What is a Licensed Money Transmitter?
A licensed money transmitter is a non-bank company that is legally authorized to receive money from one party and transmit it to another. In the United States, money transmitters are regulated at two levels. At the federal level, they register with the Financial Crimes Enforcement Network (FinCEN) as a Money Services Business. At the state level, they generally need a license in each state where they serve customers. The NMLS coordinates many of those state applications.
This page gives general information. It is not legal advice. Whether a license applies to a specific business depends on its activity, its custody of funds and the law in each jurisdiction.
Why the license exists
Moving money outside banks has long been a route for fraud and money laundering. Licensing places non-bank firms under supervision. It sets rules for safeguarding customer funds, disclosing fees and handling complaints. It also requires AML programs. Banks, card networks and large enterprises often prefer counterparties that are licensed.
What activity can trigger licensing
Definitions differ by state. Activities that often fall under money transmission include:
- receiving money from a sender and delivering it to a recipient
- international remittances
- issuing or selling stored value
- exchanging fiat and crypto-assets for customers, or holding customer crypto
- holding and disbursing funds between buyers and sellers, beyond what a payment processor exemption allows
Duties of a licensee
- A written BSA and AML program, a compliance officer, testing and training
- Transaction monitoring and reports of suspicious activity
- Sanctions screening
- Travel Rule data for qualifying transfers
- Safeguarding customer funds, usually with permitted investments and segregation
- Financial reports, surety bonds, minimum net worth and state examinations
Costs and partner models
State-by-state rules, bonds and capital make a nationwide build slow and costly. Many fintech and crypto firms instead work with an existing licensed partner or a sponsor bank.
How Amboss describes its role
Amboss Payments is described on the payment providers page as pure-software, self-custodial technology. Customers keep control of their keys and funds, and Amboss never takes custody. The same page states that self-custody is not a blanket exemption from licensing or sanctions requirements. Availability and obligations depend on the customer's activity and jurisdiction. Customers should take their own legal advice.