This bill enacts the "Money Transmission Modernization Act" for the following purposes:
(1) Promote coordination among the states in all areas of regulation, licensing, and supervision to reduce regulatory burden and more effectively utilize regulator resources;
(2) Protect the public from financial crime;
(3) Standardize the types of activities that are subject to licensing or otherwise exempt from licensing; and
(4) Modernize safety and soundness requirements to ensure customer funds are protected in an environment that supports innovative and competitive business practices.
This bill generally prohibits a person from engaging in the business of money transmission or advertising, soliciting, or holding itself out as providing money transmission, unless the person is licensed under this bill. The licensure requirement does not apply to:
(1) A person that a licensee designates to engage in money transmission on behalf of the licensee (an "authorized delegate") acting within the scope of authority conferred by a written contract with the licensee; or
(2) A person that is exempt pursuant to a list of 15 exemptions contained in the full text of this bill and who does not engage in money transmission outside the scope of the applicable exemption.
For purposes of this bill, "money transmission" means:
(1) Selling or issuing payment instruments to a person located in this state;
(2) Selling or issuing stored value to a person located in this state;
(3) Receiving money for transmission from a person located in this state; or
(4) Payroll processing services.
"Money transmission" does not mean the provision solely of telecommunications services or network access.
This bill authorizes the commissioner of financial institutions to exercise various powers, including:
(1) Enter into agreements or relationships with other government officials or entities to improve efficiencies and reduce regulatory burdens by standardizing methods or procedures, and sharing resources, records, or related information. This bill specifically authorizes the commissioner to participate in multistate supervisory processes established between states and coordinated through the Conference of State Bank Supervisors, Money Transmitter Regulators Association, and affiliates and successors thereof for all licensees that hold licenses in this state and other states. This bill also authorizes the commissioner to utilize a nationwide multistate licensing system and registry;
(2) Examine or investigate a licensee or an authorized delegate, and use, hire, contract, or employ analytical systems, methods, or software to examine or investigate any person subject to this bill. The full text of this bill specifies various procedures for the examinations;
(3) Accept, from other state or federal government agencies or officials, licensing, examination, or investigation reports;
(4) Accept audit reports made by an independent CPA or other qualified third-party auditor for an applicant or licensee, and incorporate the audit report in any report of examination or investigation;
(5) Rely on and utilize the reports referenced in subdivisions (3) and (4) for any purposes deemed appropriate by the commissioner under this bill, including for purposes of making determinations regarding applications received under this bill;
(6) Administer, interpret, and enforce this bill;
(7) Promulgate rules effectuating the purposes of this bill; and
(8) Recover the cost of administering and enforcing this bill by imposing and collecting proportionate and equitable fees and costs associated with applications, examinations, investigations, and other actions required to achieve the purpose of this bill.
Generally, all information or reports the commissioner obtains from an applicant, licensee, or authorized delegate under this bill are confidential and must not be disclosed or distributed outside the department of financial institutions. This bill authorizes the commissioner to disclose confidential information in a manner the commissioner deems proper to
(1) Government agencies; and
(2) The Conference of State Bank Supervisors and the Money Transmission Regulator Association; provided, that these associations have entered into confidentiality agreements with the commissioner.
The full text of this bill specifies various procedures and requirements for the licensure application process, issuance of licenses, renewals, maintenance of licensure, acquisition of control, updating information, quarterly condition reports, annual audited financial statements, reporting, recordkeeping, establishment of relationship between a licensee and an authorized delegate, conduct of authorized delegates, transmission time, refunds, receipts, notice, disclosure for payroll processing services, suspension and revocation of licensure, suspension and revocation of authorized delegates, consent and emergency orders, and referral of violations for investigation and prosecution.
A person that engages in the business of money transmission on behalf of a person not licensed under this bill or not exempt from this bill provides money transmission to the same extent as if the person were a licensee, and is jointly and severally liable with the unlicensed or nonexempt person.
Under this bill, a licensee's responsibility to any person who purchases a payment instrument or money transmission transaction from a licensee or a licensee's authorized agent is limited to the face amount of the payment instrument or money transmission transaction purchased.
This bill requires a licensee to maintain a tangible net worth of:
(1) The greater of $100,000 or three percent of total assets for the first $100,000,000;
(2) Two percent of additional assets for $100,000,000 to $1,000,000,000; and
(3) One-half of one percent of additional assets for over $1,000,000,000.
An applicant for licensure must provide, and a licensee must maintain at all times, security consisting of a surety bond in a form satisfactory to the commissioner. The amount of the required security must be the greater of $50,000 or an amount equal to 100 percent of the licensee's average daily money transmission liability in this state calculated for the most recently completed calendar quarter, up to a maximum of $800,000. The full text of this bill specifies additional requirements pertaining to the surety bond.
This bill requires a licensee to maintain permissible investments that have a market value, computed in accordance with U.S. generally accepted accounting principles, of not less than the aggregate amount of all of its outstanding money transmission obligations. The full text of this bill specifies various requirements applicable to permissible investments.
This bill establishes the following criminal penalties for violations:
(1) A knowing and willful violation of this bill for which a penalty is not specifically provided is a Class C misdemeanor; provided, that each day the violation occurs constitutes a separate offense;
(2) It is a Class E felony for a person to knowingly and willfully make a material, false statement in any document filed or required to be filed under this bill with the intent to deceive the recipient of the document;
(3) It is a Class E felony for a person to knowingly and willfully fail to file a document required to be filed under this bill;
(4) It is a Class E felony for a person to carry on an unauthorized money transmitter business; and
(5) It is a Class E felony for a person to obstruct or endeavor to obstruct a lawful examination of a licensee or agent.
After notice and opportunity for a hearing, this bill authorizes the commissioner to levy the following administrative discipline for a violation of this bill:
(1) Cease and desist order;
(2) Refund, disburse, or disgorge any fees collected in violation of this bill;
(3) Pay to the commissioner a civil penalty, not to exceed $1,000 for each violation or, in the case of a continuing violation, $1,000 for each day that the violation continues; or
(4) Pay the costs and expenses for the investigation and prosecution of the matter, including reasonable attorney's fees.
This bill takes effect January 1, 2024.