Connecticut Money Transmitter Laws

Who needs to register?

Under Connecticut statute, all entities engaging in the business of issuing or selling payment instruments or stored value, receiving money or monetary value for current or future transmission, or the business of transmitting money or monetary value within the United States or to locations outside the United States by any and all means must obtain a money transmitter license in the state.

Update October 24, 2017, Agent of Payee Relationship: Pursuant to Section 36a-1-8 of the Regulations of Connecticut State Agencies, the Department of Banking no-action position with respect to the money transmitter licensure requirement for persons who receive money on behalf of another person pursuant to a principal-agent relationship when these conditions are satisfied between the principal (payee) and recipient of money or monetary value:

1. A written agreement that:

  • (a) expressly designates the recipient as an agent accepting payment on the payee’s behalf
  • (b)Provides that payment to the agent constitutes payment to the payee
  • (c) Evidences an understanding between the parties that the payee will be in control of the undertaking; and

2. The recipient of money or monetary value is:

  • (a) an agent of a merchant payee who receives payment for good or services other than money transmission that has been or will be provided by the merchant payee and such holds the agent out to the public as accepting payment on payees behalf; or
  • (b) a person duly licensed with the department as a consumer collection agency, mortgage servicer, small loan licensee, or student loan servicer that receives money or monetary value on behalf of a payee in accordance with and within scope of its regulatory scheme.

Lastly, please note that this no-action position shall only apply to agents who receive money or monetary value on behalf of a payee and shall not apply to agents who remit money or monetary value to other persons on behalf of payor, such as bill payment providers and payroll processors.

Who is the regulator?

Connecticut Department of Banking

What are the money transmitter license requirements?

Registering as a transmitter in the state of Connecticut requires the following fees and documentation:

  • Identifying information
  • Business web address
  • Identification for contact employee and consumer complaint employee
  • Location of books and records
  • Officers, members, partners, and trustee information
  • Name of any share holder owning 10% of corporation; ownership percentage of partners in the business
  • Any corporation holding 25% of stock
  • Book and market values of permissible investments in most recent statement, and 30 days before filing
  • Total dollar amount of applicant’s outstanding instruments and transmissions in Connecticut and the US (most recent statements and 30 days prior)
  • Articles of Incorporation, Articles of Organization, Partnership Agreement, Trust Agreement, and Organizational Chart of indirect owners
  • Authority to do business in Connecticut
  • Personal and Business History Statement for all control persons and direct owners
  • Most recent audited unconsolidated financial statement, including balance sheet and receipts and disbursement for the preceding year, prepared by an independent CPA; an interim financial statement 30 days before filing
  • Agent List and information compiled in an excel spreadsheet
  • Letter of Acknowledgement from US Department of Treasury indicating business is a registered MSB
  • Minimum net worth is determined by nature of business. If issuing money orders, then the net worth minimum is $100,000. If issuing travelers checks or electronic payment instruments, the net worth minimum is $1,000,000. If a money transmitter who is not issuing stored value, the net worth minimum is $500,000. If a money transmitter who is issuing stored value, the net worth minimum is either $500,000 or a higher amount determined by Commissioner.
  • License fees vary depending on time of registration. Firms registering between October 1 of any odd-numbered year to September 30 of any even-numbered year must pay a nonrefundable investigation fee of $625 and a license fee of $2,250.  Firms registering between October 1 of any even-numbered year to September 30 of any odd-numbered year must pay a nonrefundable investigation fee of $625 and a license fee of $1,250.

Note: The Commission may conduct state or national criminal history records check of of applicants and partner, director, trustee, principal officer, member and any share holder owning 10% or more of each of the businesses’s securities. A separate application and fee is required for each place of business.

What are the general bonding requirements?

Bonding requirements are determined based upon the average amount of money received or the average amount of money transferred for two previous reporting quarters. Bonding amount is determined by the greater of the two amounts.

If the weekly average is $150 or less: $300,000
If the weekly average falls between $150 – $250: $500,000
If the weekly average is greater than $250: $1,000,000

Bitcoin and Cryptocurrency

Effective October 1, 2017, the State of Connecticut defined parameters for Bitcoin and other cryptocurrencies into their statute and how service providers for Bitcoin and other blockchain based technologies are regulated:

“Virtual currency” means any type of digital unit [ Bitcoin ] that is used as a medium of exchange or a form of digitally stored value or that is incorporated into payment system technology [ Digital Currency ]. Virtual currency shall be construed to include digital units of exchange [ Cryptocurrency ] that (A) have a centralized repository or administrator; (B) are decentralized and have no centralized repository or administrator; [ Blockchain ] or (C) may be created or obtained by computing or manufacturing effort [ Bitcoin mining ]. Virtual currency shall not be construed to include digital units that are used (i) solely within online gaming platforms with no market or application outside such gaming platforms, or (ii) exclusively as part of a consumer affinity or rewards program, and can be applied solely as payment for purchases with the issuer or other designated merchants, but cannot be converted into or redeemed for fiat currency.

A statement describing the type of money transmission business that will be conducted by the applicant in this state and whether such money transmission will include the transmission of monetary value in the form of virtual currency [Bitcoin];

Each licensee that engages in the business of money transmission in this state by receiving, transmitting, storing or maintaining custody or control of virtual currency on behalf of another person shall at all times hold virtual currency of the same type and amount owed or obligated to such other person. As used in subsection (a) of this section, outstanding money transmissions does not include any virtual currency held pursuant to this subsection, and “value” means the lower of book or market value, except that with regard to debt obligations which the licensee as a matter of policy retains until maturity, “value” means the greater of book or market value unless the commissioner orders that for some or all investments of a particular licensee, “value” means the lower of book or market value.

Permissible investments and virtual currency held pursuant to subsection (b) of this section, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of any claimants against the licensee to serve the faithful performance of the obligations of the licensee and the licensee’s authorized delegates with respect to the licensee’s money transmission business in this state in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.”

Additional resources

Connecticut Money Transmitter Act

Agent of Payee Relationship No Action Position

“Virtual banking”. Section 36a-170.

Disclaimer: Information provided by Shipkevich, PLLC and any of its affiliated web pages is for general educational purposes only, and should not be taken as legal advice.