Bill Text: TX HB3233 | 2017-2018 | 85th Legislature | Comm Sub

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Bill Title: Relating to the regulation of money services businesses.

Sponsorship: Partisan Bill (Republican 1)

Status: (Introduced - Dead) 2017-04-19 - Comm. report sent to Local & Consent Calendar [HB3233 Detail]

Download: Texas-2017-HB3233-Comm_Sub.html

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85R18078 TSR-F
By: Burrows H.B. No. 3233
Substitute the following for H.B. No. 3233:
By: Holland C.S.H.B. No. 3233

A BILL TO BE ENTITLED
AN ACT
relating to the regulation of money services businesses.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Section 151.002(b), Finance Code, is amended by
adding Subdivision (20-a) to read as follows:
(20-a) "Tangible net worth" means the total value of
all assets, minus any liabilities and intangible assets.
SECTION 2. Section 151.003, Finance Code, as amended by
Chapters 1000 (H.B. 483) and 75 (S.B. 899), Acts of the 84th
Legislature, Regular Session, 2015, is reenacted and amended to
read as follows:
Sec. 151.003. EXCLUSIONS. Subject to Subchapter J, the
following persons are not required to be licensed under this
chapter:
(1) the United States or an instrumentality of the
United States, including the United States Post Office or a
contractor acting on behalf of the United States Post Office;
(2) a state or an agency, political subdivision, or
other instrumentality of a state;
(3) a federally insured financial institution, as that
term is defined by Section 201.101, that is organized under the laws
of this state, another state, or the United States;
(4) a foreign bank branch or agency in the United
States established under the federal International Banking Act of
1978 (12 U.S.C. Section 3101 et seq.);
(5) a person acting as an agent for an entity excluded
under Subdivision (3) or (4), to the extent of the person's actions
in that capacity, provided that:
(A) the entity is liable for satisfying the money
services obligation owed to the purchaser on the person's receipt
of the purchaser's money; and
(B) the entity and person enter into a written
contract that appoints the person as the entity's agent and the
person acts only within the scope of authority conferred by the
contract;
(6) a person that, on behalf of the United States or a
department, agency, or instrumentality of the United States, or a
state or county, city, or any other governmental agency or
political subdivision of a state, provides electronic funds
transfer services of governmental benefits for a federal, state,
county, or local governmental agency;
(7) a person that acts as an intermediary on behalf of
and at the direction of a license holder in the process by which the
license holder, after receiving money or monetary value from a
purchaser, either directly or through an authorized delegate,
transmits the money or monetary value to the purchaser's designated
recipient, provided that the license holder is liable for
satisfying the obligation owed to the purchaser;
(8) an attorney or title company that in connection
with a real property transaction receives and disburses domestic
currency or issues an escrow or trust fund check only on behalf of a
party to the transaction;
(9) a person engaged in the business of currency
transportation who is both a registered motor carrier under Chapter
643, Transportation Code, and a licensed armored car company or
courier company under Chapter 1702, Occupations Code, provided that
the person:
(A) only transports currency [from a person to]:
(i) from a person to the same person at
another location; [or]
(ii) from a person to a financial
institution to be deposited in an account belonging to the same
person; or
(iii) to a person from a financial
institution after being withdrawn from an account belonging to the
same person; and
(B) does not otherwise engage in the money
transmission or currency exchange business or depository agent
services business without a license issued under this chapter;
(9-a) a trust company, as defined by Section
187.001(a), that is organized under the laws of this state; and
(10) any other person, transaction, or class of
persons or transactions exempted by commission rule or any other
person or transaction exempted by the commissioner's order on a
finding that the licensing of the person is not necessary to achieve
the purposes of this chapter.
SECTION 3. The heading to Section 151.2031, Finance Code,
is amended to read as follows:
Sec. 151.2031. USE OF NATIONWIDE MULTISTATE [MORTGAGE]
LICENSING SYSTEM AND REGISTRY.
SECTION 4. Sections 151.2031(a) and (b), Finance Code, are
amended to read as follows:
(a) In this section, "Nationwide Multistate [Mortgage]
Licensing System and Registry" or "nationwide registry" means a
licensing system developed and maintained by the Conference of
State Bank Supervisors or an affiliated organization to manage
mortgage licenses and other financial services licenses, or a
successor registry.
(b) The commissioner may require that a person submit
through the Nationwide Multistate [Mortgage] Licensing System and
Registry in the form and manner prescribed by the commissioner and
acceptable to the registry any information or document or payment
of a fee required to be submitted under this chapter or rules
adopted under this chapter.
SECTION 5. Section 151.302(c), Finance Code, is amended to
read as follows:
(c) On application and a finding that the exemption is in
the public interest, the commissioner may exempt a person that:
(1) incidentally engages in the money transmission
business only to the extent reasonable and necessary to accomplish
a primary business objective unrelated to the money transmission
business;
(2) does not advertise or offer money transmission
services to the public except to the extent reasonable and
necessary to fairly advertise or offer the person's primary
business services; and
(3) [either transmits money exclusively in connection
with commercial contracts in interstate commerce or does not charge
a fee to transmit money or] transmits money without a fee as an
inducement for customer participation in the person's primary
business.
SECTION 6. Section 151.304(b), Finance Code, is amended to
read as follows:
(b) At the time an application for a money transmission
license is submitted, an applicant must file with the department:
(1) an application fee in the amount established by
commission rule;
(2) audited financial statements that are
satisfactory to the commissioner for purposes of determining
whether the applicant has the minimum net worth required under
Section 151.307 and is likely to maintain the required minimum net
worth if a license is issued; and
(3) security [in the amount of $300,000,] that meets
the requirements of Section 151.308, and an undertaking or
agreement that the applicant will increase or supplement the
security to equal the aggregate security required by the
commissioner under that section before the issuance of the license
and the start of operations.
SECTION 7. Section 151.307, Finance Code, is amended by
amending Subsection (a) and adding Subsection (c) to read as
follows:
(a) An applicant for a money transmission license must
possess, and a money transmission license holder must maintain at
all times, a minimum net worth computed in accordance with
generally accepted accounting principles of:
(1) $100,000, if business is proposed to be or is
conducted, directly or through an authorized delegate, at four or
fewer locations; or
(2) $500,000, if business is proposed to be or is
conducted, directly or through an authorized delegate, at five or
more locations or over the Internet.
(c) At least 50 percent of the applicant's or license
holder's total net worth under this section must be tangible net
worth.
SECTION 8. Section 151.308, Finance Code, is amended by
amending Subsection (b) and adding Subsections (b-1) and (b-2) to
read as follows:
(b) The amount of the required security is the greater of
$300,000 or an amount equal to one percent of the license holder's
total yearly dollar volume of money transmission business in this
state or the applicant's projected total volume of business in this
state for the first year of licensure, up to a maximum of $2
million.
(b-1) The commissioner may increase the amount of security
required of an applicant who intends to provide, or a license holder
who is providing, third-party bill payments in conjunction with
loan acceleration services, up to a total amount of $2 million, by
multiplying the amount of security required under this section by a
factor of up to two, if the commissioner determines, with respect to
the applicant or license holder, that a higher amount of the
required security is necessary to achieve the purposes of this
chapter based on the factors listed under Section 151.307(b).
(b-2) When the amount of the required security exceeds $1
million, the applicant or license holder may, in the alternative,
provide security in the amount of $1 million, plus a dollar for
dollar increase in the net worth of the applicant or license holder
over the amount required under Section 151.307, up to a total amount
of $2 million.
SECTION 9. Section 151.702, Finance Code, is amended to
read as follows:
Sec. 151.702. CEASE AND DESIST ORDERS FOR UNLICENSED
PERSONS. (a) If the commissioner has reason to believe that an
unlicensed person has engaged or is likely to engage in an activity
for which a license is required under this chapter, the
commissioner may order the person to cease and desist from the
violation until the person is issued a license under this chapter.
The commissioner's order is subject to Section 151.709, unless the
order is issued as an emergency order. The commissioner may issue
an emergency cease and desist order in accordance with Section
151.710 if the commissioner finds that the person's violation or
likely violation threatens immediate and irreparable harm to the
public.
(b) A cease and desist order under this section may require
the unlicensed person to take affirmative action to correct any
condition resulting from or contributing to the activity or
violation, including the payment of restitution to each resident of
this state damaged by the violation.
SECTION 10. The heading to Section 151.705, Finance Code,
is amended to read as follows:
Sec. 151.705. CEASE AND DESIST ORDERS FOR LICENSE HOLDERS
OR AUTHORIZED DELEGATES.
SECTION 11. Section 151.707(d), Finance Code, is amended to
read as follows:
(d) In determining the amount of the penalty, the
commissioner shall consider factors that include the seriousness of
the violation, the person's compliance history, and the person's
good faith in attempting to comply with this chapter, provided that
if the person is found to have demonstrated wilful disregard under
Subsection (a)(4), the trier of fact may [shall] recommend that the
commissioner impose the maximum administrative penalty permitted
under Subsection (c).
SECTION 12. (a) Sections 151.304, 151.307, and 151.308,
Finance Code, as amended by this Act, apply to a new application for
a money transmission license only if the application was submitted
on or after the effective date of this Act. An application for a
license submitted before the effective date of this Act is governed
by the law in effect on the date the application was submitted, and
the former law is continued in effect for that purpose.
(b) A person holding a money transmission license on
September 1, 2017, who is not in compliance with the net worth
requirements of Section 151.307, Finance Code, as amended by this
Act, shall comply with the net worth requirements of that section
not later than September 1, 2022. On written application and for
good cause shown, the banking commissioner of Texas may extend the
period for compliance under this section for the money transmission
license holder.
(c) Not later than July 1, 2018, a person holding a money
transmission license on September 1, 2017, shall comply with the
security requirements of Section 151.308, Finance Code, as amended
by this Act.
(d) Sections 151.702 and 151.707, Finance Code, as amended
by this Act, apply only to a violation that occurs on or after the
effective date of this Act. A violation that occurs before that
date is governed by the law in effect immediately before the
effective date of this Act, and that law is continued in effect for
that purpose.
SECTION 13. This Act takes effect September 1, 2017.