S.B. No. 1403

	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.
	______________________________	______________________________
	President of the Senate	Speaker of the House
	I hereby certify that S.B. No. 1403 passed the Senate on
	April 19, 2017, by the following vote:  Yeas 31, Nays 0.
	______________________________
	Secretary of the Senate
	I hereby certify that S.B. No. 1403 passed the House on
	May 19, 2017, by the following vote:  Yeas 144, Nays 0, two
	present not voting.
	______________________________
	Chief Clerk of the House
	Approved:
	______________________________
	Date
	______________________________
	Governor