Bill Summary – FastDemocracy

Fiscal Note
                                      Fiscal Services Division
HF 2262 – Uniform Money Transmission Modernization Act (LSB5289HV.1)
Staff Contact: Xavier Leonard (515.725.0509) xavier.leonard@legis.iowa.gov
Fiscal Note Version – Final Action
Description
House File 2262 relates to money transmission services, provides penalties, and does the
following:
• Adds to the exempted persons list for Iowa Code chapter 533C (Uniform Money
     Transmission Modernization Act).
• Permits the superintendent of banking (superintendent) to suspend and revoke licenses or
     the designation of a delegate, place licensees in receiverships, or require a licensee to
     revoke the designation of an authorized delegate if conditions are met.
• Establishes the procedure for the issuance of orders to cease and desist by the
     superintendent.
• Permits the superintendent to enter into consent orders to resolve matters arising under
     Iowa Code chapter 533C.
• Permits the Attorney General or a county attorney to investigate violations of Iowa Code
     chapter 533C.
• Permits the superintendent to assess a civil penalty of up to $1,000 per day, plus the State’s
     costs and expenses for the investigation and prosecution of the matter. Fees are paid to the
     Financial Services Licensing Fund established by the Bill. These civil remedies do not
     preclude any other provision of law.
• Prohibits the superintendent from taking action against a licensee without providing notice
     and allowing a hearing, in accordance with Iowa Code chapter 17A, when requested by the
     affected licensee.
The Bill takes effect upon enactment. Except for the section of the Bill amending Iowa Code
section 533C.103, the Bill applies retroactively to July 1, 2023.
A person who is not licensed under Iowa Code chapter 533C who knowingly engages in an
activity for which a license is required commits an aggravated misdemeanor. The Bill also
establishes the following criminal acts with penalties: a person who knowingly provides false,
misleading, or incomplete information with respect to reports required under Iowa Code chapter
533C commits a Class C felony. A person who intentionally makes a false certification in a
record required by Iowa Code chapter 533C commits a Class D felony.
Background
According to the Iowa Division of Banking (IDOB), Department of Insurance and Financial
Services (DIFS), there has been one settlement agreement and consent order in the past 15
years. The IDOB joined with 45 other State regulators to reach a settlement agreement and
consent order, which assessed a fine of $216,000 per state for a payment processing company
over erroneous withdrawals.
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2023 Iowa Acts, House File 675 (Money Transmission Modernization Act), repealed multiple
Iowa Code sections, some of which are reestablished by this Bill, including the sections referring
to uniformity of application and construction, the Financial Services Licensing Fund, and chapter
applicability.
A Class C felony is punishable by confinement for up to 10 years and a fine of at least $1,375
but no more than $13,660. A Class D felony is punishable by confinement for up to five years
and a fine of at least $1,025 but no more than $10,245.
Assumptions
• The following will not change over the projection period: charge, conviction, and sentencing
   patterns and trends; prisoner length of stay (LOS); revocation rates; plea bargaining; and
   other criminal justice system policies and practices.
• A delay of six months is assumed from the effective date of this Bill to the date of first entry
   of affected offenders into the correctional system.
• Marginal costs for county jails cannot be estimated due to a lack of data. For purposes of
   this analysis, the marginal cost for county jails is assumed to be $50 per day.
Correctional Impact
House File 2262 creates new criminal offenses, and the correctional impact cannot be
estimated for the Bill due to a lack of existing conviction data. Figure 1 shows estimates for
sentencing to State prison, parole, probation, or Community-Based Corrections (CBC)
residential facilities; LOS in months under those supervisions; and supervision marginal costs
per day for Class C felonies, Class D felonies, and aggravated misdemeanors. Refer to the
Legislative Services Agency (LSA) memo addressed to the General Assembly, Cost Estimates
Used for Correctional Impact Statements, dated January 16, 2024, for information related to the
correctional system.
                         Figure 1 — Sentencing Estimate and Length of Stay (LOS)
                                                                                       Percent
                         Percent FY23 Avg. Marginal Percent        FY23              Sentenced to   Marginal Percent             FY23     Marginal
                         Ordered   LOS in      Prison Ordered Field Avg. Avg. Cost      CBC          CBC      Ordered Marginal Field Avg. Cost Per
                         to State Prison (All Cost Per    to      LOS on Per Day Residential        Cost Per to County Cost Per LOS on      Day
Conviction Offense Class Prison Releases)       Day    Probation Probation Probation   Facility       Day       Jail   Day Jail  Parole    Parole
C Felony Non-Persons      86.0%      19.4      $24.94   64.2%      42.2     $ 7.67      13.0%       $ 20.00   34.0%    $ 50.00    21.3    $   7.67
D Felony Non-Persons      84.4%      13.0      $24.94   69.8%      39.5     $ 7.67      14.5%       $ 20.00   32.2%    $ 50.00    15.7    $   7.67
Agg Misd Non-Persons      30.4%       7.5      $24.94   45.0%      25.1     $ 7.67      3.6%        $ 20.00   71.7%    $ 50.00    11.9    $   7.67
Minority Impact
House File 2262 establishes new criminal offenses. As a result, Criminal and Juvenile Justice
Planning (CJJP) of the Department of Management (DOM) cannot use existing data to estimate
the minority impact of the Bill. Refer to the LSA memo addressed to the General Assembly,
Minority Impact Statement, dated January 16, 2024, for information related to minorities in the
criminal justice system.
Fiscal Impact
House File 2262 establishes new criminal offenses, and the fiscal impact cannot be estimated
due to a lack of existing conviction data. Figure 2 shows the average State cost per offense for
a Class C felony, Class D felony, and an aggravated misdemeanor. The estimated impact to
the State General Fund includes operating costs incurred by the Judicial Branch, the Indigent
Defense Fund, and the Department of Corrections (DOC). The cost would be incurred across
multiple fiscal years for prison and parole supervision.
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                              Figure 2 — Average State Cost Per Offense
                                Offense Class                    Average Cost
                                Class C Felony                 $14,300 to $27,500
                                Class D Felony                 $12,600 to $18,200
                            Aggravated Misdemeanor             $7,500 to $10,800
Sources
Iowa Division of Banking, Department of Insurance and Financial Services
Criminal and Juvenile Justice Planning, Department of Management
Department of Corrections
Legislative Services Agency
                                                                               /s/ Jennifer Acton
                                                                                 April 29, 2024
Doc ID 1448832
The fiscal note for this Bill was prepared pursuant to Joint Rule 17 and the Iowa Code. Data used in developing this
fiscal note is available from the Fiscal Services Division of the Legislative Services Agency upon request.
                                                 www.legis.iowa.gov
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Statutes affected: 
Introduced: 533C.102, 533C.103
Enrolled: 533C.102, 533C.103