Money Transmission Agreement

A money transmission agreement is the written contract under which a licensed money transmitter allows another business to take part in moving customers' money on the licensee's behalf. The most common version is the contract between a licensee and its authorized delegate, such as a grocery store or pharmacy that takes cash from senders at the counter. The same name is used in industry for program agreements between licensed transmitters and fintech platforms that sit in front of the customer.

The term is mainly American. It is industry usage rather than a single defined legal term: state statutes speak of the "written contract" a licensee must sign with each delegate. The agreement sits alongside the licensee's own money transmitter licenses, its federal registration as a money services business and its anti-money laundering program.

Think of a well-known courier company that lets a corner shop accept parcels under its name. The shop is not a courier itself. It is allowed to take parcels only because the courier has signed it up, told it the rules and promised to stand behind every parcel the shop accepts.

A money transmission agreement works the same way for money. The licensed company holds the permission to move money, and the shop, app or partner works under that permission. The contract spells out what the partner may do, whose money it is holding while it waits to hand it over, what checks it must run on customers, and what happens if it breaks the rules. If something goes wrong, the regulator looks first at the licensed company that signed the partner up.

Most US states regulate the licensee–delegate relationship in their money transmission laws. The Money Transmission Modernization Act, a model law drafted by state regulators through the Conference of State Bank Supervisors and enacted in whole or in part by 31 states as of September 2026, sets out a common list. Before using a delegate, the licensee must adopt written policies to keep its delegates compliant, run a risk-based background investigation and sign a written contract. Under the model text (for example Iowa Code §533C.501 as of 2026), the contract must:

• Appointment. It appoints the signer as the licensee's authorized delegate with authority to conduct money transmission on the licensee's behalf.
• Scope. It sets out the nature of the relationship and the rights and duties of each party.
• Legal compliance. It binds the delegate to state money transmission law, the Bank Secrecy Act and the USA PATRIOT Act.
• Handling of funds. It requires the delegate to remit and handle money as the contract says, and imposes a trust over money received, net of fees, for the benefit of the licensee.
• Records and examination. It requires the delegate to keep records and to accept examination by the state regulator.
• Regulator's power. It states that the regulator may suspend or revoke a delegate designation, and confirms the delegate has received the licensee's policies.

The model law also bars delegates from using sub-delegates, treats commingled funds as held in trust for the licensee, and, if the licensee's own license is suspended, revoked, surrendered or expires, requires it to show the regulator within five business days that it has notified its delegates, who must stop acting for it immediately. At federal level, agents of an MSB do not register with FinCEN separately, but the principal must keep a list of its agents and cover them in its AML program.

Two broad families of agreement exist. Agent agreements cover physical networks: retail outlets that collect cash for transfers or pay out money to recipients. They focus on cash handling, settlement deadlines, till limits, signage, customer identification and staff training, and they underpin most remittance collection and remittance payout at the counter.

Program agreements cover digital partners, such as marketplaces, payroll platforms or consumer apps that want to offer money movement without holding a license. Here the licensed transmitter is the legal provider of the service, often holding customer money in a for-benefit-of account, while the platform supplies the interface. These arrangements are sometimes marketed as license sponsorship; other platforms rely on exemptions such as acting as agent of the payee. Regulators look closely at whether the platform presents itself as the transmitter, who controls the funds and whether the licensee really supervises the flow; a weak structure can leave the platform engaged in unlicensed money transmission.

Beyond the statutory minimum, agreements usually cover:

• Settlement. How quickly the partner must pass collected funds to the licensee, and whether it must prefund or post collateral.
• Fees and revenue. The split of transfer fees and any share of the exchange-rate margin.
• Compliance duties. Identification thresholds, sanctions list screening, record retention and escalation of unusual activity to the licensee's AML compliance officer.
• Consumer protection. Delivery of the disclosures required by the federal Remittance Transfer Rule, complaint handling and error resolution.
• Audit and termination. The licensee's right to inspect, suspend or terminate the partner, and the data each party keeps afterwards.

Agreements for a domestic money transfer product follow the same pattern without foreign exchange clauses.

The licensee remains responsible for its partners. Examiners test whether it monitors agents' transactions, visits outlets and terminates partners that ignore the rules; the surety bond and permissible investments a licensee holds exist partly to protect customers if agent money goes missing.

Other jurisdictions use similar contracts under different names. In the European Union and the United Kingdom, payment and e-money institutions may provide services through registered agents (payment services agents and EMI agents), and the principal remains fully liable for them. In many emerging markets, banks and mobile money operators sign agent agreements with shops under central bank rules on branchless banking agents.

• CSBS – Money Transmission Modernization Act
• Iowa Code §533C.501 – Relationship between licensee and authorized delegate