Senate File 421 - Introduced
SENATE FILE 421
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO SSB 1102)
A BILL FOR
1 An Act relating to money transmission services.
2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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1 Section 1. Section 533A.2, subsection 2, paragraph h, Code
2 2023, is amended to read as follows:
3 h. A person licensed under chapter 533C, including that
4 person’s authorized delegates as defined in section 533C.102,
5 or a person exempt from licensing under section 533C.103, when
6 engaging in money transmission or currency exchange as defined
7 in section 533C.102.
8 Sec. 2. Section 533C.101, Code 2023, is amended to read as
9 follows:
10 533C.101 Short title.
11 This chapter may be cited as the “Uniform Money Services
12 Transmission Modernization Act”.
13 Sec. 3. Section 533C.102, Code 2023, is amended to read as
14 follows:
15 533C.102 Definitions.
16 In this chapter:
17 1. “Applicant” means a person that files an application for
18 a license under this chapter.
19 1. “Acting in concert” means persons knowingly acting
20 together with a common goal of jointly acquiring control of a
21 licensee whether or not pursuant to an express agreement.
22 2. “Authorized delegate” means a person a licensee
23 designates to provide money services on behalf of the licensee.
24 3. “Bank” means an institution organized under federal or
25 state law which does any of the following:
26 a. Accepts demand deposits or deposits that the depositor
27 may use for payment to third parties and engages in the
28 business of making commercial loans.
29 b. Engages in credit card operations and maintains only one
30 office that accepts deposits, does not accept demand deposits
31 or deposits that the depositor may use for payments to third
32 parties, does not accept a savings or time deposit less than
33 one hundred thousand dollars, and does not engage in the
34 business of making commercial loans.
35 4. “Compensation” means any fee, commission, or other
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1 benefit.
2 5. “Conducting the business” means engaging in activities
3 of a licensee or money transmitter more than ten times in any
4 calendar year for compensation.
5 3. “Average daily money transmission liability” means
6 the amount of the licensee’s outstanding money transmission
7 obligations in this state at the end of each day in a given
8 period of time, added together, and divided by the total
9 number of days in the given period of time. For purposes of
10 calculating average daily money transmission liability under
11 this chapter for any required licensee, the given period of
12 time shall be the quarters ending March 31, June 30, September
13 30, and December 31.
14 4. “Bank Secrecy Act” means the federal Bank Secrecy Act,
15 31 U.S.C. §5311 et seq., and its implementing regulations, as
16 amended.
17 5. “Closed loop stored value” means stored value that is
18 redeemable by the issuer only for goods or services provided by
19 the issuer or its affiliate or franchisees of the issuer or its
20 affiliate, except to the extent required by applicable law to
21 be redeemable in cash for its cash value.
22 6. “Control” means any of the following:
23 a. Ownership of, or the The power to vote, directly
24 or indirectly, at least twenty-five percent of a class of
25 outstanding voting securities or voting interests of a licensee
26 or person in control of a licensee.
27 b. Power The power to elect or appoint a majority of key
28 individuals, executive officers, managers, directors, trustees,
29 or other persons exercising managerial authority of a licensee
30 or person in control of a licensee.
31 c. The power to exercise, directly or indirectly, a
32 controlling influence over the management or policies of a
33 licensee or person in control of a licensee.
34 7. “Credit union” means a cooperative, nonprofit association
35 incorporated under chapter 533 or the Federal Credit Union Act,
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1 12 U.S.C. §1751 et seq., that is insured by the national credit
2 union administration and includes an office of a credit union.
3 8. “Currency exchange” means receipt of compensation from
4 the exchange of money of one government for money of another
5 government.
6 9. “Executive officer” means a president, chairperson of
7 the executive committee, chief financial officer, responsible
8 individual, or other individual who performs similar functions.
9 7. “Eligible rating” means a credit rating of any of the
10 three highest rating categories provided by an eligible rating
11 service, whereby each category may include rating category
12 modifiers such as “plus” or “minus” for Standard and Poor’s 500
13 stock market index, or the equivalent for any other eligible
14 rating service. A long-term credit rating is deemed eligible
15 if the rating is equal to “A-” or higher by Standard and Poor’s
16 500 stock market index, or the equivalent from any other
17 eligible rating service. A short-term credit rating is deemed
18 eligible if the rating is equal to or higher than “A-2” or
19 “SP-2” by Standard and Poor’s 500 stock market index, or the
20 equivalent from any other eligible rating service. In the
21 event that the ratings differ among eligible rating services,
22 the highest rating shall apply when determining whether a
23 security bears an eligible rating.
24 8. “Eligible rating service” means any nationally recognized
25 statistical rating organization as defined by the federal
26 Securities and Exchange Commission, and any other organization
27 designated by the superintendent by rule or order.
28 9. “Federally insured depository financial institution”
29 means a bank, credit union, savings and loan association, trust
30 company, savings association, savings bank, industrial bank, or
31 industrial loan company organized under the laws of the United
32 States or any state, when such entity has federally insured
33 deposits.
34 10. “In this state” means at a physical location within Iowa
35 for an in-person transaction request.
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1 11. “Individual” means a natural person.
2 12. “Key individual” means an individual ultimately
3 responsible for establishing or directing policies and
4 procedures of the licensee, including an executive officer,
5 manager, director, or trustee.
6 10. 13. “Licensee” means a person licensed under this
7 chapter.
8 11. “Location” means a place of business at which activity
9 conducted by a licensee or money transmitter occurs.
10 14. “Material litigation” means litigation that, according
11 to generally accepted accounting principles in the United
12 States, is significant to a person’s financial health and would
13 be required to be disclosed in the person’s audited financial
14 statements, report to shareholders, or similar records.
15 12. 15. “Monetary value” means a medium of exchange,
16 whether or not redeemable in money.
17 13. 16. “Money” means a medium of exchange authorized or
18 adopted by a domestic the United States or a foreign government
19 as a part of its currency and that is customarily used and
20 accepted as a medium of exchange in the country of issuance.
21 The term includes a monetary unit of account established by an
22 intergovernmental organization or by agreement between two or
23 more governments.
24 14. “Money services” means money transmission or currency
25 exchange.
26 15. 17. “Money transmission” means and includes any of the
27 following:
28 a. Selling or issuing payment instruments to one or more
29 persons or issuing payment instruments which are sold to one or
30 more persons a person located in this state.
31 b. Selling or issuing stored value to a person located in
32 this state.
33 b. c. Conducting the business of receiving Receiving money
34 or monetary value for transmission from a person located in
35 this state.
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1 c. Conducting the business of receiving money for obligors
2 for the purpose of paying obligors’ bills, invoices, or
3 accounts.
4 d. “Money transmission” does not include the provision
5 solely of online or telecommunications services or network
6 access.
7 16. “Outstanding”, with respect to a payment instrument,
8 means issued or sold by or for the licensee and reported as
9 sold but not yet paid by or for the licensee.
10 18. “Money services businesses accredited state” or “MSB
11 accredited state” means a state agency that is accredited by the
12 conference of state bank supervisors and the money transmitter
13 regulators association for money transmission licensing and
14 supervision.
15 19. “Multistate licensing process” means any agreement
16 entered into by and among state regulators relating to
17 coordinated processing of applications for money transmission
18 licenses, applications for the acquisition of control of a
19 licensee, control determinations, or notice and information
20 requirements for a change of key individuals.
21 20. “Nationwide multistate licensing system” or “NMLS”
22 means the nationwide multistate licensing system and registry
23 developed by the conference of state bank supervisors and the
24 American association of residential mortgage regulators and
25 owned and operated by the state regulatory registry, LLC, or
26 any successor or affiliated entity, for the licensing and
27 registration of persons in financial services industries.
28 21. “Outstanding money transmission obligations” means any
29 of the following:
30 a. Any payment instrument or stored value issued or sold
31 by the licensee to a person located in the United States or
32 reported as sold by an authorized delegate of the licensee to
33 a person that is located in the United States that has not yet
34 been paid or refunded by or for the licensee, or escheated in
35 accordance with applicable abandoned property laws.
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1 b. Any money received for transmission by the licensee or an
2 authorized delegate in the United States from a person located
3 in the United States that has not been received by the payee
4 or refunded to the sender, or escheated in accordance with
5 applicable abandoned property laws.
6 22. “Passive investor” means a person that can attest in a
7 medium prescribed by the superintendent or commits in writing
8 to any of the following:
9 a. The person does not have the power to elect a majority
10 of key individuals or executive officers, managers, directors,
11 trustees, or other persons exercising managerial authority of a
12 person in control of a licensee.
13 b. The person is not employed by and does not have any
14 managerial duties of the licensee or person in control of a
15 licensee.
16 c. The person does not have the power to exercise, directly
17 or indirectly, a controlling influence over the management or
18 policies of a licensee or person in control of a licensee.
19 17. 23. “Payment instrument” means a written or electronic
20 check, draft, money order, traveler’s check, stored-value,
21 or other written or electronic instrument or order for the
22 transmission or payment of money or monetary value, sold to
23 one or more persons, whether or not that instrument or order
24 is negotiable. “Payment instrument” does not include an stored
25 value or any instrument that is redeemable by the issuer
26 only for goods or services provided by the issuer or an its
27 affiliate in merchandise or service, a credit card voucher, or
28 a letter of credit, except to the extent required by applicable
29 law to be redeemable in cash for its cash value, or not sold
30 to the public but issued and distributed as part of a loyalty,
31 rewards, or promotional program.
32 24. “Payroll processing services” means receiving money for
33 transmission pursuant to a contract with a person to deliver
34 wages or salaries, make payments of payroll taxes to states and
35 federal agencies, make payments relating to employee benefit
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1 plans, or make distributions of other authorized deductions
2 from wages or salaries. The term “payroll processing services”
3 does not include an employer performing payroll processing
4 services on its own behalf or on behalf of its affiliate, or
5 a professional employment organization subject to regulation
6 under other applicable state law.
7 18. 25. “Person” means an individual, corporation, business
8 trust, estate, trust, partnership, general partnership, limited
9 partnership, limited liability company, association, joint
10 venture stock corporation, trust, corporation, government;
11 governmental subdivision, agency or instrumentality; public
12 corporation; or any other legal or commercial corporate entity
13 identified by the superintendent.
14 19. “Proceeds” means property acquired or derived directly
15 or indirectly from, produced through, realized through, or
16 caused by an act or omission and includes any property of any
17 kind.
18 20. “Property” means anything of value, and includes any
19 interest in property, including any benefit, privilege, claim,
20 or right with respect to anything of value, whether real
21 or personal, tangible or intangible, without reduction for
22 expenses incurred for acquisition, maintenance, production, or
23 any other purpose.
24 21. “Record” means information that is inscribed on a
25 tangible medium or that is stored in an electronic or other
26 medium and is retrievable in perceivable form.
27 22. “Responsible individual” means an individual who is
28 employed by a licensee and has principal managerial authority
29 over the provision of money services by the licensee in this
30 state.
31 23. “State” means a state of the United States, the District
32 of Columbia, Puerto Rico, the United States Virgin Islands, or
33 any territory or insular possession subject to the jurisdiction
34 of the United States.
35 26. “Receipt” means a paper receipt, electronic record, or
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1 other written confirmation.
2 27. “Receiving money for transmission” or “money received
3 for transmission” means receiving money or monetary value in
4 the United States for transmission within or outside the United
5 States by electronic or other means.
6 28. “Remit” means to make direct payments of money to a
7 licensee or its representative authorized to receive money
8 or to deposit money in a bank in an account specified by the
9 licensee.
10 24. 29. “Stored-value” means a monetary value that is
11 representing a claim against the issuer evidenced by an
12 electronic or digital record, and that is intended and accepted
13 for use as a means of redemption for money or monetary value,
14 or payment for goods or services. The term “stored-value”
15 includes but is not limited to “prepaid access” as defined by 31
16 C.F.R. §1010.100, as amended. “Stored-value” does not include a
17 payment instrument or closed loop stored value, or stored value
18 not sold to the public but issued and distributed as part of a
19 loyalty, rewards, or promotional program.
20 25. 30. “Superintendent” means the superintendent of
21 banking for the state of Iowa.
22 26. “Transaction” includes a purchase, sale, trade, loan,
23 pledge, investment, gift, transfer, transmission, delivery,
24 deposit, withdrawal, payment, transfer between accounts,
25 exchange of currency, extension of credit, purchase or sale of
26 any monetary instrument or stored-value, use of a safe deposit
27 box, or any other acquisition or disposition of property by
28 whatever means effected.
29 27. “Unsafe or unsound practice” means a practice or
30 conduct by a person licensed to engage in money transmission
31 or an authorized delegate of such a person which creates the
32 likelihood of material loss, insolvency, or dissipation of
33 the licensee’s assets, or otherwise materially prejudices the
34 interests of its customers.
35 31. “Tangible net worth” means the aggregate assets of a
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