NMLS Simplifies Money Transmitter Licensing

1 Jul

Nearly every state requires that money transmitters operating within the state obtain a money transmitter license.  Some states, such as New York, require money transmitters to obtain a license if they transact business with residents of the state, whether or not the company has an actual physical presence in the state.  The process of applying for money transmitter licenses and renewing those licenses every year is quite onerous.  The burden is magnified for companies operating nationally, requiring over forty different money transmitter licenses annually.

Good news for money transmitters: a number of states have recently joined forces to allow companies to complete one universal application or renewal form rather than individual applications and renewals for each state.

Since April 2012, money transmitters seeking to become licensed in participating states can simply complete a universal application located on the Nationwide Mortgage Licensing System (“NMLS”) website found here.

NMLS is a secure, web-based system created by state regulators to provide efficiencies in processing state licenses and to improve supervision of state regulated industries. Formed in 2008, NMLS originally began as a centralized, national repository for information related to mortgage companies.  Currently, NMLS is the sole system of licensure for certain mortgage companies in over 58 jurisdictions.  Over the last 2 years, NMLS has branched out to service state licensing in other areas, including money transmitter licenses.

There are currently 14 states that allow money transmitters to apply for and renew their licenses via NMLS. We anticipate that this number will continue to grow.  During 2013, 5 states joined, including 4 states since June 24th.

Due to the large number of states participating with the NMLS in the mortgage licensing sector, it is likely that more and more states will determine that participating with the NMLS with money transmitter licensing is a safe and efficient way for prospective and current money transmitters to apply for and renew their licenses.  This is sure to lighten the substantial burden imposed on companies attempting to comply with multiple licensing regulatory schemes.

Holli Targan

Attorney & Partner

htargan@jaffelaw.com

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