Bill Text: IA HF431 | 2023-2024 | 90th General Assembly | Introduced

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Bill Title: A bill for an act relating to money transmission services.(Formerly HSB 128; See HF 675.)

Spectrum: Committee Bill

Status: (Introduced) 2023-04-11 - Withdrawn. H.J. 805. [HF431 Detail]

Download: Iowa-2023-HF431-Introduced.html

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House File 431 - Introduced
HOUSE FILE 431
BY COMMITTEE ON COMMERCE
(SUCCESSOR TO HSB 128)
A BILL FOR
An Act relating to money transmission services.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA:
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Section 1. Section 533A.2, subsection 2, paragraph h, Code
2023, is amended to read as follows:
h. A person licensed under chapter 533C , including that
person’s authorized delegates as defined in section 533C.102 ,
or a person exempt from licensing under section 533C.103 , when
engaging in money transmission or currency exchange as defined
in section 533C.102 .
Sec. 2. Section 533C.101, Code 2023, is amended to read as
follows:
533C.101 Short title.
This chapter may be cited as the “Uniform Money Services
Transmission Modernization Act” .
Sec. 3. Section 533C.102, Code 2023, is amended to read as
follows:
533C.102 Definitions.
In this chapter :
1. “Applicant” means a person that files an application for
a license under this chapter .
1. “Acting in concert” means persons knowingly acting
together with a common goal of jointly acquiring control of a
licensee whether or not pursuant to an express agreement.
2. “Authorized delegate” means a person a licensee
designates to provide money services on behalf of the licensee.
3. “Bank” means an institution organized under federal or
state law which does any of the following:
a. Accepts demand deposits or deposits that the depositor
may use for payment to third parties and engages in the
business of making commercial loans.
b. Engages in credit card operations and maintains only one
office that accepts deposits, does not accept demand deposits
or deposits that the depositor may use for payments to third
parties, does not accept a savings or time deposit less than
one hundred thousand dollars, and does not engage in the
business of making commercial loans.
4. “Compensation” means any fee, commission, or other
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benefit.
5. “Conducting the business” means engaging in activities
of a licensee or money transmitter more than ten times in any
calendar year for compensation.
3. “Average daily money transmission liability” means
the amount of the licensee’s outstanding money transmission
obligations in this state at the end of each day in a given
period of time, added together, and divided by the total
number of days in the given period of time. For purposes of
calculating average daily money transmission liability under
this chapter for any required licensee, the given period of
time shall be the quarters ending March 31, June 30, September
30, and December 31.
4. “Bank Secrecy Act” means the federal Bank Secrecy Act,
31 U.S.C. §5311 et seq., and its implementing regulations, as
amended.
5. “Closed loop stored value” means stored value that is
redeemable by the issuer only for goods or services provided by
the issuer or its affiliate or franchisees of the issuer or its
affiliate, except to the extent required by applicable law to
be redeemable in cash for its cash value.
6. “Control” means any of the following:
a. Ownership of, or the The power to vote, directly
or indirectly, at least twenty-five percent of a class of
outstanding voting securities or voting interests of a licensee
or person in control of a licensee.
b. Power The power to elect or appoint a majority of key
individuals, executive officers, managers, directors, trustees,
or other persons exercising managerial authority of a licensee
or person in control of a licensee.
c. The power to exercise, directly or indirectly, a
controlling influence over the management or policies of a
licensee or person in control of a licensee.
7. “Credit union” means a cooperative, nonprofit association
incorporated under chapter 533 or the Federal Credit Union Act,
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12 U.S.C. §1751 et seq., that is insured by the national credit
union administration and includes an office of a credit union.
8. “Currency exchange” means receipt of compensation from
the exchange of money of one government for money of another
government.
9. “Executive officer” means a president, chairperson of
the executive committee, chief financial officer, responsible
individual, or other individual who performs similar functions.
7. “Eligible rating” means a credit rating of any of the
three highest rating categories provided by an eligible rating
service, whereby each category may include rating category
modifiers such as “plus” or “minus” for Standard and Poor’s 500
stock market index, or the equivalent for any other eligible
rating service. A long-term credit rating is deemed eligible
if the rating is equal to “A-” or higher by Standard and Poor’s
500 stock market index, or the equivalent from any other
eligible rating service. A short-term credit rating is deemed
eligible if the rating is equal to or higher than “A-2” or
“SP-2” by Standard and Poor’s 500 stock market index, or the
equivalent from any other eligible rating service. In the
event that the ratings differ among eligible rating services,
the highest rating shall apply when determining whether a
security bears an eligible rating.
8. “Eligible rating service” means any nationally recognized
statistical rating organization as defined by the federal
Securities and Exchange Commission, and any other organization
designated by the superintendent by rule or order.
9. “Federally insured depository financial institution”
means a bank, credit union, savings and loan association, trust
company, savings association, savings bank, industrial bank, or
industrial loan company organized under the laws of the United
States or any state, when such entity has federally insured
deposits.
10. “In this state” means at a physical location within Iowa
for an in-person transaction request.
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11. “Individual” means a natural person.
12. “Key individual” means an individual ultimately
responsible for establishing or directing policies and
procedures of the licensee, including an executive officer,
manager, director, or trustee.
10. 13. “Licensee” means a person licensed under this
chapter .
11. “Location” means a place of business at which activity
conducted by a licensee or money transmitter occurs.
14. “Material litigation” means litigation that, according
to generally accepted accounting principles in the United
States, is significant to a person’s financial health and would
be required to be disclosed in the person’s audited financial
statements, report to shareholders, or similar records.
12. 15. “Monetary value” means a medium of exchange,
whether or not redeemable in money.
13. 16. “Money” means a medium of exchange authorized or
adopted by a domestic the United States or a foreign government
as a part of its currency and that is customarily used and
accepted as a medium of exchange in the country of issuance .
The term includes a monetary unit of account established by an
intergovernmental organization or by agreement between two or
more governments.
14. “Money services” means money transmission or currency
exchange.
15. 17. “Money transmission” means and includes any of the
following:
a. Selling or issuing payment instruments to one or more
persons or issuing payment instruments which are sold to one or
more persons a person located in this state .
b. Selling or issuing stored value to a person located in
this state.
b. c. Conducting the business of receiving Receiving money
or monetary value for transmission from a person located in
this state .
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c. Conducting the business of receiving money for obligors
for the purpose of paying obligors’ bills, invoices, or
accounts.
d. “Money transmission” does not include the provision
solely of online or telecommunications services or network
access.
16. “Outstanding” , with respect to a payment instrument,
means issued or sold by or for the licensee and reported as
sold but not yet paid by or for the licensee.
18. “Money services businesses accredited state” or “MSB
accredited state” means a state agency that is accredited by the
conference of state bank supervisors and the money transmitter
regulators association for money transmission licensing and
supervision.
19. “Multistate licensing process” means any agreement
entered into by and among state regulators relating to
coordinated processing of applications for money transmission
licenses, applications for the acquisition of control of a
licensee, control determinations, or notice and information
requirements for a change of key individuals.
20. “Nationwide multistate licensing system” or “NMLS”
means the nationwide multistate licensing system and registry
developed by the conference of state bank supervisors and the
American association of residential mortgage regulators and
owned and operated by the state regulatory registry, LLC, or
any successor or affiliated entity, for the licensing and
registration of persons in financial services industries.
21. “Outstanding money transmission obligations” means any
of the following:
a. Any payment instrument or stored value issued or sold
by the licensee to a person located in the United States or
reported as sold by an authorized delegate of the licensee to
a person that is located in the United States that has not yet
been paid or refunded by or for the licensee, or escheated in
accordance with applicable abandoned property laws.
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b. Any money received for transmission by the licensee or an
authorized delegate in the United States from a person located
in the United States that has not been received by the payee
or refunded to the sender, or escheated in accordance with
applicable abandoned property laws.
22. “Passive investor” means a person that can attest in a
medium prescribed by the superintendent or commits in writing
to any of the following:
a. The person does not have the power to elect a majority
of key individuals or executive officers, managers, directors,
trustees, or other persons exercising managerial authority of a
person in control of a licensee.
b. The person is not employed by and does not have any
managerial duties of the licensee or person in control of a
licensee.
c. The person does not have the power to exercise, directly
or indirectly, a controlling influence over the management or
policies of a licensee or person in control of a licensee.
17. 23. “Payment instrument” means a written or electronic
check, draft, money order, traveler’s check, stored-value,
or other written or electronic instrument or order for the
transmission or payment of money or monetary value, sold to
one or more persons, whether or not that instrument or order
is negotiable. “Payment instrument” does not include an stored
value or any instrument that is redeemable by the issuer
only for goods or services provided by the issuer or an its
affiliate in merchandise or service, a credit card voucher, or
a letter of credit , except to the extent required by applicable
law to be redeemable in cash for its cash value, or not sold
to the public but issued and distributed as part of a loyalty,
rewards, or promotional program .
24. “Payroll processing services” means receiving money for
transmission pursuant to a contract with a person to deliver
wages or salaries, make payments of payroll taxes to states and
federal agencies, make payments relating to employee benefit
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plans, or make distributions of other authorized deductions
from wages or salaries. The term “payroll processing services”
does not include an employer performing payroll processing
services on its own behalf or on behalf of its affiliate, or
a professional employment organization subject to regulation
under other applicable state law.
18. 25. “Person” means an individual, corporation, business
trust, estate, trust, partnership, general partnership, limited
partnership, limited liability company, association, joint
venture stock corporation, trust, corporation , government;
governmental subdivision, agency or instrumentality; public
corporation; or any other legal or commercial corporate entity
identified by the superintendent .
19. “Proceeds” means property acquired or derived directly
or indirectly from, produced through, realized through, or
caused by an act or omission and includes any property of any
kind.
20. “Property” means anything of value, and includes any
interest in property, including any benefit, privilege, claim,
or right with respect to anything of value, whether real
or personal, tangible or intangible, without reduction for
expenses incurred for acquisition, maintenance, production, or
any other purpose.
21. “Record” means information that is inscribed on a
tangible medium or that is stored in an electronic or other
medium and is retrievable in perceivable form.
22. “Responsible individual” means an individual who is
employed by a licensee and has principal managerial authority
over the provision of money services by the licensee in this
state.
23. “State” means a state of the United States, the District
of Columbia, Puerto Rico, the United States Virgin Islands, or
any territory or insular possession subject to the jurisdiction
of the United States.
26. “Receipt” means a paper receipt, electronic record, or
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other written confirmation.
27. “Receiving money for transmission” or “money received
for transmission” means receiving money or monetary value in
the United States for transmission within or outside the United
States by electronic or other means.
28. “Remit” means to make direct payments of money to a
licensee or its representative authorized to receive money
or to deposit money in a bank in an account specified by the
licensee.
24. 29. “Stored-value” means a monetary value that is
representing a claim against the issuer evidenced by an
electronic or digital record , and that is intended and accepted
for use as a means of redemption for money or monetary value,
or payment for goods or services. The term “stored-value”
includes but is not limited to “prepaid access” as defined by 31
C.F.R. §1010.100, as amended. “Stored-value” does not include a
payment instrument or closed loop stored value, or stored value
not sold to the public but issued and distributed as part of a
loyalty, rewards, or promotional program .
25. 30. “Superintendent” means the superintendent of
banking for the state of Iowa.
26. “Transaction” includes a purchase, sale, trade, loan,
pledge, investment, gift, transfer, transmission, delivery,
deposit, withdrawal, payment, transfer between accounts,
exchange of currency, extension of credit, purchase or sale of
any monetary instrument or stored-value, use of a safe deposit
box, or any other acquisition or disposition of property by
whatever means effected.
27. “Unsafe or unsound practice” means a practice or
conduct by a person licensed to engage in money transmission
or an authorized delegate of such a person which creates the
likelihood of material loss, insolvency, or dissipation of
the licensee’s assets, or otherwise materially prejudices the
interests of its customers.
31. “Tangible net worth” means the aggregate assets of a
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licensee excluding all intangible assets, less liabilities, as
determined in accordance with generally accepted accounting
principles in the United States.
32. “In the United States” means a person in any state,
territory, or possession of the United States, District
of Columbia, Commonwealth of Puerto Rico, or U.S. military
installation that is located in a foreign country.
Sec. 4. Section 533C.103, Code 2023, is amended to read as
follows:
533C.103 Exclusions Exemptions .
The superintendent may require that any person claiming
to be exempt from licensing pursuant to this section
provide information and documentation to the superintendent
demonstrating that the person qualifies for any claimed
exemption. This chapter does not apply to:
1. The United States or a department, agency, agent, or
instrumentality thereof.
2. A money Money transmission by the United States postal
service or by a contractor on behalf an agent of the United
States postal service.
3. A state, county, city, or any other governmental agency ,
or governmental subdivision , instrumentality, or agent of a
state.
4. The following entities whether chartered or organized
under the laws of a state or of the United States: a bank,
A federally insured depository financial institution, bank
holding company, savings and loan association, savings bank,
credit union, office of an international banking corporation,
branch of a foreign bank that establishes a federal branch
pursuant to the federal International Bank Act, 12 U.S.C.
§3102, as amended , corporation organized pursuant to the
federal Bank Service Company Act, 12 U.S.C. §1861 – 1867, as
amended, or corporation organized under the federal Edge Act,
12 U.S.C. §611 – 633 , as amended .
5. Electronic funds transfer of governmental benefits
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for a federal, state, county, or governmental agency by a
contractor on behalf of the United States or a department,
agency, or instrumentality thereof, or on behalf of a state or
governmental subdivision, agency, or instrumentality thereof.
6. A board of trade designated as a contract market under
the federal Commodity Exchange Act, 7 U.S.C. §1 – 25, as
amended, or a person that, in the ordinary course of business,
provides clearance and settlement services for a board of trade
to the extent of its operation as or for such a board.
7. A registered futures commission merchant under the
federal commodities laws to the extent of its operation as such
a merchant.
8. A person that provides clearance or settlement services
pursuant to a registration as a clearing agency or an exemption
from such registration granted under the federal securities
laws to the extent of its operation as such a provider acts
as an intermediary by processing payments between an entity
that has directly incurred an outstanding money transmission
obligation to a sender, and the sender’s designated recipient,
provided all of the following apply:
a. The entity is properly licensed or exempt from licensing
requirements under this chapter .
b. The entity provides a receipt, electronic record, or
other written confirmation to the sender identifying the entity
as the provider of money transmission in the transaction.
c. The entity bears sole responsibility to satisfy the
outstanding money transmission obligations to the sender,
including the obligation to make the sender whole in connection
with any failure to transmit the funds to the sender’s
designated recipient.
9. An operator of a payment system to the extent that it
provides processing, clearing, or settlement services, between
or among persons excluded by this section , or licensees, in
connection with wire transfers, credit card transactions,
debit card transactions, stored-value transactions, automated
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clearing house transfers, or similar funds transfers.
10. A person registered as a securities broker-dealer under
federal or state securities laws to the extent of its operation
as such a broker-dealer.
11. A delayed deposit services business as defined in
chapter 533D .
12. A real estate broker or salesperson as defined in
chapter 543B .
13. Pari-mutuel wagering, racetracks, excursion gambling
boats, and gambling structures as provided in chapters 99D and
99F .
14. A person engaging in the business of debt management
that is licensed or exempt from licensing pursuant to section
533A.2 .
15. An insurance company organized under chapter 508 , 514 ,
514B , 515 , 518 , 518A , or 520 , or authorized to do the business
of insurance in Iowa to the extent of its operation as an
insurance company.
16. An insurance producer as defined in section 522B.1 to
the extent of its operation as an insurance producer.
17. A person appointed as an agent of a payee to collect
and process a payment from a payor to the payee for goods or
services, other than money transmission itself, provided to the
payor by the payee, provided all of the following apply:
a. There exists a written agreement between the payee and
the agent directing the agent to collect and process payments
from payors on the payee’s behalf.
b. The payee holds the agent out to the public as accepting
payments for goods or services on the payee’s behalf.
c. Payment for the goods and services is treated as received
by the payee upon receipt by the agent so that the payor’s
obligation is extinguished and there is no risk of loss to the
payor if the agent fails to remit the funds to the payee.
18. An individual employed by a licensee, authorized
delegate, or any person exempted from the licensing
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requirements of this chapter when acting within the scope
of employment and under the supervision of the licensee,
authorized delegate, or exempted person as an employee and not
as an independent contractor.
19. A person expressly appointed as a third-party service
provider to or agent of an entity exempt under subsection 4,
provided all of the following apply:
a. The service provider or agent is engaging in money
transmission on behalf of and pursuant to a written agreement
with the exempt entity that sets forth the specific functions
that the service provider or agent is to perform.
b. The exempt entity assumes all risk of loss and all
legal responsibility for satisfying the outstanding money
transmission obligations owed to purchasers and holders of the
outstanding money transmission obligations upon receipt of the
purchaser’s or holder’s money or monetary value by the service
provider or agent.
20. A person exempt by regulation or order if the
superintendent finds such exemption to be in the public
interest and that the regulation of such person is not
necessary for the purposes of this chapter.
Sec. 5. Section 533C.201, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.201 Implementation.
1. In order to carry out the purposes of this chapter,
the superintendent may, subject to the provisions of section
533C.202:
a. Enter into agreements or relationships with other
government officials, federal and state regulatory agencies,
and regulatory associations in order to improve efficiencies
and reduce regulatory burden by standardizing methods or
procedures, and sharing resources, records, or related
information obtained under this chapter.
b. Use, hire, contract, or employ analytical systems,
methods, or software to examine or investigate any person
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subject to this chapter.
c. Accept, from other state or federal government agencies
or officials, licensing, examination, or investigation reports
made by such other state or federal government agencies or
officials.
d. Accept audit reports made by an independent certified
public accountant or other qualified third-party auditor for an
applicant or licensee and incorporate the audit report in any
report of examination or investigation.
2. The superintendent shall have the broad administrative
authority to administer, interpret, and enforce this chapter,
to promulgate rules or regulations implementing this chapter,
and to recover the cost of administering and enforcing this
chapter 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 chapter.
3. For a transaction requested electronically or by phone,
the provider of money transmission may determine if the person
requesting the transmission is located in this state by relying
on other information provided by the person regarding the
location of the individual’s residential address or a business
entity’s principal place of business or other physical address
location, and any records associated with the person that the
provider of money transmission may have that indicate such
location, including but not limited to an address associated
with an account, provided that any transaction requested by
an individual whose residential address is in Iowa shall be
presumed to occur in Iowa.
4. Outstanding money transmission obligations shall be
established and extinguished in accordance with applicable
state law.
Sec. 6. Section 533C.202, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.202 Confidentiality.
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1. Except as otherwise provided in subsection 2, financial
statements, balance sheets, authorized delegate information,
all information and reports obtained by the superintendent
from an applicant, licensee, or authorized delegate, and
all information contained in or related to an examination,
investigation, operating report, or condition report prepared
by, on behalf of, or for the use of the superintendent are
confidential and are not subject to disclosure under chapter
22.
2. The superintendent may disclose information not
otherwise subject to disclosure under subsection 1 where:
a. Representatives of state or federal agencies certify in
a record that they shall maintain the confidentiality of the
information.
b. The superintendent finds that the release is reasonably
necessary for the protection and interest of the public in
accordance with chapter 22.
3. This section does not prohibit the superintendent
from disclosing to the public a list of all licensees or the
aggregated financial or transactional data concerning those
licensees.
4. The division of banking or superintendent’s records
containing nonconfidential information may be made available
to the public on the division’s website, upon receipt by the
division of a written request, or via the NMLS. The release
of information shall include, where applicable, all of the
following:
a. The name, business address, telephone number, and unique
identifier of a licensee.
b. The business address of a licensee’s registered agent for
service.
c. The name, business address, and telephone number of all
authorized delegates.
d. The terms, or a copy, of any bond filed by a licensee,
provided that confidential information, including but not
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limited to prices and fees for such bond, is redacted.
e. Copies of any nonconfidential final orders of the
superintendent relating to any violation of this chapter or
regulations implementing this chapter.
f. Imposition of an administrative fine or penalty under
this chapter.
Sec. 7. Section 533C.203, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.203 Supervision.
1. The superintendent may conduct an examination or
investigation of a licensee or authorized delegate or otherwise
take independent action authorized by this chapter or by a
rule adopted or order issued under this chapter as reasonably
necessary or appropriate to administer and enforce this
chapter, regulations implementing this chapter, and other
applicable law, including the federal Bank Secrecy Act, Pub.
L. No. 91-508, and the federal Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept
and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56. The
superintendent shall provide supervision as follows:
a. Conducting an examination either on site or off site as
the supervision may reasonably require.
b. Conducting an examination in conjunction with an
examination conducted by representatives of other state
agencies or agencies of another state or of the federal
government.
c. Accepting the examination report of another state agency
or an agency of another state or of the federal government, or
a report prepared by an independent accounting firm, which on
being accepted is considered for all purposes as an official
report of the superintendent.
d. Summoning and examining under oath a key individual or
employee of a licensee or authorized delegate and requiring the
person to produce records regarding any matter related to the
condition and business of the licensee or authorized delegate.
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2. A licensee or authorized delegate shall provide, and
the superintendent shall have full and complete access to, all
records the superintendent may reasonably require to conduct
a complete examination. The records shall be provided at the
location and in the format specified by the superintendent,
provided the superintendent may utilize multistate record
production standards and examination procedures when such
standards will reasonably achieve the requirements of this
section.
3. Unless otherwise directed by the superintendent, a
licensee shall pay all costs reasonably incurred in connection
with an examination of the licensee or the licensee’s
authorized delegates.
Sec. 8. Section 533C.204, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.204 Networked supervision.
1. To efficiently and effectively administer and
enforce this chapter and to minimize regulatory burden, the
superintendent is authorized and encouraged to participate in
multistate supervisory processes established between states and
coordinated through the conference of state bank supervisors,
the money transmitter regulators association, and affiliates
and successors thereof for all licensees that hold licenses in
this state and other states. As a participant in multistate
supervision, the superintendent shall engage in all of the
following:
a. Cooperation, coordination, and information sharing with
other state and federal regulators in accordance with section
533C.202.
b. Cooperation, coordination, and information sharing with
organizations, the membership of which is made up of state or
federal government agencies, provided that the organizations
agree in writing to maintain the confidentiality and security
of the shared information in accordance with section 533C.202.
c. Entering into written cooperation, coordination, or
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information-sharing contracts or agreements with organizations
the membership of which is made up of state or federal
government agencies.
2. The superintendent shall not waive, and nothing in this
section constitutes a waiver of, the superintendent’s authority
to conduct an examination or investigation or otherwise take
independent action authorized by this chapter or a rule adopted
or order issued under this chapter to enforce compliance with
applicable state or federal law.
3. A joint examination or investigation, or acceptance of
an examination or investigation report, shall not waive an
examination assessment provided for in this chapter.
Sec. 9. Section 533C.205, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.205 Relationship to federal law.
1. In the event state money transmission jurisdiction is
conditioned on a federal law, any inconsistencies between a
provision of this chapter and the federal law governing money
transmission shall be governed by the applicable federal law to
the extent of the inconsistency.
2. In the event of any inconsistencies between this chapter
and a federal law that governs pursuant to subsection 1,
the superintendent may provide interpretive guidance that
identifies the inconsistency and the appropriate means of
compliance with federal law.
Sec. 10. Section 533C.301, Code 2023, is amended to read as
follows:
533C.301 License required.
1. A person shall not engage in currency exchange the
business of money transmission or advertise, solicit, or hold
itself out as providing currency exchange for which the person
receives revenues equal to or greater than five percent of
total revenues unless the person: money transmission unless
they are
a. Is licensed under this article .
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b. Is licensed for money transmission under article 2 .
c. Is an authorized delegate of a person licensed under
article 2 .
2. This section shall not apply to the following:
a. A person that is an authorized delegate of a person
licensed under this chapter acting within the scope of
authority conferred by a written contract with the licensee.
b. A person that is exempt pursuant to section 533C.103 and
does not engage in money transmission outside the scope of such
exemption.
2. 3. A license under this article is not transferable or
assignable.
Sec. 11. Section 533C.302, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.302 Consistent state licensing.
1. To establish consistent licensing between this state and
other states, the superintendent is authorized and encouraged
to provide all of the following:
a. Implement all licensing provisions of this chapter in a
manner that is consistent with other states that have adopted
this chapter or multistate licensing processes.
b. Participate in nationwide protocols for licensing
cooperation and coordination among state regulators provided
that such protocols are consistent with this section.
2. The superintendent is authorized and encouraged to
establish relationships or contracts with NMLS or other
entities designated by NMLS to enable the superintendent to do
all of the following:
a. Collect and maintain records.
b. Coordinate multistate licensing processes and supervision
processes.
c. Process fees.
d. Facilitate communication between this state, the
superintendent, and licensees or other persons subject to this
chapter.
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3. The superintendent is authorized and encouraged to
utilize NMLS for all aspects of licensing in accordance
with this chapter, including but not limited to: license
applications, applications for acquisitions of control, surety
bonds, reporting, criminal history background checks, credit
checks, fee processing, and examinations.
4. The superintendent is authorized and encouraged
to utilize NMLS forms, processes, and functionalities in
accordance with this chapter. In the event NMLS does not
provide functionality, forms, or processes for a provision of
this chapter, the superintendent is authorized and encouraged
to strive to implement the requirements in a manner that
facilitates uniformity with respect to licensing, supervision,
reporting, and regulation of licensees which are licensed in
multiple jurisdictions.
5. For the purpose of participating in the NMLS and
registry, the superintendent is authorized to waive or modify,
in whole or in part, by rule, regulation, or order, any or
all of the requirements and to establish new requirements
as reasonably necessary to participate in the nationwide
multistate licensing system and registry.
Sec. 12. Section 533C.303, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.303 Application for license.
1. Applicants for a license under this chapter shall
apply on a form prescribed by the superintendent. Each such
form shall contain content as set forth by rule, regulation,
instruction, or procedure of the superintendent and shall be
changed or updated by the superintendent in accordance with
applicable law in order to carry out the purposes of this
chapter and maintain consistency with NMLS licensing standards
and practices. The application shall state or contain, as
applicable, the following:
a. The legal name and residential and business addresses
of the applicant and any fictitious or trade name used by the
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applicant in conducting its business.
b. A list of any criminal convictions of the applicant
and any material litigation in which the applicant has been
involved in the ten-year period immediately preceding the
submission of the application.
c. A description of any money transmission previously
provided by the applicant and the money transmission that the
applicant seeks to provide in this state.
d. A list of the applicant’s proposed authorized delegates
and the locations in this state where the applicant and its
authorized delegates propose to engage in money transmission.
e. A list of other states in which the applicant is licensed
to engage in money transmission and of any license revocations,
suspensions, or other disciplinary action taken against the
applicant in another state.
f. Information concerning any bankruptcy or receivership
proceedings affecting the licensee or a person in control of
a licensee.
g. A sample form of contract for authorized delegates.
h. A sample form of payment instrument or stored value.
i. The name and address of any federally insured depository
financial institution through which the applicant plans to
conduct money transmission.
j. Any other information the superintendent or NMLS
reasonably requires with respect to the applicant.
2. If an applicant is a corporation, limited liability
company, partnership, or other legal entity, the applicant
shall also provide all of the following:
a. The date of the applicant’s incorporation or formation
and state or country of incorporation or formation.
b. If applicable, a certificate of good standing from the
state or country in which the applicant is incorporated or
formed.
c. A brief description of the structure or organization of
the applicant, including any parents or subsidiaries of the
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applicant, and whether any parents or subsidiaries are publicly
traded.
d. The legal name, any fictitious or trade name, all
business and residential addresses, and the employment, in the
ten-year period immediately preceding the submission of the
application of each key individual and person in control of the
applicant.
e. A list of any criminal convictions and material
litigation in which a person in control of the applicant that
is not an individual has been involved in the ten-year period
immediately preceding the submission of the application.
f. A copy of audited financial statements for the most
recent fiscal year and for the two-year period immediately
preceding the submission of the application or, if determined
to be acceptable to the superintendent, certified unaudited
financial statements for the most recent fiscal year or other
period acceptable to the superintendent.
g. A certified copy of the applicant’s unaudited financial
statements for the most recent fiscal quarter.
h. If the applicant is a publicly traded corporation, a
copy of the most recent report filed with the United States
securities and exchange commission under section 13 of the
federal Securities Exchange Act of 1934, 15 U.S.C. §78m, as
amended.
i. If the applicant is a wholly owned subsidiary of any of
the following:
(1) A corporation publicly traded in the United States, a
copy of audited financial statements for the parent corporation
for the most recent fiscal year or a copy of the parent
corporation’s most recent report filed under section 13 of the
federal Securities Exchange Act of 1934, 15 U.S.C. §78m, as
amended.
(2) A corporation publicly traded outside the United
States, a copy of similar documentation filed with the
regulator of the parent corporation’s domicile outside the
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United States.
j. The name and address of the applicant’s registered agent
in this state.
k. Any other information the superintendent reasonably
requires with respect to the applicant.
3. A nonrefundable application fee of one thousand dollars
and a license fee shall accompany an application for a license
under this chapter. The license fee shall be refunded if
the application is denied. The license fee shall be the sum
of five hundred dollars plus an additional ten dollars for
each location in this state at which business is conducted
through authorized delegates or employees of the licensee, but
shall not exceed five thousand dollars. Fees for locations
added after the initial application shall be submitted with
the quarterly reports pursuant to section 533C.601. If the
licensee has no locations in this state at which business is
conducted through authorized delegates or employees of the
licensee, the license fee shall be set by the superintendent,
but shall not exceed five thousand dollars. A license
under this chapter expires on the next December 31 after its
issuance. The initial license fee is considered an annual fee
and the superintendent shall prorate the license fee, refunding
any amount due to a partial license year. No refund of a
license fee shall be made when a license is suspended, revoked,
or surrendered.
4. A person who requests written confirmation from the
superintendent that a license is not required shall submit a
fee of one hundred dollars along with the written request.
Sec. 13. Section 533C.304, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.304 Information requirements for certain individuals.
1. An individual in control of a licensee or applicant, an
individual seeking to acquire control of a licensee, and each
key individual shall furnish to the superintendent through NMLS
the following items:
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a. The individual’s fingerprints for submission to the
federal bureau of investigation and the superintendent for
purposes of a national criminal history background check unless
the person currently resides outside of the United States and
has resided outside of the United States for the last ten
years.
b. Personal history and experience in a form and in a
medium prescribed by the superintendent, to obtain all of the
following:
(1) An independent credit report from a consumer reporting
agency. If the individual does not have a social security
number, the requirement shall be waived.
(2) Information related to any criminal convictions or
pending charges.
(3) Information related to any regulatory or administrative
action and any civil litigation involving claims of fraud,
misrepresentation, conversion, mismanagement of funds, breach
of fiduciary duty, or breach of contract.
2. If the individual has resided outside of the United
States at any time in the last ten years, the individual shall
also provide an investigative background report prepared by an
independent search firm. The search firm shall demonstrate
it has sufficient knowledge, resources, and employs accepted
and reasonable methodologies to conduct the research of the
background report and be unaffiliated with, or have no interest
in, the individual it is researching. The investigative
background report shall be written in the English language and
shall contain all of the following:
a. If available in the individual’s current jurisdiction
of residency, a comprehensive credit report, or any equivalent
information obtained or generated by the independent search
firm to accomplish such report, including a search of the court
data in the countries, provinces, states, cities, towns, and
contiguous areas where the individual resided and worked.
b. Criminal record information for the past ten years,
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including but not limited to felonies, misdemeanors, or
similar convictions for violations of law in the countries,
provinces, states, cities, towns, and contiguous areas where
the individual resided and worked.
c. Employment history.
d. Media history, including an electronic search of
national and local publications, wire services, and business
applications.
e. Financial services-related regulatory history, including
but not limited to money transmission, securities, banking,
insurance, and mortgage-related industries.
Sec. 14. NEW SECTION . 533C.305 Issuance of license.
1. When an application for an original license is filed
under this chapter and appears to include all required
information, the application is considered complete and the
superintendent shall promptly notify the applicant in a record
of the date on which the application is determined to be
complete. The application is approved one hundred twenty-one
days after completion, unless denied or approved earlier by
the superintendent. The license takes effect as of the first
business day after expiration of the one hundred twenty-day
period. The superintendent may for good cause extend the
application period.
2. A determination by the superintendent that an
application is complete and is accepted for processing means
only that the application, on its face, appears to include
all of the items, including the criminal background check
response from the federal bureau of investigation, and address
all of the matters that are required. A determination by
the superintendent that an application is complete is not
an assessment of the substance of the application or of the
sufficiency of the information provided.
3. When an application is filed and considered complete
under this section, the superintendent shall investigate the
applicant’s financial condition and responsibility, financial
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and business experience, character, and general fitness. The
superintendent may conduct an on-site investigation of the
applicant, the reasonable cost of which the applicant shall
pay. The superintendent shall issue a license to an applicant
under this section if the superintendent finds that all of the
following conditions have been fulfilled:
a. The applicant has complied with sections 533C.303 and
533C.304.
b. The financial condition and responsibility, financial and
business experience, competence, character, and general fitness
of the applicant or key individuals and person in control of
the applicant, indicate that it is in the interest of the
public to permit the applicant to engage in money transmission.
4. If an applicant avails itself or is otherwise subject
to a multistate licensing process, the superintendent is
authorized and encouraged to accept the investigation results
of a lead investigative state for the purpose of subsection
3, if the lead investigative state has sufficient staffing,
expertise, and minimum standards. Additionally, if this
state is a lead investigative state, the superintendent is
authorized and encouraged to investigate the applicant pursuant
to subsection 3, and the time frames established by agreement
through the multistate licensing process, provided, that in no
case shall such time frame be noncompliant with the application
period in subsection 1, paragraph “a” .
5. The superintendent shall issue a formal written notice
of the denial of a license application within thirty days of
the decision to deny the application. The superintendent shall
set forth in the notice of denial the specific reasons for the
denial of the application. An applicant whose application is
denied by the superintendent under this section may appeal
within thirty days after receipt of the written notice of the
denial pursuant to chapter 17A.
6. The initial license term shall begin on the day the
application is approved. The license shall expire on December
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31 of the year in which the license term began, unless the
initial license date is between November 1 and December 31, in
which case the initial license term shall run through December
31 of the following year.
Sec. 15. NEW SECTION . 533C.306 Renewal of license.
1. A license under this chapter shall be renewed annually.
An annual renewal fee of five hundred dollars plus an
additional ten dollars for each location in this state at which
business is conducted through authorized delegates or employees
of the licensee, which shall not exceed five thousand dollars,
shall be paid no more than sixty days before the license
expiration. The renewal term shall be for a period of one year
and shall begin on January 1 of each year after the initial
license term and shall expire on December 31 of the year the
renewal term begins.
2. A licensee shall submit a renewal report with the
renewal fee, in a form prescribed by the superintendent. The
renewal report shall state or contain a description of each
material change in information submitted by the licensee in its
original license application which has not been reported to the
superintendent.
3. The superintendent for good cause may grant an extension
of the renewal date.
4. The superintendent is authorized and encouraged
to utilize NMLS to process renewals provided that such
functionality is consistent with this section.
5. If a licensee does not file a renewal report or pay its
renewal fee by December 1, or any extension of time granted by
the superintendent, the superintendent may assess a late fee
of one hundred dollars per day.
Sec. 16. NEW SECTION . 533C.307 Maintenance of license.
If a licensee does not continue to meet the qualifications or
satisfy the requirements that apply to an applicant for a new
money transmission license, the superintendent may suspend or
revoke the licensee’s license in accordance with the procedures
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established by this chapter or other applicable state law for
such suspension or revocation.
1. An applicant for a money transmission license shall
demonstrate that the applicant meets or will meet the
requirements of sections 533C.801, 533C.802, and 533C.803.
2. A money transmission licensee shall at all times meet the
requirements of sections 533C.801, 533C.802, and 533C.803.
Sec. 17. Section 533C.401, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.401 Acquisition of control.
1. Any person, or group of persons acting in concert,
seeking to acquire control of a licensee shall obtain the
written approval of the superintendent prior to acquiring
control. An individual is not deemed to acquire control
of a licensee and is not subject to acquisition of control
provisions when that individual becomes a key individual in the
ordinary course of business.
2. A person is presumed to exercise a controlling
influence when the person holds the power to vote, directly
or indirectly, at least ten percent of the outstanding voting
shares or voting interests of a licensee or person in control
of a licensee. A person presumed to exercise a controlling
influence can rebut the presumption of control if the person
is a passive investor.
3. For purposes of determining the percentage of a
person controlled by any other person, the person’s interest
shall be aggregated with the interest of any other immediate
family member, including the person’s spouse, parents,
children, siblings, mother-in-law, father-in-law, son-in-law,
daughter-in-law, brother-in-law, sister-in-law, and any other
person who shares such person’s home.
4. A person, or group of persons acting in concert, seeking
to acquire control of a licensee shall, in cooperation with
the licensee, submit an application in a form and in a medium
prescribed by the superintendent and a nonrefundable fee of one
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thousand dollars with the request for approval.
5. Upon request, the superintendent may permit a licensee or
the person, or group of persons acting in concert, to submit
some or all information required by the superintendent pursuant
to subsection 4 without using NMLS.
6. The application required by subsection 4 shall include
information required by section 533C.304 for a licensee,
including for any new key individuals that have not previously
completed the requirements.
7. When an application for acquisition of control under this
section appears to include all the items and address all of the
matters that are required, the application shall be considered
complete and the superintendent shall promptly notify the
applicant in a record of the date on which the application was
determined to be complete. The application is approved and the
person, or group of persons acting in concert, are permitted to
acquire control sixty-one days after application completion,
unless denied or approved earlier by the superintendent. The
superintendent may for good cause extend the application
period.
8. A determination by the superintendent that an
application is complete and is accepted for processing means
only that the application, on its face, appears to include all
of the items and address all of the matters that are required,
and is not an assessment of the substance of the application or
of the sufficiency of the information provided.
9. When an application is filed and considered complete
under subsection 7, the superintendent shall investigate the
financial condition and responsibility, financial and business
experience, character, and general fitness of the person, or
group of persons acting in concert, seeking to acquire control.
The superintendent shall approve an acquisition of control
pursuant to this section if the superintendent finds that all
of the following conditions have been fulfilled:
a. The requirements of subsections 4 and 6 have been met,
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as applicable.
b. The financial condition and responsibility, financial and
business experience, competence, character, and general fitness
of the person, or group of persons acting in concert, seeking
to acquire control, and of the key individuals and persons that
would be in control of the licensee indicate that it is in the
interest of the public to permit the applicant to control the
licensee.
10. If an applicant avails itself or is otherwise subject
to a multistate licensing process, the superintendent is
authorized and encouraged to accept the investigation results
of a lead investigative state for the purpose of subsection
9 if the lead investigative state has sufficient staffing,
expertise, and minimum standards. If this state is a lead
investigative state, the superintendent is authorized and
encouraged to investigate the applicant pursuant to subsection
9 and the time frames established by agreement through the
multistate licensing process.
11. The superintendent shall issue a formal written
notice of the denial of an application to acquire control
within thirty days of the decision to deny the application.
The superintendent shall set forth in the notice of denial
the specific reasons for the denial of the application. An
applicant whose application is denied by the superintendent
under this section may appeal within thirty days after receipt
of the written notice of the denial.
12. The requirements of subsections 1 and 4 shall not apply
to any of the following:
a. A person that acts as a proxy for the sole purpose of
voting at a designated meeting of the shareholders or holders
of voting shares or voting interests of a licensee or a person
in control of a licensee.
b. A person that acquires control of a licensee by devise
or descent.
c. A person that acquires control of a licensee as a
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personal representative, custodian, guardian, conservator, or
trustee, or as an officer appointed by a court of competent
jurisdiction or by operation of law.
d. A person that is exempt under section 533C.103,
subsection 4.
e. A person that the superintendent determines is not
subject to subsection 1 based on the public interest.
f. A public offering of securities of a licensee or a person
in control of a licensee.
g. An internal reorganization of a person in control of the
licensee where the ultimate person in control of the licensee
remains the same.
13. Persons specified in subsection 12, paragraphs “b” ,
“c” , “d” , “f” , and “g” , in cooperation with the licensee,
shall notify the superintendent within fifteen days after the
acquisition of control.
14. The requirements of subsections 1 and 4 shall not
apply to a person that has complied with and received approval
to engage in money transmission under this chapter or was
identified as a person in control in a prior application filed
with and approved by the superintendent or by an MSB accredited
state pursuant to a multistate licensing process, provided all
of the following apply:
a. The person has not had a license revoked or suspended.
b. The person has not controlled a licensee that has had a
license revoked or suspended while the person was in control of
the licensee in the previous five years.
c. If the person is a licensee, the person is well-managed
and has received at least a satisfactory rating for compliance
at its most recent examination by an MSB-accredited state if
such rating was given.
d. The licensee to be acquired is projected to meet the
requirements of sections 533C.801, 533C.802, and 533C.803 after
the acquisition of control is completed.
e. If the person acquiring control is a licensee, that
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licensee is projected to meet the requirements of sections
533C.801, 533C.802, and 533C.803 after the acquisition of
control is completed.
f. The licensee to be acquired will not implement any
material changes to its business plan as a result of the
acquisition of control.
g. If the person acquiring control is a licensee, that
licensee will not implement any material changes to its
business plan as a result of the acquisition of control.
h. The person provides notice of the acquisition in
cooperation with the licensee and attests to the provisions in
this subsection in a form and in a medium prescribed by the
superintendent. If the notice is not disapproved within thirty
days after the date on which the notice was determined to be
complete, the notice is deemed approved.
15. Before filing an application for approval to acquire
control of a licensee, a person may request in writing a
determination from the superintendent as to whether the person
would be considered a person in control of a licensee upon
consummation of a proposed transaction. If the superintendent
determines that the person would not be a person in control of
a licensee, the proposed person and transaction are not subject
to the requirements of subsections 1 and 4.
16. If a multistate licensing process includes a
determination pursuant to subsection 15 and an applicant avails
itself or is otherwise subject to the multistate licensing
process, the superintendent is authorized and encouraged to
accept the control determination of a lead investigative state
with sufficient staffing, expertise, and minimum standards
for the purpose of subsection 15. If this state is a lead
investigative state, the superintendent is authorized and
encouraged to investigate the applicant pursuant to subsection
15 and the time frames established by agreement through the
multistate licensing process.
Sec. 18. Section 533C.402, Code 2023, is amended by striking
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the section and inserting in lieu thereof the following:
533C.402 Notice and information requirements for a change of
key individuals.
1. A licensee adding or replacing any key individual shall
provide notice in a manner prescribed by the superintendent
within fifteen days after the effective date of the key
individual’s appointment and provide information as required by
section 533C.304 within forty-five days of the effective date.
2. A key individual is considered approved ninety-one
days after notice is provided pursuant to this section,
unless denied or approved earlier by the superintendent.
The superintendent may issue a notice of disapproval of a
key individual if the competence, experience, character, or
integrity of the individual would not be in the best interests
of the public or the customers of the licensee to permit
the individual to be a key individual of such licensee. A
notice of disapproval shall contain a statement of the basis
for disapproval and shall be sent to the licensee and the
disapproved individual. A licensee may appeal a notice of
disapproval within thirty days after receipt of the written
notice of such disapproval.
3. If a multistate licensing process includes a key
individual notice review and disapproval process pursuant to
this section and the licensee avails itself or is otherwise
subject to the multistate licensing process, the superintendent
is authorized and encouraged to accept the determination
of another state if the investigating state has sufficient
staffing, expertise, and minimum standards for the purpose of
this section. If this state is a lead investigative state,
the superintendent is authorized and encouraged to investigate
the applicant pursuant to subsection 2 and the time frames
established by agreement through the multistate licensing
process.
Sec. 19. Section 533C.501, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
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533C.501 Relationship between licensee and authorized
delegate.
1. Before a licensee is authorized to conduct business
through an authorized delegate or allows a person to act as the
licensee’s authorized delegate, the licensee shall do all of
the following:
a. Adopt, and update as necessary, written policies and
procedures reasonably designed to ensure that the licensee’s
authorized delegates comply with applicable state and federal
law.
b. Enter into a written contract that complies with this
subsection.
c. Conduct a reasonable risk-based background investigation
sufficient for the licensee to determine whether the authorized
delegate has complied and will likely comply with applicable
state and federal law.
2. An authorized delegate shall operate in full compliance
with this chapter.
3. The written contract required by subsection 1, shall be
signed by the licensee and the authorized delegate and shall:
a. Appoint the person signing the contract as the licensee’s
authorized delegate with the authority to conduct money
transmission on behalf of the licensee.
b. Set forth the nature and scope of the relationship
between the licensee and the authorized delegate and the
respective rights and responsibilities of the parties.
c. Require the authorized delegate to agree to fully
comply with all applicable state and federal laws, rules, and
regulations pertaining to money transmission, including this
chapter and regulations implementing this chapter, relevant
provisions of the federal Bank Secrecy Act and federal Uniting
and Strengthening America by Providing Appropriate Tools
Required to Intercept and Obstruct Terrorism Act of 2001, Pub.
L. No. 107-56.
d. Require the authorized delegate to remit and handle money
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and monetary value in accordance with the terms of the contract
between the licensee and the authorized delegate.
e. Impose a trust on money and monetary value net of
fees received for money transmission for the benefit of the
licensee.
f. Require the authorized delegate to prepare and maintain
records as required by this chapter or regulations implementing
this chapter, or as reasonably requested by the superintendent.
g. Acknowledge that the authorized delegate consents to
examination or investigation by the superintendent.
h. State that the licensee is subject to regulation by the
superintendent who may suspend or revoke an authorized delegate
designation or require the licensee to terminate an authorized
delegate designation as a part of regulation.
i. Acknowledge receipt of the written policies and
procedures required under subsection 1.
4. If the licensee’s license is suspended, revoked,
surrendered, or expired, the licensee shall, within five
business days, provide documentation to the superintendent that
the licensee has notified all applicable authorized delegates
of the licensee whose names are in a record filed with the
superintendent of the suspension, revocation, surrender,
or expiration of a license. Upon suspension, revocation,
surrender, or expiration of a license, applicable authorized
delegates shall immediately cease to provide money transmission
as an authorized delegate of the licensee.
5. An authorized delegate of a licensee holds in trust for
the benefit of the licensee all money net of fees received from
money transmission. If any authorized delegate commingles any
funds received from money transmission with any other funds or
property owned or controlled by the authorized delegate, all
commingled funds and other property shall be considered held in
trust in favor of the licensee in an amount equal to the amount
of money net of fees received from money transmission.
6. An authorized delegate may not use a subdelegate to
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conduct money transmission on behalf of a licensee.
Sec. 20. Section 533C.502, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.502 Unauthorized activities.
A person shall not engage in the business of money
transmission on behalf of a person not licensed under this
chapter. A person who engages in such activity provides
money transmission to the same extent as if the person were a
licensee, and shall be jointly and severally liable with the
unlicensed or nonexempt person.
Sec. 21. Section 533C.601, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.601 Report of condition.
1. A licensee shall submit a report of condition within
forty-five days of the end of the calendar quarter, or within
any extended time as the superintendent may prescribe.
2. The report of condition shall include all of the
following:
a. Financial information at the licensee level.
b. Nationwide and state-specific money transmission
transaction information in every jurisdiction in the United
States where the licensee is licensed to engage in money
transmission.
c. Permissible investments report.
d. Transaction destination country reporting for money
received for transmission, if applicable. This information
shall only be included in a report of condition submitted
within forty-five days of the end of the fourth calendar
quarter.
e. Any other information the superintendent reasonably
requires with respect to the licensee. The superintendent is
authorized and encouraged to utilize NMLS for the submission of
the report required by this section and is authorized to update
as necessary the requirements of this section to carry out the
purposes of this chapter and maintain consistency with NMLS
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reporting.
Sec. 22. Section 533C.602, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.602 Audited financials.
1. A licensee shall, within ninety days after the end
of each fiscal year, or within any extended time as the
superintendent may prescribe, file with the superintendent an
audited financial statement for the fiscal year prepared in
accordance with United States generally accepted accounting
principles and any other information as the superintendent may
reasonably require.
2. The audited financial statements shall be prepared by an
independent certified public accountant or independent public
accountant who is satisfactory to the superintendent.
3. The audited financial statements shall include or be
accompanied by a certificate of opinion of the independent
certified public accountant or independent public accountant
that is satisfactory in form and content to the superintendent.
If the certificate or opinion is qualified, the superintendent
may order the licensee to take any action as the superintendent
may find necessary to enable the independent or certified
public accountant or independent public accountant to remove
the qualification.
Sec. 23. NEW SECTION . 533C.603 Authorized delegate
reporting.
1. A licensee shall submit a report of authorized delegates
within forty-five days of the end of the calendar quarter. The
superintendent is authorized and encouraged to utilize NMLS for
the submission of the report required by this section provided
that such functionality is consistent with the requirements of
this section.
2. The authorized delegate report shall include the
following for each authorized delegate:
a. Company legal name.
b. Taxpayer employer identification number.
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c. Principal provider identifier.
d. Physical address.
e. Mailing address.
f. Any business conducted in other states.
g. Any fictitious or trade name.
h. Contact person name, phone number, and email.
i. Start date as licensee’s authorized delegate.
j. End date acting as licensee’s authorized delegate, if
applicable.
k. Any other information the superintendent reasonably
requires with respect to the authorized delegate.
Sec. 24. NEW SECTION . 533C.604 Report of certain events.
1. A licensee shall submit a nonrefundable fee of one
thousand dollars with the request and file a report with the
superintendent within one business day after the licensee knows
or has reason to know of the occurrence of any of the following
events:
a. The filing of a petition by or against the licensee under
the federal bankruptcy code, 11 U.S.C. §§101 – 110, as amended,
for bankruptcy or reorganization.
b. The filing of a petition by or against the licensee for
receivership.
c. The filing of a petition or commencement of any other
judicial or administrative proceeding for its dissolution or
reorganization.
d. The filing of a petition or the making of a general
assignment for the benefit of its creditors.
e. The commencement of a proceeding to revoke or suspend its
license in a state or country in which the licensee engages in
business or is licensed.
2. A licensee shall file a report with the superintendent
within three business days after the licensee has reason to
know of the occurrence of a felony charge or conviction of
the licensee, a key individual or person in control of the
licensee, or an authorized delegate.
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Sec. 25. NEW SECTION . 533C.605 Bank secrecy act reports.
A licensee and an authorized delegate shall file all reports
required by federal currency reporting, record keeping, and
suspicious activity reporting requirements pursuant to the
federal Bank Secrecy Act and other federal and state laws
pertaining to money laundering. The timely filing of a
complete and accurate report required under this section with
the appropriate federal agency is deemed compliant with the
requirements of this section.
Sec. 26. NEW SECTION . 533C.606 Records.
1. A licensee shall maintain records in any form, for the
purpose of determining compliance with this chapter, for at
least three years, including all of the following:
a. A record of each outstanding money transmission
obligation sold.
b. A general ledger posted at least monthly containing all
asset, liability, capital, income, and expense accounts.
c. Bank statements and bank reconciliation records.
d. Records or outstanding money transmission obligations.
e. Records of each outstanding money transmission obligation
paid within the three-year period.
f. A list of the last-known names and addresses of all of
the licensee’s authorized delegates.
g. Any other records the superintendent reasonably requires
by rule.
2. Records specified in this section may be maintained
outside the state if they are made accessible to the
superintendent on seven business days’ notice that is sent by
the superintendent in a record.
3. All records maintained by the licensee as required
in this section are open to inspection by the superintendent
pursuant to section 533C.203.
Sec. 27. NEW SECTION . 533C.607 Disclosure.
1. Except as otherwise provided by this chapter, the
records of the superintendent relating to examinations,
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supervision, and regulation of a person licensed pursuant to
this chapter or authorized delegates of a person licensed
pursuant to this chapter are not public records and are
not subject to disclosure under chapter 22. Neither the
superintendent nor any member of the superintendent’s staff
shall disclose any information obtained in the discharge of the
superintendent’s official duties to any person not connected
with the department, except that the superintendent or the
superintendent’s designee may disclose information to the
following:
a. Representatives of federal agencies insuring accounts in
the financial institution.
b. Representatives of state agencies, federal agencies, or
foreign countries having regulatory or supervisory authority
over the activities of the financial institution or similar
financial institutions if those representatives are permitted
to and do, upon request of the superintendent, disclose similar
information respecting those financial institutions under
their regulation or supervision, or to those representatives
who state in writing under oath that they will maintain the
confidentiality of that information.
c. To the attorney general.
d. To a federal or state grand jury in response to a lawful
subpoena or pursuant to a county attorney subpoena.
e. To the auditor of the state for the purpose of conducting
audits authorized by law.
2. Notwithstanding subsection 1, the superintendent may
disclose the following:
a. The fact of filing of applications with the department
pursuant to this chapter, give notice of a hearing, if any,
regarding those applications, and announce the superintendent’s
action thereon.
b. Final decisions in connection with proceedings for the
suspension or revocation of licenses or certificates issued
pursuant to this chapter.
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c. Prepare and circulate reports reflecting the assets and
liabilities of licensees on an aggregate basis, including other
information considered pertinent to the purpose of each report
for general statistical information.
d. Prepare and circulate reports provided by law.
3. Every official report of the department is prima
facie evidence of the facts therein stated in any action or
proceeding wherein the superintendent is a party.
4. Nothing in this section shall be construed to prevent the
disclosure of information that is:
a. Admissible in evidence in any civil or criminal
proceeding brought by or at the request of the superintendent
or this state to enforce or prosecute violations of this
chapter, chapter 706B, or the rules adopted, or orders issued
pursuant to this chapter.
b. Requested by or provided to a federal agency, including
but not limited to the department of defense, department of
energy, department of homeland security, nuclear regulatory
commission, and centers for disease control and prevention, to
assist state and local government with domestic preparedness
for acts of terrorism.
5. The attorney general or the department of public safety
may report any possible violations indicated by analysis
of the reports required by this chapter to any appropriate
law enforcement or regulatory agency for use in the proper
discharge of its official duties. The attorney general or the
department of public safety shall provide copies of the reports
required by this chapter to any appropriate prosecutorial or
law enforcement agency upon being provided with a written
request for records relating to a specific individual or entity
and stating that the agency has an articulable suspicion that
such individual or entity has committed a felony offense or a
violation of this chapter to which the reports are relevant.
A person who releases information received pursuant to this
subsection except in the proper discharge of the person’s
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official duties is guilty of a serious misdemeanor.
6. Any report, record, information, analysis, or request
obtained by the attorney general or department of public safety
pursuant to this chapter is not a public record as defined in
chapter 22 and is not subject to disclosure.
Sec. 28. Section 533C.701, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.701 Timely transmission.
1. Every licensee shall forward all money received for
transmission in accordance with the terms of the agreement
between the licensee and the sender unless the licensee has a
reasonable belief or a reasonable basis to believe that the
sender may be a victim of fraud or that a crime or violation
of law, rule, or regulation has occurred, is occurring, or may
occur.
2. If a licensee fails to forward money received for
transmission in accordance with this section, the licensee
shall respond to inquiries by the sender with the reason for
the failure unless providing a response would violate a state
or federal law, rule, or regulation.
Sec. 29. Section 533C.702, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.702 Refunds.
1. Every licensee shall refund to the sender within ten
days of receipt of the sender’s written request for a refund of
any and all money received for transmission unless any of the
following occurs:
a. The money has been forwarded within ten days of the date
on which the money was received for transmission.
b. Instructions have been given committing an equivalent
amount of money to the person designated by the sender within
ten days of the date on which the money was received for
transmission.
c. The agreement between the licensee and the sender
instructs the licensee to forward the money at a time that is
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beyond ten days of the date on which the money was received
for transmission. If funds have not yet been forwarded in
accordance with the terms of the agreement between the licensee
and the sender, the licensee shall issue a refund in accordance
with the other provisions of this section.
d. The refund is requested for a transaction that the
licensee has not completed based on a reasonable belief or a
reasonable basis to believe that a crime or violation of law,
rule, or regulation has occurred, is occurring, or may occur.
e. The refund request does not enable the licensee to
identify the sender’s name and address, telephone number, or
the particular transaction to be refunded in the event the
sender has multiple transactions outstanding.
2. This section does not apply to money received for
transmission subject to the remittance transfer rule of the
federal Electronic Fund Transfer Act, 12 C.F.R. §1005.30
– 1005.36, as amended, or pursuant to a written agreement
between the licensee and payee to process payments for goods or
services provided by the payee.
Sec. 30. Section 533C.703, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.703 Receipts.
1. For a transaction conducted in person, the receipt
may be provided electronically if the sender requests or
agrees to receive an electronic receipt. For a transaction
conducted electronically or by phone, a receipt may be provided
electronically. All electronic receipts shall be provided in
a retainable form.
2. Every licensee or its authorized delegate shall provide
the sender a receipt for money received for transmission.
The receipt required by this section shall be in English
and in the language principally used by the licensee or
authorized delegate to advertise, solicit, or negotiate, either
orally or in writing, for a transaction conducted in person,
electronically, or by phone, if other than English, and shall
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contain, as applicable, all of the following:
a. The name of the sender.
b. The name of the designated recipient.
c. The date of the transaction.
d. The unique transaction or identification number.
e. The name of the licensee, NMLS unique ID, the licensee’s
business address, and the licensee’s customer service telephone
number.
f. The amount of the transaction in United States dollars.
g. Any fee charged by the licensee to the sender for the
transaction.
h. Any taxes collected by the licensee from the sender for
the transaction.
3. This section does not apply to any of the following:
a. Money received for transmission subject to the remittance
rule of the federal Electronic Fund Transfer Act, 12 C.F.R.
§1005.30 – 1005.36, as amended.
b. Money received for transmission that is not primarily for
personal, family, or household purposes.
c. Money received for transmission pursuant to a written
agreement between the licensee and payee to process payments
for goods or services provided by the payee.
d. Payroll processing services.
Sec. 31. Section 533C.704, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.704 Disclosures for payroll processing services.
1. A licensee that provides payroll processing services
shall do all of the following:
a. Issue reports to clients detailing client payroll
obligations in advance of the payroll funds being deducted from
an account.
b. Make available worker pay stubs or an equivalent
statement to workers.
2. This section does not apply to a licensee providing
payroll processing services where the licensee’s client
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designated the intended recipients to the licensee and the
licensee is responsible for providing the disclosures required
by subsection 1, paragraph “a” .
Sec. 32. Section 533C.801, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.801 Net worth.
1. A licensee under this chapter shall maintain at all times
a tangible net worth of the greater of one hundred thousand
dollars or three percent of total assets for the first one
hundred million dollars, two percent of additional assets for
one hundred million dollars to one billion dollars, and half of
one percent of additional assets for over one billion dollars.
2. Tangible net worth shall be demonstrated at initial
application by the applicant’s most recent audited or unaudited
financial statements pursuant to section 533C.303, subsection
2, paragraph “f” .
3. Notwithstanding the foregoing provisions of this
section, the superintendent shall have the authority, for good
cause shown, to exempt any applicant or licensee, in part or in
whole, from the requirements of this section.
Sec. 33. Section 533C.802, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.802 Surety bond.
1. An applicant for a money transmission license shall
provide, and a licensee at all times shall maintain, security
consisting of a surety bond in a form satisfactory to the
superintendent.
2. The amount of the required security shall be the
greater of one hundred thousand dollars or an amount equal
to one hundred percent of the licensee’s average daily money
transmission liability in this state calculated for the most
recently completed three-month period, up to a maximum of five
hundred thousand dollars.
3. A licensee that maintains a bond in the maximum amount
provided for in subsection 2 shall not be required to calculate
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its average daily money transmission liability in this state
for purposes of this section.
4. A licensee may exceed the maximum required bond amount
pursuant to section 533C.804, subsection 1, paragraph “l” .
Sec. 34. Section 533C.803, Code 2023, is amended by striking
the section and inserting in lieu thereof the following:
533C.803 Maintenance of permissible investments.
1. A licensee shall maintain at all times permissible
investments that have a market value computed in accordance
with United States generally accepted accounting principles of
not less than the aggregate amount of all of its outstanding
money transmission obligations.
2. Except for permissible investments enumerated in section
533C.804, subsection 1, the superintendent, with respect to
any licensee, may by rule or order limit the extent to which
a specific investment maintained by a licensee within a class
of permissible investments may be considered a permissible
investment, if the specific investment represents undue risk to
customers, not reflected in the market value of investments.
3. Permissible investments, even if commingled with other
assets of the licensee, are held in trust for the benefit
of the purchasers and holders of the licensee’s outstanding
money transmission obligations in the event of insolvency,
the filing of a petition by or against the licensee under the
federal bankruptcy code, 11 U.S.C. §101 – 110, as amended, for
bankruptcy or reorganization, the filing of a petition by or
against the licensee for receivership, the commencement of any
other judicial or administrative proceeding for its dissolution
or reorganization, or in the event of an action by a creditor
against the licensee who is not a beneficiary of this statutory
trust. No permissible investments impressed with a trust
pursuant to this section shall be subject to attachment, levy
of execution, or sequestration by order of any court, except
for a beneficiary of this statutory trust.
4. Upon the establishment of a statutory trust in accordance
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with subsection 3, or when any funds are drawn on a letter of
credit pursuant to section 533C.804, subsection 1, paragraph
“m” , the superintendent shall notify the applicable regulator
of each state in which the licensee is licensed to engage in
money transmission, if any, of the establishment of the trust
or the funds drawn on the letter of credit, as applicable.
Notice shall be deemed satisfied if performed pursuant to
a multistate agreement or through NMLS. Funds drawn on a
letter of credit, and any other permissible investments held
in trust for the benefit of the purchasers and holders of the
licensee’s outstanding money transmission obligations, are
deemed held in trust for the benefit of such purchasers and
holders on a pro rata and equitable basis in accordance with
statutes pursuant to which permissible investments are required
to be held in this state, and other states, as applicable.
Any statutory trust established hereunder shall be terminated
upon extinguishment of all of the licensee’s outstanding money
transmission obligations.
5. The superintendent by rule or by order may allow other
types of investments that the superintendent determines
are of sufficient liquidity and quality to be a permissible
investment. The superintendent is authorized to participate
in efforts with other state regulators to determine that other
types of investments are of sufficient liquidity and quality
to be a permissible investment.
Sec. 35. NEW SECTION . 533C.804 Types of permissible
investments.
1. The following investments are permissible under section
533C.803:
a. Cash, including demand deposits, savings deposits, and
funds in such accounts held for the benefit of the licensee’s
customers in a federally insured depository financial
institution.
b. Cash equivalents including automated clearinghouse items
in transit to the licensee and automated clearinghouse items or
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international wires in transit to a payee.
c. Cash in transit via armored car.
d. Cash in smart safes.
e. Cash in licensee-owned locations.
f. Debit card or credit card-funded transmission receivables
owed by any bank.
g. Money market mutual funds rated “AAA” by Standard and
Poor’s 500 stock market index, or the equivalent from any
eligible rating service.
h. Certificates of deposit or senior debt obligations of an
insured depository institution, pursuant to the federal Deposit
Insurance Act, 12 U.S.C. §1813, as amended, or as defined under
the federal Credit Union Act, 12 U.S.C. §1751, as amended.
i. An obligation of the United States or a commission,
agency, or instrumentality thereof.
j. An obligation that is guaranteed fully as to principal
and interest by the United States.
k. An obligation of a state or a governmental subdivision,
agency, or instrumentality thereof.
l. One hundred percent of the surety bond provided for
under section 533C.802 that exceeds the average daily money
transmission liability in this state.
m. The full drawable amount of an irrevocable standby
letter of credit for which the stated beneficiary is the
superintendent that stipulates that the beneficiary need only
draw a sight draft under the letter of credit and present it
to obtain funds up to the letter of credit amount within seven
days of presentation of the items required by this section.
(1) The letter of credit shall conform to the following:
(a) Be issued by a federally insured depository financial
institution, a foreign bank that is authorized under federal
law to maintain a federal agency or federal branch office
in a state or states, or a foreign bank that is authorized
under state law to maintain a branch in a state that bears an
eligible rating, or whose parent company bears an eligible
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rating and such bank is regulated, supervised, and examined
by the United States federal or state authorities having
regulatory authority over banks, credit unions, and trust
companies.
(b) Be irrevocable, unconditional, and indicate that it is
not subject to any condition or qualifications outside of the
letter of credit.
(c) Not contain reference to any other agreements,
documents, or entities, or otherwise provide for any security
interest in the licensee.
(d) Contain an issue date and expiration date, and expressly
provide for automatic extension, without written amendment,
for an additional period of one year from the present or each
future expiration date, unless the issuer of the letter of
credit notifies the superintendent in writing by certified
or registered mail or courier mail or other receipted means,
at least sixty days prior to any expiration date, that the
irrevocable letter of credit shall not be extended. In
the event of any notice of expiration or nonextension of a
letter of credit issued under this division, the licensee
shall be required to demonstrate to the satisfaction of the
superintendent, fifteen days prior to expiration, that the
licensee maintains and will maintain permissible investments
in accordance with section 533C.803, subsection 1, upon the
expiration of the letter of credit. If the licensee is not
able to do so, the superintendent may draw on the letter of
credit in an amount up to the amount necessary to meet the
licensee’s requirements to maintain permissible investments
in accordance with section 533C.803, subsection 1. Any
such draw shall be offset against the licensee’s outstanding
money transmission obligations. The drawn funds shall be
held in trust by the superintendent or the superintendent’s
designated agent, to the extent authorized by law, as agent for
the benefit of the purchasers and holders of the licensee’s
outstanding money transmission obligations.
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(2) The letter of credit shall provide that the issuer of
the letter of credit will honor, at sight, a presentation made
by the beneficiary to the issuer of the following documents on
or prior to the expiration date of the letter of credit:
(a) The original letter of credit, including any
amendments.
(b) A written statement from the beneficiary stating that
any of the following events have occurred:
(i) The filing of a petition by or against the licensee
under the federal bankruptcy code, 11 U.S.C. §101 – 110, as
amended, for bankruptcy or reorganization.
(ii) The filing of a petition by or against the licensee
for receivership, or the commencement of any other judicial
or administrative proceeding for its dissolution or
reorganization.
(iii) The seizure of assets of a licensee by the
superintendent or any other state financial regulatory entity
pursuant to an emergency order issued in accordance with
applicable law, on the basis of an action, violation, or
condition that has caused or is likely to cause the insolvency
of the licensee.
(iv) The beneficiary has received notice of expiration on
nonextension of a letter of credit and the licensee failed to
demonstrate to the satisfaction of the beneficiary that the
licensee will maintain permissible investments in accordance
with section 533C.803, subsection 1, upon the expiration or
nonextension of the letter of credit.
(3) The superintendent may designate an agent to serve
on the superintendent’s behalf as beneficiary to a letter
of credit so long as the agent and letter of credit meet
requirements established by the superintendent. The
superintendent’s agent may serve as agent for multiple
licensing authorities for a single irrevocable letter of credit
if the proceeds of the drawable amount for the purposes of this
section are assigned to the superintendent.
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(4) The superintendent is authorized and encouraged to
participate in multistate processes designed to facilitate the
issuance and administration of letters of credit, including
but not limited to services provided by the NMLS and state
regulatory registry, LLC.
2. Unless permitted by the superintendent by rule or by
order to exceed the limit as set forth herein, the following
investments are permissible under section 533C.803 to the
extent specified:
a. Receivables that are payable to a licensee from its
authorized delegates in the ordinary course of business
that are less than seven days old, up to fifty percent of
the aggregate value of the licensee’s total permissible
investments.
b. Of the receivables permissible under subsection 1,
receivables that are payable to a licensee from a single
authorized delegate in the ordinary course of business may not
exceed ten percent of the aggregate value of the licensee’s
total permissible investments.
c. The following investments are permissible up to twenty
percent per category and combined up to fifty percent of
the aggregate value of the licensee’s total permissible
investments:
(1) An up-to-six-month short-term investment bearing an
eligible rating.
(2) Commercial paper bearing an eligible rating.
(3) A bill, note, bond, or debenture bearing an eligible
rating.
(4) United States tri-party repurchase agreements
collateralized at one hundred percent or more with United
States government or agency securities, municipal bonds, or
other securities bearing an eligible rating.
(5) Money market mutual funds rated less than “AAA” and
equal to or higher than “A-” by Standard and Poor’s 500 stock
market index, or the equivalent from any other eligible rating
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service.
(6) A mutual fund or other investment fund composed solely
and exclusively of one or more permissible investments listed
in section 533C.804, subsection 1, paragraph “a” through “k” .
d. Cash, including demand deposits, savings deposits, and
funds in such accounts held for the benefit of the licensee’s
customers, at foreign depository institutions are permissible
up to ten percent of the aggregate value of the licensee’s
total permissible investments if the licensee has received a
satisfactory rating in its most recent examination and the
foreign depository institution fulfills all of the following:
(1) An eligible rating.
(2) Registered under the federal Foreign Account Tax
Compliance Act, Pub. L. No. 111-147.
(3) Not located in any country subject to sanctions from the
federal office of foreign asset control.
(4) Not located in a high-risk or noncooperative
jurisdiction as designated by the international financial
action task force.
Sec. 36. REPEAL. Sections 533C.206, 533C.503, 533C.504,
533C.505, 533C.506, 533C.507, 533C.705, 533C.706, 533C.707,
533C.708, 533C.901, 533C.902, 533C.903, and 533C.904, Code
2023, are repealed.
Sec. 37. CODE EDITOR DIRECTIVE. The following articles
shall be changed by the Code editor to substantially conform
to the following:
1. ARTICLE 2 shall be retitled IMPLEMENTATION,
CONFIDENTIALITY, SUPERVISION, AND RELATIONSHIP TO FEDERAL LAW.
2. ARTICLE 3 shall be retitled MONEY TRANSMISSION LICENSES.
3. ARTICLE 4 shall be retitled ACQUISITION OF CONTROL AND
CHANGE OF KEY INDIVIDUAL.
4. ARTICLE 5 shall be retitled AUTHORIZED DELEGATES.
5. ARTICLE 6 shall be retitled REPORTING AND RECORDS.
6. ARTICLE 7 shall be retitled TIMELY TRANSMISSION,
REFUNDS, AND DISCLOSURES.
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7. ARTICLE 8 shall be retitled PRUDENTIAL STANDARDS.
EXPLANATION
The inclusion of this explanation does not constitute agreement with
the explanation’s substance by the members of the general assembly.
This bill relates to bank transmission services. The
bill includes updates to the licensing processes for money
transmission services seeking to do business in the state, and
encourages the superintendent of banking to collaborate with
multistate licensing processes. The bill allows for uniform
requirements for licensing across states to ensure multi-state
compliance for a money transmission services business.
The bill modifies the name of the “Uniform Money Services
Act” to the “Uniform Money Transmission Modernization Act”.
The bill defines the terms “acting in concert”, “average
daily money transmission liability”, “Bank Secrecy Act”,
“closed loop stored value”, “eligible rating”, “eligible rating
service”, “federally insured depository financial institution”,
“in this state”, “individual”, “key individual”, “material
litigation”, “MSB accredited state”, “nationwide multistate
licensing system” (NMLS), “outstanding money transmission
obligations”, “passive investor”, “payroll processing
services”, “receipt”, “receiving money for transmission”,
“remit”, and “tangible net worth”.
The bill modifies the definitions for “control”, “money”,
“money transmission”, “payment instrument”, “person”, and
“stored-value”. The bill deletes various definitions.
The bill provides that the superintendent may require a
person to provide documentation demonstrating their exemption
from licensing requirements. Under the bill, exemptions
are expanded to include additional activities and entities,
including certain persons that act as intermediaries by
processing payments, a person appointed as an agent of the
payee to collect and process payments from a payor to the
payee provided certain requirements, an individual employed
and supervised by an exempted entity, a third-party service
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provider or agent under certain conditions, and a person exempt
by regulation.
The bill authorizes a superintendent to enter into
agreements or relationships with other regulatory entities to
improve efficiencies, utilize software or other processes for
investigation purposes, accept reports from other government
entities, and accept audit reports. The superintendent has the
authority to enforce the bill and promulgate related rules.
The bill requires that certain financial,
identification-related, investigation-related, and other
relevant information remain confidential. Exceptions include
sharing information for the public interest, where the
superintendent may disclose otherwise confidential information.
The release of nonconfidential information shall include
specific limited identifying information.
The bill allows for the superintendent to supervise
and conduct examinations or investigations regarding the
acquisition of a license for conducting money transmission
services. A licensee or authorized delegate shall provide
the superintendent with relevant documents regarding that
examination or investigation.
The bill provides that the superintendent shall coordinate
and effectively participate in relevant multistate networks.
The bill designates federal law to preempt state money
transmission law where there are inconsistencies between the
two.
The bill prohibits a person from engaging in the business
of money transmission or advertising, soliciting, or holding
itself out as providing money transmission unless they are
licensed under the provisions of the bill, an authorized
delegate, or fall under an exception.
The bill encourages consistent state licensing and
utilization of NMLS. The superintendent is authorized and
encouraged to implement licensing provisions in a manner
that is consistent with other states or multistate licensing
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process, and participate in national licensing cooperation
protocols. The superintendent is authorized and encouraged
to build relationships or contracts with NMLS to help the
superintendent maintain records, coordinate multistate efforts,
process fees, and facilitate communication. The superintendent
should use NMLS forms where available, and where unavailable,
create forms that facilitate uniformity. The superintendent
may waive or modify requirements to participate in the NMLS.
The bill provides for an application for a license.
The superintendent shall create an application form. An
application for a license shall contain specified information,
including criminal convictions, a description of previous money
transmission services, a list of proposed authorized delegates
and locations for money transmission, other states in which the
applicant is currently engaging in money transmission, as well
as disciplinary actions, and bankruptcy disclosure. If the
applicant is a corporation, LLC, partnership, or other legal
entity, additional information is required to be included on
the application, including audits, dates of incorporations,
parent and subsidiary companies, and trading information. An
applicant shall be charged an application fee of $1,000 which
shall be refunded upon rejection of an application. The bill
establishes a license fee in the amount of $500 plus $10 per
location in Iowa in which business is conducted, or set by
the superintendent if there is no location, but not to exceed
$5,000. No refund of a license fee shall be made upon a license
suspension, revocation, or surrender.
The bill provides that any individual in control of a
licensee, applicant, or individual seeking to acquire control
of a licensee, and each key individual shall provide the
superintendent with information, including fingerprints, a
credit report, and relevant litigation. The bill allows for
different information based on an applicant’s residence.
The bill provides for the issuance of licenses. An applicant
must comply with provisions of the bill to be approved for a
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license. The superintendent may extend a 120-day period of
application review for good cause. The superintendent can
rely on other multistate license procedures for application
purposes. The superintendent shall provide written notice of
denial of an application and include specific reasons for the
denial.
The bill allows a license to be renewed annually. The cost
of the renewal fee shall correspond to the initial licensure
fee. No refund of a license fee shall be made upon a license
suspension, revocation, or surrender. A renewal report
created by the superintendent shall be filed annually with
the licensee’s renewal fee. If the licensee does not file
a renewal report by the set deadline, the superintendent may
charge a $100 per day late fee.
The bill provides for acquisition of control of a licensee.
Individuals seeking to acquire control of a licensee shall
obtain written approval of the superintendent prior to
acquisition and complete an application in a form created
by the superintendent. A person is presumed to exercise a
controlling influence when the person holds the power to vote,
directly or indirectly, at least 10 percent of the outstanding
voting shares or voting interests of a licensee or person in
control of a licensee. Individuals seeking acquisition shall
submit a $1,000 fee with an application for acquisition. The
superintendent shall approve or deny the application. The
superintendent can rely on other multistate license procedures
for application purposes. The superintendent shall provide
written notice of denial of an application and include specific
reasons for the denial. A person may request a determination
from the superintendent regarding control prior to filing an
application.
The bill requires notice regarding a change of key
individuals. The superintendent may issue a notice of
disapproval within 90 days of receiving the notice of
the change and shall contain a statement on the basis of
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disapproval.
The bill requires a licensee to conduct a background check,
provide written policies, and comply with requirements of the
bill before an authorized delegate can act on the licensee’s
behalf. An authorized delegate shall act in full compliance
with the bill’s provisions. An authorized delegate and
licensee shall sign a written contract containing provisions
related to the scope of the relationship and requirements
of each party. If the licensee’s license is suspended,
revoked, surrendered, or expired, the licensee shall provide
documentation to the superintendent within five business days
that the licensee has notified all applicable authorized
delegates, and delegates shall immediately cease to provide
money transmission as an authorized delegate of the licensee.
The bill prohibits a person from engaging in money
transmission on behalf of an unlicensed person.
The bill requires a quarterly report by a licensee within
45 days of the close of a quarter. The report shall include
financial information, state and national transaction
information, permissible investment information, and additional
information. The bill requires an annual audited financial
statement from a licensee within 90 days of the end of each
fiscal year. A licensee shall be required to file a quarterly
report of authorized delegates within 45 days of the close of
a quarter.
The bill requires a licensee to file a report and submit a
payment of $1,000 within one business day regarding bankruptcy,
receivership, dissolution, reorganization, revocation, or
suspension events. A licensee is required to file a report
within three business days in events regarding a felony charge
or conviction of the licensee, a key individual or person in
control of the licensee, or an authorized delegate.
The bill requires licensees and authorized delegates to
comply with federal record keeping and reporting requirements,
including pursuant to the federal Bank Secrecy Act, 31 U.S.C.
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§5311.
The bill requires licensees to maintain records, inside
or outside of the state, for compliance determination. This
includes ledgers, bank statements, records of obligations,
lists of names, and information the superintendent requires.
The bill includes prohibitions on disclosure and
disclosure allowances. A superintendent’s records relating
to examinations, supervision, or regulation of a licensed
individual or authorized delegate are not considered public
records and are not subject to disclosure. The bill provides
for exceptions to when information may be disclosed to certain
parties.
The bill requires that a licensee transmit money in a timely
manner unless there is a valid reason to abstain.
The bill requires a licensee to refund the sender within 10
days of receipt of a written request for a refund, unless an
exception occurs, including belief that a crime or violation
of law, rule, or regulation has occurred, is occurring, or may
occur.
The bill requires every licensee or authorized delegate to
provide a sender a receipt for money received for transmission.
The receipt shall be communicated in English or the language
principally used by the licensee or authorized delegate. The
receipt shall contain applicable information, including the
name of sender, name of the recipient, the date, and the
amount.
The bill provides that a licensee providing payroll
processing services shall issue reports to clients with details
of client payroll obligations and make pay stubs available to
workers. Certain licensees providing these services are exempt
where the client designated the intended recipients to the
licensee.
The bill requires a licensee to maintain a tangible amount
of net worth at all times. The amount shall be the greater
of $100,000 or 3 percent of total assets for the first $100
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million, 2 percent of additional assets for $100 million to
$1 billion, and .5 percent of additional assets for over $1
billion. Net worth may be demonstrated by the applicant’s
most recent audit or unaudited financial statements. The
superintendent may exempt any applicant or licensee for good
cause.
The bill requires an applicant for a money transmission
license to maintain a surety bond of 100 percent of the
licensee’s average daily money transmission liability for a
three-month period, or $100,000, whichever is greater, with a
maximum amount of $500,000. A licensee may exceed the maximum
amount.
The bill requires that a licensee maintain permissible
investments of not less than the total amount of all of its
outstanding money transmission obligations. Permissible
investments shall be held in a trust for the benefit of the
purchaser and holder of the licensee’s outstanding money
transmission obligation in case of certain financial events.
Funds drawn on a letter of credit shall cause a superintendent
to notify applicable regulators under specific circumstances.
The superintendent may expand the types of investments deemed
to be permissible.
The bill provides a list of permissible investments by
a licensee that have a market value computed in accordance
with United States generally accepted accounting principles
of not less than the aggregate amount of all of a licensee’s
outstanding money transmission obligations. The list of
permissible investments includes a specific letter of credit
for which the stated beneficiary is the superintendent subject
to requirements. The letter of credit shall be irrevocable,
unconditional, issued by a federally insured depository
financial institution or an authorized foreign bank, not
contain reference to other writings or entities, and contain
an issue date, expiration date, and an automatic extension
subject to change. Upon the expiration or lack of extension,
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a licensee shall be required to demonstrate sufficient
permissible investment amounts. If the licensee cannot show
acceptable permissible investments, the superintendent may
draw on the letter of credit. The letter of credit shall
provide that the issuer of the letter of credit will honor the
letter and a written statement from the beneficiary stating
that certain significant financial events have occurred. The
superintendent may designate an agent to serve as beneficiary
to a letter of credit. The bill provides limits for certain
investments.
The bill repeals Code sections 533C.206, 533C.503, 533C.504,
533C.505, 533C.506, 533C.507, 533C.705, 533C.706, 533C.707,
533C.708, 533C.901, 533C.902, 533C.903, and 533C.904.
The Code editor is directed to change the names of articles
two through eight of Code chapter 533C.
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