper bond premium. Bond premium starts at 1% of the bond amount.

 

Receive your money transmitter license

The exact waiting period for this license is undetermined. You can check the status of your application through your NMLS account or by calling the DOB directly.

 

GET YOUR FREE CALIFORNIA MONEY TRANSMITTER LICENSE BOND HERE