Texas money transmitter licensing

The Texas law

Money services in Texas are governed by the Money Services Act in Chapter 152 of the Texas Finance Code, administered by the Texas Department of Banking. It covers two licensed activities: money transmission (receiving money or monetary value to transmit it) and currency exchange. Doing either without a license, or an applicable exemption, is a serious violation.

Signs your product may be money transmission

• Customer funds land in an account your company controls before reaching the recipient.
• You hold balances customers can spend or withdraw later (a stored-value wallet).
• You pay out to third parties on customers' instructions.
• You sell or issue payment instruments such as prepaid access or checks.

Some models fall outside the definition or within an exemption. Common examples are a platform that acts only as a merchant's agent to collect payment, or a company that never takes control of funds because a licensed partner or a bank does. These arrangements have to be structured and documented carefully. The label you give your product does not decide it.

What an application involves

1. Company records and ownership. Organizational documents, the ownership chain, and background information on controlling persons and executives.
2. Financial condition. Financial statements showing you meet the statutory net worth requirement, and a security device such as a surety bond sized to your activity.
3. A compliance program. Written anti-money-laundering policies, a compliance officer, training, independent testing, and procedures for recordkeeping and reporting.
4. A business plan. How the product works, the flow of funds, your partners and agents, and the volumes you expect.
5. Ongoing obligations after approval. Periodic reports, examinations, permissible investments to back outstanding obligations, and notice of material changes.

Applications for state money transmission licenses are generally made through the Nationwide Multistate Licensing System (NMLS). If you operate in other states, expect a separate license, or reliance on an exemption, in each one.

The federal layer

Separately from any state license, most money transmitters must register with FinCEN as a money services business, generally within 180 days of being established. They must also run an anti-money-laundering program under the Bank Secrecy Act, file suspicious activity reports and currency transaction reports where required, and screen against OFAC sanctions lists. Registration is not a license, and a license does not replace registration.

Digital assets

The Department of Banking has published guidance on how the Money Services Act applies to virtual currency and stablecoins. The answer depends on the asset and the activity, and the guidance has been updated over time, so read the current version before designing a product that touches digital assets.

Next, see the compliance checklist for the program a license application expects you to have.