What is Money Transfer License (MTL)?

Money Transfer License (MTL), or a money transmitter license, is a type of license that legally allows money transmitters to provide financial services. It’s a legal requirement for every money transmitter business to hold an MTL. 

It’s important to note that federal and/or state laws determine which institution that provides money services requires obtaining a money transfer license. 

The term money transmitter also known as a money transfer service is used to describe an institution that receives and transfers funds on someone’s behalf both within and outside of the borders of the United States. This type of institution usually oversees and provides financial services such as:

• Currency exchange services including fiat currencies and cryptocurrencies;
• Means to cash your checks;
• Issuing money orders or traveler’s cheques.

Additionally, money transmitters are part of the money service business (MSB) group.

If a financial institution is responsible for managing transactions related to money on someone’s behalf, then it must comply with the legal requirement of holding an MTL.

In the US, federal and/or state laws determine which institution requires an MTL. It’s usually issued by the Financial Crimes Enforcement Network of the United States Department of Treasury (FinCEN).

The main objective of a money transfer license is the prevention of illegal activities such as money laundering and other financial crimes. 

In order to determine whether a money transfer license is required for your business, first, you need to find out if your company is legally considered a money service business (MSB). If you deal with transferring money from one place to another, chances are that your business falls under the money service business umbrella, and you should look into acquiring a money transfer license.

When it comes to the crypto sector, the guidelines are not so clear as it depends on where the business is located at.

In the US, only a few states exempt cryptocurrency companies from money transfer license requirements, and only a small number of countries around the world join this exemption as well.

A cryptocurrency company can be considered a money service business if it offers services such as virtual currency exchange or transfer depending on the state the said company is operating in. If it’s established that the company is an MSB, it will most likely require a money transfer license. In order to find out more information, make sure to check out your state or country's laws.