Existing law provides for the licensure and regulation of various financial institutions by the Commissioner of Financial Institutions. (Title 55 of NRS) This bill provides for the licensure and regulation by the Commissioner of Financial Institutions of merchant acquirer limited purpose banks. Under section 66 of this bill, a merchant acquirer limited purpose bank, also known as a merchant bank, is authorized to engage in: (1) certain activities associated with effecting transactions within payment card networks, which section 15 of this bill designates as “merchant acquiring activities”; (2) certain activities involving the processing of payment card transactions, which section 22 of this bill designates as “settlement activities”; (3) the accepting and holding of certain deposits; and (4) any incidental activity that is approved by the Commissioner in accordance with procedures set forth in section 68 of this bill. Section 71 of this bill sets forth certain restrictions on the accepting and holding of deposits by a merchant bank, including prohibiting a merchant bank from accepting and holding any deposit other than a deposit from a corporation that owns a majority of the shares of the merchant bank. Section 70 of this bill prohibits a merchant bank from engaging in any activity that is not authorized by the provisions of this bill, including, among other activities, engaging in the business of banking, money transmission, acting as a fiduciary, making loans and various other prohibited activities. Sections 3-25 of this bill define certain words and terms for the purposes of this bill. Sections 26, 28-31, 33, 35 and 36 of this bill set forth various powers and duties of the Commissioner with respect to the licensure and regulation of merchant acquirer limited purpose banks. Section 27 of this bill prohibits an officer or employee of the Division of Financial Institutions from having certain involvement with a merchant bank. Section 32 of this bill sets forth certain requirements for the provision of notices required under the provisions of this bill. Sections 34, 38, 39 and 41 of this bill set forth procedures and requirements for the organization and licensure of a merchant bank. Section 40 of this bill authorizes: (1) a state agency to apply for and be issued a license to operate a merchant bank; and (2) the Commissioner to, by regulation, waive or modify any requirement set forth in this bill that the Commissioner determines is not appropriate for a merchant bank that is operated by a state agency. Section 37 of this bill exempts a participant in the Regulatory Experimentation Program for Product Innovation from the provisions of this bill. Section 42 of this bill requires a merchant bank to provide certain items to the Commissioner before beginning business, including a letter of credit to satisfy the costs and expenses associated with a receivership. Section 43 of this bill sets forth certain requirements for such a letter of credit. Section 45 of this bill authorizes the Commissioner to require a merchant bank to provide an additional letter of credit and the holding company of a merchant bank to provide a certain guaranty. Section 44 of this bill requires a merchant bank to maintain bond coverage in amounts and in a form acceptable to the Commissioner. Sections 46 and 72 of this bill require a merchant bank to maintain certain capital. Section 47 of this bill authorizes a merchant bank to establish certain offices in this State. Section 48 of this bill sets forth certain restrictions on advertising by a merchant bank. Section 49 of this bill sets forth certain restrictions on the business name and certain forms used by a merchant bank. Sections 50-57, 59-62 and 64 of this bill set forth certain requirements and restrictions on the operations of the board of directors of a merchant bank. Section 58 of this bill requires a merchant bank to notify the Commissioner of, and the Commissioner to investigate, certain changes or proposed changes in the ownership of a merchant bank. Section 63 of this bill authorizes a merchant bank to indemnify and defend its officers, directors, employees, agents and other parties under certain circumstances. Section 64 authorizes a merchant bank to purchase or lease certain property, subject to certain limitations. Sections 65 and 66 of this bill set forth certain restrictions on the sale of the stock of a merchant bank. Section 67 of this bill sets forth the activities in which a merchant bank may engage. Section 69 of this bill prohibits a merchant bank from engaging in a merchant acquiring activity unless the activity originates in the United States and the merchant with whom the activity is engaged has a physical location in the United States. Section 73 of this bill establishes requirements for the handling of merchant funds by a merchant bank. Section 74 of this bill prohibits a merchant bank from making any investment other than certain specified investments. Sections 75 and 76 of this bill require a merchant bank to provide certain reports and information to the Commissioner. Sections 77-83 of this bill set forth various powers of the Commissioner with respect to examinations of merchant banks and other powers relating to the investigation and enforcement of the provisions of this bill. Sections 77 and 110 of this bill provide for the confidentiality of certain information obtained by the Commissioner. Sections 84 and 85 of this bill require a merchant bank to perform certain audits and cooperate with any audits and examinations performed by the Commissioner. Section 85 additionally requires a merchant bank to pay an assessment levied by the Commissioner relating to such audits and examinations. Sections 86 and 87 of this bill authorize the Commissioner to take certain disciplinary actions against a merchant bank. Section 88 of this bill sets forth certain requirements for the reorganization, merger or consolidation of a merchant bank. Section 89 of this bill sets forth certain requirements for the voluntary liquidation of a merchants bank. Section 71 authorizes a merchant bank to apply to receive deposit insurance from the Federal Deposit Insurance Corporation. Sections 90-100 of this bill establish procedures and requirements for the liquidation of a merchant bank whose deposit accounts are insured by the Federal Deposit Insurance Corporation. Sections 100 and 101 of this bill establish procedures and requirements for the reorganization of a dissolved merchant bank. Section 102 of this bill makes it a misdemeanor to make certain untrue and derogatory statements concerning a merchant bank, or take certain similar actions, under certain circumstances. Section 103 of this bill imposes certain penalties upon a merchant bank for engaging in certain prohibited acts. Sections 104-109 of this bill add references to merchant banks and the provisions of this bill to various provisions of existing law pertaining to financial institutions so that merchant banks are treated similarly to other financial institutions for certain purposes.

Statutes affected:
As Introduced: 657.037, 658.098, 659.125, 52.450, 78.020, 78.045, 239.010
BDR: 657.037, 658.098, 659.125, 52.450, 78.020, 78.045, 239.010