Money transmitters in the state of Arkansas must adhere to new regulations to remain licensed with the Arkansas State Board of Collection Agencies. Enacted on Feb. 13, Senate Bill 187 requires money transmitters to purchase a license bond in an amount based on the dollar volume of money transmissions, payment instruments, and store value instruments. The amount of the bond must be at least $10,000, and cannot exceed $300,000. This new law changes the previous regulation requiring the amount of the surety bond to be $50,000, plus an additional $10,000 per location.
A license bond grants money transmitters eligibility to possess a license, whether as an individual or a business. The bond will also ensure the consumer is financially covered by a third party in the event any fraud or other criminal activities are committed by the money transmitter.
What is a money transmitter?
Also referred to as money remitters or money transfer services, money transmitters transfer funds or provide payment services. Most states define a money transmitter as anyone who receives money to transmit money to another location by any means including wire, facsimile, electronic transfer or payment instrument. Money transmitters are one of several disciplines within money services businesses (MSB), which refers to a business that converts or wires money.
Although the majority of money services business disciplines require a minimum financial threshold to be considered an MSB, a financial threshold does not exist for money transmitters. Therefore, any business that transfers funds or provides payment services is considered a money transmitter regardless of the amount of money generated in business activity. Some popular examples of money transmitters include Barclays, PayPal, Western Union and MoneyCorp.
Who needs a money transmitter license?
The Financial Crimes Enforcement Network defines a money services business as an entity conducting activities in any of the following financial products or services:
- Issuer, seller, or reemer of money orders or Traveler’s Checks
- Money transmission or Check cashing
- Foreign currency exchange or currency dealing in foreign exchange
- Provider or seller of prepaid access
What are the licensing requirements for money transmitters?
All states, except for Montana, require money transmission businesses to satisfy certain requirements to be licensed. It is important for money transmitters to be familiar with the licensing requirements in every state in which they do business. Requirements for attaining an Arkansas money services license include completion of the following:
- Arkansas Money Services License Application
- Pay all applicable fees by check or money order to Arkansas Securities Department
- Application fee: $1,500
- License fee: $750
- Certificate of Resolution
- Authority to Obtain Information From Outside Sources Form
- List of authorized delegates and their physical locations, including limited service and mobile locations
- Completed Arkansas Money Services Information Form
- Financial Statements – Money Transmission License Note:
- Arkansas Code § 23-55-207 requires a licensee to maintain a net worth of at least $250,000 for a money transmission license
- A copy of the applicant’s audited financial statements for the most recent fiscal year
- A copy of the applicant’s balance sheet and profit and loss statement dated within 30 days of the date of the application
Applicants will also be required to purchase a money transmitter surety bond. The commissioner or superintendent of the Arkansas Department of Financial Institutions will determine the amount of the applicant’s bond, within the range of $10,000 and $300,000, based on a number of factors, including but not limited to:
- Applicant’s financial condition
- Applicant’s net worth
- Amount of business for the previous year
- Anticipated business for the upcoming year
In addition to the various state requirements, money transmitters must also register with the Financial Crimes Enforcement Network (FinCEN) of the U.S. Department of Treasury. Registration is valid for two years before it must be renewed. Money transmitters must use the BSA E-Filing System to submit initial registration forms and renewals. As of July 1, 2012, FinCEN no longer accepts paper forms. There are civil and criminal penalties for money services businesses that do not register with FinCEN.
Instructions for how to enroll and submit your registration form in the BSA E-Filing System are available by visiting their website. Section 1022.380, Title 31 of the Electronic Code of Federal Regulations details the registration requirements for money services businesses with FinCEN.
For any questions or for more information on Arkansas Money Services License contact the Arkansas Securities Department by calling (501) 324-9260 or check out the department’s website.
Need a money transmitter surety bond in Arkansas?
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