Industry Letter

Foreign Exchange Dealers May be Required to be Licensed as Money Transmitters

April 19, 2011

With the recent publication of our March 31, 2011 Industry Letter: “Money Transmitters with No Physical Presence in New York,” the Department has received several inquiries asking what, if any, activities of a foreign exchange dealer require licensing by the New York State Banking Department (the “Department”).

This letter addresses the general circumstances under which a license is required. In short, when a foreign exchange dealer (spot or forward) accepts one currency from a client and returns counter-currency to the same customer, this activity is not a regulated activity which requires licensing with the Department. However, if the foreign exchange dealer accepts one currency from customers residing or located in New York State at the time of the transaction and, at the customer’s request, transmits the counter-currency to a third-party, a New York money transmitters license is required. A license is required whether the dealer’s customers are individual consumers or commercial users.

The Department is aware that there are a number of persons who are engaged in the foreign exchange business that do provide this additional service for residents of New York and/or persons located in New York. As noted in our industry letter of March 31, 2011, the Department will provide a transition period for foreign exchange dealers to obtain a license from the Superintendent. Such persons have until September 30, 2011 to submit a completed application for a license as a money transmitter to the Department. The forms for such an application are available on our website. Such persons may continue to operate without a license until six months from the date their application is deemed complete or until notified by the Department that their application has been denied, whichever occurs first, provided that the Superintendent may extend the period in which a company may operate without a license for just cause.

Questions with respect to the application process should be directed to the Deputy Superintendent of the Department’s Licensed Financial Services Division at (212) 709-5500.

Jane M. Azia
Director of Non-Depository Institutions and Consumer Products