Senate Study Bill 1102 - Introduced SENATE/HOUSE FILE _____ BY (PROPOSED DEPARTMENT OF COMMERCE/BANKING DIVISION BILL) A BILL FOR An Act relating to money transmission services. 1 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 2 TLSB 1213XD (13) 90 es/rn
S.F. _____ H.F. _____ Section 1. Section 533A.2, subsection 2, paragraph h, Code 1 2023, is amended to read as follows: 2 h. A person licensed under chapter 533C , including that 3 persons authorized delegates as defined in section 533C.102 , 4 or a person exempt from licensing under section 533C.103 , when 5 engaging in money transmission or currency exchange as defined 6 in section 533C.102 . 7 Sec. 2. Section 533C.101, Code 2023, is amended to read as 8 follows: 9 533C.101 Short title. 10 This chapter may be cited as the Uniform Money Services 11 Transmission Modernization Act . 12 Sec. 3. Section 533C.102, Code 2023, is amended to read as 13 follows: 14 533C.102 Definitions. 15 In this chapter : 16 1. Applicant means a person that files an application for 17 a license under this chapter . 18 1. Acting in concert means persons knowingly acting 19 together with a common goal of jointly acquiring control of a 20 licensee whether or not pursuant to an express agreement. 21 2. Authorized delegate means a person a licensee 22 designates to provide money services on behalf of the licensee. 23 3. Bank means an institution organized under federal or 24 state law which does any of the following: 25 a. Accepts demand deposits or deposits that the depositor 26 may use for payment to third parties and engages in the 27 business of making commercial loans. 28 b. Engages in credit card operations and maintains only one 29 office that accepts deposits, does not accept demand deposits 30 or deposits that the depositor may use for payments to third 31 parties, does not accept a savings or time deposit less than 32 one hundred thousand dollars, and does not engage in the 33 business of making commercial loans. 34 4. Compensation means any fee, commission, or other 35 -1- LSB 1213XD (13) 90 es/rn 1/ 59
S.F. _____ H.F. _____ benefit. 1 5. Conducting the business means engaging in activities 2 of a licensee or money transmitter more than ten times in any 3 calendar year for compensation. 4 3. Average daily money transmission liability means 5 the amount of the licensees outstanding money transmission 6 obligations in this state at the end of each day in a given 7 period of time, added together, and divided by the total 8 number of days in the given period of time. For purposes of 9 calculating average daily money transmission liability under 10 this chapter for any required licensee, the given period of 11 time shall be the quarters ending March 31, June 30, September 12 30, and December 31. 13 4. Bank Secrecy Act means the federal Bank Secrecy Act, 14 31 U.S.C. 5311 et seq., and its implementing regulations, as 15 amended. 16 5. Closed loop stored value means stored value that is 17 redeemable by the issuer only for goods or services provided by 18 the issuer or its affiliate or franchisees of the issuer or its 19 affiliate, except to the extent required by applicable law to 20 be redeemable in cash for its cash value. 21 6. Control means any of the following: 22 a. Ownership of, or the The power to vote, directly 23 or indirectly, at least twenty-five percent of a class of 24 outstanding voting securities or voting interests of a licensee 25 or person in control of a licensee. 26 b. Power The power to elect or appoint a majority of key 27 individuals, executive officers, managers, directors, trustees, 28 or other persons exercising managerial authority of a licensee 29 or person in control of a licensee. 30 c. The power to exercise, directly or indirectly, a 31 controlling influence over the management or policies of a 32 licensee or person in control of a licensee. 33 7. Credit union means a cooperative, nonprofit association 34 incorporated under chapter 533 or the Federal Credit Union Act, 35 -2- LSB 1213XD (13) 90 es/rn 2/ 59
S.F. _____ H.F. _____ 12 U.S.C. 1751 et seq., that is insured by the national credit 1 union administration and includes an office of a credit union. 2 8. Currency exchange means receipt of compensation from 3 the exchange of money of one government for money of another 4 government. 5 9. Executive officer means a president, chairperson of 6 the executive committee, chief financial officer, responsible 7 individual, or other individual who performs similar functions. 8 7. Eligible rating means a credit rating of any of the 9 three highest rating categories provided by an eligible rating 10 service, whereby each category may include rating category 11 modifiers such as plus or minus for Standard and Poors 500 12 stock market index, or the equivalent for any other eligible 13 rating service. A long-term credit rating is deemed eligible 14 if the rating is equal to A- or higher by Standard and Poors 15 500 stock market index, or the equivalent from any other 16 eligible rating service. A short-term credit rating is deemed 17 eligible if the rating is equal to or higher than A-2 or 18 SP-2 by Standard and Poors 500 stock market index, or the 19 equivalent from any other eligible rating service. In the 20 event that the ratings differ among eligible rating services, 21 the highest rating shall apply when determining whether a 22 security bears an eligible rating. 23 8. Eligible rating service means any nationally recognized 24 statistical rating organization as defined by the federal 25 Securities and Exchange Commission, and any other organization 26 designated by the superintendent by rule or order. 27 9. Federally insured depository financial institution 28 means a bank, credit union, savings and loan association, trust 29 company, savings association, savings bank, industrial bank, or 30 industrial loan company organized under the laws of the United 31 States or any state, when such entity has federally insured 32 deposits. 33 10. In this state means at a physical location within Iowa 34 for an in-person transaction request. 35 -3- LSB 1213XD (13) 90 es/rn 3/ 59
S.F. _____ H.F. _____ 11. Individual means a natural person. 1 12. Key individual means an individual ultimately 2 responsible for establishing or directing policies and 3 procedures of the licensee, including an executive officer, 4 manager, director, or trustee. 5 10. 13. Licensee means a person licensed under this 6 chapter . 7 11. Location means a place of business at which activity 8 conducted by a licensee or money transmitter occurs. 9 14. Material litigation means litigation that, according 10 to generally accepted accounting principles in the United 11 States, is significant to a persons financial health and would 12 be required to be disclosed in the persons audited financial 13 statements, report to shareholders, or similar records. 14 12. 15. Monetary value means a medium of exchange, 15 whether or not redeemable in money. 16 13. 16. Money means a medium of exchange authorized or 17 adopted by a domestic the United States or a foreign government 18 as a part of its currency and that is customarily used and 19 accepted as a medium of exchange in the country of issuance . 20 The term includes a monetary unit of account established by an 21 intergovernmental organization or by agreement between two or 22 more governments. 23 14. Money services means money transmission or currency 24 exchange. 25 15. 17. Money transmission means and includes any of the 26 following: 27 a. Selling or issuing payment instruments to one or more 28 persons or issuing payment instruments which are sold to one or 29 more persons a person located in this state . 30 b. Selling or issuing stored value to a person located in 31 this state. 32 b. c. Conducting the business of receiving Receiving money 33 or monetary value for transmission from a person located in 34 this state . 35 -4- LSB 1213XD (13) 90 es/rn 4/ 59
S.F. _____ H.F. _____ c. Conducting the business of receiving money for obligors 1 for the purpose of paying obligors bills, invoices, or 2 accounts. 3 d. Money transmission does not include the provision 4 solely of online or telecommunications services or network 5 access. 6 16. Outstanding , with respect to a payment instrument, 7 means issued or sold by or for the licensee and reported as 8 sold but not yet paid by or for the licensee. 9 18. Money services businesses accredited state or MSB 10 accredited state means a state agency that is accredited by the 11 conference of state bank supervisors and the money transmitter 12 regulators association for money transmission licensing and 13 supervision. 14 19. Multistate licensing process means any agreement 15 entered into by and among state regulators relating to 16 coordinated processing of applications for money transmission 17 licenses, applications for the acquisition of control of a 18 licensee, control determinations, or notice and information 19 requirements for a change of key individuals. 20 20. Nationwide multistate licensing system or NMLS 21 means the nationwide multistate licensing system and registry 22 developed by the conference of state bank supervisors and the 23 American association of residential mortgage regulators and 24 owned and operated by the state regulatory registry, LLC, or 25 any successor or affiliated entity, for the licensing and 26 registration of persons in financial services industries. 27 21. Outstanding money transmission obligations means any 28 of the following: 29 a. Any payment instrument or stored value issued or sold 30 by the licensee to a person located in the United States or 31 reported as sold by an authorized delegate of the licensee to 32 a person that is located in the United States that has not yet 33 been paid or refunded by or for the licensee, or escheated in 34 accordance with applicable abandoned property laws. 35 -5- LSB 1213XD (13) 90 es/rn 5/ 59
S.F. _____ H.F. _____ b. Any money received for transmission by the licensee or an 1 authorized delegate in the United States from a person located 2 in the United States that has not been received by the payee 3 or refunded to the sender, or escheated in accordance with 4 applicable abandoned property laws. 5 22. Passive investor means a person that can attest in a 6 medium prescribed by the superintendent or commits in writing 7 to any of the following: 8 a. The person does not have the power to elect a majority 9 of key individuals or executive officers, managers, directors, 10 trustees, or other persons exercising managerial authority of a 11 person in control of a licensee. 12 b. The person is not employed by and does not have any 13 managerial duties of the licensee or person in control of a 14 licensee. 15 c. The person does not have the power to exercise, directly 16 or indirectly, a controlling influence over the management or 17 policies of a licensee or person in control of a licensee. 18 17. 23. Payment instrument means a written or electronic 19 check, draft, money order, travelers check, stored-value, 20 or other written or electronic instrument or order for the 21 transmission or payment of money or monetary value, sold to 22 one or more persons, whether or not that instrument or order 23 is negotiable. Payment instrument does not include an stored 24 value or any instrument that is redeemable by the issuer 25 only for goods or services provided by the issuer or an its 26 affiliate in merchandise or service, a credit card voucher, or 27 a letter of credit , except to the extent required by applicable 28 law to be redeemable in cash for its cash value, or not sold 29 to the public but issued and distributed as part of a loyalty, 30 rewards, or promotional program . 31 24. Payroll processing services means receiving money for 32 transmission pursuant to a contract with a person to deliver 33 wages or salaries, make payments of payroll taxes to states and 34 federal agencies, make payments relating to employee benefit 35 -6- LSB 1213XD (13) 90 es/rn 6/ 59
S.F. _____ H.F. _____ plans, or make distributions of other authorized deductions 1 from wages or salaries. The term payroll processing services 2 does not include an employer performing payroll processing 3 services on its own behalf or on behalf of its affiliate, or 4 a professional employment organization subject to regulation 5 under other applicable state law. 6 18. 25. Person means an individual, corporation, business 7 trust, estate, trust, partnership, general partnership, limited 8 partnership, limited liability company, association, joint 9 venture stock corporation, trust, corporation , government; 10 governmental subdivision, agency or instrumentality; public 11 corporation; or any other legal or commercial corporate entity 12 identified by the superintendent . 13 19. Proceeds means property acquired or derived directly 14 or indirectly from, produced through, realized through, or 15 caused by an act or omission and includes any property of any 16 kind. 17 20. Property means anything of value, and includes any 18 interest in property, including any benefit, privilege, claim, 19 or right with respect to anything of value, whether real 20 or personal, tangible or intangible, without reduction for 21 expenses incurred for acquisition, maintenance, production, or 22 any other purpose. 23 21. Record means information that is inscribed on a 24 tangible medium or that is stored in an electronic or other 25 medium and is retrievable in perceivable form. 26 22. Responsible individual means an individual who is 27 employed by a licensee and has principal managerial authority 28 over the provision of money services by the licensee in this 29 state. 30 23. State means a state of the United States, the District 31 of Columbia, Puerto Rico, the United States Virgin Islands, or 32 any territory or insular possession subject to the jurisdiction 33 of the United States. 34 26. Receipt means a paper receipt, electronic record, or 35 -7- LSB 1213XD (13) 90 es/rn 7/ 59
S.F. _____ H.F. _____ other written confirmation. 1 27. Receiving money for transmission or money received 2 for transmission means receiving money or monetary value in 3 the United States for transmission within or outside the United 4 States by electronic or other means. 5 28. Remit means to make direct payments of money to a 6 licensee or its representative authorized to receive money 7 or to deposit money in a bank in an account specified by the 8 licensee. 9 24. 29. Stored-value means a monetary value that is 10 representing a claim against the issuer evidenced by an 11 electronic or digital record , and that is intended and accepted 12 for use as a means of redemption for money or monetary value, 13 or payment for goods or services. The term stored-value 14 includes but is not limited to prepaid access as defined by 31 15 C.F.R. 1010.100, as amended. Stored-value does not include a 16 payment instrument or closed loop stored value, or stored value 17 not sold to the public but issued and distributed as part of a 18 loyalty, rewards, or promotional program . 19 25. 30. Superintendent means the superintendent of 20 banking for the state of Iowa. 21 26. Transaction includes a purchase, sale, trade, loan, 22 pledge, investment, gift, transfer, transmission, delivery, 23 deposit, withdrawal, payment, transfer between accounts, 24 exchange of currency, extension of credit, purchase or sale of 25 any monetary instrument or stored-value, use of a safe deposit 26 box, or any other acquisition or disposition of property by 27 whatever means effected. 28 27. Unsafe or unsound practice means a practice or 29 conduct by a person licensed to engage in money transmission 30 or an authorized delegate of such a person which creates the 31 likelihood of material loss, insolvency, or dissipation of 32 the licensees assets, or otherwise materially prejudices the 33 interests of its customers. 34 31. Tangible net worth means the aggregate assets of a 35 -8- LSB 1213XD (13) 90 es/rn 8/ 59
S.F. _____ H.F. _____ licensee excluding all intangible assets, less liabilities, as 1 determined in accordance with generally accepted accounting 2 principles in the United States. 3 32. In the United States means a person in any state, 4 territory, or possession of the United States, District 5 of Columbia, Commonwealth of Puerto Rico, or U.S. military 6 installation that is located in a foreign country. 7 Sec. 4. Section 533C.103, Code 2023, is amended to read as 8 follows: 9 533C.103 Exclusions Exemptions . 10 The superintendent may require that any person claiming 11 to be exempt from licensing pursuant to this section 12 provide information and documentation to the superintendent 13 demonstrating that the person qualifies for any claimed 14 exemption. This chapter does not apply to: 15 1. The United States or a department, agency, agent, or 16 instrumentality thereof. 17 2. A money Money transmission by the United States postal 18 service or by a contractor on behalf an agent of the United 19 States postal service. 20 3. A state, county, city, or any other governmental agency , 21 or governmental subdivision , instrumentality, or agent of a 22 state. 23 4. The following entities whether chartered or organized 24 under the laws of a state or of the United States: a bank, 25 A federally insured depository financial institution, bank 26 holding company, savings and loan association, savings bank, 27 credit union, office of an international banking corporation, 28 branch of a foreign bank that establishes a federal branch 29 pursuant to the federal International Bank Act, 12 U.S.C. 30 3102, as amended , corporation organized pursuant to the 31 federal Bank Service Company Act, 12 U.S.C. 1861 1867, as 32 amended, or corporation organized under the federal Edge Act, 33 12 U.S.C. 611 633 , as amended . 34 5. Electronic funds transfer of governmental benefits 35 -9- LSB 1213XD (13) 90 es/rn 9/ 59
S.F. _____ H.F. _____ for a federal, state, county, or governmental agency by a 1 contractor on behalf of the United States or a department, 2 agency, or instrumentality thereof, or on behalf of a state or 3 governmental subdivision, agency, or instrumentality thereof. 4 6. A board of trade designated as a contract market under 5 the federal Commodity Exchange Act, 7 U.S.C. 1 25, as 6 amended, or a person that, in the ordinary course of business, 7 provides clearance and settlement services for a board of trade 8 to the extent of its operation as or for such a board. 9 7. A registered futures commission merchant under the 10 federal commodities laws to the extent of its operation as such 11 a merchant. 12 8. A person that provides clearance or settlement services 13 pursuant to a registration as a clearing agency or an exemption 14 from such registration granted under the federal securities 15 laws to the extent of its operation as such a provider acts 16 as an intermediary by processing payments between an entity 17 that has directly incurred an outstanding money transmission 18 obligation to a sender, and the senders designated recipient, 19 provided all of the following apply: 20 a. The entity is properly licensed or exempt from licensing 21 requirements under this chapter . 22 b. The entity provides a receipt, electronic record, or 23 other written confirmation to the sender identifying the entity 24 as the provider of money transmission in the transaction. 25 c. The entity bears sole responsibility to satisfy the 26 outstanding money transmission obligations to the sender, 27 including the obligation to make the sender whole in connection 28 with any failure to transmit the funds to the senders 29 designated recipient. 30 9. An operator of a payment system to the extent that it 31 provides processing, clearing, or settlement services, between 32 or among persons excluded by this section , or licensees, in 33 connection with wire transfers, credit card transactions, 34 debit card transactions, stored-value transactions, automated 35 -10- LSB 1213XD (13) 90 es/rn 10/ 59
S.F. _____ H.F. _____ clearing house transfers, or similar funds transfers. 1 10. A person registered as a securities broker-dealer under 2 federal or state securities laws to the extent of its operation 3 as such a broker-dealer. 4 11. A delayed deposit services business as defined in 5 chapter 533D . 6 12. A real estate broker or salesperson as defined in 7 chapter 543B . 8 13. Pari-mutuel wagering, racetracks, excursion gambling 9 boats, and gambling structures as provided in chapters 99D and 10 99F . 11 14. A person engaging in the business of debt management 12 that is licensed or exempt from licensing pursuant to section 13 533A.2 . 14 15. An insurance company organized under chapter 508 , 514 , 15 514B , 515 , 518 , 518A , or 520 , or authorized to do the business 16 of insurance in Iowa to the extent of its operation as an 17 insurance company. 18 16. An insurance producer as defined in section 522B.1 to 19 the extent of its operation as an insurance producer. 20 17. A person appointed as an agent of a payee to collect 21 and process a payment from a payor to the payee for goods or 22 services, other than money transmission itself, provided to the 23 payor by the payee, provided all of the following apply: 24 a. There exists a written agreement between the payee and 25 the agent directing the agent to collect and process payments 26 from payors on the payees behalf. 27 b. The payee holds the agent out to the public as accepting 28 payments for goods or services on the payees behalf. 29 c. Payment for the goods and services is treated as received 30 by the payee upon receipt by the agent so that the payors 31 obligation is extinguished and there is no risk of loss to the 32 payor if the agent fails to remit the funds to the payee. 33 18. An individual employed by a licensee, authorized 34 delegate, or any person exempted from the licensing 35 -11- LSB 1213XD (13) 90 es/rn 11/ 59
S.F. _____ H.F. _____ requirements of this chapter when acting within the scope 1 of employment and under the supervision of the licensee, 2 authorized delegate, or exempted person as an employee and not 3 as an independent contractor. 4 19. A person expressly appointed as a third-party service 5 provider to or agent of an entity exempt under subsection 4, 6 provided all of the following apply: 7 a. The service provider or agent is engaging in money 8 transmission on behalf of and pursuant to a written agreement 9 with the exempt entity that sets forth the specific functions 10 that the service provider or agent is to perform. 11 b. The exempt entity assumes all risk of loss and all 12 legal responsibility for satisfying the outstanding money 13 transmission obligations owed to purchasers and holders of the 14 outstanding money transmission obligations upon receipt of the 15 purchasers or holders money or monetary value by the service 16 provider or agent. 17 20. A person exempt by regulation or order if the 18 superintendent finds such exemption to be in the public 19 interest and that the regulation of such person is not 20 necessary for the purposes of this chapter. 21 Sec. 5. Section 533C.201, Code 2023, is amended by striking 22 the section and inserting in lieu thereof the following: 23 533C.201 Implementation. 24 1. In order to carry out the purposes of this chapter, 25 the superintendent may, subject to the provisions of section 26 533C.202: 27 a. Enter into agreements or relationships with other 28 government officials, federal and state regulatory agencies, 29 and regulatory associations in order to improve efficiencies 30 and reduce regulatory burden by standardizing methods or 31 procedures, and sharing resources, records, or related 32 information obtained under this chapter. 33 b. Use, hire, contract, or employ analytical systems, 34 methods, or software to examine or investigate any person 35 -12- LSB 1213XD (13) 90 es/rn 12/ 59
S.F. _____ H.F. _____ subject to this chapter. 1 c. Accept, from other state or federal government agencies 2 or officials, licensing, examination, or investigation reports 3 made by such other state or federal government agencies or 4 officials. 5 d. Accept audit reports made by an independent certified 6 public accountant or other qualified third-party auditor for an 7 applicant or licensee and incorporate the audit report in any 8 report of examination or investigation. 9 2. The superintendent shall have the broad administrative 10 authority to administer, interpret, and enforce this chapter, 11 to promulgate rules or regulations implementing this chapter, 12 and to recover the cost of administering and enforcing this 13 chapter by imposing and collecting proportionate and equitable 14 fees and costs associated with applications, examinations, 15 investigations, and other actions required to achieve the 16 purpose of this chapter. 17 3. For a transaction requested electronically or by phone, 18 the provider of money transmission may determine if the person 19 requesting the transmission is located in this state by relying 20 on other information provided by the person regarding the 21 location of the individuals residential address or a business 22 entitys principal place of business or other physical address 23 location, and any records associated with the person that the 24 provider of money transmission may have that indicate such 25 location, including but not limited to an address associated 26 with an account, provided that any transaction requested by 27 an individual whose residential address is in Iowa shall be 28 presumed to occur in Iowa. 29 4. Outstanding money transmission obligations shall be 30 established and extinguished in accordance with applicable 31 state law. 32 Sec. 6. Section 533C.202, Code 2023, is amended by striking 33 the section and inserting in lieu thereof the following: 34 533C.202 Confidentiality. 35 -13- LSB 1213XD (13) 90 es/rn 13/ 59
S.F. _____ H.F. _____ 1. Except as otherwise provided in subsection 2, financial 1 statements, balance sheets, authorized delegate information, 2 all information and reports obtained by the superintendent 3 from an applicant, licensee, or authorized delegate, and 4 all information contained in or related to an examination, 5 investigation, operating report, or condition report prepared 6 by, on behalf of, or for the use of the superintendent are 7 confidential and are not subject to disclosure under chapter 8 22. 9 2. The superintendent may disclose information not 10 otherwise subject to disclosure under subsection 1 where: 11 a. Representatives of state or federal agencies certify in 12 a record that they shall maintain the confidentiality of the 13 information. 14 b. The superintendent finds that the release is reasonably 15 necessary for the protection and interest of the public in 16 accordance with chapter 22. 17 3. This section does not prohibit the superintendent 18 from disclosing to the public a list of all licensees or the 19 aggregated financial or transactional data concerning those 20 licensees. 21 4. The division of banking or superintendents records 22 containing nonconfidential information may be made available 23 to the public on the divisions website, upon receipt by the 24 division of a written request, or via the NMLS. The release 25 of information shall include, where applicable, all of the 26 following: 27 a. The name, business address, telephone number, and unique 28 identifier of a licensee. 29 b. The business address of a licensees registered agent for 30 service. 31 c. The name, business address, and telephone number of all 32 authorized delegates. 33 d. The terms, or a copy, of any bond filed by a licensee, 34 provided that confidential information, including but not 35 -14- LSB 1213XD (13) 90 es/rn 14/ 59
S.F. _____ H.F. _____ limited to prices and fees for such bond, is redacted. 1 e. Copies of any nonconfidential final orders of the 2 superintendent relating to any violation of this chapter or 3 regulations implementing this chapter. 4 f. Imposition of an administrative fine or penalty under 5 this chapter. 6 Sec. 7. Section 533C.203, Code 2023, is amended by striking 7 the section and inserting in lieu thereof the following: 8 533C.203 Supervision. 9 1. The superintendent may conduct an examination or 10 investigation of a licensee or authorized delegate or otherwise 11 take independent action authorized by this chapter or by a 12 rule adopted or order issued under this chapter as reasonably 13 necessary or appropriate to administer and enforce this 14 chapter, regulations implementing this chapter, and other 15 applicable law, including the federal Bank Secrecy Act, Pub. 16 L. No. 91-508, and the federal Uniting and Strengthening 17 America by Providing Appropriate Tools Required to Intercept 18 and Obstruct Terrorism Act of 2001, Pub. L. No. 107-56. The 19 superintendent shall provide supervision as follows: 20 a. Conducting an examination either on site or off site as 21 the supervision may reasonably require. 22 b. Conducting an examination in conjunction with an 23 examination conducted by representatives of other state 24 agencies or agencies of another state or of the federal 25 government. 26 c. Accepting the examination report of another state agency 27 or an agency of another state or of the federal government, or 28 a report prepared by an independent accounting firm, which on 29 being accepted is considered for all purposes as an official 30 report of the superintendent. 31 d. Summoning and examining under oath a key individual or 32 employee of a licensee or authorized delegate and requiring the 33 person to produce records regarding any matter related to the 34 condition and business of the licensee or authorized delegate. 35 -15- LSB 1213XD (13) 90 es/rn 15/ 59
S.F. _____ H.F. _____ 2. A licensee or authorized delegate shall provide, and 1 the superintendent shall have full and complete access to, all 2 records the superintendent may reasonably require to conduct 3 a complete examination. The records shall be provided at the 4 location and in the format specified by the superintendent, 5 provided the superintendent may utilize multistate record 6 production standards and examination procedures when such 7 standards will reasonably achieve the requirements of this 8 section. 9 3. Unless otherwise directed by the superintendent, a 10 licensee shall pay all costs reasonably incurred in connection 11 with an examination of the licensee or the licensees 12 authorized delegates. 13 Sec. 8. Section 533C.204, Code 2023, is amended by striking 14 the section and inserting in lieu thereof the following: 15 533C.204 Networked supervision. 16 1. To efficiently and effectively administer and 17 enforce this chapter and to minimize regulatory burden, the 18 superintendent is authorized and encouraged to participate in 19 multistate supervisory processes established between states and 20 coordinated through the conference of state bank supervisors, 21 the money transmitter regulators association, and affiliates 22 and successors thereof for all licensees that hold licenses in 23 this state and other states. As a participant in multistate 24 supervision, the superintendent shall engage in all of the 25 following: 26 a. Cooperation, coordination, and information sharing with 27 other state and federal regulators in accordance with section 28 533C.202. 29 b. Cooperation, coordination, and information sharing with 30 organizations, the membership of which is made up of state or 31 federal government agencies, provided that the organizations 32 agree in writing to maintain the confidentiality and security 33 of the shared information in accordance with section 533C.202. 34 c. Entering into written cooperation, coordination, or 35 -16- LSB 1213XD (13) 90 es/rn 16/ 59
S.F. _____ H.F. _____ information-sharing contracts or agreements with organizations 1 the membership of which is made up of state or federal 2 government agencies. 3 2. The superintendent shall not waive, and nothing in this 4 section constitutes a waiver of, the superintendents authority 5 to conduct an examination or investigation or otherwise take 6 independent action authorized by this chapter or a rule adopted 7 or order issued under this chapter to enforce compliance with 8 applicable state or federal law. 9 3. A joint examination or investigation, or acceptance of 10 an examination or investigation report, shall not waive an 11 examination assessment provided for in this chapter. 12 Sec. 9. Section 533C.205, Code 2023, is amended by striking 13 the section and inserting in lieu thereof the following: 14 533C.205 Relationship to federal law. 15 1. In the event state money transmission jurisdiction is 16 conditioned on a federal law, any inconsistencies between a 17 provision of this chapter and the federal law governing money 18 transmission shall be governed by the applicable federal law to 19 the extent of the inconsistency. 20 2. In the event of any inconsistencies between this chapter 21 and a federal law that governs pursuant to subsection 1, 22 the superintendent may provide interpretive guidance that 23 identifies the inconsistency and the appropriate means of 24 compliance with federal law. 25 Sec. 10. Section 533C.301, Code 2023, is amended to read as 26 follows: 27 533C.301 License required. 28 1. A person shall not engage in currency exchange the 29 business of money transmission or advertise, solicit, or hold 30 itself out as providing currency exchange for which the person 31 receives revenues equal to or greater than five percent of 32 total revenues unless the person: money transmission unless 33 they are 34 a. Is licensed under this article . 35 -17- LSB 1213XD (13) 90 es/rn 17/ 59
S.F. _____ H.F. _____ b. Is licensed for money transmission under article 2 . 1 c. Is an authorized delegate of a person licensed under 2 article 2 . 3 2. This section shall not apply to the following: 4 a. A person that is an authorized delegate of a person 5 licensed under this chapter acting within the scope of 6 authority conferred by a written contract with the licensee. 7 b. A person that is exempt pursuant to section 533C.103 and 8 does not engage in money transmission outside the scope of such 9 exemption. 10 2. 3. A license under this article is not transferable or 11 assignable. 12 Sec. 11. Section 533C.302, Code 2023, is amended by striking 13 the section and inserting in lieu thereof the following: 14 533C.302 Consistent state licensing. 15 1. To establish consistent licensing between this state and 16 other states, the superintendent is authorized and encouraged 17 to provide all of the following: 18 a. Implement all licensing provisions of this chapter in a 19 manner that is consistent with other states that have adopted 20 this chapter or multistate licensing processes. 21 b. Participate in nationwide protocols for licensing 22 cooperation and coordination among state regulators provided 23 that such protocols are consistent with this section. 24 2. The superintendent is authorized and encouraged to 25 establish relationships or contracts with NMLS or other 26 entities designated by NMLS to enable the superintendent to do 27 all of the following: 28 a. Collect and maintain records. 29 b. Coordinate multistate licensing processes and supervision 30 processes. 31 c. Process fees. 32 d. Facilitate communication between this state, the 33 superintendent, and licensees or other persons subject to this 34 chapter. 35 -18- LSB 1213XD (13) 90 es/rn 18/ 59
S.F. _____ H.F. _____ 3. The superintendent is authorized and encouraged to 1 utilize NMLS for all aspects of licensing in accordance 2 with this chapter, including but not limited to: license 3 applications, applications for acquisitions of control, surety 4 bonds, reporting, criminal history background checks, credit 5 checks, fee processing, and examinations. 6 4. The superintendent is authorized and encouraged 7 to utilize NMLS forms, processes, and functionalities in 8 accordance with this chapter. In the event NMLS does not 9 provide functionality, forms, or processes for a provision of 10 this chapter, the superintendent is authorized and encouraged 11 to strive to implement the requirements in a manner that 12 facilitates uniformity with respect to licensing, supervision, 13 reporting, and regulation of licensees which are licensed in 14 multiple jurisdictions. 15 5. For the purpose of participating in the NMLS and 16 registry, the superintendent is authorized to waive or modify, 17 in whole or in part, by rule, regulation, or order, any or 18 all of the requirements and to establish new requirements 19 as reasonably necessary to participate in the nationwide 20 multistate licensing system and registry. 21 Sec. 12. Section 533C.303, Code 2023, is amended by striking 22 the section and inserting in lieu thereof the following: 23 533C.303 Application for license. 24 1. Applicants for a license under this chapter shall 25 apply on a form prescribed by the superintendent. Each such 26 form shall contain content as set forth by rule, regulation, 27 instruction, or procedure of the superintendent and shall be 28 changed or updated by the superintendent in accordance with 29 applicable law in order to carry out the purposes of this 30 chapter and maintain consistency with NMLS licensing standards 31 and practices. The application shall state or contain, as 32 applicable, the following: 33 a. The legal name and residential and business addresses 34 of the applicant and any fictitious or trade name used by the 35 -19- LSB 1213XD (13) 90 es/rn 19/ 59
S.F. _____ H.F. _____ applicant in conducting its business. 1 b. A list of any criminal convictions of the applicant 2 and any material litigation in which the applicant has been 3 involved in the ten-year period immediately preceding the 4 submission of the application. 5 c. A description of any money transmission previously 6 provided by the applicant and the money transmission that the 7 applicant seeks to provide in this state. 8 d. A list of the applicants proposed authorized delegates 9 and the locations in this state where the applicant and its 10 authorized delegates propose to engage in money transmission. 11 e. A list of other states in which the applicant is licensed 12 to engage in money transmission and of any license revocations, 13 suspensions, or other disciplinary action taken against the 14 applicant in another state. 15 f. Information concerning any bankruptcy or receivership 16 proceedings affecting the licensee or a person in control of 17 a licensee. 18 g. A sample form of contract for authorized delegates. 19 h. A sample form of payment instrument or stored value. 20 i. The name and address of any federally insured depository 21 financial institution through which the applicant plans to 22 conduct money transmission. 23 j. Any other information the superintendent or NMLS 24 reasonably requires with respect to the applicant. 25 2. If an applicant is a corporation, limited liability 26 company, partnership, or other legal entity, the applicant 27 shall also provide all of the following: 28 a. The date of the applicants incorporation or formation 29 and state or country of incorporation or formation. 30 b. If applicable, a certificate of good standing from the 31 state or country in which the applicant is incorporated or 32 formed. 33 c. A brief description of the structure or organization of 34 the applicant, including any parents or subsidiaries of the 35 -20- LSB 1213XD (13) 90 es/rn 20/ 59
S.F. _____ H.F. _____ applicant, and whether any parents or subsidiaries are publicly 1 traded. 2 d. The legal name, any fictitious or trade name, all 3 business and residential addresses, and the employment, in the 4 ten-year period immediately preceding the submission of the 5 application of each key individual and person in control of the 6 applicant. 7 e. A list of any criminal convictions and material 8 litigation in which a person in control of the applicant that 9 is not an individual has been involved in the ten-year period 10 immediately preceding the submission of the application. 11 f. A copy of audited financial statements for the most 12 recent fiscal year and for the two-year period immediately 13 preceding the submission of the application or, if determined 14 to be acceptable to the superintendent, certified unaudited 15 financial statements for the most recent fiscal year or other 16 period acceptable to the superintendent. 17 g. A certified copy of the applicants unaudited financial 18 statements for the most recent fiscal quarter. 19 h. If the applicant is a publicly traded corporation, a 20 copy of the most recent report filed with the United States 21 securities and exchange commission under section 13 of the 22 federal Securities Exchange Act of 1934, 15 U.S.C. 78m, as 23 amended. 24 i. If the applicant is a wholly owned subsidiary of any of 25 the following: 26 (1) A corporation publicly traded in the United States, a 27 copy of audited financial statements for the parent corporation 28 for the most recent fiscal year or a copy of the parent 29 corporations most recent report filed under section 13 of the 30 federal Securities Exchange Act of 1934, 15 U.S.C. 78m, as 31 amended. 32 (2) A corporation publicly traded outside the United 33 States, a copy of similar documentation filed with the 34 regulator of the parent corporations domicile outside the 35 -21- LSB 1213XD (13) 90 es/rn 21/ 59
S.F. _____ H.F. _____ United States. 1 j. The name and address of the applicants registered agent 2 in this state. 3 k. Any other information the superintendent reasonably 4 requires with respect to the applicant. 5 3. A nonrefundable application fee of one thousand dollars 6 and a license fee shall accompany an application for a license 7 under this chapter. The license fee shall be refunded if 8 the application is denied. The license fee shall be the sum 9 of five hundred dollars plus an additional ten dollars for 10 each location in this state at which business is conducted 11 through authorized delegates or employees of the licensee, but 12 shall not exceed five thousand dollars. Fees for locations 13 added after the initial application shall be submitted with 14 the quarterly reports pursuant to section 533C.601. If the 15 licensee has no locations in this state at which business is 16 conducted through authorized delegates or employees of the 17 licensee, the license fee shall be set by the superintendent, 18 but shall not exceed five thousand dollars. A license 19 under this chapter expires on the next December 31 after its 20 issuance. The initial license fee is considered an annual fee 21 and the superintendent shall prorate the license fee, refunding 22 any amount due to a partial license year. No refund of a 23 license fee shall be made when a license is suspended, revoked, 24 or surrendered. 25 4. A person who requests written confirmation from the 26 superintendent that a license is not required shall submit a 27 fee of one hundred dollars along with the written request. 28 Sec. 13. Section 533C.304, Code 2023, is amended by striking 29 the section and inserting in lieu thereof the following: 30 533C.304 Information requirements for certain individuals. 31 1. An individual in control of a licensee or applicant, an 32 individual seeking to acquire control of a licensee, and each 33 key individual shall furnish to the superintendent through NMLS 34 the following items: 35 -22- LSB 1213XD (13) 90 es/rn 22/ 59
S.F. _____ H.F. _____ a. The individuals fingerprints for submission to the 1 federal bureau of investigation and the superintendent for 2 purposes of a national criminal history background check unless 3 the person currently resides outside of the United States and 4 has resided outside of the United States for the last ten 5 years. 6 b. Personal history and experience in a form and in a 7 medium prescribed by the superintendent, to obtain all of the 8 following: 9 (1) An independent credit report from a consumer reporting 10 agency. If the individual does not have a social security 11 number, the requirement shall be waived. 12 (2) Information related to any criminal convictions or 13 pending charges. 14 (3) Information related to any regulatory or administrative 15 action and any civil litigation involving claims of fraud, 16 misrepresentation, conversion, mismanagement of funds, breach 17 of fiduciary duty, or breach of contract. 18 2. If the individual has resided outside of the United 19 States at any time in the last ten years, the individual shall 20 also provide an investigative background report prepared by an 21 independent search firm. The search firm shall demonstrate 22 it has sufficient knowledge, resources, and employs accepted 23 and reasonable methodologies to conduct the research of the 24 background report and be unaffiliated with, or have no interest 25 in, the individual it is researching. The investigative 26 background report shall be written in the English language and 27 shall contain all of the following: 28 a. If available in the individuals current jurisdiction 29 of residency, a comprehensive credit report, or any equivalent 30 information obtained or generated by the independent search 31 firm to accomplish such report, including a search of the court 32 data in the countries, provinces, states, cities, towns, and 33 contiguous areas where the individual resided and worked. 34 b. Criminal record information for the past ten years, 35 -23- LSB 1213XD (13) 90 es/rn 23/ 59
S.F. _____ H.F. _____ including but not limited to felonies, misdemeanors, or 1 similar convictions for violations of law in the countries, 2 provinces, states, cities, towns, and contiguous areas where 3 the individual resided and worked. 4 c. Employment history. 5 d. Media history, including an electronic search of 6 national and local publications, wire services, and business 7 applications. 8 e. Financial services-related regulatory history, including 9 but not limited to money transmission, securities, banking, 10 insurance, and mortgage-related industries. 11 Sec. 14. NEW SECTION . 533C.305 Issuance of license. 12 1. When an application for an original license is filed 13 under this chapter and appears to include all required 14 information, the application is considered complete and the 15 superintendent shall promptly notify the applicant in a record 16 of the date on which the application is determined to be 17 complete. The application is approved one hundred twenty-one 18 days after completion, unless denied or approved earlier by 19 the superintendent. The license takes effect as of the first 20 business day after expiration of the one hundred twenty-day 21 period. The superintendent may for good cause extend the 22 application period. 23 2. A determination by the superintendent that an 24 application is complete and is accepted for processing means 25 only that the application, on its face, appears to include 26 all of the items, including the criminal background check 27 response from the federal bureau of investigation, and address 28 all of the matters that are required. A determination by 29 the superintendent that an application is complete is not 30 an assessment of the substance of the application or of the 31 sufficiency of the information provided. 32 3. When an application is filed and considered complete 33 under this section, the superintendent shall investigate the 34 applicants financial condition and responsibility, financial 35 -24- LSB 1213XD (13) 90 es/rn 24/ 59
S.F. _____ H.F. _____ and business experience, character, and general fitness. The 1 superintendent may conduct an on-site investigation of the 2 applicant, the reasonable cost of which the applicant shall 3 pay. The superintendent shall issue a license to an applicant 4 under this section if the superintendent finds that all of the 5 following conditions have been fulfilled: 6 a. The applicant has complied with sections 533C.303 and 7 533C.304. 8 b. The financial condition and responsibility, financial and 9 business experience, competence, character, and general fitness 10 of the applicant or key individuals and person in control of 11 the applicant, indicate that it is in the interest of the 12 public to permit the applicant to engage in money transmission. 13 4. If an applicant avails itself or is otherwise subject 14 to a multistate licensing process, the superintendent is 15 authorized and encouraged to accept the investigation results 16 of a lead investigative state for the purpose of subsection 17 3, if the lead investigative state has sufficient staffing, 18 expertise, and minimum standards. Additionally, if this 19 state is a lead investigative state, the superintendent is 20 authorized and encouraged to investigate the applicant pursuant 21 to subsection 3, and the time frames established by agreement 22 through the multistate licensing process, provided, that in no 23 case shall such time frame be noncompliant with the application 24 period in subsection 1, paragraph a . 25 5. The superintendent shall issue a formal written notice 26 of the denial of a license application within thirty days of 27 the decision to deny the application. The superintendent shall 28 set forth in the notice of denial the specific reasons for the 29 denial of the application. An applicant whose application is 30 denied by the superintendent under this section may appeal 31 within thirty days after receipt of the written notice of the 32 denial pursuant to chapter 17A. 33 6. The initial license term shall begin on the day the 34 application is approved. The license shall expire on December 35 -25- LSB 1213XD (13) 90 es/rn 25/ 59
S.F. _____ H.F. _____ 31 of the year in which the license term began, unless the 1 initial license date is between November 1 and December 31, in 2 which case the initial license term shall run through December 3 31 of the following year. 4 Sec. 15. NEW SECTION . 533C.306 Renewal of license. 5 1. A license under this chapter shall be renewed annually. 6 An annual renewal fee of five hundred dollars plus an 7 additional ten dollars for each location in this state at which 8 business is conducted through authorized delegates or employees 9 of the licensee, which shall not exceed five thousand dollars, 10 shall be paid no more than sixty days before the license 11 expiration. The renewal term shall be for a period of one year 12 and shall begin on January 1 of each year after the initial 13 license term and shall expire on December 31 of the year the 14 renewal term begins. 15 2. A licensee shall submit a renewal report with the 16 renewal fee, in a form prescribed by the superintendent. The 17 renewal report shall state or contain a description of each 18 material change in information submitted by the licensee in its 19 original license application which has not been reported to the 20 superintendent. 21 3. The superintendent for good cause may grant an extension 22 of the renewal date. 23 4. The superintendent is authorized and encouraged 24 to utilize NMLS to process renewals provided that such 25 functionality is consistent with this section. 26 5. If a licensee does not file a renewal report or pay its 27 renewal fee by December 1, or any extension of time granted by 28 the superintendent, the superintendent may assess a late fee 29 of one hundred dollars per day. 30 Sec. 16. NEW SECTION . 533C.307 Maintenance of license. 31 If a licensee does not continue to meet the qualifications or 32 satisfy the requirements that apply to an applicant for a new 33 money transmission license, the superintendent may suspend or 34 revoke the licensees license in accordance with the procedures 35 -26- LSB 1213XD (13) 90 es/rn 26/ 59
S.F. _____ H.F. _____ established by this chapter or other applicable state law for 1 such suspension or revocation. 2 1. An applicant for a money transmission license shall 3 demonstrate that the applicant meets or will meet the 4 requirements of sections 533C.801, 533C.802, and 533C.803. 5 2. A money transmission licensee shall at all times meet the 6 requirements of sections 533C.801, 533C.802, and 533C.803. 7 Sec. 17. Section 533C.401, Code 2023, is amended by striking 8 the section and inserting in lieu thereof the following: 9 533C.401 Acquisition of control. 10 1. Any person, or group of persons acting in concert, 11 seeking to acquire control of a licensee shall obtain the 12 written approval of the superintendent prior to acquiring 13 control. An individual is not deemed to acquire control 14 of a licensee and is not subject to acquisition of control 15 provisions when that individual becomes a key individual in the 16 ordinary course of business. 17 2. A person is presumed to exercise a controlling 18 influence when the person holds the power to vote, directly 19 or indirectly, at least ten percent of the outstanding voting 20 shares or voting interests of a licensee or person in control 21 of a licensee. A person presumed to exercise a controlling 22 influence can rebut the presumption of control if the person 23 is a passive investor. 24 3. For purposes of determining the percentage of a 25 person controlled by any other person, the persons interest 26 shall be aggregated with the interest of any other immediate 27 family member, including the persons spouse, parents, 28 children, siblings, mother-in-law, father-in-law, son-in-law, 29 daughter-in-law, brother-in-law, sister-in-law, and any other 30 person who shares such persons home. 31 4. A person, or group of persons acting in concert, seeking 32 to acquire control of a licensee shall, in cooperation with 33 the licensee, submit an application in a form and in a medium 34 prescribed by the superintendent and a nonrefundable fee of one 35 -27- LSB 1213XD (13) 90 es/rn 27/ 59
S.F. _____ H.F. _____ thousand dollars with the request for approval. 1 5. Upon request, the superintendent may permit a licensee or 2 the person, or group of persons acting in concert, to submit 3 some or all information required by the superintendent pursuant 4 to subsection 4 without using NMLS. 5 6. The application required by subsection 4 shall include 6 information required by section 533C.304 for a licensee, 7 including for any new key individuals that have not previously 8 completed the requirements. 9 7. When an application for acquisition of control under this 10 section appears to include all the items and address all of the 11 matters that are required, the application shall be considered 12 complete and the superintendent shall promptly notify the 13 applicant in a record of the date on which the application was 14 determined to be complete. The application is approved and the 15 person, or group of persons acting in concert, are permitted to 16 acquire control sixty-one days after application completion, 17 unless denied or approved earlier by the superintendent. The 18 superintendent may for good cause extend the application 19 period. 20 8. A determination by the superintendent that an 21 application is complete and is accepted for processing means 22 only that the application, on its face, appears to include all 23 of the items and address all of the matters that are required, 24 and is not an assessment of the substance of the application or 25 of the sufficiency of the information provided. 26 9. When an application is filed and considered complete 27 under subsection 7, the superintendent shall investigate the 28 financial condition and responsibility, financial and business 29 experience, character, and general fitness of the person, or 30 group of persons acting in concert, seeking to acquire control. 31 The superintendent shall approve an acquisition of control 32 pursuant to this section if the superintendent finds that all 33 of the following conditions have been fulfilled: 34 a. The requirements of subsections 4 and 6 have been met, 35 -28- LSB 1213XD (13) 90 es/rn 28/ 59
S.F. _____ H.F. _____ as applicable. 1 b. The financial condition and responsibility, financial and 2 business experience, competence, character, and general fitness 3 of the person, or group of persons acting in concert, seeking 4 to acquire control, and of the key individuals and persons that 5 would be in control of the licensee indicate that it is in the 6 interest of the public to permit the applicant to control the 7 licensee. 8 10. If an applicant avails itself or is otherwise subject 9 to a multistate licensing process, the superintendent is 10 authorized and encouraged to accept the investigation results 11 of a lead investigative state for the purpose of subsection 12 9 if the lead investigative state has sufficient staffing, 13 expertise, and minimum standards. If this state is a lead 14 investigative state, the superintendent is authorized and 15 encouraged to investigate the applicant pursuant to subsection 16 9 and the time frames established by agreement through the 17 multistate licensing process. 18 11. The superintendent shall issue a formal written 19 notice of the denial of an application to acquire control 20 within thirty days of the decision to deny the application. 21 The superintendent shall set forth in the notice of denial 22 the specific reasons for the denial of the application. An 23 applicant whose application is denied by the superintendent 24 under this section may appeal within thirty days after receipt 25 of the written notice of the denial. 26 12. The requirements of subsections 1 and 4 shall not apply 27 to any of the following: 28 a. A person that acts as a proxy for the sole purpose of 29 voting at a designated meeting of the shareholders or holders 30 of voting shares or voting interests of a licensee or a person 31 in control of a licensee. 32 b. A person that acquires control of a licensee by devise 33 or descent. 34 c. A person that acquires control of a licensee as a 35 -29- LSB 1213XD (13) 90 es/rn 29/ 59
S.F. _____ H.F. _____ personal representative, custodian, guardian, conservator, or 1 trustee, or as an officer appointed by a court of competent 2 jurisdiction or by operation of law. 3 d. A person that is exempt under section 533C.103, 4 subsection 4. 5 e. A person that the superintendent determines is not 6 subject to subsection 1 based on the public interest. 7 f. A public offering of securities of a licensee or a person 8 in control of a licensee. 9 g. An internal reorganization of a person in control of the 10 licensee where the ultimate person in control of the licensee 11 remains the same. 12 13. Persons specified in subsection 12, paragraphs b , 13 c , d , f , and g , in cooperation with the licensee, 14 shall notify the superintendent within fifteen days after the 15 acquisition of control. 16 14. The requirements of subsections 1 and 4 shall not 17 apply to a person that has complied with and received approval 18 to engage in money transmission under this chapter or was 19 identified as a person in control in a prior application filed 20 with and approved by the superintendent or by an MSB accredited 21 state pursuant to a multistate licensing process, provided all 22 of the following apply: 23 a. The person has not had a license revoked or suspended. 24 b. The person has not controlled a licensee that has had a 25 license revoked or suspended while the person was in control of 26 the licensee in the previous five years. 27 c. If the person is a licensee, the person is well-managed 28 and has received at least a satisfactory rating for compliance 29 at its most recent examination by an MSB-accredited state if 30 such rating was given. 31 d. The licensee to be acquired is projected to meet the 32 requirements of sections 533C.801, 533C.802, and 533C.803 after 33 the acquisition of control is completed. 34 e. If the person acquiring control is a licensee, that 35 -30- LSB 1213XD (13) 90 es/rn 30/ 59
S.F. _____ H.F. _____ licensee is projected to meet the requirements of sections 1 533C.801, 533C.802, and 533C.803 after the acquisition of 2 control is completed. 3 f. The licensee to be acquired will not implement any 4 material changes to its business plan as a result of the 5 acquisition of control. 6 g. If the person acquiring control is a licensee, that 7 licensee will not implement any material changes to its 8 business plan as a result of the acquisition of control. 9 h. The person provides notice of the acquisition in 10 cooperation with the licensee and attests to the provisions in 11 this subsection in a form and in a medium prescribed by the 12 superintendent. If the notice is not disapproved within thirty 13 days after the date on which the notice was determined to be 14 complete, the notice is deemed approved. 15 15. Before filing an application for approval to acquire 16 control of a licensee, a person may request in writing a 17 determination from the superintendent as to whether the person 18 would be considered a person in control of a licensee upon 19 consummation of a proposed transaction. If the superintendent 20 determines that the person would not be a person in control of 21 a licensee, the proposed person and transaction are not subject 22 to the requirements of subsections 1 and 4. 23 16. If a multistate licensing process includes a 24 determination pursuant to subsection 15 and an applicant avails 25 itself or is otherwise subject to the multistate licensing 26 process, the superintendent is authorized and encouraged to 27 accept the control determination of a lead investigative state 28 with sufficient staffing, expertise, and minimum standards 29 for the purpose of subsection 15. If this state is a lead 30 investigative state, the superintendent is authorized and 31 encouraged to investigate the applicant pursuant to subsection 32 15 and the time frames established by agreement through the 33 multistate licensing process. 34 Sec. 18. Section 533C.402, Code 2023, is amended by striking 35 -31- LSB 1213XD (13) 90 es/rn 31/ 59
S.F. _____ H.F. _____ the section and inserting in lieu thereof the following: 1 533C.402 Notice and information requirements for a change of 2 key individuals. 3 1. A licensee adding or replacing any key individual shall 4 provide notice in a manner prescribed by the superintendent 5 within fifteen days after the effective date of the key 6 individuals appointment and provide information as required by 7 section 533C.304 within forty-five days of the effective date. 8 2. A key individual is considered approved ninety-one 9 days after notice is provided pursuant to this section, 10 unless denied or approved earlier by the superintendent. 11 The superintendent may issue a notice of disapproval of a 12 key individual if the competence, experience, character, or 13 integrity of the individual would not be in the best interests 14 of the public or the customers of the licensee to permit 15 the individual to be a key individual of such licensee. A 16 notice of disapproval shall contain a statement of the basis 17 for disapproval and shall be sent to the licensee and the 18 disapproved individual. A licensee may appeal a notice of 19 disapproval within thirty days after receipt of the written 20 notice of such disapproval. 21 3. If a multistate licensing process includes a key 22 individual notice review and disapproval process pursuant to 23 this section and the licensee avails itself or is otherwise 24 subject to the multistate licensing process, the superintendent 25 is authorized and encouraged to accept the determination 26 of another state if the investigating state has sufficient 27 staffing, expertise, and minimum standards for the purpose of 28 this section. If this state is a lead investigative state, 29 the superintendent is authorized and encouraged to investigate 30 the applicant pursuant to subsection 2 and the time frames 31 established by agreement through the multistate licensing 32 process. 33 Sec. 19. Section 533C.501, Code 2023, is amended by striking 34 the section and inserting in lieu thereof the following: 35 -32- LSB 1213XD (13) 90 es/rn 32/ 59
S.F. _____ H.F. _____ 533C.501 Relationship between licensee and authorized 1 delegate. 2 1. Before a licensee is authorized to conduct business 3 through an authorized delegate or allows a person to act as the 4 licensees authorized delegate, the licensee shall do all of 5 the following: 6 a. Adopt, and update as necessary, written policies and 7 procedures reasonably designed to ensure that the licensees 8 authorized delegates comply with applicable state and federal 9 law. 10 b. Enter into a written contract that complies with this 11 subsection. 12 c. Conduct a reasonable risk-based background investigation 13 sufficient for the licensee to determine whether the authorized 14 delegate has complied and will likely comply with applicable 15 state and federal law. 16 2. An authorized delegate shall operate in full compliance 17 with this chapter. 18 3. The written contract required by subsection 1, shall be 19 signed by the licensee and the authorized delegate and shall: 20 a. Appoint the person signing the contract as the licensees 21 authorized delegate with the authority to conduct money 22 transmission on behalf of the licensee. 23 b. Set forth the nature and scope of the relationship 24 between the licensee and the authorized delegate and the 25 respective rights and responsibilities of the parties. 26 c. Require the authorized delegate to agree to fully 27 comply with all applicable state and federal laws, rules, and 28 regulations pertaining to money transmission, including this 29 chapter and regulations implementing this chapter, relevant 30 provisions of the federal Bank Secrecy Act and federal Uniting 31 and Strengthening America by Providing Appropriate Tools 32 Required to Intercept and Obstruct Terrorism Act of 2001, Pub. 33 L. No. 107-56. 34 d. Require the authorized delegate to remit and handle money 35 -33- LSB 1213XD (13) 90 es/rn 33/ 59
S.F. _____ H.F. _____ and monetary value in accordance with the terms of the contract 1 between the licensee and the authorized delegate. 2 e. Impose a trust on money and monetary value net of 3 fees received for money transmission for the benefit of the 4 licensee. 5 f. Require the authorized delegate to prepare and maintain 6 records as required by this chapter or regulations implementing 7 this chapter, or as reasonably requested by the superintendent. 8 g. Acknowledge that the authorized delegate consents to 9 examination or investigation by the superintendent. 10 h. State that the licensee is subject to regulation by the 11 superintendent who may suspend or revoke an authorized delegate 12 designation or require the licensee to terminate an authorized 13 delegate designation as a part of regulation. 14 i. Acknowledge receipt of the written policies and 15 procedures required under subsection 1. 16 4. If the licensees license is suspended, revoked, 17 surrendered, or expired, the licensee shall, within five 18 business days, provide documentation to the superintendent that 19 the licensee has notified all applicable authorized delegates 20 of the licensee whose names are in a record filed with the 21 superintendent of the suspension, revocation, surrender, 22 or expiration of a license. Upon suspension, revocation, 23 surrender, or expiration of a license, applicable authorized 24 delegates shall immediately cease to provide money transmission 25 as an authorized delegate of the licensee. 26 5. An authorized delegate of a licensee holds in trust for 27 the benefit of the licensee all money net of fees received from 28 money transmission. If any authorized delegate commingles any 29 funds received from money transmission with any other funds or 30 property owned or controlled by the authorized delegate, all 31 commingled funds and other property shall be considered held in 32 trust in favor of the licensee in an amount equal to the amount 33 of money net of fees received from money transmission. 34 6. An authorized delegate may not use a subdelegate to 35 -34- LSB 1213XD (13) 90 es/rn 34/ 59
S.F. _____ H.F. _____ conduct money transmission on behalf of a licensee. 1 Sec. 20. Section 533C.502, Code 2023, is amended by striking 2 the section and inserting in lieu thereof the following: 3 533C.502 Unauthorized activities. 4 A person shall not engage in the business of money 5 transmission on behalf of a person not licensed under this 6 chapter. A person who engages in such activity provides 7 money transmission to the same extent as if the person were a 8 licensee, and shall be jointly and severally liable with the 9 unlicensed or nonexempt person. 10 Sec. 21. Section 533C.601, Code 2023, is amended by striking 11 the section and inserting in lieu thereof the following: 12 533C.601 Report of condition. 13 1. A licensee shall submit a report of condition within 14 forty-five days of the end of the calendar quarter, or within 15 any extended time as the superintendent may prescribe. 16 2. The report of condition shall include all of the 17 following: 18 a. Financial information at the licensee level. 19 b. Nationwide and state-specific money transmission 20 transaction information in every jurisdiction in the United 21 States where the licensee is licensed to engage in money 22 transmission. 23 c. Permissible investments report. 24 d. Transaction destination country reporting for money 25 received for transmission, if applicable. This information 26 shall only be included in a report of condition submitted 27 within forty-five days of the end of the fourth calendar 28 quarter. 29 e. Any other information the superintendent reasonably 30 requires with respect to the licensee. The superintendent is 31 authorized and encouraged to utilize NMLS for the submission of 32 the report required by this section and is authorized to update 33 as necessary the requirements of this section to carry out the 34 purposes of this chapter and maintain consistency with NMLS 35 -35- LSB 1213XD (13) 90 es/rn 35/ 59
S.F. _____ H.F. _____ reporting. 1 Sec. 22. Section 533C.602, Code 2023, is amended by striking 2 the section and inserting in lieu thereof the following: 3 533C.602 Audited financials. 4 1. A licensee shall, within ninety days after the end 5 of each fiscal year, or within any extended time as the 6 superintendent may prescribe, file with the superintendent an 7 audited financial statement for the fiscal year prepared in 8 accordance with United States generally accepted accounting 9 principles and any other information as the superintendent may 10 reasonably require. 11 2. The audited financial statements shall be prepared by an 12 independent certified public accountant or independent public 13 accountant who is satisfactory to the superintendent. 14 3. The audited financial statements shall include or be 15 accompanied by a certificate of opinion of the independent 16 certified public accountant or independent public accountant 17 that is satisfactory in form and content to the superintendent. 18 If the certificate or opinion is qualified, the superintendent 19 may order the licensee to take any action as the superintendent 20 may find necessary to enable the independent or certified 21 public accountant or independent public accountant to remove 22 the qualification. 23 Sec. 23. NEW SECTION . 533C.603 Authorized delegate 24 reporting. 25 1. A licensee shall submit a report of authorized delegates 26 within forty-five days of the end of the calendar quarter. The 27 superintendent is authorized and encouraged to utilize NMLS for 28 the submission of the report required by this section provided 29 that such functionality is consistent with the requirements of 30 this section. 31 2. The authorized delegate report shall include the 32 following for each authorized delegate: 33 a. Company legal name. 34 b. Taxpayer employer identification number. 35 -36- LSB 1213XD (13) 90 es/rn 36/ 59
S.F. _____ H.F. _____ c. Principal provider identifier. 1 d. Physical address. 2 e. Mailing address. 3 f. Any business conducted in other states. 4 g. Any fictitious or trade name. 5 h. Contact person name, phone number, and email. 6 i. Start date as licensees authorized delegate. 7 j. End date acting as licensees authorized delegate, if 8 applicable. 9 k. Any other information the superintendent reasonably 10 requires with respect to the authorized delegate. 11 Sec. 24. NEW SECTION . 533C.604 Report of certain events. 12 1. A licensee shall submit a nonrefundable fee of one 13 thousand dollars with the request and file a report with the 14 superintendent within one business day after the licensee knows 15 or has reason to know of the occurrence of any of the following 16 events: 17 a. The filing of a petition by or against the licensee under 18 the federal bankruptcy code, 11 U.S.C. 101 110, as amended, 19 for bankruptcy or reorganization. 20 b. The filing of a petition by or against the licensee for 21 receivership. 22 c. The filing of a petition or commencement of any other 23 judicial or administrative proceeding for its dissolution or 24 reorganization. 25 d. The filing of a petition or the making of a general 26 assignment for the benefit of its creditors. 27 e. The commencement of a proceeding to revoke or suspend its 28 license in a state or country in which the licensee engages in 29 business or is licensed. 30 2. A licensee shall file a report with the superintendent 31 within three business days after the licensee has reason to 32 know of the occurrence of a felony charge or conviction of 33 the licensee, a key individual or person in control of the 34 licensee, or an authorized delegate. 35 -37- LSB 1213XD (13) 90 es/rn 37/ 59
S.F. _____ H.F. _____ Sec. 25. NEW SECTION . 533C.605 Bank secrecy act reports. 1 A licensee and an authorized delegate shall file all reports 2 required by federal currency reporting, record keeping, and 3 suspicious activity reporting requirements pursuant to the 4 federal Bank Secrecy Act and other federal and state laws 5 pertaining to money laundering. The timely filing of a 6 complete and accurate report required under this section with 7 the appropriate federal agency is deemed compliant with the 8 requirements of this section. 9 Sec. 26. NEW SECTION . 533C.606 Records. 10 1. A licensee shall maintain records in any form, for the 11 purpose of determining compliance with this chapter, for at 12 least three years, including all of the following: 13 a. A record of each outstanding money transmission 14 obligation sold. 15 b. A general ledger posted at least monthly containing all 16 asset, liability, capital, income, and expense accounts. 17 c. Bank statements and bank reconciliation records. 18 d. Records or outstanding money transmission obligations. 19 e. Records of each outstanding money transmission obligation 20 paid within the three-year period. 21 f. A list of the last-known names and addresses of all of 22 the licensees authorized delegates. 23 g. Any other records the superintendent reasonably requires 24 by rule. 25 2. Records specified in this section may be maintained 26 outside the state if they are made accessible to the 27 superintendent on seven business days notice that is sent by 28 the superintendent in a record. 29 3. All records maintained by the licensee as required 30 in this section are open to inspection by the superintendent 31 pursuant to section 533C.203. 32 Sec. 27. NEW SECTION . 533C.607 Disclosure. 33 1. Except as otherwise provided by this chapter, the 34 records of the superintendent relating to examinations, 35 -38- LSB 1213XD (13) 90 es/rn 38/ 59
S.F. _____ H.F. _____ supervision, and regulation of a person licensed pursuant to 1 this chapter or authorized delegates of a person licensed 2 pursuant to this chapter are not public records and are 3 not subject to disclosure under chapter 22. Neither the 4 superintendent nor any member of the superintendents staff 5 shall disclose any information obtained in the discharge of the 6 superintendents official duties to any person not connected 7 with the department, except that the superintendent or the 8 superintendents designee may disclose information to the 9 following: 10 a. Representatives of federal agencies insuring accounts in 11 the financial institution. 12 b. Representatives of state agencies, federal agencies, or 13 foreign countries having regulatory or supervisory authority 14 over the activities of the financial institution or similar 15 financial institutions if those representatives are permitted 16 to and do, upon request of the superintendent, disclose similar 17 information respecting those financial institutions under 18 their regulation or supervision, or to those representatives 19 who state in writing under oath that they will maintain the 20 confidentiality of that information. 21 c. To the attorney general. 22 d. To a federal or state grand jury in response to a lawful 23 subpoena or pursuant to a county attorney subpoena. 24 e. To the auditor of the state for the purpose of conducting 25 audits authorized by law. 26 2. Notwithstanding subsection 1, the superintendent may 27 disclose the following: 28 a. The fact of filing of applications with the department 29 pursuant to this chapter, give notice of a hearing, if any, 30 regarding those applications, and announce the superintendents 31 action thereon. 32 b. Final decisions in connection with proceedings for the 33 suspension or revocation of licenses or certificates issued 34 pursuant to this chapter. 35 -39- LSB 1213XD (13) 90 es/rn 39/ 59
S.F. _____ H.F. _____ c. Prepare and circulate reports reflecting the assets and 1 liabilities of licensees on an aggregate basis, including other 2 information considered pertinent to the purpose of each report 3 for general statistical information. 4 d. Prepare and circulate reports provided by law. 5 3. Every official report of the department is prima 6 facie evidence of the facts therein stated in any action or 7 proceeding wherein the superintendent is a party. 8 4. Nothing in this section shall be construed to prevent the 9 disclosure of information that is: 10 a. Admissible in evidence in any civil or criminal 11 proceeding brought by or at the request of the superintendent 12 or this state to enforce or prosecute violations of this 13 chapter, chapter 706B, or the rules adopted, or orders issued 14 pursuant to this chapter. 15 b. Requested by or provided to a federal agency, including 16 but not limited to the department of defense, department of 17 energy, department of homeland security, nuclear regulatory 18 commission, and centers for disease control and prevention, to 19 assist state and local government with domestic preparedness 20 for acts of terrorism. 21 5. The attorney general or the department of public safety 22 may report any possible violations indicated by analysis 23 of the reports required by this chapter to any appropriate 24 law enforcement or regulatory agency for use in the proper 25 discharge of its official duties. The attorney general or the 26 department of public safety shall provide copies of the reports 27 required by this chapter to any appropriate prosecutorial or 28 law enforcement agency upon being provided with a written 29 request for records relating to a specific individual or entity 30 and stating that the agency has an articulable suspicion that 31 such individual or entity has committed a felony offense or a 32 violation of this chapter to which the reports are relevant. 33 A person who releases information received pursuant to this 34 subsection except in the proper discharge of the persons 35 -40- LSB 1213XD (13) 90 es/rn 40/ 59
S.F. _____ H.F. _____ official duties is guilty of a serious misdemeanor. 1 6. Any report, record, information, analysis, or request 2 obtained by the attorney general or department of public safety 3 pursuant to this chapter is not a public record as defined in 4 chapter 22 and is not subject to disclosure. 5 Sec. 28. Section 533C.701, Code 2023, is amended by striking 6 the section and inserting in lieu thereof the following: 7 533C.701 Timely transmission. 8 1. Every licensee shall forward all money received for 9 transmission in accordance with the terms of the agreement 10 between the licensee and the sender unless the licensee has a 11 reasonable belief or a reasonable basis to believe that the 12 sender may be a victim of fraud or that a crime or violation 13 of law, rule, or regulation has occurred, is occurring, or may 14 occur. 15 2. If a licensee fails to forward money received for 16 transmission in accordance with this section, the licensee 17 shall respond to inquiries by the sender with the reason for 18 the failure unless providing a response would violate a state 19 or federal law, rule, or regulation. 20 Sec. 29. Section 533C.702, Code 2023, is amended by striking 21 the section and inserting in lieu thereof the following: 22 533C.702 Refunds. 23 1. Every licensee shall refund to the sender within ten 24 days of receipt of the senders written request for a refund of 25 any and all money received for transmission unless any of the 26 following occurs: 27 a. The money has been forwarded within ten days of the date 28 on which the money was received for transmission. 29 b. Instructions have been given committing an equivalent 30 amount of money to the person designated by the sender within 31 ten days of the date on which the money was received for 32 transmission. 33 c. The agreement between the licensee and the sender 34 instructs the licensee to forward the money at a time that is 35 -41- LSB 1213XD (13) 90 es/rn 41/ 59
S.F. _____ H.F. _____ beyond ten days of the date on which the money was received 1 for transmission. If funds have not yet been forwarded in 2 accordance with the terms of the agreement between the licensee 3 and the sender, the licensee shall issue a refund in accordance 4 with the other provisions of this section. 5 d. The refund is requested for a transaction that the 6 licensee has not completed based on a reasonable belief or a 7 reasonable basis to believe that a crime or violation of law, 8 rule, or regulation has occurred, is occurring, or may occur. 9 e. The refund request does not enable the licensee to 10 identify the senders name and address, telephone number, or 11 the particular transaction to be refunded in the event the 12 sender has multiple transactions outstanding. 13 2. This section does not apply to money received for 14 transmission subject to the remittance transfer rule of the 15 federal Electronic Fund Transfer Act, 12 C.F.R. 1005.30 16 1005.36, as amended, or pursuant to a written agreement 17 between the licensee and payee to process payments for goods or 18 services provided by the payee. 19 Sec. 30. Section 533C.703, Code 2023, is amended by striking 20 the section and inserting in lieu thereof the following: 21 533C.703 Receipts. 22 1. For a transaction conducted in person, the receipt 23 may be provided electronically if the sender requests or 24 agrees to receive an electronic receipt. For a transaction 25 conducted electronically or by phone, a receipt may be provided 26 electronically. All electronic receipts shall be provided in 27 a retainable form. 28 2. Every licensee or its authorized delegate shall provide 29 the sender a receipt for money received for transmission. 30 The receipt required by this section shall be in English 31 and in the language principally used by the licensee or 32 authorized delegate to advertise, solicit, or negotiate, either 33 orally or in writing, for a transaction conducted in person, 34 electronically, or by phone, if other than English, and shall 35 -42- LSB 1213XD (13) 90 es/rn 42/ 59
S.F. _____ H.F. _____ contain, as applicable, all of the following: 1 a. The name of the sender. 2 b. The name of the designated recipient. 3 c. The date of the transaction. 4 d. The unique transaction or identification number. 5 e. The name of the licensee, NMLS unique ID, the licensees 6 business address, and the licensees customer service telephone 7 number. 8 f. The amount of the transaction in United States dollars. 9 g. Any fee charged by the licensee to the sender for the 10 transaction. 11 h. Any taxes collected by the licensee from the sender for 12 the transaction. 13 3. This section does not apply to any of the following: 14 a. Money received for transmission subject to the remittance 15 rule of the federal Electronic Fund Transfer Act, 12 C.F.R. 16 1005.30 1005.36, as amended. 17 b. Money received for transmission that is not primarily for 18 personal, family, or household purposes. 19 c. Money received for transmission pursuant to a written 20 agreement between the licensee and payee to process payments 21 for goods or services provided by the payee. 22 d. Payroll processing services. 23 Sec. 31. Section 533C.704, Code 2023, is amended by striking 24 the section and inserting in lieu thereof the following: 25 533C.704 Disclosures for payroll processing services. 26 1. A licensee that provides payroll processing services 27 shall do all of the following: 28 a. Issue reports to clients detailing client payroll 29 obligations in advance of the payroll funds being deducted from 30 an account. 31 b. Make available worker pay stubs or an equivalent 32 statement to workers. 33 2. This section does not apply to a licensee providing 34 payroll processing services where the licensees client 35 -43- LSB 1213XD (13) 90 es/rn 43/ 59
S.F. _____ H.F. _____ designated the intended recipients to the licensee and the 1 licensee is responsible for providing the disclosures required 2 by subsection 1, paragraph a . 3 Sec. 32. Section 533C.801, Code 2023, is amended by striking 4 the section and inserting in lieu thereof the following: 5 533C.801 Net worth. 6 1. A licensee under this chapter shall maintain at all times 7 a tangible net worth of the greater of one hundred thousand 8 dollars or three percent of total assets for the first one 9 hundred million dollars, two percent of additional assets for 10 one hundred million dollars to one billion dollars, and half of 11 one percent of additional assets for over one billion dollars. 12 2. Tangible net worth shall be demonstrated at initial 13 application by the applicants most recent audited or unaudited 14 financial statements pursuant to section 533C.303, subsection 15 2, paragraph f . 16 3. Notwithstanding the foregoing provisions of this 17 section, the superintendent shall have the authority, for good 18 cause shown, to exempt any applicant or licensee, in part or in 19 whole, from the requirements of this section. 20 Sec. 33. Section 533C.802, Code 2023, is amended by striking 21 the section and inserting in lieu thereof the following: 22 533C.802 Surety bond. 23 1. An applicant for a money transmission license shall 24 provide, and a licensee at all times shall maintain, security 25 consisting of a surety bond in a form satisfactory to the 26 superintendent. 27 2. The amount of the required security shall be the 28 greater of one hundred thousand dollars or an amount equal 29 to one hundred percent of the licensees average daily money 30 transmission liability in this state calculated for the most 31 recently completed three-month period, up to a maximum of five 32 hundred thousand dollars. 33 3. A licensee that maintains a bond in the maximum amount 34 provided for in subsection 2 shall not be required to calculate 35 -44- LSB 1213XD (13) 90 es/rn 44/ 59
S.F. _____ H.F. _____ its average daily money transmission liability in this state 1 for purposes of this section. 2 4. A licensee may exceed the maximum required bond amount 3 pursuant to section 533C.804, subsection 1, paragraph l . 4 Sec. 34. Section 533C.803, Code 2023, is amended by striking 5 the section and inserting in lieu thereof the following: 6 533C.803 Maintenance of permissible investments. 7 1. A licensee shall maintain at all times permissible 8 investments that have a market value computed in accordance 9 with United States generally accepted accounting principles of 10 not less than the aggregate amount of all of its outstanding 11 money transmission obligations. 12 2. Except for permissible investments enumerated in section 13 533C.804, subsection 1, the superintendent, with respect to 14 any licensee, may by rule or order limit the extent to which 15 a specific investment maintained by a licensee within a class 16 of permissible investments may be considered a permissible 17 investment, if the specific investment represents undue risk to 18 customers, not reflected in the market value of investments. 19 3. Permissible investments, even if commingled with other 20 assets of the licensee, are held in trust for the benefit 21 of the purchasers and holders of the licensees outstanding 22 money transmission obligations in the event of insolvency, 23 the filing of a petition by or against the licensee under the 24 federal bankruptcy code, 11 U.S.C. 101 110, as amended, for 25 bankruptcy or reorganization, the filing of a petition by or 26 against the licensee for receivership, the commencement of any 27 other judicial or administrative proceeding for its dissolution 28 or reorganization, or in the event of an action by a creditor 29 against the licensee who is not a beneficiary of this statutory 30 trust. No permissible investments impressed with a trust 31 pursuant to this section shall be subject to attachment, levy 32 of execution, or sequestration by order of any court, except 33 for a beneficiary of this statutory trust. 34 4. Upon the establishment of a statutory trust in accordance 35 -45- LSB 1213XD (13) 90 es/rn 45/ 59
S.F. _____ H.F. _____ with subsection 3, or when any funds are drawn on a letter of 1 credit pursuant to section 533C.804, subsection 1, paragraph 2 m , the superintendent shall notify the applicable regulator 3 of each state in which the licensee is licensed to engage in 4 money transmission, if any, of the establishment of the trust 5 or the funds drawn on the letter of credit, as applicable. 6 Notice shall be deemed satisfied if performed pursuant to 7 a multistate agreement or through NMLS. Funds drawn on a 8 letter of credit, and any other permissible investments held 9 in trust for the benefit of the purchasers and holders of the 10 licensees outstanding money transmission obligations, are 11 deemed held in trust for the benefit of such purchasers and 12 holders on a pro rata and equitable basis in accordance with 13 statutes pursuant to which permissible investments are required 14 to be held in this state, and other states, as applicable. 15 Any statutory trust established hereunder shall be terminated 16 upon extinguishment of all of the licensees outstanding money 17 transmission obligations. 18 5. The superintendent by rule or by order may allow other 19 types of investments that the superintendent determines 20 are of sufficient liquidity and quality to be a permissible 21 investment. The superintendent is authorized to participate 22 in efforts with other state regulators to determine that other 23 types of investments are of sufficient liquidity and quality 24 to be a permissible investment. 25 Sec. 35. NEW SECTION . 533C.804 Types of permissible 26 investments. 27 1. The following investments are permissible under section 28 533C.803: 29 a. Cash, including demand deposits, savings deposits, and 30 funds in such accounts held for the benefit of the licensees 31 customers in a federally insured depository financial 32 institution. 33 b. Cash equivalents including automated clearinghouse items 34 in transit to the licensee and automated clearinghouse items or 35 -46- LSB 1213XD (13) 90 es/rn 46/ 59
S.F. _____ H.F. _____ international wires in transit to a payee. 1 c. Cash in transit via armored car. 2 d. Cash in smart safes. 3 e. Cash in licensee-owned locations. 4 f. Debit card or credit card-funded transmission receivables 5 owed by any bank. 6 g. Money market mutual funds rated AAA by Standard and 7 Poors 500 stock market index, or the equivalent from any 8 eligible rating service. 9 h. Certificates of deposit or senior debt obligations of an 10 insured depository institution, pursuant to the federal Deposit 11 Insurance Act, 12 U.S.C. 1813, as amended, or as defined under 12 the federal Credit Union Act, 12 U.S.C. 1751, as amended. 13 i. An obligation of the United States or a commission, 14 agency, or instrumentality thereof. 15 j. An obligation that is guaranteed fully as to principal 16 and interest by the United States. 17 k. An obligation of a state or a governmental subdivision, 18 agency, or instrumentality thereof. 19 l. One hundred percent of the surety bond provided for 20 under section 533C.802 that exceeds the average daily money 21 transmission liability in this state. 22 m. The full drawable amount of an irrevocable standby 23 letter of credit for which the stated beneficiary is the 24 superintendent that stipulates that the beneficiary need only 25 draw a sight draft under the letter of credit and present it 26 to obtain funds up to the letter of credit amount within seven 27 days of presentation of the items required by this section. 28 (1) The letter of credit shall conform to the following: 29 (a) Be issued by a federally insured depository financial 30 institution, a foreign bank that is authorized under federal 31 law to maintain a federal agency or federal branch office 32 in a state or states, or a foreign bank that is authorized 33 under state law to maintain a branch in a state that bears an 34 eligible rating, or whose parent company bears an eligible 35 -47- LSB 1213XD (13) 90 es/rn 47/ 59
S.F. _____ H.F. _____ rating and such bank is regulated, supervised, and examined 1 by the United States federal or state authorities having 2 regulatory authority over banks, credit unions, and trust 3 companies. 4 (b) Be irrevocable, unconditional, and indicate that it is 5 not subject to any condition or qualifications outside of the 6 letter of credit. 7 (c) Not contain reference to any other agreements, 8 documents, or entities, or otherwise provide for any security 9 interest in the licensee. 10 (d) Contain an issue date and expiration date, and expressly 11 provide for automatic extension, without written amendment, 12 for an additional period of one year from the present or each 13 future expiration date, unless the issuer of the letter of 14 credit notifies the superintendent in writing by certified 15 or registered mail or courier mail or other receipted means, 16 at least sixty days prior to any expiration date, that the 17 irrevocable letter of credit shall not be extended. In 18 the event of any notice of expiration or nonextension of a 19 letter of credit issued under this division, the licensee 20 shall be required to demonstrate to the satisfaction of the 21 superintendent, fifteen days prior to expiration, that the 22 licensee maintains and will maintain permissible investments 23 in accordance with section 533C.803, subsection 1, upon the 24 expiration of the letter of credit. If the licensee is not 25 able to do so, the superintendent may draw on the letter of 26 credit in an amount up to the amount necessary to meet the 27 licensees requirements to maintain permissible investments 28 in accordance with section 533C.803, subsection 1. Any 29 such draw shall be offset against the licensees outstanding 30 money transmission obligations. The drawn funds shall be 31 held in trust by the superintendent or the superintendents 32 designated agent, to the extent authorized by law, as agent for 33 the benefit of the purchasers and holders of the licensees 34 outstanding money transmission obligations. 35 -48- LSB 1213XD (13) 90 es/rn 48/ 59
S.F. _____ H.F. _____ (2) The letter of credit shall provide that the issuer of 1 the letter of credit will honor, at sight, a presentation made 2 by the beneficiary to the issuer of the following documents on 3 or prior to the expiration date of the letter of credit: 4 (a) The original letter of credit, including any 5 amendments. 6 (b) A written statement from the beneficiary stating that 7 any of the following events have occurred: 8 (i) The filing of a petition by or against the licensee 9 under the federal bankruptcy code, 11 U.S.C. 101 110, as 10 amended, for bankruptcy or reorganization. 11 (ii) The filing of a petition by or against the licensee 12 for receivership, or the commencement of any other judicial 13 or administrative proceeding for its dissolution or 14 reorganization. 15 (iii) The seizure of assets of a licensee by the 16 superintendent or any other state financial regulatory entity 17 pursuant to an emergency order issued in accordance with 18 applicable law, on the basis of an action, violation, or 19 condition that has caused or is likely to cause the insolvency 20 of the licensee. 21 (iv) The beneficiary has received notice of expiration on 22 nonextension of a letter of credit and the licensee failed to 23 demonstrate to the satisfaction of the beneficiary that the 24 licensee will maintain permissible investments in accordance 25 with section 533C.803, subsection 1, upon the expiration or 26 nonextension of the letter of credit. 27 (3) The superintendent may designate an agent to serve 28 on the superintendents behalf as beneficiary to a letter 29 of credit so long as the agent and letter of credit meet 30 requirements established by the superintendent. The 31 superintendents agent may serve as agent for multiple 32 licensing authorities for a single irrevocable letter of credit 33 if the proceeds of the drawable amount for the purposes of this 34 section are assigned to the superintendent. 35 -49- LSB 1213XD (13) 90 es/rn 49/ 59
S.F. _____ H.F. _____ (4) The superintendent is authorized and encouraged to 1 participate in multistate processes designed to facilitate the 2 issuance and administration of letters of credit, including 3 but not limited to services provided by the NMLS and state 4 regulatory registry, LLC. 5 2. Unless permitted by the superintendent by rule or by 6 order to exceed the limit as set forth herein, the following 7 investments are permissible under section 533C.803 to the 8 extent specified: 9 a. Receivables that are payable to a licensee from its 10 authorized delegates in the ordinary course of business 11 that are less than seven days old, up to fifty percent of 12 the aggregate value of the licensees total permissible 13 investments. 14 b. Of the receivables permissible under subsection 1, 15 receivables that are payable to a licensee from a single 16 authorized delegate in the ordinary course of business may not 17 exceed ten percent of the aggregate value of the licensees 18 total permissible investments. 19 c. The following investments are permissible up to twenty 20 percent per category and combined up to fifty percent of 21 the aggregate value of the licensees total permissible 22 investments: 23 (1) An up-to-six-month short-term investment bearing an 24 eligible rating. 25 (2) Commercial paper bearing an eligible rating. 26 (3) A bill, note, bond, or debenture bearing an eligible 27 rating. 28 (4) United States tri-party repurchase agreements 29 collateralized at one hundred percent or more with United 30 States government or agency securities, municipal bonds, or 31 other securities bearing an eligible rating. 32 (5) Money market mutual funds rated less than AAA and 33 equal to or higher than A- by Standard and Poors 500 stock 34 market index, or the equivalent from any other eligible rating 35 -50- LSB 1213XD (13) 90 es/rn 50/ 59
S.F. _____ H.F. _____ service. 1 (6) A mutual fund or other investment fund composed solely 2 and exclusively of one or more permissible investments listed 3 in section 533C.804, subsection 1, paragraph a through k . 4 d. Cash, including demand deposits, savings deposits, and 5 funds in such accounts held for the benefit of the licensees 6 customers, at foreign depository institutions are permissible 7 up to ten percent of the aggregate value of the licensees 8 total permissible investments if the licensee has received a 9 satisfactory rating in its most recent examination and the 10 foreign depository institution fulfills all of the following: 11 (1) An eligible rating. 12 (2) Registered under the federal Foreign Account Tax 13 Compliance Act, Pub. L. No. 111-147. 14 (3) Not located in any country subject to sanctions from the 15 federal office of foreign asset control. 16 (4) Not located in a high-risk or noncooperative 17 jurisdiction as designated by the international financial 18 action task force. 19 Sec. 36. REPEAL. Sections 533C.206, 533C.503, 533C.504, 20 533C.505, 533C.506, 533C.507, 533C.705, 533C.706, 533C.707, 21 533C.708, 533C.901, 533C.902, 533C.903, and 533C.904, Code 22 2023, are repealed. 23 Sec. 37. CODE EDITOR DIRECTIVE. The following articles 24 shall be changed by the Code editor to substantially conform 25 to the following: 26 1. ARTICLE 2 shall be retitled IMPLEMENTATION, 27 CONFIDENTIALITY, SUPERVISION, AND RELATIONSHIP TO FEDERAL LAW. 28 2. ARTICLE 3 shall be retitled MONEY TRANSMISSION LICENSES. 29 3. ARTICLE 4 shall be retitled ACQUISITION OF CONTROL AND 30 CHANGE OF KEY INDIVIDUAL. 31 4. ARTICLE 5 shall be retitled AUTHORIZED DELEGATES. 32 5. ARTICLE 6 shall be retitled REPORTING AND RECORDS. 33 6. ARTICLE 7 shall be retitled TIMELY TRANSMISSION, 34 REFUNDS, AND DISCLOSURES. 35 -51- LSB 1213XD (13) 90 es/rn 51/ 59
S.F. _____ H.F. _____ 7. ARTICLE 8 shall be retitled PRUDENTIAL STANDARDS. 1 EXPLANATION 2 The inclusion of this explanation does not constitute agreement with 3 the explanations substance by the members of the general assembly. 4 This bill relates to bank transmission services. The 5 bill includes updates to the licensing processes for money 6 transmission services seeking to do business in the state, and 7 encourages the superintendent of banking to collaborate with 8 multistate licensing processes. The bill allows for uniform 9 requirements for licensing across states to ensure multi-state 10 compliance for a money transmission services business. 11 The bill modifies the name of the Uniform Money Services 12 Act to the Uniform Money Transmission Modernization Act. 13 The bill defines the terms acting in concert, average 14 daily money transmission liability, Bank Secrecy Act, 15 closed loop stored value, eligible rating, eligible rating 16 service, federally insured depository financial institution, 17 in this state, individual, key individual, material 18 litigation, MSB accredited state, nationwide multistate 19 licensing system (NMLS), outstanding money transmission 20 obligations, passive investor, payroll processing 21 services, receipt, receiving money for transmission, 22 remit, and tangible net worth. 23 The bill modifies the definitions for control, money, 24 money transmission, payment instrument, person, and 25 stored-value. The bill deletes various definitions. 26 The bill provides that the superintendent may require a 27 person to provide documentation demonstrating their exemption 28 from licensing requirements. Under the bill, exemptions 29 are expanded to include additional activities and entities, 30 including certain persons that act as intermediaries by 31 processing payments, a person appointed as an agent of the 32 payee to collect and process payments from a payor to the 33 payee provided certain requirements, an individual employed 34 and supervised by an exempted entity, a third-party service 35 -52- LSB 1213XD (13) 90 es/rn 52/ 59
S.F. _____ H.F. _____ provider or agent under certain conditions, and a person exempt 1 by regulation. 2 The bill authorizes a superintendent to enter into 3 agreements or relationships with other regulatory entities to 4 improve efficiencies, utilize software or other processes for 5 investigation purposes, accept reports from other government 6 entities, and accept audit reports. The superintendent has the 7 authority to enforce the bill and promulgate related rules. 8 The bill requires that certain financial, 9 identification-related, investigation-related, and other 10 relevant information remain confidential. Exceptions include 11 sharing information for the public interest, where the 12 superintendent may disclose otherwise confidential information. 13 The release of nonconfidential information shall include 14 specific limited identifying information. 15 The bill allows for the superintendent to supervise 16 and conduct examinations or investigations regarding the 17 acquisition of a license for conducting money transmission 18 services. A licensee or authorized delegate shall provide 19 the superintendent with relevant documents regarding that 20 examination or investigation. 21 The bill provides that the superintendent shall coordinate 22 and effectively participate in relevant multistate networks. 23 The bill designates federal law to preempt state money 24 transmission law where there are inconsistencies between the 25 two. 26 The bill prohibits a person from engaging in the business 27 of money transmission or advertising, soliciting, or holding 28 itself out as providing money transmission unless they are 29 licensed under the provisions of the bill, an authorized 30 delegate, or fall under an exception. 31 The bill encourages consistent state licensing and 32 utilization of NMLS. The superintendent is authorized and 33 encouraged to implement licensing provisions in a manner 34 that is consistent with other states or multistate licensing 35 -53- LSB 1213XD (13) 90 es/rn 53/ 59
S.F. _____ H.F. _____ process, and participate in national licensing cooperation 1 protocols. The superintendent is authorized and encouraged 2 to build relationships or contracts with NMLS to help the 3 superintendent maintain records, coordinate multistate efforts, 4 process fees, and facilitate communication. The superintendent 5 should use NMLS forms where available, and where unavailable, 6 create forms that facilitate uniformity. The superintendent 7 may waive or modify requirements to participate in the NMLS. 8 The bill provides for an application for a license. 9 The superintendent shall create an application form. An 10 application for a license shall contain specified information, 11 including criminal convictions, a description of previous money 12 transmission services, a list of proposed authorized delegates 13 and locations for money transmission, other states in which the 14 applicant is currently engaging in money transmission, as well 15 as disciplinary actions, and bankruptcy disclosure. If the 16 applicant is a corporation, LLC, partnership, or other legal 17 entity, additional information is required to be included on 18 the application, including audits, dates of incorporations, 19 parent and subsidiary companies, and trading information. An 20 applicant shall be charged an application fee of $1,000 which 21 shall be refunded upon rejection of an application. The bill 22 establishes a license fee in the amount of $500 plus $10 per 23 location in Iowa in which business is conducted, or set by 24 the superintendent if there is no location, but not to exceed 25 $5,000. No refund of a license fee shall be made upon a license 26 suspension, revocation, or surrender. 27 The bill provides that any individual in control of a 28 licensee, applicant, or individual seeking to acquire control 29 of a licensee, and each key individual shall provide the 30 superintendent with information, including fingerprints, a 31 credit report, and relevant litigation. The bill allows for 32 different information based on an applicants residence. 33 The bill provides for the issuance of licenses. An applicant 34 must comply with provisions of the bill to be approved for a 35 -54- LSB 1213XD (13) 90 es/rn 54/ 59
S.F. _____ H.F. _____ license. The superintendent may extend a 120-day period of 1 application review for good cause. The superintendent can 2 rely on other multistate license procedures for application 3 purposes. The superintendent shall provide written notice of 4 denial of an application and include specific reasons for the 5 denial. 6 The bill allows a license to be renewed annually. The cost 7 of the renewal fee shall correspond to the initial licensure 8 fee. No refund of a license fee shall be made upon a license 9 suspension, revocation, or surrender. A renewal report 10 created by the superintendent shall be filed annually with 11 the licensees renewal fee. If the licensee does not file 12 a renewal report by the set deadline, the superintendent may 13 charge a $100 per day late fee. 14 The bill provides for acquisition of control of a licensee. 15 Individuals seeking to acquire control of a licensee shall 16 obtain written approval of the superintendent prior to 17 acquisition and complete an application in a form created 18 by the superintendent. A person is presumed to exercise a 19 controlling influence when the person holds the power to vote, 20 directly or indirectly, at least 10 percent of the outstanding 21 voting shares or voting interests of a licensee or person in 22 control of a licensee. Individuals seeking acquisition shall 23 submit a $1,000 fee with an application for acquisition. The 24 superintendent shall approve or deny the application. The 25 superintendent can rely on other multistate license procedures 26 for application purposes. The superintendent shall provide 27 written notice of denial of an application and include specific 28 reasons for the denial. A person may request a determination 29 from the superintendent regarding control prior to filing an 30 application. 31 The bill requires notice regarding a change of key 32 individuals. The superintendent may issue a notice of 33 disapproval within 90 days of receiving the notice of 34 the change and shall contain a statement on the basis of 35 -55- LSB 1213XD (13) 90 es/rn 55/ 59
S.F. _____ H.F. _____ disapproval. 1 The bill requires a licensee to conduct a background check, 2 provide written policies, and comply with requirements of the 3 bill before an authorized delegate can act on the licensees 4 behalf. An authorized delegate shall act in full compliance 5 with the bills provisions. An authorized delegate and 6 licensee shall sign a written contract containing provisions 7 related to the scope of the relationship and requirements 8 of each party. If the licensees license is suspended, 9 revoked, surrendered, or expired, the licensee shall provide 10 documentation to the superintendent within five business days 11 that the licensee has notified all applicable authorized 12 delegates, and delegates shall immediately cease to provide 13 money transmission as an authorized delegate of the licensee. 14 The bill prohibits a person from engaging in money 15 transmission on behalf of an unlicensed person. 16 The bill requires a quarterly report by a licensee within 17 45 days of the close of a quarter. The report shall include 18 financial information, state and national transaction 19 information, permissible investment information, and additional 20 information. The bill requires an annual audited financial 21 statement from a licensee within 90 days of the end of each 22 fiscal year. A licensee shall be required to file a quarterly 23 report of authorized delegates within 45 days of the close of 24 a quarter. 25 The bill requires a licensee to file a report and submit a 26 payment of $1,000 within one business day regarding bankruptcy, 27 receivership, dissolution, reorganization, revocation, or 28 suspension events. A licensee is required to file a report 29 within three business days in events regarding a felony charge 30 or conviction of the licensee, a key individual or person in 31 control of the licensee, or an authorized delegate. 32 The bill requires licensees and authorized delegates to 33 comply with federal record keeping and reporting requirements, 34 including pursuant to the federal Bank Secrecy Act, 31 U.S.C. 35 -56- LSB 1213XD (13) 90 es/rn 56/ 59
S.F. _____ H.F. _____ 5311. 1 The bill requires licensees to maintain records, inside 2 or outside of the state, for compliance determination. This 3 includes ledgers, bank statements, records of obligations, 4 lists of names, and information the superintendent requires. 5 The bill includes prohibitions on disclosure and 6 disclosure allowances. A superintendents records relating 7 to examinations, supervision, or regulation of a licensed 8 individual or authorized delegate are not considered public 9 records and are not subject to disclosure. The bill provides 10 for exceptions to when information may be disclosed to certain 11 parties. 12 The bill requires that a licensee transmit money in a timely 13 manner unless there is a valid reason to abstain. 14 The bill requires a licensee to refund the sender within 10 15 days of receipt of a written request for a refund, unless an 16 exception occurs, including belief that a crime or violation 17 of law, rule, or regulation has occurred, is occurring, or may 18 occur. 19 The bill requires every licensee or authorized delegate to 20 provide a sender a receipt for money received for transmission. 21 The receipt shall be communicated in English or the language 22 principally used by the licensee or authorized delegate. The 23 receipt shall contain applicable information, including the 24 name of sender, name of the recipient, the date, and the 25 amount. 26 The bill provides that a licensee providing payroll 27 processing services shall issue reports to clients with details 28 of client payroll obligations and make pay stubs available to 29 workers. Certain licensees providing these services are exempt 30 where the client designated the intended recipients to the 31 licensee. 32 The bill requires a licensee to maintain a tangible amount 33 of net worth at all times. The amount shall be the greater 34 of $100,000 or 3 percent of total assets for the first $100 35 -57- LSB 1213XD (13) 90 es/rn 57/ 59
S.F. _____ H.F. _____ million, 2 percent of additional assets for $100 million to 1 $1 billion, and .5 percent of additional assets for over $1 2 billion. Net worth may be demonstrated by the applicants 3 most recent audit or unaudited financial statements. The 4 superintendent may exempt any applicant or licensee for good 5 cause. 6 The bill requires an applicant for a money transmission 7 license to maintain a surety bond of 100 percent of the 8 licensees average daily money transmission liability for a 9 three-month period, or $100,000, whichever is greater, with a 10 maximum amount of $500,000. A licensee may exceed the maximum 11 amount. 12 The bill requires that a licensee maintain permissible 13 investments of not less than the total amount of all of its 14 outstanding money transmission obligations. Permissible 15 investments shall be held in a trust for the benefit of the 16 purchaser and holder of the licensees outstanding money 17 transmission obligation in case of certain financial events. 18 Funds drawn on a letter of credit shall cause a superintendent 19 to notify applicable regulators under specific circumstances. 20 The superintendent may expand the types of investments deemed 21 to be permissible. 22 The bill provides a list of permissible investments by 23 a licensee that have a market value computed in accordance 24 with United States generally accepted accounting principles 25 of not less than the aggregate amount of all of a licensees 26 outstanding money transmission obligations. The list of 27 permissible investments includes a specific letter of credit 28 for which the stated beneficiary is the superintendent subject 29 to requirements. The letter of credit shall be irrevocable, 30 unconditional, issued by a federally insured depository 31 financial institution or an authorized foreign bank, not 32 contain reference to other writings or entities, and contain 33 an issue date, expiration date, and an automatic extension 34 subject to change. Upon the expiration or lack of extension, 35 -58- LSB 1213XD (13) 90 es/rn 58/ 59
S.F. _____ H.F. _____ a licensee shall be required to demonstrate sufficient 1 permissible investment amounts. If the licensee cannot show 2 acceptable permissible investments, the superintendent may 3 draw on the letter of credit. The letter of credit shall 4 provide that the issuer of the letter of credit will honor the 5 letter and a written statement from the beneficiary stating 6 that certain significant financial events have occurred. The 7 superintendent may designate an agent to serve as beneficiary 8 to a letter of credit. The bill provides limits for certain 9 investments. 10 The bill repeals Code sections 533C.206, 533C.503, 533C.504, 11 533C.505, 533C.506, 533C.507, 533C.705, 533C.706, 533C.707, 12 533C.708, 533C.901, 533C.902, 533C.903, and 533C.904. 13 The Code editor is directed to change the names of articles 14 two through eight of Code chapter 533C. 15 -59- LSB 1213XD (13) 90 es/rn 59/ 59