How to Get a Money Transmitter License in Texas: Step-by-Step Guide

With Texas’s booming fintech scene, from Austin’s startups to Houston’s financial hubs, understanding the licensing process is crucial to operate legally and avoid hefty fines. But where do you start, and what does it take to comply?

Step 1: Confirm Your Business Needs a Texas MTL

Before diving in, verify if your business requires a Money Transmitter License under Texas Finance Code, Chapter 152. You need an MTL if you:

• Facilitate money transfers between individuals or accounts.
• Operate a crypto exchange or wallet handling digital currencies.
• Provide payment processing or bill payment services.
• Issue prepaid cards or digital wallets.

Exemptions apply to banks, government entities, or certain merchant processors, see Texas Department of Banking.

Crypto businesses, however, often face stricter scrutiny, per Supervisory Memorandum 1037

Step 2: Register as a Money Services Business with FinCEN

All money transmitters must register as a Money Services Business (MSB) with the Financial Crimes Enforcement Network (FinCEN). This federal requirement ensures compliance with Anti-Money Laundering (AML) laws.

Steps include:

• Complete FinCEN Form 107: Submit electronically via the FinCEN BSA E-Filing System.
• Provide Business Details: Include your business name, address, services, and key personnel.
• Renew Every Two Years: Failure to renew risks penalties, per InnReg.

Registration takes 1–2 weeks, with no fee, but maintaining records for five years is mandatory. Ask your self Is your business ready for federal oversight?

• FinCEN registration is free but requires renewal every two years.

Step 3: Prepare Your Business for Texas MTL Requirements

The Texas Department of Banking (TX-DOB) oversees MTL applications via the Nationwide Multistate Licensing System (NMLS). You’ll need to meet financial and operational criteria:

• Net Worth: Maintain $100,000 for four or fewer locations, or $500,000 for five+ locations or online services, with 50% as tangible net worth,
• Surety Bond: Secure a bond of $300,000 or 1% of your annual transaction volume (max $2 million), costing 0.5–5% based on credit
• AML/KYC Policy: Develop a Bank Secrecy Act-compliant policy

Audited financial statements by a CPA are required to verify net worth. Can your business meet these thresholds?

Research Insight: 80% of Texas MTL applicants need CPA-audited financials

Step 4: Complete the NMLS Application

Submit your MTL application through the NMLS, Texas’s primary platform.

Key forms include:

• Form MU1: Details your business, locations, and operations.
• Form MU2: Covers control persons, officers, and directors, including background checks.
• FinCEN Registration Number: Proof of MSB registration.
• AML/BSA Policy: Submit your compliance plan.

Pay a $10,000 non-refundable filing fee via NMLS. Incomplete applications may be returned, delaying approval

Step 5: Submit Additional Documents by Mail | Await Approval

Some documents must be mailed to the Texas Department of Banking, Corporate Activities Division, 2601 North Lamar Blvd., Austin, TX 78705-4294:

• Original Surety Bond: Or submit an electronic bond via NMLS.
• Business Locations List: Include all operational sites.
• Financial Statements: CPA-audited, verifying net worth.
• Other Jurisdictions: List states where you’re licensed or applying.

Ensure accuracy, as errors can lead to rejection, per Faisal Khan. Will your paperwork pass scrutiny?

Research Insight: 30% of Texas MTL applications are returned for errors, per TX-DOB.

Step 6: Await Review and Approval

The TX-DOB reviews your application for compliance, financial stability, and background checks, a process taking 6–24 months due to backlogs, per Remitso. You may face:

• Background Checks: For all key personnel via NMLS.
• Interviews: TX-DOB may request in-person discussions.
• Additional Documentation: To clarify financials or operations.

Approval grants your MTL, valid until December 31 annually, requiring renewal with updated financials. Can you endure the wait?

• Bullet 3: Approval can take 6–24 months, per Remitso.

Maintance Required for a Texas MLT | Compliance and Renew Annually

Post-licensing, maintain compliance with:

1. Annual Renewal: Submit updated financials and fees ($2,500–$5,000) by December 31

 2. Recordkeeping: Retain transaction records for five years, per Texas Department of Banking.

  3. AML/KYC Monitoring: Use systems like Fenergo’s FinCrime OS,

Non-compliance risks penalties or license revocation. 20% of Texas MTLs face audits annually, per TX-DOB.

Out of Pocket Costs for SEcuring a Money Transmitters License in Texas

The Texas MTL process is daunting:

• Costs: $10,000 filing fee, $2,500–$5,000 renewals, and $1,500–$100,000 bond premiums, per SuretyBonds.com.
• Time: 6–24 months for approval, with 30% of applications delayed by errors.
• Compliance: AML/KYC policies require ongoing investment, with 25% of startups outsourcing to firms like Fenergo.

Why Pursue a Texas MTL? Unlocking Fintech Opportunities

Texas’s fintech sector, with 10% annual growth, benefits from streamlined MTL processes under the 2023 Money Transmission Modernization Act, adopted by 31 states, including Texas. The act’s stablecoin provisions and agent exemptions ease crypto licensing, with 99% of U.S. money transmission covered.

As Austin’s fintech startups grow, an MTL positions you for success. Will you seize this opportunity?