Open Regulated Money Services Businesses Activities

Question: Which money services businesses activities does the Banking Department regulate?
Answer:
The Department regulates the following money services activities conducted by “money services businesses” or “MSBs”, if they are being offered in Texas (regardless of whether the business has a physical presence in Texas):

  • Currency Exchange
  • Money Transmission (includes "in-person" and "internet" transactions)
  • Currency Transportation
  • Money Orders
  • Travelers Checks
  • Third-Party Bill Paying
  • Gift Cards (in open systems)
  • Stored Value Products (not issued by insured financial institutions).

OpenSellers of Gift Cards

Question: Are sellers of mall gift certificates or gift cards required to be licensed?
Answer:
A license is required if the certificates or gift cards are sold by a third party for the benefit of the mall retailers. Gift certificates and gift cards are considered to be stored value products for licensing purposes.

OpenMoney Order Charged Back

Question: I cashed a money order for someone and it was charged back to my bank account "payment stopped." How can I get my money?

Answer: File a written complaint with the Texas Department of Banking.

OpenOffer Wire Transmission Services

Question: I want to offer wire transmission services as an agent of Western Union or MoneyGram. Do I need a currency transmission license from the Department?
Answer:
No, you will be considered an authorized delegate (agent) for either Western Union or MoneyGram. As an authorized delegate of a license holder such as Western Union or MoneyGram, you do not need a license from the Department for the activities covered by the authorized delegate agreement. However, if you are also offering other Department-regulated money services business activities not covered in your authorized delegate agreement with either Western Union or MoneyGram, you would need a license from the Department. For example, if in addition to being a Western Union and MoneyGram agent you also offer currency exchange services on your own, you would need a Currency Exchange License from the Department of Banking.

OpenLaws for Regulating Money Service Businesses

Question: Under what law or laws does the Banking Department regulate money services businesses?
Answer:
The Department regulates money services businesses under Chapter 151 of the Texas Finance Code and the title of this regulation is the Money Services Act. In addition, Chapter 33 (formerly Chapters 4 and 29) of the Texas Administrative Code is also applicable to MSBs regulated by the Department.

To engage solely in currency exchange, you must obtain a Currency Exchange License. To engage in any of the other money services activities regulated by the Banking Department, including currency exchange, you must obtain a Money Transmission License.

OpenCheck Cashers

Question: Does the Banking Department regulate check cashers?
Answer:
No, check cashers are not regulated in Texas. Any complaints about a check casher in Texas should be directed to the Attorney General's Office.

OpenAm I Doing Money Transmission

Question: How can I know if my existing or proposed business activity is money transmission?
Answer: If you obtain possession of funds in any manner, and make an equivalent amount available at a later time or in a different location, you are likely conducting money transmission.  If when you perform this activity, an individual or entity in Texas is involved in any portion of a transaction, you likely need a money transmission license. However, under certain circumstances a person conducting money transmission may not need a license.

If you wish to send an inquiry to the Department seeking a determination on whether your business activity constitutes money transmission, please include the following at a minimum:

  • A detailed description of how your business is conducted, including all services offered.
  • A clear description of the flow of funds from beginning to end. We find flow charts and diagrams particularly useful.
  • Descriptions of all accounts where customer funds are held, including who has any form of access to the funds.
  • The identities of and relative relationships between all parties involved in a transaction, including their respective rights, obligations, and liabilities.

OpenNeed A MSB License

Question:  How can I know if I need a money transmission license?
Answer:  If you conduct money transmission involving people or entities located in Texas, and are compensated even indirectly for doing so, you must get a license unless:

  • You are the authorized delegate of a license holder;
  • You qualify for one of the exclusions listed in Finance Code §151.003; or
  • You have been granted an exemption under Finance Code §151.302(c).

To obtain a determination from the Department that your business activity does not require a money transmission license under one of these three provisions, please include the following, at a minimum:

If you are the authorized delegate of a license holder:

  • A description of all types of transactions in which you are involved;
  • The identities and relative relationships between all parties involved in a transaction, including respective rights, obligations, and liabilities; and
  • A signed copy of the agreement between you and the license holder, highlighting the sections that satisfy the requirements of Finance Code § 151.402(c).

If you are the agent of a federally insured financial institution, or of a foreign bank:

  • The same items required above, as appropriate;
  • A signed copy of the agreement between you and the financial institution, which must demonstrate that:
    • the financial institution is liable for the money services obligation owed to the purchaser;
    • the financial institution has appointed you as its agent for providing money services; and
    • the financial institution assumes all legal responsibility in the state of Texas for any obligations owed to the purchaser upon receipt of the purchaser's money by you.
  • Please highlight the sections of the agreement that satisfy these requirements.

If you believe you qualify for an exemption under Finance Code §151.302(c):

  • A thorough description of all your business activities, including those which are not money services;
  • An explanation of how your money transmission services are introduced to potential customers, including any advertising or solicitation;
  • An explanation of all fees charged for all services provided, or other ways in which you are compensated either directly or indirectly for your services; and
  • Signed copies of any agreements entered between you and your customers or clients.

PLEASE NOTE:  an exemption under this section must be issued by the Banking Commissioner after investigating these qualifications and finding that it is in the public interest to grant the exemption. Even if you feel you qualify for the exemption, you still need a license until such time as the Commissioner grants an exemption.

OpenCost with Determining the Need for a License

Question:  Is there a cost associated with obtaining a determination from the Department?
Answer:  There may be. The research and analysis conducted by the Department in order to determine whether a person needs a license is considered an investigation under Finance Code § 151.104, which authorizes recovery of reasonable costs incurred in connection with such an investigation. Based on the amount of resources necessary to evaluate routine licensing inquiries, the Department does not generally seek to recover costs when a matter is straightforward and involves sixteen or fewer hours of employee time. When cases are more complex, they often require substantially more Department resources. We then seek to recover our costs for time spent over the sixteen hour threshold. Under 7 TAC § 33.27(g), the cost of employee time spent conducting such investigations is $75 per hour.

Please send requests for determination letters, with the appropriate materials described above  via email or first class mail to:

Texas Department of Banking
Legal Division
2601 N. Lamar Blvd.
Austin, TX 78705-4294

OpenMoney Service Business (MSB) Licensing Requirements

Question: What are some of the basic requirements if I want to apply for a license under Chapter 151 of the Finance Code?
Answer:

  1. Submit a current financial statement. Audited financial statement if applying for a Money Transmission License. The financial statement must show a net worth of at least $500,000 for a Money Transmission License.
  2. Minimum security of at least $300,000 in the form of a Money Services Bond, Letter of Credit, or Deposit in Lieu of Bond if applying for a Money Transmission License. For a Currency Exchange License, the amount of the security is $2,500.
  3. Full background information on the applicant and its principals; see Section 151.202(b) of the Code.
  4. The completed application form with all required exhibits.
  5. Filing fee.

Look on the website under Application Forms, for complete information on filing requirements.

OpenFederal Laws and My Application

Question: What recent federal regulations impact my application?
Answer:
Applicants must demonstrate compliance with Title 31 CFR Part 103 regarding anti money laundering programs and the registration of money service businesses. See FinCEN.


See Finance Code §151.301(b)(4)
See Finance Code §151.302.

See 7 TAC §33.3.

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