HOUSE . . . . . . . No. 4840
The Commonwealth of Massachusetts
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HOUSE OF REPRESENTATIVES, July 9, 2024.
The committee on Ways and Means, to whom was referred the Bill
relative to the regulation of money transmission by the Division of Banks
(House, No. 1106), reports recommending that the same ought to pass
with an amendment substituting therefor the accompanying bill (House,
No. 4840).
For the committee,
AARON MICHLEWITZ.
 FILED ON: 7/9/2024
HOUSE . . . . . . . . . . . . . . . No. 4840
The Commonwealth of Massachusetts
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In the One Hundred and Ninety-Third General Court
(2023-2024)
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An Act relative to the regulation of 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 and inserting in place thereof the following section:-
3 Section 4. A bank may engage directly in the business of selling, issuing or registering
4 checks.
5 SECTION 2. Chapter 169 of the General Laws is hereby repealed.
6 SECTION 3. The General Laws are hereby amended by inserting after chapter 169A the
7 following chapter:-
8 CHAPTER 169B
9 THE MONEY TRANSMISSION ACT
10 Section 1. As used in this chapter, the following words shall, unless the context clearly
11 requires otherwise, have the following meanings:
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12 “Acting in concert”, persons knowingly acting together with a common goal of jointly
13 acquiring control of a licensee whether or not pursuant to an express agreement.
14 “Authorized delegate”, a person a licensee designates to engage in money transmission
15 on behalf of the licensee.
16 “Average daily money transmission liability”, the amount of the licensee’s outstanding
17 money transmission obligations in the commonwealth at the end of each day in a given period of
18 time, added together and divided by the total number of days in the given period of time. For
19 purposes of calculating average daily money transmission liability under this chapter for any
20 licensee required to do so, the given period of time shall be the quarters ending March 31, June
21 30, September 30 and December 31.
22 “Bank Secrecy Act”, the Bank Secrecy Act, 31 U.S.C. section 5311, et seq. and its
23 implementing regulations, as amended and recodified from time to time.
24 “Closed loop stored value”, stored value that is redeemable by the issuer only for goods
25 or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except
26 to the extent required by applicable law to be redeemable in cash for its cash value.
27 “Commissioner”, the commissioner of banks.
28 “Control”, the power to: (i) vote, directly or indirectly, at least 25 per cent of the
29 outstanding voting shares or voting interests of a licensee or person in control of a licensee; (ii)
30 elect or appoint a majority of key individuals or executive officers, managers, directors, trustees,
31 or other persons exercising managerial authority of a person in control of a licensee; or (iii)
32 exercise, directly or indirectly, a controlling influence over the management or policies of a
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33 licensee or person in control of a licensee; provided, that for rebuttable presumptions of control a
34 person shall be presumed to exercise a controlling influence when the person holds the power to
35 vote, directly or indirectly, at least 10 per cent of the outstanding voting shares or voting interests
36 of a licensee or person in control of a licensee; and provided further, that a person presumed to
37 exercise a controlling influence may rebut the presumption of control if the person is a passive
38 investor. For purposes of determining the percentage of a person controlled by any other person,
39 the person’s interest shall be aggregated with the interest of any other immediate family member,
40 including the person’s spouse, parents, children, siblings, mothers- and fathers-in law, sons- and
41 daughters-in-law, brothers- and sisters-in-law and any other person who shares such person’s
42 home. Consistent with the authority described in subsection (b) of section 4, the commissioner
43 may adopt regulations, policies and procedures as necessary, which may modify the definition of
44 “control”.
45 “Division”, the division of banks.
46 “Eligible rating”, a credit rating of any of the 3 highest rating categories provided by an
47 eligible rating service, whereby each category may include rating category modifiers such as
48 “plus” or “minus” for S&P, or the equivalent for any other eligible rating service. Long-term
49 credit ratings shall be deemed eligible if the rating is equal to A- or higher by S&P, or the
50 equivalent from any other eligible rating service. Short-term credit ratings shall be deemed
51 eligible if the rating is equal to or higher than A-2 or SP-2 by S&P, or the equivalent from any
52 other eligible rating service. In the event that ratings differ among eligible rating services, the
53 highest rating shall apply when determining whether a security bears an eligible rating.
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54 “Eligible rating service”, any nationally recognized statistical rating organization, as
55 defined by the United States Securities and Exchange Commission, and any other organization
56 designated by the commissioner by rule or order.
57 “Federally insured depository financial institution”, a bank, credit union, savings and loan
58 association, trust company, savings association, savings bank, industrial bank, or industrial loan
59 company organized under the laws of the United States or any state of the United States, when
60 such bank, credit union, savings and loan association, trust company, savings association,
61 savings bank, industrial bank or industrial loan company has federally insured deposits.
62 “Individual”, a natural person.
63 “In the commonwealth”, at a physical location within the commonwealth of
64 Massachusetts for a transaction requested in person. For a transaction requested electronically or
65 by phone, the provider of money transmission may determine if the person requesting the
66 transaction is in the commonwealth by relying on other information provided by the person
67 regarding the location of the individual’s residential address or a business entity’s principal place
68 of business or other physical address location and any records associated with the person that the
69 provider of money transmission may have that indicate such location, including, but not limited
70 to, an address associated with an account.
71 “Key individual”, any individual ultimately responsible for establishing or directing
72 policies and procedures of the licensee, such as an executive officer, manager, director, or
73 trustee.
74 “Licensee”, a person licensed under this chapter.
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75 “Material litigation”, litigation, that according to United States generally accepted
76 accounting principles, is significant to a person’s financial health and would be required to be
77 disclosed in the person’s annual audited financial statements, report to shareholders or similar
78 records.
79 “Monetary value”, a medium of exchange, whether or not redeemable in money.
80 “Money”, a medium of exchange that is authorized or adopted by the United States or a
81 foreign government. Money shall include a monetary unit of account established by an
82 intergovernmental organization or by agreement between 2 or more governments.
83 “Money transmission”, (i) selling or issuing payment instruments to a person located in
84 the commonwealth; (ii) selling or issuing stored value to a person located in the commonwealth;
85 or (iii) receiving money for transmission from a person located in the commonwealth. Money
86 transmission shall apply only to those transactions engaged in by a person for personal, family or
87 household purposes and shall not include the provision solely of online or telecommunications
88 services or network access.
89 “MSB accredited state”, a state agency that is accredited by the Conference of State Bank
90 Supervisors and Money Transmitter Regulators Association for money transmission licensing
91 and supervision.
92 “Multistate licensing process”, any agreement entered into by and among state regulators
93 relating to coordinated processing of applications for money transmission licenses, applications
94 for the acquisition of control of a licensee, control determinations, or notice and information
95 requirements for a change of key individuals.
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 96 “NMLS”, the Nationwide Multistate Licensing System and Registry developed by the
97 Conference of State Bank Supervisors and the American Association of Residential Mortgage
98 Regulators and owned and operated by the State Regulatory Registry, LLC, or any successor or
99 affiliated entity, for the licensing and registration of persons in financial services industries.
100 “Outstanding money transmission obligations”, obligations that shall be established and
101 extinguished in accordance with applicable state law and shall include: (i) any payment
102 instrument or stored value issued or sold by the licensee to a person located in the United States
103 or reported as sold by an authorized delegate of the licensee to a person that is located in the
104 United States that has not yet been paid or refunded by or for the licensee, or escheated in
105 accordance with applicable abandoned property laws; or (ii) any money received for
106 transmission by the licensee or an authorized delegate in the United States from a person located
107 in the United States that has not been received by the payee or refunded to the sender or
108 escheated in accordance with applicable abandoned property laws.
109 “Passive investor”, a person that: (i) does not have the power to elect a majority of key
110 individuals or executive officers, managers, directors, trustees, or other persons exercising
111 managerial authority of a person in control of a licensee; (ii) is not employed by and does not
112 have any managerial duties of the licensee or person in control of a licensee; (iii) does not have
113 the power to exercise, directly or indirectly, a controlling influence over the management or
114 policies of a licensee or person in control of a licensee; and (iv) either: (A) attests to (i), (ii) and
115 (iii), in a form and in a medium prescribed by the commissioner; or (B) commits to the passivity
116 characteristics of (i), (ii) and (iii) in a written document.
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117 “Payment instrument”, a written or electronic check, draft, money order, traveler’s check,
118 or other written or electronic instrument for the transmission or payment of money or monetary
119 value, whether or not negotiable. Payment instrument shall not include stored value or any
120 instrument that is: (i) redeemable by the issuer only for goods or services provided by the issuer
121 or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by
122 applicable law to be redeemable in cash for its cash value; or (ii) not sold to the public but issued
123 and distributed as part of a loyalty, rewards, or promotional program.
124 “Person”, any individual, general partnership, limited partnership, limited liability
125 company, corporation, trust, association, joint stock corporation or other corporate entity
126 identified by the commissioner.
127 “Prepaid access”, as defined by 31 C.F.R. 1010.100, as amended or recodified from time
128 to time.
129 “Receiving money for transmission” or “money received for transmission”, receiving
130 money or monetary value in the United States for transmission within or outside the United
131 States by electronic or other means.
132 “Remit”, to make direct payments of money to a licensee or its representative authorized
133 to receive money or to deposit money in a bank in an account specified by the licensee.
134 “Stored value”, monetary value representing a claim against the issuer evidenced by an
135 electronic or digital record and that is intended and accepted for use as a means of redemption
136 for money or monetary value, or payment for goods or services; provided, that stored value shall
137 include, but shall not be limited to, prepaid access; and provided further, that stored value shall
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138 not include a payment instrument or closed loop stored value, or stored value not sold to the
139 public but issued and distributed as part of a loyalty, rewards or promotional program.
140 “Tangible net worth”, the aggregate assets of a licensee excluding all intangible assets,
141 less liabilities, as determined in accordance with United States generally accepted accounting
142 principles.
143 “United States”, (i) any state, territory or possession of the United States; (ii) the District
144 of Columbia; (iii) the commonwealth of Puerto Rico; or (iv) a United States military installation
145 located in a foreign country.
146 Section 2. (a) This chapter shall not apply to:
147 (i) an operator of a payment system to the extent that it provides processing, clearing or
148 settlement services, between or among persons exempted by this subsection or licensees, in
149 connection with wire transfers, credit card transactions, debit card transactions, stored-value
150 transactions, automated clearing house transfers or similar funds transfers;
151 (ii) a person appointed as an agent of a payee to collect and process a payment from a
152 payor to the payee for goods or services, other than money transmission itself, provided to the
153 payor by the payee; provided, that: (A) there exists a written agreement between the payee and
154 the agent directing the agent to collect and process payments from payors on the payee’s behalf;
155 (B) the payee holds the agent out to the public as accepting payments for goods or services on
156 the payee’s behalf; and (C) payment for the goods and services is treated as received by the
157 payee upon receipt by the agent so that the payor’s obligation is extinguished and there is no risk
158 of loss to the payor if the agent fails to remit the funds to the payee;
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159 (iii) a person that acts as an intermediary by processing payments between an entity that
160 has directly incurred an outstanding money transmission obligation to a sender, and the sender’s
161 designated recipient; provided, that the entity: (A) is properly licensed or exempt from licensing
162 requirements under this chapter; (B) provides a receipt, electronic record or other written
163 confirmation to the sender identifying the entity as the provider of money transmission in the
164 transaction; and (C) bears sole responsibility to satisfy the outstanding money transmission
165 obligation to the sender, including the obligation to make the sender whole in connection with
166 any failure to transmit the funds to the sender’s designated recipient;
167 (iv) the United States or a department, agency, or instrumentality thereof, or its agent.
168 (v) money transmission by the United States Postal Service or by an agent of the United
169 States Postal Service;
170 (vi) a state, county, city or any other governmental agency or governmental subdivision
171 or instrumentality of a state, or its agent;
172 (vii) a federally insured depository financial institution, bank holding company, office of
173 an international banking corporation, foreign bank that establishes a federal branch pursuant to
174 the International Bank Act, 12 U.S.C. section 3102, as amended or recodified from time to time,
175 corporation organized pursuant to the Bank Service Corporation Act, 12 U.S.C. sections 1861 to
176 1867, inclusive, as amended or recodified from time to time or corporation organized under the
177 Edge Act, 12 U.S.C. sections 611 to 633, inclusive, as amended or recodified from time to time;
178 (viii) electronic funds transfer of governmental benefits for a federal, state, county or
179 governmental agency by a contractor on behalf of the United States or a department, agency or
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180 instrumentality thereof, or on behalf of a state or governmental subdivision, agency or
181 instrumentality thereof;
182 (ix) a board of trade designated as a contract market under the federal Commodity
183 Exchange Act, 7 U.S.C. sections 1 to 25, inclusive, as amended or recodified from time to time,
184 or a person that, in the ordinary course of business, provides clearance and settlement services
185 for a board of trade to the extent of its operation as or for such a board;
186 (x) a registered futures commission merchant under the federal commodities laws to the
187 extent of its operation as such a merchant;
188 (xi) a person registered as a securities broker-dealer under federal or state sec