Key takeaways
- The Money Transmission Modernization Act (MTMA) is a model state law for money transmitters, approved by the Conference of State Bank Supervisors in 2021.
- It has been adopted in whole or in part by more than 30 states, replacing a patchwork of different state rules with common standards.
- Its core financial requirements are minimum net worth, a surety bond and permissible investments at least equal to outstanding money transmission obligations at all times.
- Because the permissible investment test applies at all times, firms need a daily, reconciled view of obligations and eligible assets.
What the MTMA is
In the United States, money transmission is licensed by each state, not by the federal government. A company that sends money for customers across the country may need a licence in nearly every state, each with its own rules. The Money Transmission Modernization Act is a model law, drafted by state regulators and industry and approved by the Conference of State Bank Supervisors, intended to replace those differences with a single set of standards that each state adopts into its own law.
More than 30 states have adopted it in whole or in part. Adoption is not identical everywhere: some states left out optional sections, such as the provisions on virtual currency, and some kept existing rules alongside it. A multi-state transmitter therefore still needs to know which version applies in each state, but the core requirements are now broadly aligned.
The core financial requirements
| Requirement | What the MTMA sets |
|---|---|
| Tangible net worth | At least $100,000, rising with the size of the firm's total assets |
| Surety bond or security | Greater of $100,000 or 100% of average daily money transmission liability in the state over the last completed three months, capped at $500,000 |
| Permissible investments | Market value at all times not less than all outstanding money transmission obligations |
| Concentration limits | Receivables from any single authorized delegate count only up to 10% of total permissible investments |
Our guides to permissible investments and average daily money transmission liability work through each calculation with numbers.
Beyond capital: supervision and change of control
The MTMA also standardises how states supervise. It supports multi-state examinations, where several states examine a transmitter together rather than separately, and shared reporting through the Nationwide Multistate Licensing System, including the quarterly MSB Call Report. It sets common rules for change of control, record keeping, authorized delegates and the timely transmission of funds. For transmitters, the effect is fewer conflicting demands, but also examiners who compare notes and expect the same figures in every state.
What it means operationally
The most demanding part of the MTMA is two words: at all times. Permissible investments must cover outstanding obligations every day, not only at quarter end when the call report is prepared. A firm that checks only at quarter end can be out of compliance for weeks without knowing it, and examiners can ask for the position on any day.
The practical consequence is that the permissible investment calculation moves from finance's quarter-end close into daily operations. Treasury needs to know each morning whether yesterday's position was covered, which assets counted, and whether any delegate or partner balance is approaching an ageing or concentration limit.
Meeting that standard requires a daily, reconciled view of obligations to customers, by state where the state calculation requires it, and of eligible assets after concentration limits and ageing tests. Safeheld produces that view from bank, processor and ledger records each day. See Safeheld reconciliation and the NMLS MSB call report.
Frequently asked questions
What is the Money Transmission Modernization Act?
A model state law for money transmitters, approved by the Conference of State Bank Supervisors in 2021, that sets common licensing, capital and supervision standards.
How many states have adopted the MTMA?
More than 30 states, in whole or in part.
What are the MTMA's main financial requirements?
Minimum net worth, a surety bond, and permissible investments at least equal to outstanding money transmission obligations at all times.
Does the MTMA apply the same way in every state?
Not exactly. States adopt it into their own laws and some leave out optional sections, so firms must check each state's version.
References
- Massachusetts General Laws c.169B §9: net worth, security and permissible investments
- Iowa Code §533C.804: types of permissible investments (Uniform Money Transmission Modernization Act)
- Wisconsin Department of Financial Institutions, Money Transmission Modernization Act
- NMLS, MSB Call Report Section III: Permissible Investments Report
About Safeheld
Safeheld reconciles client money every day, resolves every difference and prepares every regulatory return for sign-off, for regulated firms in the United States, the United Kingdom, the European Union, Canada, Australia, Singapore and Hong Kong. To discuss your operations, contact us at safeheld.com/contact.
This article is for general information and does not constitute legal or regulatory advice.