HOUSE . . . . . . . . No. 4550
The Commonwealth of Massachusetts
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HOUSE OF REPRESENTATIVES, March 24, 2022.
The committee on Financial Services to whom was referred the
petition (accompanied by bill, House, No. 1166) of James M. Murphy
relative to the regulation of the business of domestic and foreign money
transmission by the Division of Banks, reports recommending that the
accompanying bill (House, No. 4550) ought to pass.
For the committee,
JAMES M. MURPHY.
 FILED ON: 2/1/2022
HOUSE . . . . . . . . . . . . . . . No. 4550
The Commonwealth of Massachusetts
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In the One Hundred and Ninety-Second General Court
(2021-2022)
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An Act relative to the regulation of the business of domestic and foreign money transmission by
the Division of Banks.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority
of the same, as follows:
1 SECTION 1. Chapter 167F of the General Laws is hereby amended by striking out
2 section 4, as appearing in the 2018 Official Edition, and inserting in place thereof the following
3 section:--
4 Section 4. A bank may engage directly in the business of selling, issuing or registering
5 checks.
6 SECTION 2. Chapter 169 of the General Laws is hereby repealed.
7 SECTION 3. The General Laws are hereby amended by inserting after chapter 169A the
8 following chapter:-
9 Chapter 169B.
10 Licensing and Supervision of Money Transmitters
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11 Section 1. As used in this chapter, the following words shall, unless the context clearly
12 requires otherwise, have the following meanings:
13 “Authorized delegate”, a person designated by a licensee under the provisions of this
14 chapter to engage in money transmission on behalf of the licensee.
15 “Branch office”, any office in the commonwealth operated by a licensee at which the
16 licensee engages in money transmission.
17 “Commissioner”, the commissioner of banks.
18 “Closed loop stored value", stored value that is redeemable by the issuer only for goods
19 or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except
20 to the extent required by applicable law to be redeemable in cash for its cash value.
21 “Licensee”, a person licensed under this chapter to engage in the business of money
22 transmission.
23 “Material litigation”, any litigation that, according to generally accepted accounting
24 principles, is deemed significant to an applicant’s or licensee’s financial health and would be
25 required to be referenced in that entity’s annual audited financial statements, report to
26 shareholders or similar documents.
27 “Money transmission”, any of the following: (1) selling or issuing payment instruments
28 to a person located in the commonwealth; (2) selling or issuing stored value to a person located
29 in the commonwealth; or (3) receiving money for transmission from a person located in the
30 commonwealth. The term does not include: transactions undertaken for other than personal,
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31 family, or household purposes; or the provision solely of online or telecommunications services
32 or network access.
33 “Nationwide Multistate Licensing System and Registry” or “NMLS”, the multistate
34 system developed by the Conference of State Bank Supervisors and the American Association of
35 Residential Mortgage Regulators and owned and operated by the State Regulatory Registry,
36 LLC, or any successor or affiliated entity, for the licensing and registration of persons in
37 financial services industries.
38 "Outstanding money transmission obligations", (1) Any payment instrument or stored
39 value issued or sold by the licensee to a person located in the United States or reported as sold by
40 an authorized delegate of the licensee to a person that is located in the United States that has not
41 yet been paid or refunded by or for the licensee, or escheated in accordance with applicable
42 unclaimed property laws; or (2) Any money received for transmission by the licensee or an
43 authorized delegate in the United States from a person located in the United States that has not
44 been received by the payee or refunded to the sender, or escheated in accordance with applicable
45 unclaimed property laws.
46 “Payment instrument”, a written or electronic check, draft, money order, traveler's check,
47 or other written or electronic instrument for the transmission or payment of money or monetary
48 value, whether or not negotiable. The term does not include: any credit card voucher; any letter
49 of credit; stored value; or any instrument that (1) is redeemable by the issuer only for goods or
50 services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to
51 the extent required by applicable law to be redeemable in cash for its cash value; or (2) not sold
52 to the public but issued and distributed as part of a loyalty, rewards, or promotional program.
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53 “Person”, any individual, partnership, association, joint-stock association, trust, limited
54 liability company, limited liability partnership or corporation.
55 “Principal shareholder”, any person or group of persons acting in concert who is the
56 owner of 10 per cent or more of any voting class of an applicant’s stock.
57 “Remit”, either to make direct payment of money to a licensee or its representatives
58 authorized to receive the money, or to deposit money in a bank, credit union or savings and loan
59 association or other similar financial institution in an account specified by the licensee.
60 “Stored value”, means monetary value representing a claim against the issuer evidenced
61 by an electronic or digital record, and that is intended and accepted for use as a means of
62 redemption for money or monetary value, or payment for goods or services. The term includes,
63 but is not limited to, "prepaid access" as defined by 31 C.F.R. Section 1010.100, as amended or
64 recodified from time to time. Notwithstanding the foregoing, the term "stored value" does not
65 include a payment instrument or closed loop stored value, or stored value not sold to the public
66 but issued and distributed as part of a loyalty, rewards, or promotional program.
67 Section 2. No person or entity shall engage in the business of money transmission
68 without first obtaining a license from the commissioner pursuant to this chapter. A license is not
69 required for a person that is an authorized delegate of a licensee acting within the scope of
70 authority conferred by a written contract with the licensee.
71 If a licensee intends to engage in money transmission business at a location other than its
72 main office, such licensee shall register each such branch office with the commissioner by
73 providing such information as the commissioner may determine; provided, however, that
74 registration shall not be required for a location of an authorized delegate.
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75 Section 3. Nothing in this chapter shall be construed to apply to:
76 (a) the United States or a department, agency, or instrumentality thereof;
77 (b) money transmission by the United States Postal Service or by a contractor on behalf
78 of the United States Postal Service;
79 (c) a state or a governmental subdivision, agency, or instrumentality thereof;
80 (d) a bank, as defined in section 1 of chapter 167, a national banking association, a
81 federally chartered credit union, a federal savings and loan association, a federal savings bank, or
82 any subsidiary of the above, or any bank, trust company, savings bank, savings and loan
83 association, or credit union organized under the laws of any other state, or any subsidiary of the
84 above, a bank holding company, an office of an international banking corporation, a branch of a
85 foreign bank, a corporation organized pursuant to the Bank Services Act, or a corporation
86 organized under the Edge Act under the laws of a state or the United States if the person does not
87 issue, sell, or provide payment instruments or stored value through an authorized delegate that is
88 not such a person;
89 (e) electronic funds transfer of governmental benefits for a federal, state, or governmental
90 agency by a contractor on behalf of the United States or a department, agency, or instrumentality
91 thereof, or a state or governmental subdivision, agency, or instrumentality thereof;
92 (f) a board of trade designated as a contract market under the Commodity Exchange Act
93 or a person that, in the ordinary course of business, provides clearance and settlement services
94 for a board of trade to the extent of its operation as or for such a board of trade;
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 95 (g) a registered futures commission merchant under the federal commodities laws to the
96 extent of its operation as such a merchant;
97 (h) a person that provides clearance or settlement services pursuant to a registration as a
98 clearing agency or an exemption from such registration granted under the federal securities laws
99 to the extent of its operation as such a provider;
100 (i) A person appointed as an agent of a payee to collect and process a payment from a
101 payor to the payee for goods or services, other than money transmission itself, provided to the
102 payor by
103 the payee, provided that: (1) there exists a written agreement between the payee and the
104 agent directing the agent to collect and process payments from payors on the payee's behalf; (2)
105 the payee holds the agent out to the public as accepting payments for goods or services on the
106 payee's behalf; and (3) payment for the goods and services is treated as received by the payee
107 upon receipt by the agent so that the payor's obligation is extinguished and there is no risk of loss
108 to the payor if the agent fails to remit the funds to the payee;
109 (j) an operator of a payment system to the extent that it provides processing, clearing, or
110 settlement services, between or among persons excluded by this section, in connection with wire
111 transfers, credit card transactions, debit card transactions, stored value transactions, automated
112 clearing house transfers, or similar funds transfers;
113 (k) a person registered as a securities broker-dealer under federal or state securities laws
114 to the extent of its operation as such a broker-dealer;
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115 (l) A person that acts as an intermediary by processing payments between an entity that
116 has directly incurred an outstanding money transmission obligation to a sender, and the sender's
117 designated recipient, provided that the entity: (1) is properly licensed or exempt from licensing
118 requirements under this chapter; (2) provides a receipt, electronic record, or other written
119 confirmation to the sender identifying the entity as the provider of money transmission in the
120 transaction; and (3) bears sole responsibility to satisfy the outstanding money transmission
121 obligation to the sender, including the obligation to make the sender whole in connection with
122 any failure to transmit the funds to the sender's designated recipient;
123 (m) A person expressly appointed as a third party service provider to or agent of an entity
124 exempt under section 3(d), solely to the extent that: (1) such service provider or agent is
125 engaging in money transmission on behalf of and pursuant to a written agreement with
126 the exempt entity that sets forth the specific functions that the service provider or agent is to
127 perform; and (2) the exempt entity assumes all risk of loss and all legal responsibility for
128 satisfying the outstanding money transmission obligations owed to purchasers and holders of the
129 outstanding money transmission obligations upon receipt of the purchaser's or holder's money or
130 monetary value by the service provider or agent; or
131 (n) A person exempt by regulation or order if the Commissioner finds such exemption to
132 be in the public interest and that the regulation of such person is not necessary for the purposes
133 of this chapter.
134 Section 4. (a) The commissioner may establish a minimum net worth not to exceed
135 $5,000,000 for entities engaged in the business of money transmission.
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136 (b) The commissioner is authorized to adopt, amend, or repeal rules and regulations to aid
137 in the administration and enforcement of this chapter. Such regulation may contain such
138 classifications, differentiations, or other provisions, and may provide for such adjustments and
139 exceptions for any class of transactions, as in the judgment of the commissioner are necessary or
140 proper to carry out the purposes of this chapter, to prevent circumvention or evasion thereof, or
141 to facilitate compliance therewith.
142 (c) Notwithstanding any other provision of this chapter, the commissioner may issue an
143 advisory opinion or adopt regulations relative to the business of money transmission for the
144 purpose of maintaining consistency with regulations adopted by a federal regulatory agency and
145 governing provisions similar to those contained in this chapter.
146 Section 5. The application for a license shall be in a form prescribed by the commissioner
147 and shall contain the name and address or addresses where the business of the applicant is
148 located and if the applicant is a partnership, association, corporation, or other form of business
149 organization, the names and addresses of each member, director, principal officer thereof, and
150 any individual acting as a manager of a branch office location. Such application shall also
151 include a description of the activities of the applicant, in such detail and for such periods as the
152 commissioner may require, as well as such further information as the commissioner may require.
153 The commissioner may require a background investigation of each applicant for a license to
154 engage in the business of money transmission by means of fingerprint and state and national
155 criminal history record checks by the department of criminal justice information services
156 pursuant to section 172 of chapter 6 and the Federal Bureau of Investigation. If the applicant is a
157 partnership, association, corporation or other form of business organization, the commissioner
158 may require such background investigation by means of fingerprint checks on each member,
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159 director, principal officer of such applicant, and any individual acting as a manager of a branch
160 office, or a manager of a location from which an authorized delegate engages in money
161 transmission. The commissioner may require a background investigation by means of state
162 criminal history record checks by the department of criminal justice information services
163 pursuant to section 172 of chapter 6 on a manager of a location from which an authorized
164 delegate engages in money transmission during an investigation or examination of a licensee.
165 Receipt of criminal history record information by a private entity shall be prohibited. Each
166 application for a license shall be accompanied by an investigation fee. Investigation and license
167 fees shall be determined annually by the secretary of administration and finance under section 3B
168 of chapter 7.
169 Upon the filing of an application for a license, if the commissioner finds that the financial
170 responsibility, character, reputation, integrity and general fitness of the applicant, and of the
171 partners or members thereof if the applicant is a partnership or association, and of the officers,
172 directors and principal employees if the applicant is a corporation, are such as to warrant belief
173 that the business will be operated honestly, fairly, soundly and efficiently in the public interest
174 consistent with the purposes of this chapter, the commissioner shall thereupon issue the applicant
175 a license to engage in the business of money transmission. If the commissioner shall not so find
176 or: (a) the applicant made a false statement of a material fact in the application for a license; (b)
177 an officer, director or member of the applicant business, or manager of a location from which the
178 applicant’s authorized delegate will engage in money transmission, has, within 10 years prior to
179 the filing of the application, been (1) convicted of or pleaded nolo contendere to a felony, or (2)
180 committed an act involving fraud or deceit, which act is substantially related to the
181 qualifications, functions or duties of a person engaged in the business of money transmission; (c)
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182 the applicant violated any of the provisions of this chapter or regulations promulgated hereunder,
183 any similar regulatory scheme of another jurisdiction, or any other law applicable to the conduct
184 of the business sought to be licensed; (d) a licensee or authorized delegate of a li