HOUSE BILL No. 2560
AN ACT concerning financial institutions; relating to entities regulated by the office of the
state bank commissioner; pertaining to the state banking code; providing when an
application is considered abandoned or expired; allowing an originating trustee to
have such trustee's principal place of business outside of Kansas; relating to bank
deposits, withdrawals and safe deposit box lease agreements; authorizing any person
to become a depositor or enter into an agreement for the lease of a safe deposit box;
providing methods in which bank deposits may be withdrawn by a depositor;
prohibiting banks from requiring a cosigner for an account of a child in the custody
of the secretary for children and families, the secretary of corrections or a federally
recognized Indian tribe; enacting the Kansas money transmission act; providing
oversight thereof by the commissioner; establishing powers, duties and
responsibilities of the commissioner; enacting the Kansas earned wage access
services act; establishing the administration of such act by the office of the state bank
commissioner; providing for registration, bond requirements; duties, prohibited acts,
reports, records retention, orders, civil fines, criminal penalties and fees; amending
K.S.A. 9-535, 9-806, 9-1204, 9-1721 and 9-2107 and repealing the existing sections;
also repealing K.S.A. 9-508, 9-509, 9-510, 9-510a, 9-511, 9-513, 9-513a, 9-513b, 9-
513c, 9-513d and 9-513e and K.S.A. 2023 Supp. 9-512.
Be it enacted by the Legislature of the State of Kansas:
New Section 1. (a) Sections 1 through 42, and amendments
thereto, shall be known and may be cited as the Kansas money
transmission act.
(b) As used in the Kansas money transmission act:
(1) "Act" means the Kansas money transmission act.
(2) "Acting in concert" means persons knowingly acting together
with a common goal of jointly acquiring control of a licensee whether
or not pursuant to an express agreement.
(3) "Authorized delegate" means a person designated by a licensee
to engage in money transmission on behalf of the licensee.
(4) "Average daily money transmission liability" means the
amount of the licensee's outstanding money transmission obligations in
Kansas at the end of each day in a given period of time added together
and divided by the total number of days in the given period of time. For
any licensee required to calculate "average daily money transmission
liability" pursuant to this act, the given period of time shall be the
calendar quarters ending March 31, June 30, September 30 and
December 31.
(5) "Closed loop stored value" means stored value that is
redeemable by the issuer only for goods or services provided by the
issuer or the issuer's affiliates or franchisees of the issuer or the
franchisees's affiliates, except to the extent required by applicable law
to be redeemable in cash for its cash value.
(6) "Commissioner" means the state bank commissioner, or a
person designated by the state bank commissioner to enforce this act.
(7) "Control" means the power to:
(A) Vote directly or indirectly at least 25% of the outstanding
voting shares or voting interests of a licensee or person in control of a
licensee;
(B) elect or appoint a majority of key individuals or executive
officers, managers, directors, trustees or other persons exercising
managerial authority of a person in control of a licensee; or
(C) exercise, directly or indirectly, a controlling influence over the
management or policies of a licensee or person in control of a licensee.
(8) "Eligible rating" means a credit rating from any of the three
highest rating categories provided by an eligible rating service. Each
rating category may include rating category modifiers such as plus or
minus for Standard & Poor or the equivalent for any other eligible
rating service. "Eligible rating" shall be determined as follows:
(A) Long-term credit ratings shall be deemed eligible if the rating
is equal to A- or higher by Standard & Poor or the equivalent from any
other eligible rating service.
(B) Short-term credit ratings are deemed eligible if the rating is
equal to or higher than A-2 or SP-2 by Standard & Poor or the
equivalent from any other eligible rating service. If ratings differ
among eligible rating services, the highest rating shall apply when
determining whether a security bears an eligible rating. HOUSE BILL No. 2560—page 2
(9) "Eligible rating service" means any nationally recognized
statistical rating organization that has been registered by the securities
and exchange commission or any organization designated by the
commissioner through order or rules and regulations as an eligible
rating service.
(10) "Federally insured depository financial institution" means a
bank, credit union, savings and loan association, trust company, savings
association, savings bank, industrial bank or industrial loan company
organized under the laws of the United States or any state of the United
States, when such bank, credit union, savings and loan association, trust
company, savings association, savings bank, industrial bank or
industrial loan company has federally insured deposits.
(11) "In Kansas" means the:
(A) Physical location of a person who is requesting a transaction
in person in the state of Kansas; or
(B) person's residential address or the principal place of business
for a person requesting a transaction electronically or by telephone if
such residential address or principal place of business is in the state of
Kansas.
(12) "Individual" means a natural person.
(13) "Key individual" means any individual ultimately responsible
for establishing or directing policies and procedures of the licensee,
including, but not limited to, an executive officer, manager, director or
trustee.
(14) "Licensee" means a person licensed under this act.
(15) "Material litigation" means litigation, that according to
United States generally accepted accounting principles, is significant to
a person's financial health and would be a required disclosure in the
person's annual audited financial statements, report to shareholders or
similar records.
(16) "Money" means a medium of exchange that is authorized or
adopted by the United States or a foreign government. "Money"
includes a monetary unit of account established by an
intergovernmental organization or by agreement between two or more
governments.
(17) "Monetary value" means a medium of exchange, whether or
not redeemable in money.
(18) (A) "Money transmission" means any of the following:
(i) Selling or issuing payment instruments to a person located in
Kansas;
(ii) selling or issuing stored value to a person located in Kansas;
(iii) receiving money for transmission from a person located in
Kansas; or
(iv) payroll processing services.
(B) "Money transmission" does not include the provision of solely
online or telecommunications services or network access.
(19) "Money service business accredited state" means a state
agency that is accredited by the conference of state bank supervisors
and money transmitter regulators association for money transmission
licensing and supervision.
(20) "Multistate licensing process" means any agreement entered
into by state regulators relating to coordinated processing of
applications for money transmission licenses, applications for the
acquisition of control of a licensee, control determinations or notice and
information requirements for a change of key individuals.
(21) "Nationwide multistate licensing system and registry" means
a licensing system developed by the conference of state bank
supervisors and the American association of residential mortgage
regulators and owned and operated by the state regulatory registry,
limited liability company or any successor or affiliated entity for the
licensing and registration of persons in financial services industries.
(22) (A) "Outstanding money transmission obligation" means:
(i) Any payment instrument or stored value issued or sold by the
licensee to a person located in the United States or reported as sold by HOUSE BILL No. 2560—page 3
an authorized delegate of the licensee to a person that is located in the
United States that has not yet been paid or refunded by or for the
licensee or escheated in accordance with applicable abandoned
property laws; or
(ii) any money received for transmission by the licensee or an
authorized delegate in the United States from a person located in the
United States that has not been received by the payee or refunded to the
sender or escheated in accordance with applicable abandoned property
laws.
(B) "In the United States" includes a person in any state, territory
or possession of the United States, the District of Columbia, the
commonwealth of Puerto Rico or a United States military installation
that is located in a foreign country.
(23) "Passive investor" means a person that:
(A) Does not have the power to elect a majority of key individuals
or executive officers, managers, directors, trustees or other persons
exercising managerial authority of a person in control of a licensee;
(B) is not employed by and does not have any managerial duties
of the licensee or person in control of a licensee; or
(C) does not have the power to exercise, directly or indirectly, a
controlling influence over the management or policies of a licensee or
person in control of a licensee; and
(D) (i) Either attests to subparagraphs (A), (B) and (C) in a form
and in a manner prescribed by the commissioner; or
(ii) commits to the passivity characteristics of subparagraphs (A),
(B) and (C) in a written document.
(24) (A) "Payment instrument" means a written or electronic
check, draft, money order, traveler's check or other written or electronic
instrument for the transmission or payment of money or monetary
value, regardless of negotiability.
(B) "Payment instrument" does not include stored value or any
instrument that is:
(i) Redeemable by the issuer only for goods or services provided
by the issuer or the issuer's affiliate or franchisees of the issuer or the
franchisees' affiliate, except to the extent required by applicable law to
be redeemable in cash for its cash value; or
(ii) not sold to the public but issued and distributed as part of a
loyalty, rewards or promotional program.
(25) "Payroll processing services" means the receipt of money for
transmission pursuant to a contract with a person to deliver wages or
salaries, make payment of payroll taxes to state and federal agencies,
make payments relating to employee benefit plans or make
distributions of other authorized deductions from wages or salaries.
"Payroll processing services" does not include an employer performing
payroll processing services on the employer's own behalf or on behalf
of an affiliate.
(26) "Person" means any individual, general partnership, limited
partnership, limited liability company, corporation, trust, association,
joint stock corporation or other corporate entity identified or recognized
by the commissioner.
(27) "Receiving money for transmission" or "money received for
transmission" means the receipt of money or monetary value in the
United States for transmission within or outside the United States by
electronic or other means.
(28) "Stored value" means monetary value representing a claim
against the issuer evidenced by an electronic or digital record and that
is intended and accepted for use as a means of redemption for money or
monetary value or payment for goods or services. "Stored value"
includes, but is not limited to, prepaid access as defined by 31 C.F.R. §
1010.100. "Stored value" does not include a payment instrument or
closed loop stored value or stored value not sold to the public but
issued and distributed as part of a loyalty, rewards or promotional
program.
(29) "Tangible net worth" means the aggregate assets of a licensee HOUSE BILL No. 2560—page 4
excluding all intangible assets, less liabilities, as determined in
accordance with United States generally accepted accounting
principles.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 2. (a) This act does not apply to:
(1) An operator of a payment system to the extent that such
operator provides processing, clearing or settlement services between
persons exempted under this subsection or licensees in connection with
wire transfers, credit card transactions, debit card transactions, stored
value transactions, automated clearing house transfers or similar funds
transfers.
(2) A person appointed as an agent of a payee to collect and
process a payment from a payor to the payee for goods or services
other than money transmission provided to the payor by the payee if:
(A) A written agreement exists between the payee and the agent
directing the agent to collect and process payments from payors on the
payee's behalf;
(B) the payee holds the agent out to the public as accepting
payments for goods or services on the payee's behalf; and
(C) payment for the goods and services is treated as received by
the payee upon receipt by the agent so that the payor's obligation is
extinguished and there is no risk of loss to the payor if the agent fails to
remit the funds to the payee.
(3) A person that acts as an intermediary by processing payments
between an entity that has directly incurred an outstanding money
transmission obligation to a sender and the sender's designated
recipient, if the entity:
(A) Is properly licensed or exempt from licensing requirements
under this act;
(B) provides a receipt, electronic record or other written
confirmation to the sender identifying the entity as the provider of
money transmission in the transaction; and
(C) bears sole responsibility to satisfy the outstanding money
transmission obligation to the sender, including the obligation to make
the sender whole in connection with any failure to transmit the funds to
the sender's designated recipient.
(4) The United States government and any agency, bureau,
department, office or instrumentality, corporate or otherwise, thereof,
including any official, employee or agent of any such entity.
(5) Money transmission by the United States postal service or by
an agent of the United States postal service.
(6) Any state office or officer, department, board, commission,
bureau, division, authority, agency or institution of this state, including
any political subdivision thereof, and any county, city or other
municipality.
(7) A federally insured depository financial institution, bank
holding company, office of an international banking corporation,
foreign bank that establishes a federal branch pursuant to 12 U.S.C. §
3102, a corporation organized pursuant to 12 U.S.C. §§ 1861 through
1867 or a corporation organized under 12 U.S.C. §§ 611 through 633.
(8) Electronic funds transfer of governmental benefits for a
federal, state, county or governmental agency by a contractor on behalf
of the United States or a department, agency or instrumentality thereof
or on behalf of a state or governmental subdivision, agency or
instrumentality thereof.
(9) A board of trade designated as a contract market under 7
U.S.C. §§ 1 through 25 or a person that in the ordinary course of
business provides clearance and settlement services for a board of trade
to the extent of the board of trade's operation as or for such a board.
(10) A futures commission merchant registered under federal
commodities law to the extent of the registrant's operation as such a
futures commission merchant.
(11) A person registered as a securities broker-dealer under federal
or state securities law to the extent of such registrant's operation as such HOUSE BILL No. 2560—page 5
a securities broker-dealer.
(12) An individual employed by a licensee, authorized delegate or
any person exempted from the licensing requirements of the act when
acting within the scope of employment and under the supervision of the
licensee, authorized delegate or exempted person as an employee and
not as an independent contractor.
(13) A person expressly appointed as a third-party service provider
to or agent of an entity exempt under paragraph (a)(6) solely to the
extent that:
(A) Such service provider or agent is engaging in money
transmission on behalf of and pursuant to a written agreement with the
exempt entity that sets forth the specific functions that the service
provider or agent is to perform; and
(B) the exempt entity assumes all risk of loss and all legal
responsibility for satisfying the outstanding money transmission
obligations owed to purchasers and holders of the outstanding money
transmission obligations upon receipt of the purchaser's or holder's
money or monetary value by the service provider or agent.
(14) A person engaging in the practice of law, bookkeeping,
accounting, real estate sales or brokerage.
(15) A person appointed as an agent of a payor for purposes of
providing payroll processing services for which such agent would
otherwise need to be licensed if:
(A) There is a written agreement between the payor and the agent
that directs the agent to provide payroll processing services on the
payor's behalf;
(B) the payor holds the agent out to employees and other payees
as providing payroll processing services on the payor's behalf; and
(C) the payor's obligation to a payee, including an employee or
any other party entitled to receive funds via the payroll processing
services provided by the agent, is not extinguished if such agent fails to
remit such funds to the payee.
(16) A person exempt by any rules or regulations adopted or by an
order issued if the commissioner finds such exemption to be in the
public interest and that the regulation of such person is not necessary
for the purposes of this act.
(b) The commissioner may require that any person claiming to be
exempt from licensing pursuant to this section provide information and
documentation to the commissioner demonstrating that such person
qualifies for any claimed exemption.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 3. (a) To carry out the purposes of this act, the
commissioner may:
(1) Enter into agreements or relationships with other government
officials or federal and state regulatory agencies and regulatory
associations to improve efficiencies and reduce regulatory burden by
standardizing methods or procedures and sharing resources, records or
related information obtained under this act;
(2) use, hire, contract or employ analytical systems, methods or
software to examine or investigate any person subject to this act;
(3) accept from other state or federal government agencies or
officials, licensing, examination or investigation reports made by such
other state or federal government agencies or officials; and
(4) accept audit reports made by an independent certified public
accountant or other qualified third-party auditor for an applicant or
licensee and incorporate the audit report in any report of examination or
investigation.
(b) The commissioner shall have the broad administrative
authority to administer, interpret and enforce this act, promulgate rules
and regulations necessary to implement this act and set proportionate
and equitable fees and costs associated with applications, examinations,
investigations and other actions required to provide sufficient funds to
meet the budget requirements of administering and enforcing the act for
each fiscal year and to achieve the purposes of this act. HOUSE BILL No. 2560—page 6
(c) This section shall take effect on and after January 1, 2025.
New Sec. 4. (a) (1) Except as otherwise provided in subsection
(b), all information or reports obtained by the commissioner from an
applicant, licensee or authorized delegate and all information contained
in or related to an examination, investigation, operating report or
condition report prepared by, on behalf of or for the use of the
commissioner or financial statements, balance sheets or authorized
delegate information, are confidential and are not subject to disclosure
under the Kansas open records act, K.S.A. 45-215 et seq., and
amendments thereto.
(2) The provisions of this subsection providing for the
confidentiality of public records shall expire on July 1, 2030, unless the
legislature reviews and reenacts such provisions in accordance with
K.S.A. 45-229, and amendments thereto, prior to July 1, 2030.
(b) The commissioner may disclose information not otherwise
subject to disclosure under subsection (a) to representatives of state or
federal agencies who promise in a record that such representatives will
maintain the confidentiality of the information or where the
commissioner finds that the release is reasonably necessary for the
protection and interest of the public in accordance with the Kansas
open records act.
(c) The following information contained in the records of the
office of the state bank commissioner that is not confidential and may
be made available to the public:
(1) The name, business address, telephone number and unique
identifier of a licensee;
(2) the business address of a licensee's registered agent for service;
(3) the name, business address and telephone number of all
authorized delegates;
(4) the terms of or a copy of any bond filed by a licensee, provided
that confidential information, including, but not limited to, prices and
fees for such bond is redacted; or
(5) copies of any orders of the office of the state bank
commissioner relating to any violation of this act or regulations
implementing this act.
(d) This section shall not be construed to prohibit the
commissioner from disclosing to the public a list of all licensees or the
aggregated financial or transactional data concerning those licensees.
(e) This section shall take effect on and after January 1, 2025.
New Sec. 5. (a) The commissioner may conduct an examination or
investigation of a licensee or authorized delegate or otherwise take
independent action authorized by this act or by any rules and
regulations adopted or an order issued under this act as reasonably
necessary or appropriate to administer and enforce this act, regulations
implementing this act and other applicable federal law. The
commissioner may:
(1) Conduct an examination on-site or off-site as the
commissioner may reasonably require;
(2) conduct an examination in conjunction with an examination
conducted by representatives of other state agencies, agencies of
another state or the federal government;
(3) accept the examination report of another state agency or an
agency of another state or the federal government or a report prepared
by an independent accounting firm, which, on being accepted, is
considered for all purposes as an official report of the commissioner;
and
(4) summon and examine under oath or subpoena a key individual
or employee of a licensee or authorized delegate and require such
individual or employee to produce records regarding any matter related
to the condition and business of the licensee or authorized delegate.
(b) A licensee or authorized delegate shall provide the
commissioner with full and complete access to all records the
commissioner may reasonably require to conduct a complete
examination. The records shall be provided at the location and in the HOUSE BILL No. 2560—page 7
format specified by the commissioner. The commissioner may utilize
multistate record production standards and examination procedures
when such standards will reasonably achieve the requirements of this
section.
(c) Unless otherwise directed by the commissioner, a licensee
shall pay all costs reasonably incurred in connection with an
examination of the licensee or the licensee's authorized delegates.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 6. (a) To administer and enforce the provisions of this
act and minimize the regulatory burden, the commissioner is hereby
authorized to participate in multistate supervisory processes established
between states and coordinated through the conference of state bank
supervisors, money transmitter regulators associations and affiliates
and successors thereof for all licensees that hold licenses in Kansas or
other states. As a participant in such established multistate supervisory
processes, the commissioner may:
(1) Cooperate, coordinate and share information with other state
and federal regulators in accordance with section 5, and amendments
thereto;
(2) enter into written cooperation, coordination or information-
sharing contracts or agreements with organizations, the membership of
which is made up of state or federal governmental agencies; and
(3) cooperate, coordinate and share information with
organizations, the membership of which is made up of state or federal
governmental agencies, if the organizations agree in writing to maintain
the confidentiality and security of the shared information in accordance
with section 4, and amendments thereto.
(b) The commissioner shall not waive, and nothing in this section
shall constitute a waiver of, the commissioner's authority to conduct an
examination or investigation or otherwise take independent action
authorized by this act or rules and regulations adopted or an order
issued under this act to enforce compliance with applicable state or
federal law.
(c) A joint examination or investigation or acceptance of an
examination or investigation report shall not be construed to waive an
examination assessment provided for in this act.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 7. (a) If the jurisdiction of state money transmission is
conditioned on federal law, any inconsistencies between a provision of
this act and such federal law governing money transmission shall be
governed by the applicable federal law to the extent of such
inconsistency.
(b) If there are any inconsistencies between this act and any
federal law that governs pursuant to subsection (a), the commissioner
may provide interpretive guidance that identifies the:
(1) Inconsistency; and
(2) appropriate means of compliance with federal law.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 8. (a) A person may not engage in the business of money
transmission or advertise, solicit or hold itself out as providing money
transmission unless the person is licensed under this act.
(b) Subsection (a) shall not apply to a person that is:
(1) An authorized delegate of a person licensed under this act
acting within the scope of authority conferred by a written contract with
the licensee; or
(2) exempt pursuant to section 2, and amendments thereto, and
does not engage in money transmission outside the scope of such
exemption.
(c) A license issued pursuant to section 13, and amendments
thereto, shall not be transferable or assignable.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 9. (a) To establish consistent licensing practices between
Kansas and other states, the commissioner is hereby authorized to:
(1) Implement all licensing provisions of this act in a manner HOUSE BILL No. 2560—page 8
consistent with other states that have adopted this act or multistate
licensing processes; and
(2) participate in nationwide protocols for licensing cooperation
and coordination among state regulators, if such protocols are
consistent with this act.
(b) The commissioner is authorized to establish relationships or
contracts with the national multistate licensing system and registry or
other entities designated by the national multistate licensing system and
registry to:
(1) Collect and maintain records;
(2) coordinate multistate licensing processes and supervision
processes;
(3) process fees; and
(4) facilitate communication between the commissioner and
licensees or other persons subject to this act.
(c) The commissioner may utilize the nationwide multistate
licensing system and registry for all aspects of licensing in accordance
with this act, including, but not limited to, license applications,
applications for acquisitions of control, surety bonds, reporting,
criminal history background checks, credit checks, fee processing and
examinations.
(d) The commissioner may utilize nationwide multistate licensing
system and registry forms, processes and functionalities in accordance
with this act. If the nationwide multistate licensing system and registry
does not provide functionality, forms or processes for the provision of
this act, the commissioner is authorized to implement the requirements
in a manner that facilitates uniformity regarding the licensing,
supervision, reporting and regulation of licensees that are licensed in
multiple jurisdictions.
(e) The commissioner may establish new requirements or waive or
modify, in whole or in part, any or all of the existing requirements as
reasonably necessary to participate in the nationwide multistate
licensing system and registry through the adoption of any rules and
regulations adopted or an order issued or the issuance of an order.
(f) This section shall take effect on and after January 1, 2025.
New Sec. 10. (a) Applicants for a license shall submit a completed
application in a form and manner as prescribed by the commissioner.
Each such application shall contain content as set forth by rules and
regulations, instruction or procedure of the commissioner and may be
changed or updated by the commissioner in accordance with applicable
law to carry out the purposes of this act and maintain consistency with
nationwide multistate licensing system and registry licensing standards
and practices. The application shall state or contain, as applicable:
(1) The legal name and any fictitious or trade name used by the
applicant in conducting business and the residential and business
addresses of the applicant;
(2) a list of any criminal convictions of the applicant and any
material litigation in which the applicant was involved in the 10-year
period immediately preceding the submission of the application;
(3) a description of any money transmission services previously
provided by the applicant and the money transmission services the
applicant seeks to provide in Kansas;
(4) a list of the applicant's proposed authorized delegates and the
locations in Kansas where the applicant and the applicant's authorized
delegates propose to engage in money transmission;
(5) a list of all other states where the applicant is licensed to
engage in money transmission and any license revocations, suspensions
or other disciplinary action taken against the applicant in other states;
(6) information concerning any bankruptcy or receivership
proceedings affecting the licensee or a person in control of a licensee;
(7) a sample form of the contract for authorized delegates, if
applicable;
(8) a sample form of the payment instrument or stored value, as
applicable; HOUSE BILL No. 2560—page 9
(9) the name and address of any federally insured depository
financial institution through which the applicant plans to conduct
money transmission; and
(10) any other information the commissioner or the nationwide
multistate licensing system and registry reasonably requires regarding
the applicant.
(b) If an applicant is a corporation, limited liability company,
partnership or other legal entity, the applicant shall also provide:
(1) The date of the applicant's incorporation or formation and state
or country of incorporation or formation;
(2) a certificate of good standing from the state or country where
the applicant is incorporated or formed, if applicable;
(3) a brief description of the business structure or organization of
the applicant, including any parents or subsidiaries of the applicant and
whether any such parents or subsidiaries are publicly traded;
(4) the legal name, any fictitious or trade name, all business and
residential addresses and the employment, as applicable, for the 10-year
period immediately preceding the submission of the application for
each key individual and person in control of the applicant;
(5) for any person in control of the applicant, a list of any felony
convictions and for the 10-year period immediately preceding the
submission of the application, a list of any criminal misdemeanor
convictions of a crime of dishonesty, fraud or deceit and any material
litigation in which the person involved is in control of an applicant that
is not an individual;
(6) a copy of the applicant's audited financial statements for the
most recent fiscal year and for the two-year period immediately
preceding the most recent fiscal year or, if acceptable to the
commissioner, certified unaudited financial statements for the most
recent fiscal year or other period acceptable to the commissioner;
(7) a certified copy of the applicant's unaudited financial
statements for the most recent fiscal quarter;
(8) if the applicant is a publicly traded corporation, a copy of the
most recent report filed with the securities and exchange commission
pursuant to 15 U.S.C. § 78m;
(9) if the applicant is a wholly owned subsidiary of:
(A) A corporation publicly traded in the United States, a copy of
the parent corporation's audited financial statements for the most recent
fiscal year or a copy of the parent corporation's most recent financial
report filed with the securities and exchange commission pursuant to 15
U.S.C. § 78m; or
(B) a corporation publicly traded outside the United States, a copy
of documentation similar to the requirements of paragraph (A) filed
with the regulator of the parent corporation's domicile outside the
United States;
(10) the name and address of the applicant's registered agent in
Kansas; and
(11) any other information that the commissioner reasonably
requires regarding the applicant.
(c) The commissioner shall set a nonrefundable new application
fee each year pursuant to section 3(b), and amendments thereto.
(d) The commissioner may waive one or more requirements of
subsections (a) or (b) or permit an applicant to submit other information
in lieu of the required information.
(e) This section shall take effect on and after January 1, 2025.
New Sec. 11. (a) As a part of any original application, any
individual in control of a licensee, any applicant in control of a licensee
and each key individual shall provide the commissioner with the
following items through the nationwide multistate licensing system and
registry:
(1) (A) The office of the state bank commissioner may require an
individual to be fingerprinted and submit to a state and national
criminal history record check. The fingerprints shall be used to identify
the individual and to determine whether such individual has a record of HOUSE BILL No. 2560—page 10
criminal history in this state or other jurisdictions. The office of the
state bank commissioner is authorized to submit the fingerprints to the
Kansas bureau of investigation and the federal bureau of investigation
for a state and national criminal history record check. The office of the
state bank commissioner may use the information obtained from
fingerprinting and the criminal history for purposes of verifying the
identification of the individual and in the official determination of the
qualifications and fitness of the individual to be issued or to maintain a
license;
(B) Local and state law enforcement officers and agencies shall
assist the office of the state bank commissioner in taking and
processing of fingerprints of applicants for and holders of any license,
registration, permit or certificate;
(C) The Kansas bureau of investigation shall release all records of
adult convictions and nonconvictions in Kansas and adult convictions,
adjudications and nonconvictions of another state or country to the
office of the state bank commissioner. Disclosure or use of any
information received for any purpose other than provided in this section
shall be a class A misdemeanor and shall constitute grounds for
removal from office or termination of employment; and
(D) Any individual that currently resides and has continuously
resided outside of the United States for the past 10 years shall not be
required to comply with this subsection; and
(2) a description of the individual's personal history and
experience provided in a form and manner prescribed by the
commissioner to obtain the following:
(A) An independent credit report from a consumer reporting
agency. This requirement shall be waived if the individual does not
have a social security number;
(B) information related to any criminal convictions or pending
charges; and
(C) information related to any regulatory or administrative action
and any civil litigation involving claims of fraud, misrepresentation,
conversion, mismanagement of funds, breach of fiduciary duty or
breach of contract.
(b) (1) If the individual has resided outside of the United States at
any time during the 10-year period immediately preceding the
individual's application, the individual shall also provide an
investigative background report prepared by an independent search
firm.
(2) At a minimum, the search firm shall:
(A) Demonstrate that it has sufficient knowledge and resources
and that such firm employs accepted and reasonable methodologies to
conduct the research of the background report; and
(B) not be affiliated with or have an interest with the individual it
is researching.
(3) The investigative background report shall be provided in
English and, at a minimum, shall contain the following:
(A) A comprehensive credit report or any equivalent information
obtained or generated by the independent search firm to accomplish
such report, including a search of the court data in the countries,
provinces, states, cities, towns and contiguous areas where the
individual resided and worked if such report is available in the
individual's current jurisdiction of residency;
(B) criminal records information for the 10-year period
immediately preceding the individual's application, including, but not
limited to, felonies, misdemeanors or similar convictions for violations
of law in the countries, provinces, states, cities, towns and contiguous
areas where the individual resided and worked;
(C) employment history;
(D) media history including an electronic search of national and
local publications, wire services and business applications; and
(E) financial services-related regulatory history, including, but not
limited to, money transmission, securities, banking, insurance and HOUSE BILL No. 2560—page 11
mortgage-related industries.
(c) Any information required by this section may be used by the
commissioner in making an official determination of the qualifications
and fitness of the person in control or who seeks to gain control of the
licensee.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 12. (a) A person is presumed to exercise a controlling
influence when such person holds the power to vote, directly or
indirectly, at least 10% of the outstanding voting shares or voting
interests of a licensee or person in control of a licensee.
(b) A person presumed to exercise a controlling influence pursuant
to this section may rebut the presumption of control if the person is a
passive investor.
(c) For purposes of determining the percentage of a person
controlled by any individual, the individual's interest shall be
aggregated with the interest of any other immediate family member,
including the individual's spouse, parents, children, siblings, mothers-
in-law and fathers-in-law, sons-in-law and daughters-in-law, brothers-
in-law and sisters-in-law and any other person who shares such
individual's home.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 13. (a) (1) When an application for an original license
under this act appears to include all the items and addresses all of the
matters that are required, the application shall be deemed complete, and
the commissioner shall promptly notify the applicant of the date the
application is deemed complete. The commissioner shall approve or
deny the application within 120 days after the completion date.
(2) If the application has not been approved or denied within 120
days after the completion date:
(A) The application shall be considered approved; and
(B) the license shall take effect as of the first business day after
expiration of the 120-day period.
(3) The commissioner may extend the application period for good
cause.
(b) A determination by the commissioner that an application is
complete and accepted for processing means that the application, on its
face, appears to include all of the items, including the criminal history
background check response from the Kansas bureau of investigation
and that such application addresses all of the matters that are required.
A determination of completion by the commissioner shall not be
deemed to be an assessment of the substance of the application or of the
sufficiency of the information provided.
(c) When an application is filed and considered complete under
this section, the commissioner shall investigate the applicant's financial
condition and responsibility, financial and business experience,
character and general fitness. The commissioner may conduct an on-
site investigation of the applicant at the applicant's expense. The
commissioner shall issue a license to an applicant under this section if
the commissioner finds that the following conditions have been
fulfilled:
(1) The applicant has complied with sections 10 and 11, and
amendments thereto; and
(2) the financial condition and responsibility, financial and
business experience, competence, character and general fitness of the
applicant and key individuals and persons in control of the applicant
indicate that it is in the interest of the public to permit the applicant to
engage in money transmission.
(d) If an applicant avails itself or is otherwise subject to a
multistate licensing process:
(1) The commissioner is hereby authorized to accept the
investigation results of a lead investigative state to satisfy the
requirements of subsection (c) if such lead investigative state has
sufficient staffing, expertise and minimum standards; or
(2) if Kansas is the lead investigative state, the commissioner is HOUSE BILL No. 2560—page 12
hereby authorized to investigate the applicant pursuant to subsection (c)
utilizing the timeframes established by agreement through the
multistate licensing process. No such timeframes shall be considered
noncompliant with the application period in subsection (a)(1).
(e) The commissioner shall issue a formal written notice of the
denial of a license application within 14 days of the decision to deny
the application. The commissioner shall state in the notice of denial the
specific reasons for the denial of the application. An applicant whose
application is denied by the commissioner under this subsection may
appeal within 14 days of receiving the notice and request a hearing in
accordance with the Kansas administrative procedure act, K.S.A. 77-
501 et seq., and amendments thereto.
(f) The initial license term shall begin on the day the application is
approved. The license shall expire on December 31 of the year in which
the license term began, unless the initial license date is between
November 1 and December 31, in which case the initial license term
shall run through December 31 of the following year.
(g) This section shall take effect on and after January 1, 2025.
New Sec. 14. (a) (1) A license issued under this act shall be
renewed annually.
(2) An annual renewal fee set by the commissioner shall be paid
not more than 60 days before the license expiration.
(3) The renewal term shall be for a period of one year and shall
begin on January 1 of each year after the initial license term and shall
expire on December 31 of the year the renewal term begins.
(b) A licensee shall submit a complete renewal report with the
renewal fee, in a form and manner determined by the commissioner.
The renewal report shall contain a description of each material change
in information submitted by the licensee in the licensee's original
license application that has not been reported to the commissioner.
(c) Renewal applications received within 30 days of the expiration
of the license and incomplete applications as of 30 days prior to the
expiration of the license shall be subject to a late fee set by the
commissioner.
(d) The commissioner may grant an extension of the renewal date
for good cause.
(e) The commissioner is hereby authorized to utilize the
nationwide multistate licensing system and registry to process license
renewals, if such utilization satisfies the requirements of this section.
(f) Renewal applications submitted between November 1, 2024
and December 31, 2024, considered complete pursuant to K.S.A. 9-
509, and amendments thereto, shall be considered complete under this
section.
(g) This section shall take effect on and after January 1, 2025.
New Sec. 15. (a) If a licensee does not continue to meet the
qualifications or satisfy the requirements of an applicant for a new
money transmission license, the commissioner may suspend or revoke
the licensee's license in accordance with the procedures established by
this act or other applicable state law for such suspension or revocation.
(b) An applicant for a money transmission license shall
demonstrate that such applicant meets or will meet and a money
transmission licensee shall at all times meet, the requirements of
sections 32, 33 and 34, and amendments thereto.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 16. (a) The commissioner shall have the discretion to
determine the completeness of any application submitted pursuant to
this act. In making such a determination, the commissioner shall
consider the applicant's compliance with the requirements of the act
and any other facts and circumstances that the commissioner deems
appropriate.
(b) If an applicant fails to complete the application for a new
license or for a change of control of a license within 60 days after the
commissioner provides written notice of the incomplete application, the
application will be deemed abandoned and the application fee shall be HOUSE BILL No. 2560—page 13
nonrefundable. An applicant whose application is abandoned under this
section may reapply to obtain a new license.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 17. (a) When any person or group of persons acting in
concert are seeking to acquire control of a licensee, the licensee shall
obtain the written approval of the commissioner prior to the change of
control. An individual is not deemed to acquire control of a licensee
and is not subject to this section when that individual becomes a key
individual in the ordinary course of business.
(b) A person or group of persons acting in concert that seeks to
acquire control of a licensee in cooperation with such licensee shall
submit an application in the form and manner prescribed by the
commissioner. Such application shall be accompanied by a
nonrefundable fee set by the commissioner.
(c) Upon request, the commissioner may permit a licensee, the
person or group of persons acting in concert to submit some or all
information required by the commissioner pursuant to subsection (b)
without using the nationwide multistate licensing system and registry.
(d) The application required by subsection (b) shall include all
information required by section 11, and amendments thereto, for any
new key individuals who have not previously completed the
requirements of section 11, and amendments thereto, for a licensee.
(e) (1) When an application for acquisition of control under this
section appears to include all the items and addresses all of the matters
that are required, the application shall be deemed complete and the
commissioner shall promptly notify the applicant of the date on which
the application was so deemed, and the commissioner shall approve or
deny the application within 60 days after the completion date.
(2) If the application is not approved or denied within 60 days
after the completion date:
(A) The application shall be deemed approved; and
(B) the person or group of persons acting in concert shall not be
prohibited from acquiring control.
(3) The commissioner may extend the application period for good
cause.
(f) A determination by the commissioner that an application is
complete and is accepted for processing means only that the
application, on its face, appears to include all of the items and
addresses all of the matters that are required. A determination of
completion by the commissioner shall not be deemed to be an
assessment of the substance of the application or of the sufficiency of
the information provided.
(g) When an application is filed and considered complete under
subsection (e), the commissioner shall investigate the financial
condition and responsibility, financial and business experience,
character and general fitness of the person or group of persons acting in
concert who seek to acquire control. The commissioner shall approve
an acquisition of control pursuant to this section if the commissioner
finds that all of the following conditions have been fulfilled:
(1) The requirements of subsections (b) and (d) have been met, as
applicable; and
(2) the financial condition and responsibility, financial and
business experience, competence, character and general fitness of the
person or group of persons acting in concert seeking to acquire control
and the key individuals and persons that would be in control of the
licensee after the acquisition of control indicate that it is in the interest
of the public to permit the person or group of persons acting in concert
to control the licensee.
(h) If an applicant avails itself or is otherwise subject to a
multistate licensing process:
(1) The commissioner shall be authorized to accept the
investigation results of a lead investigative state for the purposes of
subsection (g) if the lead investigative state has sufficient staffing,
expertise and minimum standards; or HOUSE BILL No. 2560—page 14
(2) if Kansas is a lead investigative state, the commissioner shall
be authorized to investigate the applicant pursuant to subsection (g) and
the timeframes established by agreement through the multistate
licensing process.
(i) The commissioner shall issue a formal written notice of the
denial of an application to acquire control within 30 days of the
decision to deny the application. The commissioner shall state in the
notice of denial the specific reasons for the denial of the application. An
applicant whose application is denied by the commissioner under this
subsection may appeal within 14 days and request a hearing in
accordance with the Kansas administrative procedure act, K.S.A. 77-
501 et seq., and amendments thereto.
(j) The requirements of subsections (a) and (b) shall not apply to
any of the following:
(1) A person that acts as a proxy for the sole purpose of voting at a
designated meeting of the shareholders or holders of voting shares or
voting interests of a licensee or a person in control of a licensee;
(2) a person that acquires control of a licensee by devise or
descent;
(3) a person that acquires control of a licensee as a personal
representative, custodian, guardian, conservator or trustee or as an
officer appointed by a court of competent jurisdiction or by operation
of law;
(4) a person that is exempt under subsection (l);
(5) a person that the commissioner determines is not subject to
subsection (a) based on the public interest;
(6) a public offering of securities of a licensee or a person in
control of a licensee; or
(7) an internal reorganization of a person in control of the licensee
if the ultimate person in control of the licensee remains the same.
(k) Persons meeting the requirements of subsections (j)(2), (j)(3),
(j)(4), (j)(6) or (j)(7) in cooperation with the licensee shall notify the
commissioner within 15 days after the acquisition of control.
(l) (1) The requirements of subsections (a) and (b) shall not apply
to a person that has complied with and received approval to engage in
money transmission under this act or was identified as a person in
control in a prior application filed with and approved by the
commissioner or by a money service business-accredited state pursuant
to a multistate licensing process, if:
(A) The person has not had a license revoked or suspended or
controlled a licensee that has had a license revoked or suspended while
the person was in control of the licensee in the previous five years;
(B) the person is a licensee, such person is well managed and has
received at least a satisfactory rating for compliance at such person's
most recent examination by an money service business accredited state
if such rating was given;
(C) the licensee to be acquired is expected to meet the
requirements of sections 32, 33 and 34, and amendments thereto, after
the acquisition of control is completed. If the person acquiring control
is a licensee, such licensee shall also be expected to meet the
requirements of sections 32, 33 and 34, and amendments thereto, after
the acquisition of control is completed;
(D) the licensee to be acquired shall not implement any material
changes to such licensee's business plan as a result of the acquisition of
control. If the person acquiring control is a licensee, such licensee shall
not implement any material changes to such licensee's business plan as
a result of the acquisition of control; and
(E) the person provides notice of the acquisition in cooperation
with the licensee and attests to the provisions of this subsection in a
form and manner prescribed by the commissioner.
(2) If the notice is not disapproved within 30 days after the date on
which the notice was determined to be complete, the notice shall be
deemed approved.
(m) Before filing an application for approval to acquire control of HOUSE BILL No. 2560—page 15
a licensee, a person may request in writing a determination from the
commissioner as to whether such person would be considered a person
in control of a licensee upon consummation of a proposed transaction.
If the commissioner determines that the person would not be a person
in control of a licensee, the person and the proposed transaction shall
not be subject to the requirements of subsections (a) and (b).
(n) If a multistate licensing process includes a determination
pursuant to subsection (m) and an applicant avails itself or is otherwise
subject to the multistate licensing process:
(1) The commissioner is hereby authorized to accept the control
determination of a lead investigative state with sufficient staffing,
expertise and minimum standards for the purpose of subsection (m); or
(2) if Kansas is a lead investigative state, the commissioner is
hereby authorized to investigate the applicant pursuant to subsection
(m) and the timeframes established by agreement through the multistate
licensing process.
(o) This section shall take effect on and after January 1, 2025.
New Sec. 18. (a) A licensee adding or replacing a key individual
shall provide:
(1) Notice in the manner prescribed by the commissioner within
15 days after the effective date of the appointment of the new key
individual; and
(2) information as required by section 10, and amendments
thereto, within 45 days of the effective date of the appointment of the
new key individual.
(b) Within 90 days of the date on which the notice provided
pursuant to subsection (a) was determined to be complete, the
commissioner may issue a notice of disapproval of a key individual if
the competence, experience, character or integrity of the individual
would not be in the best interests of the public or the customers of the
licensee to permit the individual to be a key individual of such licensee.
(c) A notice of disapproval shall state the basis for disapproval and
shall be sent to the licensee and the disapproved individual. A licensee
may appeal a notice of disapproval pursuant to the Kansas
administrative procedure act, K.S.A. 77-501 et seq., and amendments
thereto, within 14 days.
(d) If the notice provided pursuant to subsection (a) is not
disapproved within 90 days after the date when the notice was
determined to be complete, the key individual shall be deemed
approved.
(e) If a multistate licensing process includes a key individual
notice review and disapproval process pursuant to this section and the
licensee avails itself or is otherwise subject to the multistate licensing
process:
(1) The commissioner is hereby authorized to accept the
determination of another state if the investigating state has sufficient
staffing, expertise and minimum standards for the purpose of this
section; or
(2) if Kansas is a lead investigative state, the commissioner is
authorized to investigate the applicant pursuant to subsection (b) and
the timeframes established by agreement through the multistate
licensing process.
(f) This section shall take effect on and after January 1, 2025.
New Sec. 19. (a) Every licensee shall submit a report of condition
within 45 days of the end of the calendar quarter or within any
extended time as the commissioner may prescribe.
(b) The report of condition shall include:
(1) Financial information at the licensee level;
(2) nationwide and state-specific money transmission transaction
information in every jurisdiction in the United States where the licensee
is licensed to engage in money transmission;
(3) the permissible investments report;
(4) transaction destination country reporting for money received
for transmission, if applicable; and HOUSE BILL No. 2560—page 16
(5) any other information the commissioner reasonably requires
regarding the licensee.
(c) The commissioner may utilize the nationwide multistate
licensing system and registry for the submission of the report required
by subsection (a) and is authorized to change or update as necessary the
requirements of this section to carry out the purposes of this act and
maintain consistency with nationwide multistate licensing system and
registry reporting.
(d) The information required by subsection (b)(4) shall only be
included in a report of condition submitted within 45 days of the end of
the fourth calendar quarter.
(e) This section shall take effect on and after January 1, 2025.
New Sec. 20. (a) Within 90 days after the end of each fiscal year
or within any extended time as the commissioner may prescribe
through rules and regulations, every licensee shall file with the
commissioner:
(1) An audited financial statement of the licensee for the fiscal
year prepared in accordance with United States generally accepted
accounting principles; and
(2) any other information as the commissioner may reasonably
require.
(b) The audited financial statements shall be prepared by an
independent certified public accountant or independent public
accountant who has been deemed satisfactory by the commissioner.
(c) The audited financial statements shall include or be
accompanied by a certificate of opinion of the independent certified
public accountant or independent public accountant in a form and
manner determined by the commissioner. If the certificate or opinion is
qualified, the commissioner may order the licensee to take any action
as the commissioner may find necessary to enable the independent
certified public accountant or independent public accountant to remove
the qualification.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 21. (a) Each licensee shall submit a report of authorized
delegates within 45 days of the end of each calendar quarter. The
commissioner is authorized to utilize the nationwide multistate
licensing system and registry for the submission of the report required
by this subsection if such utilization is consistent with the requirements
of this section.
(b) The authorized delegate report shall include, at a minimum,
each authorized delegate's:
(1) Company legal name;
(2) taxpayer employer identification number;
(3) principal provider identifier;
(4) physical address;
(5) mailing address;
(6) any business conducted in other states;
(7) any fictitious or trade name;
(8) contact person's name, phone number and email;
(9) start date as the licensee's authorized delegate;
(10) end date acting as the licensee's authorized delegate, if
applicable; and
(11) any other information the commissioner reasonably requires
regarding the authorized delegate.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 22. (a) A licensee shall file a report with the
commissioner within one business day after the licensee has reason to
know of the:
(1) Filing of a bankruptcy or reorganization petition by or against
the licensee;
(2) filing of a petition by or against the licensee for receivership,
the commencement of any other judicial or administrative proceeding
for the licensee's dissolution or reorganization or the making of a
general assignment for the benefit of the licensee's creditors; or HOUSE BILL No. 2560—page 17
(3) commencement of a proceeding to revoke or suspend the
licensee's license in a state or country where the licensee engages in
business or is licensed.
(b) A licensee shall file a report with the commissioner within
three business days after the licensee has reason to know of a felony
conviction of:
(1) The licensee or a key individual or person in control of the
licensee; or
(2) an authorized delegate.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 23. (a) A licensee and an authorized delegate shall file
all reports required by federal currency reporting, recordkeeping and
suspicious activity reporting requirements as set forth in federal and
state laws pertaining to money laundering. The timely filing of a
complete and accurate report required under this section with the
appropriate federal agency is deemed compliant with the requirements
of this section.
(b) This section shall take effect on and after January 1, 2025.
New Sec. 24. (a) Every licensee shall maintain the following
records for at least three years:
(1) A record of each outstanding money transmission obligation
sold;
(2) a general ledger posted at least monthly containing all assets,
liability, capital, income and expense accounts;
(3) bank statements and bank reconciliation records;
(4) records of all outstanding money transmission obligations;
(5) records of each outstanding money transmission obligation
paid within the three-year period the records are maintained;
(6) a list of the last known names and addresses of all the
licensee's authorized delegates; and
(7) any other records the commissioner reasonably requires in
rules and regulations.
(b) Records specified in subsection (a) may be maintained:
(1) In any form of record; and
(2) outside this state, if such records are made accessible to the
commissioner on seven business days' notice.
(c) All records maintained by the licensee as required in this
section are open to inspection by the commissioner pursuant to section
5(a), and amendments thereto.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 25. (a) As used in this section, "remit" means to make
direct payments of money to a licensee or the licensee's representative
authorized to receive money or to deposit money in a bank in an
account specified by the licensee.
(b) Before a licensee is authorized to conduct business through an
authorized delegate or allows a person to act as the licensee's
authorized delegate, the licensee shall:
(1) Adopt and update as necessary all written policies and
procedures reasonably designed to ensure that the licensee's authorized
delegates comply with applicable state and federal law;
(2) enter into a written contract that complies with subsection (d);
and
(3) conduct a reasonable risk-based background investigation
sufficient for the licensee to determine if the authorized delegate has
complied and will likely comply with applicable state and federal law.
(c) An authorized delegate shall comply with this act.
(d) The written contract required by subsection (b) shall be signed
by the licensee and the authorized delegate and, at a minimum, shall:
(1) Appoint the person signing the contract as the licensee's
authorized delegate with the authority to conduct money transmission
on behalf of the licensee;
(2) set forth the nature and scope of the relationship between the
licensee and the authorized delegate and the respective rights and
responsibilities of each party; HOUSE BILL No. 2560—page 18
(3) require the authorized delegate to agree to fully comply with
all applicable state and federal laws and rules and regulations
pertaining to money transmission;
(4) require the authorized delegate to remit and handle money and
any monetary value in accordance with the terms of the contract
between the licensee and the authorized delegate;
(5) impose a trust on money and any monetary value net of fees
received for money transmission for the benefit of the licensee;
(6) require the authorized delegate to prepare and maintain records
as required by this act or rules and regulations adopted pursuant to this
act or as reasonably required by the commissioner;
(7) acknowledge that the authorized delegate consents to
examination or investigation by the commissioner;
(8) state that the licensee is subject to regulation by the
commissioner and, as part of such regulation, the commissioner may
suspend or revoke an authorized delegate designation or require the
licensee to terminate an authorized delegate designation; and
(9) acknowledge receipt of the written policies and procedures
required under subsection (b).
(e) Within five business days after the suspension, revocation,
surrender or expiration of a licensee's license, the licensee shall provide
documentation to the commissioner that the licensee has notified all
applicable authorized delegates of the licensee whose names are in a
record filed with the commissioner of the suspension, revocation,
surrender or expiration of a license. Upon suspension, revocation,
surrender or expiration of a license, all applicable authorized delegates
shall immediately cease to provide money transmission as an
authorized delegate of the licensee.
(f) An authorized delegate of a licensee holds in trust for the
benefit of the licensee all money net of fees received from money
transmission. If an authorized delegate commingles any funds received
from money transmission with any other funds or property owned or
controlled by the authorized delegate, all commingled funds and other
property shall be considered held in trust in favor of the licensee in an
amount equal to the amount of money net of fees received from money
transmission.
(g) No authorized delegate shall use a subdelegate to conduct
money transmission on behalf of a licensee.
(h) This section shall take effect on and after January 1, 2025.
New Sec. 26. (a) No person shall engage in the business of money
transmission on behalf of a person who is not licensed or exempt from
licensing under this act. If a person engages in such activity, such
person shall be deemed to have provided money transmission to the
same extent that such person were a licensee and shall be jointly and
severally liable with the unlicensed or nonexempt person.
(b) This section shall take effect on and after January 1, 2025.
New Sec. 27. (a) Every licensee shall forward all moneys received
for transmission in accordance with the terms of the agreement between
the licensee and the sender unless the licensee reasonably believes or
has a reasonable basis to believe that the sender may be a victim of
fraud or that a crime or violation of law or any rules and regulations has
occurred, is occurring or may occur.
(b) If a licensee fails to forward money received for transmission
in accordance with this section, the licensee shall respond to inquiries
by the sender with the reason for the failure unless providing a response
would violate a state or federal law or rules and regulations.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 28. (a) This section does not apply to moneys received
for transmission:
(1) Subject to 12 C.F.R. §§ 1005.30 through 1005.36; or
(2) pursuant to a written agreement between the licensee and
payee to process payments for goods or services provided by the payee.
(b) Within 10 days of receipt of the sender's written request for a
refund of all money received for transmission, the licensee shall refund HOUSE BILL No. 2560—page 19
such money to the sender, unless:
(1) The money has been forwarded within 10 days of the date
when the money was received for transmission;
(2) instructions have been given committing an equivalent amount
of money to the person designated by the sender within 10 days of the
date when the money was received for transmission;
(3) the agreement between the licensee and the sender instructs the
licensee to forward the money after 10 days of the date when the
money was received for transmission. If funds have not yet been
forwarded in accordance with the terms of the agreement between the
licensee and the sender, the licensee shall issue a refund in accordance
with this section; or
(4) the refund is requested for a transaction that the licensee has
not completed based on a reasonable belief or a reasonable basis to
believe that a crime or violation of law, rules and regulations has
occurred, is occurring or may occur.
(c) The refund request shall not be construed to enable the licensee
to identify the:
(1) Sender's name and address or telephone number; or
(2) particular transaction to be refunded if the sender has multiple
outstanding transactions.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 29. (a) This section shall not apply to:
(1) Money received for transmission subject to 12 C.F.R. §§
1005.30 through 1005.36;
(2) money received for transmission that is not primarily for
personal, family or household purposes;
(3) money received for transmission pursuant to a written
agreement between the licensee and payee to process payments for
goods or services provided by the payee; or
(4) payroll processing services.
(b) As used in this section, "receipt" means a paper or electronic
receipt.
(c) (1) For a transaction conducted in person, the receipt may be
provided electronically if the sender requests or agrees to receive an
electronic receipt.
(2) For a transaction conducted electronically or by phone, a
receipt may be provided electronically. All electronic receipts shall be
provided in a retainable form.
(d) (1) Every licensee or the licensee's authorized delegate shall
provide the sender a receipt for money received for transmission.
(2) The receipt shall contain the:
(A) Name of the sender;
(B) name of the designated recipient;
(C) date of the transaction;
(D) unique transaction or identification number;
(E) name of the licensee, the licensee's nationwide multistate
licensing system and registry unique identification number, the
licensee's business address and the licensee's customer service
telephone number;
(F) amount of the transaction in United States dollars;
(G) fee charged, if any, by the licensee to the sender for the
transaction; and
(H) taxes collected, if any, by the licensee from the sender for the
transaction.
(3) The receipt required by this section shall be written in English
and in the language principally used by the licensee or authorized
delegate to advertise, solicit or negotiate, either orally or in writing, for
a transaction conducted in person, electronically or by phone, if other
than English.
(e) This section shall take effect on and after January 1, 2025.
New Sec. 30. (a) Every licensee or authorized delegate shall
include on a receipt or disclose on the licensee's website or mobile
application the name of the office of the state bank commissioner and a HOUSE BILL No. 2560—page 20
statement that the licensee's Kansas customers can contact the office of
the state bank commissioner with questions or complaints about the
licensee's money transmission services.
(b) This section shall take effect on and after January 1, 2025.
New Sec. 31. (a) A licensee that provides payroll processing
services shall:
(1) Issue reports to clients detailing client payroll obligations in
advance of the payroll funds being deducted from an account; and
(2) make available worker paystubs or an equivalent statement to
workers.
(b) This section shall not apply to a licensee providing payroll
processing services where the licensee's client designates the intended
recipients to the licensee and is responsible for providing the
disclosures.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 32. (a) Every licensee shall maintain at all times a
tangible net worth of:
(1) The greater of $100,000 or 3% of such licensee's total assets
up to $100,000,000;
(2) 2% of such licensee's additional assets of $100,000,000 to
$1,000,000,000; and
(3) 0.5% of such licensee's additional assets of over
$1,000,000,000.
(b) The licensee's tangible net worth shall be demonstrated at
initial application by the applicant's most recent audited or unaudited
financial statements pursuant to section 10, and amendments thereto.
(c) Notwithstanding the provisions of this section, the
commissioner shall have the authority to exempt any applicant or
licensee, in part or in whole, from the requirements of this section.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 33. (a) An applicant for a money transmission license
shall provide and a licensee at all times shall maintain security
consisting of a surety bond in a form satisfactory to the commissioner
or, with the commissioner's approval, a deposit instead of a bond in
accordance with this section.
(b) The amount of the required security shall be:
(1) The greater of $200,000 or an amount equal to 100% of the
licensee's average daily money transmission liability in Kansas
calculated for the most recently completed three-month period, up to a
maximum of $1,000,000; or
(2) $200,000, if the licensee's tangible net worth exceeds 10% of
total assets.
(c) A licensee that maintains a bond in the maximum amount
provided for in subsection (b) shall not be required to calculate its
average daily money transmission liability in Kansas for purposes of
this section.
(d) A licensee may exceed the maximum required bond amount
pursuant to section 35, and amendments thereto.
(e) This section shall take effect on and after January 1, 2025.
New Sec. 34. (a) A licensee shall maintain permissible
investments that have a market value computed in accordance with
United States generally accepted accounting principles of not less than
the aggregate amount of the total of the licensee's outstanding money
transmission obligations.
(b) Except for the permissible investments described in section 35,
and amendments thereto, the commissioner may by rules and
regulations or order limit the extent to which a specific investment
maintained by a licensee within a class of permissible investments may
be considered a permissible investment, if the specific investment
represents undue risk to customers not reflected in the market value of
investments.
(c) Permissible investments, even if commingled with other assets
of the licensee, shall be held in trust for the benefit of the purchasers
and holders of the licensee's outstanding money transmission HOUSE BILL No. 2560—page 21
obligations in the event of insolvency, the filing of a petition by or
against the licensee under 11 U.S.C. §§ 101 through 110 for bankruptcy
or reorganization, the filing of a petition by or against the licensee for
receivership, the commencement of any other judicial or administrative
proceeding for such licensee's dissolution or reorganization or in the
event of an action by a creditor against the licensee who is not a
beneficiary of this statutory trust. No permissible investments
impressed with a trust pursuant to this subsection shall be subject to
attachment, levy of execution or sequestration by order of any court,
except for a beneficiary of this statutory trust.
(d) Upon the establishment of a statutory trust in accordance with
subsection (c) or when any funds are drawn on a letter of credit
pursuant to section 35, and amendments thereto, the commissioner shall
notify the applicable regulator of each state where the licensee is
licensed to engage in money transmission, if any, of the establishment
of the trust or the funds drawn on the letter of credit, as applicable.
Notice shall be deemed satisfied if performed pursuant to a multistate
agreement or through the nationwide multistate licensing system and
registry. Funds drawn on a letter of credit and any other permissible
investments held in trust for the benefit of the purchasers and holders of
the licensee's outstanding money transmission obligations shall be
deemed held in trust for the benefit of such purchasers and holders on a
pro rata and equitable basis in accordance with statutes pursuant to
which permissible investments are required to be held in Kansas and
other states, as applicable. Any statutory trust established under this
section shall be terminated upon extinguishment of all of the licensee's
outstanding money transmission obligations.
(e) The commissioner by rules and regulations or by order may
allow other types of investments that the commissioner determines are
of sufficient liquidity and quality to be a permissible investment. The
commissioner is hereby authorized to participate in efforts with other
state regulators to determine which other types of investments are of
sufficient liquidity and quality to be a permissible investment.
(f) This section shall take effect on and after January 1, 2025.
New Sec. 35. (a) The following investments are permissible under
this section:
(1) Cash, including demand deposits, savings deposits and funds
in accounts held for the benefit of the licensee's customers in a
federally insured depository financial institution and cash equivalents
including automated clearing house items in transit to the licensee and
automated clearing house items or international wires in transit to a
payee, cash in transit via armored car, cash in smart safes, cash in
licensee-owned locations, debit card or credit card-funded transmission
receivables owed by any bank or money market mutual funds rated
AAA by Standard & Poor or the equivalent from any eligible rating
service;
(2) certificates of deposit or senior debt obligations of a federally
insured depository institution;
(3) an obligation of the United States or a commission, agency or
instrumentality thereof, an obligation that is guaranteed fully as to
principal and interest by the United States or an obligation of a state or
a governmental subdivision, agency or instrumentality thereof;
(4) (A) the full drawable amount of an irrevocable standby letter
of credit for which the stated beneficiary is the commissioner that
stipulates that the beneficiary need only draw a sight draft under the
letter of credit and present it to obtain funds up to the letter of credit
amount within seven days of presentation of the items required by
subparagraph (D);
(B) the letter of credit shall:
(i) Be issued by a federally insured depository financial
institution, a foreign bank that is authorized under federal law to
maintain a federal agency or federal branch office in a state or states or
a foreign bank that is authorized under state law to maintain a branch in
a state that: HOUSE BILL No. 2560—page 22
(a) Bears an eligible rating or whose parent company bears an
eligible rating; and
(b) is regulated, supervised and examined by United States federal
or state authorities having regulatory authority over banks, credit
unions and trust companies;
(ii) be irrevocable, unconditional and indicate that such letter of
credit is not subject to any condition or qualifications outside of such
letter of credit;
(iii) contain no references to any other agreements, documents or
entities or otherwise provide for a security interest in the licensee; and
(iv) contain an issue date and expiration date and expressly
provide for automatic extension, without a written amendment, for an
additional period of one year from the present or each future expiration
date unless the issuer of the letter of credit notifies the commissioner in
writing by certified or registered mail or courier mail or other receipted
means at least 60 days prior to any expiration date, that the irrevocable
letter of credit will not be extended;
(C) if any notice of expiration or non-extension of a letter of credit
is issued under clause (a)(4)(B)(iv), the licensee shall be required to
demonstrate to the satisfaction of the commissioner, 15 days prior to
expiration, that the licensee maintains and shall maintain permissible
investments in accordance with section 36(a), and amendments thereto,
upon the expiration of the letter of credit. If the licensee is not able to
do so, the commissioner may draw on the letter of credit in an amount
up to the amount necessary to meet the licensee's requirements to
maintain permissible investments in accordance with section 34(a), and
amendments thereto. Any such draw shall be offset against the
licensee's outstanding money transmission obligations. The drawn
funds shall be held in trust by the commissioner or the commissioner's
designated agent, to the extent authorized by law, as agent for the
benefit of the purchasers and holders of the licensee's outstanding
money transmission obligations;
(D) the letter of credit shall provide that the issuer of such letter of
credit shall honor, at sight, a presentation made of the following
documents by the beneficiary to the issuer on or prior to the expiration
date of the letter of credit:
(i) The original letter of credit, including any amendments; and
(ii) a written statement from the beneficiary stating that any of the
following events have occurred:
(a) The filing of a bankruptcy or reorganization petition by or
against the licensee;
(b) the filing of a petition by or against the licensee for
receivership or the commencement of any other judicial or
administrative proceeding for such licensee's dissolution or
reorganization;
(c) the seizure of assets of a licensee by a commissioner pursuant
to an emergency order issued in accordance with applicable law, on the
basis of an action, violation or condition that has caused or is likely to
cause the insolvency of the licensee; or
(d) the beneficiary has received notice of expiration or non-
extension of a letter of credit and the licensee failed to demonstrate to
the satisfaction of the beneficiary that the licensee will maintain
permissible investments in accordance with section 36(a), and
amendments thereto, upon the expiration or non-extension of the letter
of credit;
(E) the commissioner may designate an agent to serve on the
commissioner's behalf as beneficiary to a letter of credit if the agent
and letter of credit meet requirements established by the commissioner.
The commissioner's agent may serve as agent for multiple licensing
authorities for a single irrevocable letter of credit if the proceeds of the
drawable amount for the purposes of subsection (a)(4) are assigned to
the commissioner; and
(F) the commissioner is hereby authorized to participate in
multistate processes designed to facilitate the issuance and HOUSE BILL No. 2560—page 23
administration of letters of credit, including, but not limited to, services
provided by the nationwide multistate licensing system and registry and
state regulatory registry, LLC; and
(5) 100% of the surety bond provided for under section 33, and
amendments thereto, that exceeds the average daily money
transmission liability in Kansas.
(b) (1) Unless permitted by the commissioner by rules and
regulations adopted or by order issued to exceed the limit as set forth
herein, the following investments are permissible under section 35, and
amendments thereto, to the extent specified:
(A) Receivables payable to a licensee from the licensee's
authorized delegates in the ordinary course of business that are less
than seven days old up to 50% of the aggregate value of the licensee's
total permissible investments; and
(B) of the receivables permissible under subparagraph (A),
receivables payable to a licensee from a single authorized delegate in
the ordinary course of business may not exceed 10% of the aggregate
value of the licensee's total permissible investments.
(2) The following investments are permissible up to 20% per
category and up to 50% combined of the aggregate value of the
licensee's total permissible investments:
(A) A short-term investment of up to six months, bearing an
eligible rating;
(B) commercial paper bearing an eligible rating;
(C) a bill, note, bond or debenture bearing an eligible rating;
(D) United States tri-party repurchase agreements collateralized at
100% or more with United States government or agency securities,
municipal bonds or other securities bearing an eligible rating;
(E) money market mutual funds rated less than AAA and equal to
or higher than A- by Standard & Poor or the equivalent from any other
eligible rating service; and
(F) a mutual fund or other investment fund composed solely and
exclusively of one or more permissible investments listed in subsection
(a)(1) through (3).
(3) Cash, including demand deposits, savings deposits and funds
in such accounts held for the benefit of the licensee's customers, at
foreign depository institutions are permissible up to 10% of the
aggregate value of the licensee's total permissible investments if the
licensee has received a satisfactory rating in the licensee's most recent
examination and the foreign depository institution:
(A) Has an eligible rating;
(B) is registered under the foreign account tax compliance act;
(C) is not located in any country subject to sanctions from the
office of foreign asset control; and
(D) is not located in a high-risk or non-cooperative jurisdiction as
designated by the financial action task force.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 36. (a) The commissioner may, after notice and an
opportunity for a hearing conducted in accordance with the Kansas
administrative procedure act, K.S.A. 77-501 et seq., and amendments
thereto, suspend or revoke a license or order a licensee to revoke the
designation of an authorized delegate if:
(1) The licensee violates this act or any rules and regulations
adopted or an order issued under this act;
(2) the licensee does not cooperate with an examination or
investigation by the commissioner;
(3) the licensee engages in fraud, intentional misrepresentation or
gross negligence;
(4) an authorized delegate is convicted of a violation of a state or
federal anti-money laundering statute or violates any rules or
regulations adopted or an order issued under this act, as a result of the
licensee's willful misconduct or willful blindness;
(5) the competence, experience, character or general fitness of the
licensee, authorized delegate, person in control of a licensee, key HOUSE BILL No. 2560—page 24
individual or responsible person of the authorized delegate indicates
that it is not in the public interest to permit the person to provide money
transmission;
(6) the licensee engages in an unsafe or unsound practice as
determined by the commissioner pursuant to subsection (b);
(7) the licensee is insolvent, suspends payment of the licensee's
obligations or makes a general assignment for the benefit of the
licensee's creditors;
(8) the licensee does not remove an authorized delegate after the
commissioner issues and serves upon the licensee a final order that
includes a finding that the authorized delegate has violated this act;
(9) a fact or condition exists that, if it had existed when the
licensee applied for a license, would have been grounds for denying the
application;
(10) the licensee's net worth becomes inadequate and the licensee,
after 10 days, fails to take steps to remedy the deficiency;
(11) the licensee demonstrated a pattern of failing to promptly pay
obligations;
(12) the licensee applied for adjudication, reorganization or other
relief under bankruptcy; or
(13) the licensee lied or made false or misleading statements to
any material fact or omitted any material fact.
(b) In determining whether a licensee is engaging in an unsafe or
unsound practice, the commissioner may consider the size and
condition of the licensee's money transmission, the magnitude of the
loss, the gravity of the violation of this act and the previous conduct of
the person involved.
(c) This section shall take effect on and after January 1, 2025.
New Sec. 37. (a) The commissioner may issue an order
suspending or revoking the designation of an authorized delegate, if the
commissioner finds that the:
(1) Authorized delegate violated this act or any rules and
regulations adopted or an order issued under this act;
(2) authorized delegate did not cooperate with an examination or
investigation by the commissioner;
(3) authorized delegate engaged in fraud, intentional
misrepresentation or gross negligence;
(4) authorized delegate is convicted of a violation of a state or
federal anti-money laundering statute;
(5) the competence, experience, character or general fitness of the
authorized delegate or a person in control of the authorized delegate
indicates that it is not in the public interest to permit the authorized
delegate to provide money transmission; or
(6) the authorized delegate is engaging in an unsafe or unsound
practice as determined by the commissioner pursuant to subsection (b).
(b) In determining whether an authorized delegate is engaging in
an unsafe or unsound practice, the commissioner may consider the size
and condition of the authorized delegate's provision of money
transmission, the magnitude of the loss, the gravity of the violation of
this act or any rules and regulations adopted or an order issued under
this act and the previous conduct of the authorized delegate.
(c) An authorized delegate may apply for relief from a suspension
or revocation of designation as an authorized delegate according to
procedures prescribed by the commissioner in rules and regulations.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 38. (a) If the commissioner determines that a violation
of this act or of any rules and regulations adopted or an order issued
under this act by a licensee, a person required to be licensed or
authorized delegate is likely to cause immediate and irreparable harm
to the licensee, the licensee's customers or the public as a result of the
violation or cause insolvency or significant dissipation of assets of the
licensee, the commissioner may issue an order requiring the licensee or
authorized delegate to cease and desist from the violation. The order
shall become effective upon service of the order on the licensee or HOUSE BILL No. 2560—page 25
authorized delegate.
(b) The commissioner may issue an order against a licensee to
cease and desist from providing money transmission through an
authorized delegate that is the subject of a separate order by the
commissioner.
(c) An order to cease and desist shall remain effective and
enforceable pending the completion of an administrative proceeding
pursuant to the Kansas administrative procedure act, K.S.A. 77-501 et
seq., and amendments thereto.
(d) An order to cease and desist shall be considered a final order
unless the licensee or authorized delegate requests a hearing within 14
days after the cease and desist order is issued.
(e) This section shall take effect on and after January 1, 2025.
New Sec. 39. (a) The commissioner may enter into a consent order
at any time with a person to resolve a matter arising under this act or
any rules and regulations adopted or order issued under this act. A
consent order shall be signed by the person to whom such consent order
is issued or by the person's authorized representative and shall indicate
agreement with the terms contained in the order. A consent order may
provide that such consent order does not constitute an admission by a
person that this act or rules and regulations adopted or an order issued
under this act has been violated.
(b) This section shall take effect on and after January 1, 2025.
New Sec. 40. (a) Any person that intentionally makes a false
statement, misrepresentation or false certification in a record filed or
required to be maintained under this act or that intentionally makes a
false entry or omits a material entry in such a record is guilty of a
severity level 9, nonperson felony.
(b) Any person that knowingly engages in an activity for which a
license is required under this act without being licensed under this act
and who receives more than $500 in compensation within a 30-day
period from this activity is guilty of a severity level 9, nonperson
felony.
(c) Any person that knowingly engages in an activity for which a
license is required under this act without being licensed under this act
and who receives not more than $500 in compensation within a 30-day
period from this activity is guilty of a class A nonperson misdemeanor.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 41. (a) As part of any summary order or consent order,
the commissioner may:
(1) Assess a fine against any person who violates this act or any
rules and regulations adopted hereunder in an amount not to exceed
$5,000 per violation. The commissioner may designate any fine
collected pursuant to this section be used for consumer education;
(2) assess the agency's operating costs and expenses for
investigating and enforcing this act;
(3) require the person to pay restitution for any loss arising from
the violation or requiring the person to reimburse any profits arising
from the violation;
(4) prohibit the person from future application for licensure
pursuant to the act; and
(5) require such affirmative action as determined by the
commissioner to carry out the purposes of this act.
(b) (1) The commissioner may enter into an informal agreement at
any time with a person to resolve a matter arising under this act, rules
and regulations adopted hereunder or an order issued pursuant to this
act.
(2) Any informal agreement authorized by this subsection shall be
considered confidential examination material. The adoption of an
informal agreement authorized by this subsection shall not be:
(A) Subject to the provisions of K.S.A. 77-501 et seq., and
amendments thereto, or K.S.A. 77-601 et seq., and amendments
thereto;
(B) considered an order or other agency action; HOUSE BILL No. 2560—page 26
(C) subject to the Kansas open records act, K.S.A. 45-215 et seq.,
and amendments thereto; or
(D) discovery or be admissible in evidence in any private civil
action.
(3) The provisions of this subsection providing for the
confidentiality of public records shall expire on July 1, 2030, unless the
legislature reviews and reenacts such provisions in accordance with the
Kansas open records act, K.S.A. 45-229, and amendments thereto, prior
to July 1, 2030.
(c) Through an examination finding, the commissioner may:
(1) Assess a fine against any licensee who violates this act or rules
and regulations adopted thereto, in an amount not to exceed $5,000 per
violation. The commissioner may designate any fine collected pursuant
to this section be used for consumer education; or
(2) require the licensee to pay restitution for any loss arising from
the violation or require the person to reimburse any profits arising from
the violation.
(d) This section shall take effect on and after January 1, 2025.
New Sec. 42. (a) The provisions of this act are severable. If any
portion of the act is declared unconstitutional or invalid, or the
application of any portion of the act to any person or circumstance is
held unconstitutional or invalid, the invalidity shall not affect other
portions of the act that can be given effect without the invalid portion
or application, and the applicability of such other portions of the act to
any person or circumstance shall remain valid and enforceable.
(b) This section shall take effect on and after January 1, 2025.
New Sec. 43. (a) Sections 43 through 58, and amendments thereto,
shall be known and may be cited as the Kansas earned wage access
services act.
(b) This act shall not apply to a:
(1) Bank holding company regulated by the federal reserve;
(2) depository institution regulated by a federal banking agency;
or
(3) a subsidiary of either paragraph (1) or (2) if such subsidiary
directly owns 25% of the bank holding company or depository
institution's common stock.
New Sec. 44. As used in sections 43 through 58, and amendments
thereto:
(a) "Act" means the Kansas earned wage access services act.
(b) "Commissioner" means the state bank commissioner or the
commissioner's designee, who shall be the deputy commissioner of the
consumer and mortgage lending division of the office of the state bank
commissioner.
(c) "Consumer" means an individual who is a resident of this state.
A provider may use the mailing address provided by a consumer to
determine such consumer's state of residence for purposes of this act.
(d) "Consumer-directed wage access services" means offering or
providing earned wage access services directly to consumers based on
the consumer's representations and the provider's reasonable
determination of the consumer's earned but unpaid income.
(e) "Director" means a member of the registrant's or applicant's
board of directors.
(f) "Earned but unpaid income" means salary, wages,
compensation or other income that a consumer has represented, and
that a provider has reasonably determined, to have been earned or to
have accrued to the benefit of the consumer in exchange for the
consumer's provision of services to an employer or on behalf of an
employer, including on an hourly, project-based, piecework or other
basis and including where the consumer is acting as an independent
contractor of the employer, but, at the time of the payment of proceeds,
have not been paid to the consumer by the employer.
(g) "Earned wage access services" means the business of
providing consumer-directed wage access services or employer-
integrated wage access services, or both. HOUSE BILL No. 2560—page 27
(h) "Employer-integrated wage access services" means the
business of delivering to consumers access to earned but unpaid income
that is based on employment, income and attendance data obtained
directly or indirectly from an employer.
(i) "Fee" means a fee imposed by a provider for delivery or
expedited delivery of proceeds to a consumer or a subscription or
membership fee imposed by a provider for a bona fide group of
services that include earned wage access services. A voluntary tip,
gratuity or donation shall not be deemed a fee.
(j) "Member" means someone who has the right to receive upon
dissolution, or has contributed 10% or more of the capital, of a limited
liability corporation or a limited liability partnership of the registrant or
applicant.
(k) "Nationwide multistate licensing system and registry" or
"registry" means a multistate licensing system developed by the
conference of state bank supervisors and the American association of
residential mortgage regulators and operated by the state regulatory
agency, LLC, for the licensing and registration of non-depository
financial service entities by participating state agencies or any
successor to the nationwide multisystem licensing system and registry.
(l) "Non-mandatory payment" means the following:
(1) A charge imposed by a provider for delivery or expedited
delivery of proceeds to a consumer so long as a provider offers the
consumer at least one option to receive proceeds at no cost to the
consumer;
(2) an amount paid by an obligor to a provider on a consumer's
behalf that entitles the consumer to receive proceeds at no cost to the
consumer;
(3) a subscription or membership charge imposed by a provider
for a group of services that include earned wage access services so long
as the provider offers the consumer at least one option to receive
proceeds at no cost to the consumer; or
(4) a tip or gratuity paid by a consumer to a provider so long as the
provider offers the consumer at least one option to receive proceeds at
no cost to the consumer.
(m) "Nonrecourse" means a provider shall not compel or attempt
to compel repayment by a consumer of outstanding proceeds or fees
owed by such consumer to such provider through any of the following
means:
(1) A civil suit against the consumer in a court of competent
jurisdiction;
(2) use of a third party to pursue collection of outstanding
proceeds or fees on the provider's behalf; or
(3) sale of outstanding amounts to a third-party collector or debt
buyer.
(n) "Obligor" means an employer or other person who employs a
consumer or any other person who is contractually obligated to pay a
consumer earned but unpaid income in exchange for a consumer's
provision of services to the employer or on behalf of the employer,
including on an hourly, project-based, piecework or other basis, and
including where the consumer is acting as an independent contractor.
(o) "Officer" means a person who participates or has authority to
participate, other than in the capacity of a director, in major
policymaking functions of the registrant or applicant, whether or not
the person has an official title. "Officer" includes, but is not limited to,
the chief executive officer, chief financial officer, chief operations
officer, chief legal officer, chief credit officer, chief compliance officer
and every vice president.
(p) "Outstanding proceeds" means proceeds remitted to a
consumer by a provider that have not yet been repaid to such provider.
(q) "Owner" means an individual who holds, directly or indirectly,
at least 10% or more of a class of voting securities or the power to
direct the management or policies of a registrant or an applicant.
(r) "Partner" means a person that has the right to receive upon HOUSE BILL No. 2560—page 28
dissolution, or has contributed, 10% or more of the capital of a
partnership of the registrant or applicant.
(s) "Person" means any individual, corporation, partnership,
association or other commercial entity.
(t) "Principal" of a registrant means a person that oversees the
daily operations of a registrant or applicant and is not an owner or key
individual of such registrant or applicant.
(u) "Proceeds" means a payment to a consumer by a provider that
is based on earned but unpaid income.
(v) "Provider" means a person who is in the business of offering
and providing earned wage access services to consumers.
(w) "Registrant" means a person who is registered with the
commissioner as an earned wage access services provider.
New Sec. 45. (a) No person shall engage in or hold such person
out as willing to engage in any earned wage access services business
with a consumer without registering with the commissioner. Any
person required to be registered as an earned wage access services
provider shall submit to the commissioner an application for
registration on forms prescribed and provided by the commissioner.
Such application for registration shall include:
(1) The applicant's name, business address, telephone number and,
if any, website address;
(2) the name and address of each owner, officer, director, member,
partner or principal of the applicant;
(3) a description of the ownership interest of any officer, director,
member, partner, agent or employee of the applicant in any affiliate or
subsidiary of the applicant or in any other entity that provides any
service to the applicant or any consumer relating to the applicant's
earned wage access services business; and
(4) any other information the commissioner may deem necessary
to evaluate the financial responsibility, financial condition, character,
qualifications and fitness of the applicant.
(b) Each application for registration shall be accompanied by a
nonrefundable fee.
(c) The commissioner shall approve an application and shall issue
a nontransferable and nonassignable registration to the applicant when
the commissioner:
(1) Receives the complete application and fee required by this
section; and
(2) determines the financial responsibility, financial condition,
character, qualifications and fitness warrants a belief that the business
of the applicant will be conducted competently, honestly, fairly and in
accordance with all applicable state and federal laws.
(d) Each earned wage access services registration issued under this
section shall expire on December 31 of each year. A registration shall
be renewed by filing a complete renewal application with the
commissioner at least 30 calendar days prior to the expiration of the
registration. Such renewal application shall contain all information the
commissioner requires to determine the existence and effect of any
material change from the information contained in the applicant's
original application, annual reports or prior renewal applications. Each
renewal application shall be accompanied by a nonrefundable renewal
fee.
(e) If the commissioner fails to issue a registration within 60
calendar days after a filed application is deemed complete by the
commissioner, the applicant may make written request for a hearing.
Upon receipt of such written request for a hearing, the commissioner
shall conduct a hearing in accordance with the Kansas administrative
procedure act.
(f) Not later than the first day of the sixth month beginning after
the effective date of this act, the commissioner shall prescribe the form
and content of an application for registration to provide earned wage
access services pursuant to this act.
(g) Notwithstanding the provisions of subsection (a), a person HOUSE BILL No. 2560—page 29
who, as of January 1, 2024, was engaged in the business of providing
earned wage access services in this state may, until the commissioner
has processed the person's application for registration, continue to
engage in the business of providing earned wage access services in this
state without registering if the person has submitted an application for
registration within three months after the commissioner has prescribed
the form and content of an application pursuant to subsection (f) and
otherwise complies with this act.
(h) The registration requirements of this act shall not apply to
individuals acting as employees or independent contractors of business
entities required to register.
New Sec. 46. Each applicant or registrant shall file with the
commissioner a surety bond in a form acceptable to the commissioner.
Such surety bond shall be issued by a surety or insurance company
authorized to conduct business in this state, securing the applicant's or
registrant's faithful performance of all duties and obligations of a
registrant. The surety bond shall:
(a) Be payable to the office of the state bank commissioner;
(b) provide that the bond may not be terminated without 30
calendar days' prior written notice to the commissioner, that such
termination shall not affect the surety's liability for violations of this act
occurring prior to the effective date of cancellation, and principal and
surety shall be and remain liable for a period of two years from the date
of any action or inaction of principal that gives rise to a claim under the
bond;
(c) provide that the bond shall not expire for two years after the
date of surrender, revocation or expiration of the applicant's or
registrant's registration, whichever occurs first;
(d) be available for:
(1) The recovery of expenses, fines and fees levied by the
commissioner under this act; and
(2) payment of losses or damages that are determined by the
commissioner to have been incurred by any consumer as a result of the
applicant's or registrant's failure to comply with the requirements of this
act; and
(e) be in the amount of $100,000.
New Sec. 47. A provider that is registered in the state of Kansas
shall be subject to the following requirements:
(a) The registrant shall provide all proceeds on a non-recourse
basis and shall treat all fees and non-mandatory payments as non-
recourse payment obligations.
(b) The registrant shall develop and implement policies and
procedures to respond to questions raised by consumers and address
complaints from consumers in an expedient manner.
(c) Before entering into an agreement with a consumer for the
provision of earned wage access services, the registrant shall:
(1) Inform the consumer of their rights under the agreement;
(2) fully and clearly disclose all fees associated with the earned
wage access services; and
(3) clearly and conspicuously describe how the consumer may
obtain proceeds at no cost to such consumer.
(d) A registrant shall inform the consumer of any material changes
to the terms and conditions of the earned wage access services before
implementing such changes for such consumer.
(e) The registrant shall provide proceeds to a consumer via any
means mutually agreed upon by the consumer and registrant.
(f) The registrant shall allow a consumer to cancel the use of the
provider's earned wage access services at any time without incurring a
cancellation fee or penalty imposed by the provider.
(g) The registrant shall comply with all applicable federal, state
and local privacy and information security laws.
(h) If a registrant solicits, charges or receives a tip, gratuity or
other donation from a consumer, the registrant shall disclose:
(1) To the consumer immediately prior to each transaction that a HOUSE BILL No. 2560—page 30
tip, gratuity or other donation amount may be zero and is voluntary;
and
(2) in its agreement with the consumer and elsewhere that tips,
gratuities or other donations are voluntary and that the offering of
earned wage access services, including the amount of proceeds a
consumer is eligible to request and the frequency with which proceeds
are provided to a consumer, is not contingent on whether the consumer
pays any tip, gratuity or donation or on the size of any tip, gratuity or
other donation.
(i) If a registrant will seek repayment of outstanding proceeds or
payment of fees or other amounts owed, including voluntary tips,
gratuities or other donations, in connection with earned wage access
services from a consumer's depository institution, including by means
of electronic funds transfer, the registrant shall do all of the following:
(1) Inform the consumer when the provider will make each
attempt to seek repayment of the proceeds from the consumer;
(2) comply with applicable provisions of the federal electronic
fund transfer act, 15 U.S.C. § 1693 et seq., and any regulations adopted
thereunder; and
(3) reimburse the consumer for the full amount of any overdraft or
nonsufficient funds fees imposed on a consumer by the consumer's
depository institution that were caused by the provider attempting to
seek payment of any outstanding proceeds, fees or other payments in
connection with earned wage access services, including voluntary tips,
gratuities or other donations, on a date before, or in an incorrect amount
from, the date or amount disclosed to the consumer. Notwithstanding
the provisions of this paragraph, no provider shall be subject to the
requirements of this paragraph with respect to payments of outstanding
proceeds or fees incurred by a consumer through fraudulent or other
unlawful means.
New Sec. 48. No person required to be registered under this act
shall:
(a) Compel or attempt to compel repayment by a consumer of
outstanding proceeds or payments owed by such consumer to the
registrant through any of the following means:
(1) A civil suit against the consumer in a court of competent
jurisdiction;
(2) use of a third party to pursue collection of outstanding
proceeds or payments on the provider's behalf;
(3) use of outbound telephone calls to attempt collection; or
(4) sale of outstanding amounts to a third-party debt collector or
debt purchaser;
(b) charge a late fee, a deferral fee, interest or any other penalty or
charge for failure to repay outstanding proceeds, fees, voluntary tips,
gratuitites or other donations;
(c) charge interest or finance charges:
(d) charge an unreasonable fee to provide expedited delivery of
proceeds to a consumer;
(e) share with an employer a portion of any fees, voluntary tips,
gratuities or other donations that were received from or charged to a
consumer for earned wage access services;
(f) condition the amount of proceeds that a consumer is eligible to
request or the frequency with which a consumer is eligible to request
proceeds on whether such consumer pays fees, voluntary tips, gratuities
or other donations or on the size of any fee, voluntary tip, gratuity or
other donation that such consumer may make to such registrant in
connection with the provision of earned wage access services;
(g) mislead or deceive consumers about the voluntary nature of
tips, gratuities or other donations or make representations that tips,
gratuities or other donations will benefit any specific individuals if the
registrant solicits, charges or receives tips, gratuities or other donations
from a consumer;
(h) charge a deferral fee or any other charge in connection with
deferring the collection of any outstanding proceeds beyond the HOUSE BILL No. 2560—page 31
original scheduled repayment date;
(i) accept credit of any kind as payment from a consumer of
outstanding proceeds or non-mandatory payments;
(j) report a consumer's payment or failed repayment of
outstanding proceeds to a consumer credit reporting agency or a debt
collector; or
(k) require a credit score to determine a consumer's eligibility for
earned wage access services.
New Sec. 49. (a) For purposes of the laws of this state:
(1) Earned wage access services provided by a registrant in
accordance with this chapter shall not be considered to be:
(A) A loan or other form of credit or the registrant a creditor or
lender with respect thereto;
(B) in violation of or noncompliant with the laws of this state
governing the sale or assignment of, or an order for, earned but unpaid
income; or
(C) money transmission or the registrant a money transmitter with
respect thereto.
(2) Fees, voluntary tips, gratuities or other donations paid to such
a registrant in accordance with this chapter shall not be considered
interest or finance charges.
(b) A registrant that provides proceeds to a consumer in
accordance with this act shall not be subject to the provisions of the
uniform consumer credit code in connection with such registrant's
earned wage access services.
(c) If there is a conflict between the provisions of this act and any
other state statute, the provisions of this act control.
New Sec. 50. (a) (1) On or before April 1 of each year, each
registrant shall file with the commissioner an annual report relating to
earned wage access services provided by the registrant in this state
during the preceding calendar year. The annual report shall be on a
form prescribed by the commissioner.
(2) The information contained in the annual report shall be
confidential and shall not be subject to the open records act, K.S.A. 45-
215 et seq., and amendments thereto. The commissioner may publish
aggregate annual report information for multiple registrants in
composite form. The provisions of this paragraph shall expire on July
1, 2029, unless the legislature reviews and acts to continue such
provisions pursuant to K.S.A. 45-229, and amendments thereto, prior to
July 1, 2029.
(b) Within 15 calendar days of any of the following events, a
registrant shall file a written report with the commissioner describing
the event and such event's expected impact on the registrant's business:
(1) The filing for bankruptcy or reorganization by the registrant;
(2) the institution of a revocation, suspension or other proceeding
against the registrant by a governmental authority that is related to the
registrant's earned wage access services business in any state;
(3) the addition or loss of any owner, officer, partner, member,
principal or director of the registrant;
(4) a felony conviction of the registrant or any of such registrant's
owners, officers, members, principals, directors or partners;
(5) a change in the registrant's name or legal entity status; or
(6) the closing or relocation of the registrant's principal place of
business.
(c) If a registrant fails to make any report to the commissioner as
required by this section, the commissioner may require the registrant to
pay a late penalty of $100 for each day such report is overdue.
New Sec. 51. (a) Each registrant shall maintain and preserve
complete and adequate business records, including a general ledger
containing all assets, liabilities, capital, income and expense accounts
for a period of three years.
(b) Each registrant shall maintain and preserve complete and
adequate records of each earned wage access services contract during
the term of the contract and for a period of five years from the date on HOUSE BILL No. 2560—page 32
which the registrant last provides proceeds to the consumer.
(c) The registrant shall provide the records to the commissioner
within three business days of the commissioner's request or, at the
commissioner's discretion, pay reasonable and necessary expenses for
the commissioner or commissioner's designee to examine them at the
place where such records are maintained. The registrant may provide
such records electronically to the commissioner in a manner prescribed
by the commissioner.
New Sec. 52. The commissioner may deny, suspend, revoke or
refuse to renew a registration issued pursuant to this act if the
commissioner finds, after notice and opportunity for a hearing
conducted in accordance with the provisions of the Kansas
administrative procedure act, that:
(a) The applicant or registrant has repeatedly or willfully violated
any provision of this act, any rules and regulations adopted thereunder
or any order lawfully issued by the commissioner pursuant to this act;
(b) the applicant or registrant has failed to file and maintain the
surety bond required under this act;
(c) the applicant or registrant is insolvent;
(d) the applicant or registrant has filed with the commissioner any
document or statement containing any false representation of a material
fact or omitting to state a material fact;
(e) the applicant, registrant or any officer, director, member,
owner, partner or principal of the applicant or registrant has been
convicted of any crime;
(f) the applicant or registrant fails to keep and maintain sufficient
records to permit an audit satisfactorily disclosing to the commissioner
the applicant's or registrant's compliance with the provisions of this act
and applicable federal law;
(g) the applicant, registrant or an employee of the applicant or
registrant has been the subject of any disciplinary action by the
commissioner or any other state or federal regulatory agency;
(h) a final judgment has been entered against the applicant or
registrant in a civil action and the commissioner finds that the conduct
on which the judgment is based indicates that it would be contrary to
the public interest to permit such person to be registered;
(i) the applicant or registrant has engaged in any deceptive
business practice;
(j) facts or conditions exist that would have justified the denial of
the registration or renewal had such facts or conditions existed or been
known to exist at the time the application for registration or renewal
was made; or
(k) the applicant or registrant has refused to furnish information
required by the commissioner within a reasonable period of time as
established by the commissioner.
New Sec. 53. (a) The commissioner shall administer the
provisions of this act. In addition to other powers granted by this act,
the commissioner, within the limitations provided by law, may exercise
the following powers:
(1) Adopt, amend and revoke rules and regulations as necessary to
carry out the intent and purpose of this act;
(2) make any investigation and examination of the operations,
books and records of an earned wage access services provider as the
commissioner deems necessary to aid in the enforcement of this act;
(3) have free and reasonable access to the offices, places of
business and all records of the registrant that will enable the
commissioner to determine whether the registrant is complying with the
provisions of this act. The commissioner may designate persons,
including comparable officials of the state in which the records are
located, to inspect the records on the commissioner's behalf;
(4) establish, charge and collect fees from applicants or registrants
for reasonable costs of investigation, examination and administration of
this act, in such amounts as the commissioner may determine to be
sufficient to meet the budget requirements of the commissioner for HOUSE BILL No. 2560—page 33
each fiscal year. The commissioner may maintain an action in any court
to recover such costs;
(5) order any registrant or person to cease any activity or practice
that the commissioner deems to be deceptive, dishonest, a violation of
this act, or of any other state or federal law, or unduly harmful to the
interests of the public;
(6) exchange any information regarding the administration of this
act with any agency of the United States or any state that regulates the
applicant or registrant or administers statutes, rules and regulations or
programs related to earned wage access services laws with any attorney
general or district attorney with jurisdiction to enforce criminal
violations of this act;
(7) disclose to any person or entity that an applicant's or
registrant's application or registration has been denied, suspended,
revoked or refused renewal;
(8) require or permit any person to file a written statement, under
oath or otherwise as the commissioner may direct, setting forth all the
facts and circumstances concerning any apparent violation of this act,
any rule and regulation adopted thereunder or any order issued pursuant
to this act;
(9) receive, as a condition in settlement of any investigation or
examination, a payment designated for consumer education to be
expended for such purpose as directed by the commissioner;
(10) delegate the authority to sign any orders, official documents
or papers issued under or related to this act to the deputy of consumer
and mortgage lending division of the office of the state bank
commissioner;
(11) (A) require fingerprinting of any officer, partner, member,
owner, principal or director of an applicant or registrant. Such
fingerprints may be submitted to the Kansas bureau of investigation
and the federal bureau of investigation for a state and national criminal
history record check to be submitted to the office of the state bank
commissioner. The fingerprints shall be used to identify the person and
to determine whether the person has a record of arrests and convictions
in this state or other jurisdictions. The office of the state bank
commissioner may use information obtained from fingerprinting and
the criminal history for purposes of verifying the identification of the
person and in the official determination of the qualifications and fitness
of the persons associated with the applicant. Whenever the office of the
state bank commissioner requires fingerprinting, any associated costs
shall be paid by the applicant or the parties to the application.
(B) The Kansas bureau of investigation shall release all records of
adult convictions, adjudications, and juvenile adjudications in Kansas
and of another state or country to the office of the state bank
commissioner. The office of the state bank commissioner shall not
disclose or use a state and national criminal history record check for
any purpose except as provided for in this section. Unauthorized use of
a state or national criminal history record check shall constitute a class
A nonperson misdemeanor.
(C) Each state and national criminal history record check shall be
confidential, not subject to the open records act, K.S.A. 45-215 et seq.,
and amendments thereto, and not be disclosed to any applicant or
registrant. The provisions of this subparagraph shall expire on July 1,
2029, unless the legislature reviews and acts to continue such
provisions pursuant to K.S.A. 45-229, and amendments thereto, prior to
July 1, 2029;
(12) issue, amend and revoke written administrative guidance
documents in accordance with the applicable provisions of the Kansas
rules and regulations filing act;
(13) enter into any informal agreement with any person for a plan
of action to address violations of this act; and
(14) require use of a nationwide multi-state licensing system and
registry for processing applications, renewals, amendments, surrenders
and any other activity that the commissioner deems appropriate. The HOUSE BILL No. 2560—page 34
commissioner may establish relationships or contracts with the
nationwide multi-state licensing system and registry or other entities to
collect and maintain records and process transaction fees or other fees
related to applicants and licensees, as may be reasonably necessary to
participate in the nationwide multi-state licensing system and registry.
The commissioner may report violations of the law, as well as
enforcement actions and other relevant information to the nationwide
multi-state licensing system and registry. The commissioner may
require any applicant or licensee to file reports with the nationwide
multi-state licensing system and registry in the form prescribed by the
commissioner.
(b) Examination reports and correspondence regarding such
reports made by the commissioner or the commissioner's designees
shall be confidential and shall not be subject to the provisions of the
open records act, K.S.A. 45-215 et seq., and amendments thereto. The
commissioner may release examination reports and correspondence
regarding the reports in connection with a disciplinary proceeding
conducted by the commissioner, a liquidation proceeding or a criminal
investigation or proceeding. Additionally, the commissioner may
furnish to federal or other state regulatory agencies or any officer or
examiner thereof, a copy of any or all examination reports and
correspondence regarding the reports made by the commissioner or the
commissioner's designees. The provisions of this subsection shall
expire on July 1, 2029, unless the legislature reviews and acts to
continue such provisions pursuant to K.S.A. 45-229, and amendments
thereto, prior to July 1, 2029.
(c) For the purpose of any examination, investigation or
proceeding under this act, the commissioner or the commissioner's
designee may administer oaths and affirmations, subpoena witnesses,
compel such witnesses' attendance, introduce evidence and require the
production of any matter that is relevant to the examination or
investigation, including the existence, description, nature, custody,
condition and location of any books, documents or other tangible things
and the identity and location of persons having knowledge of relevant
facts or any other matter reasonably calculated to lead to the discovery
of relevant information or items.
(d) The adoption of an informal agreement authorized by this
section shall not be subject to the provisions of the Kansas
administrative procedure act or the Kansas judicial review act. Any
informal agreement authorized by this subsection shall not be
considered an order or other agency action and shall be considered
confidential examination material. All such examination material shall
be confidential by law and privileged, shall not be subject to the
provisions of the open records act, K.S.A. 45-215 et seq., and
amendments thereto, shall not be subject to subpoena and shall not be
subject to discovery or admissible in evidence in any private civil
action. The provisions of this subsection shall expire on July 1, 2029,
unless the legislature reviews and acts to continue such provisions
pursuant to K.S.A. 45-229, and amendments thereto, prior to July 1,
2029.
New Sec. 54. (a) If the commissioner determines after notice and
opportunity for a hearing pursuant to the Kansas administrative
procedure act that any person has engaged, is engaging or is about to
engage in any act or practice constituting a violation of any provision
of this act, any rules and regulations adopted or order issued
thereunder, the commissioner may issue an order requiring any or all of
the following:
(1) That the person cease and desist from the unlawful act or
practice;
(2) that the person pay a fine not to exceed $5,000 per incident for
the unlawful act or practice;
(3) if any person is found to have violated any provision of this act
and such violation is committed against elder or disabled persons as
defined in K.S.A. 50-676, and amendments thereto, the commissioner HOUSE BILL No. 2560—page 35
may impose an additional penalty not to exceed $5,000 for each such
violation, in addition to any civil penalty otherwise provided by law;
(4) that the person to pay restitution for any loss arising from the
violation or requiring the person to disgorge any profits arising from
the violation. Such order may include the assessment of interest not to
exceed 8% per annum from the date of the violation;
(5) that the person take such action as in the judgment of the
commissioner will carry out the purposes of this act; or
(6) that the person be barred from subsequently applying for
registration under this act.
(b) (1) If the commissioner makes written findings of fact that the
public interest will be irreparably harmed by delay in issuing an order
under subsection (a), the commissioner may issue an emergency cease
and desist order.
(2) Such emergency order, even if not an order within the meaning
of K.S.A. 77-502, and amendments thereto, shall be subject to the same
procedures as an emergency order issued under K.S.A. 77-536, and
amendments thereto.
(3) Upon the entry of such an emergency order, the commissioner
shall promptly notify the person subject to the order that such order has
been entered, the reasons for such order and that a hearing will be held
upon written request by such person.
(4) If such person requests a hearing or, in the absence of any
request, if the commissioner determines that a hearing should be held,
the matter shall be set for a hearing that shall be conducted in
accordance with the provisions of the Kansas administrative procedure
act. Upon completion of the hearing the commissioner shall, by written
findings of fact and conclusions of law, vacate, modify or make
permanent the emergency order.
(5) If no hearing is requested and none is ordered by the
commissioner, the emergency order shall remain in effect until such
order is modified or vacated by the commissioner.
(6) Fines and penalties collected pursuant to paragraphs (2) and
(3) shall be designated for use by the commissioner for consumer
education.
New Sec. 55. (a) In case of failure or refusal to obey a subpoena
issued to any person, any court of competent jurisdiction, upon
application by the commissioner, may issue an order requiring such
person to appear before the commissioner, or the commissioner's
designee, to produce documentary evidence if so ordered or to give
evidence relating to the matter under investigation or in question. Any
failure to obey the order of the court may be punished by the court as
contempt of court.
(b) No person shall be excused from attending, testifying or
producing any document or record before the commissioner or in
obedience to the subpoena of the commissioner or the commissioner's
designee, or in any proceeding instituted by the commissioner, on the
ground that such testimony or evidence, documentary or otherwise,
required of the person may tend to incriminate the person or subject the
person to a penalty or forfeiture. No individual may be prosecuted or
subjected to any penalty or forfeiture for or on account of any
transaction, matter or thing concerning which such person is compelled,
after claiming privilege against self-incrimination, to testify or produce
evidence, documentary or otherwise, except that the individual so
testifying shall not be exempt from prosecution and punishment for
perjury committed in so testifying.
New Sec. 56. It is unlawful for any person to violate the
provisions of this act, any rules and regulations adopted or any order
issued under this act. A conviction for an intentional violation is a class
A nonperson misdemeanor. A second or subsequent conviction of this
section is a severity level 7, nonperson felony. No person may be
imprisoned for the violation of this section if such person proves that
such person had no knowledge of the act, rules and regulations or order.
New Sec. 57. The commissioner, attorney general or a county or HOUSE BILL No. 2560—page 36
district attorney may bring an action in a district court to enjoin any
violation of this act or any rules and regulations adopted thereunder.
New Sec. 58. All fees collected by the commissioner pursuant to
this act shall be subject to the provisions of K.S.A. 75-1308, and
amendments thereto.
Sec. 59. K.S.A. 9-535 is hereby amended to read as follows: 9-
535. (a) The commissioner shall approve the application if the
commissioner determines that the application favorably meets each and
every factor prescribed in K.S.A. 9-534, and amendments thereto, the
proposed acquisition is in the interest of the depositors and creditors of
the Kansas state chartered bank or bank holding company that has an
ownership interest in a Kansas state chartered bank which that is the
subject of the proposed acquisition and in the public interest generally.
Otherwise, the application shall be denied.
(b) If the commissioner denies the application, the applicant shall
have the right to a hearing before the state banking board to be
conducted in accordance with the Kansas administrative procedure act.
The state banking board shall render the board's decision affirming or
rescinding the determination of the commissioner. Any action of the
state banking board pursuant to this section is subject to review in
accordance with the Kansas judicial review act.
Sec. 60. K.S.A. 9-806 is hereby amended to read as follows: 9-
806. (a) If the applicant fails to complete any application under the
state banking code within 60 days after being notified that the
application is incomplete, such application shall be considered
abandoned and the application fee shall not be refunded. An applicant
whose application is abandoned under this section may reapply at any
time.
(b) Except as provided by subsection (c), the bank or trust
company shall engage in the activity requiring an application and
approval by the commissioner or state banking board within 18 months
from the date of approval. If the bank or trust company fails to engage
in the activity within 18 months from the date of the approval, the
application shall be deemed expired and a new application, application
fee and approval is required. The provisions of this subsection do not
apply to applications approved under K.S.A. 9-1601, and amendments
thereto.
(c) Any newly organized bank or trust company which that did not
begin business within 120 days after a certificate of authority has been
issued to such bank or trust company by the commissioner shall not
engage in the banking business or the business of a trust company
without again obtaining a certificate of authority from the
commissioner.
(d) The commissioner may extend the deadline under subsection
(b) or (c):
(1) Indefinitely, if approval from another state or federal regulator
is necessary for the bank or trust company to engage in the activity; or
(2) up to 180 days for good cause.
(e) The state banking board may designate the commissioner to
determine the completeness of any application requiring state banking
board approval or deem as expired any state banking board approved
application.
Sec. 61. K.S.A. 9-1204 is hereby amended to read as follows: 9-
1204. (a) Any bank may receive deposits from minors or in the name of
minors and pay the same upon the order of such minors whether or not
such minors are emancipated. Payments so made shall discharge the
bank from any further liability on the account person, regardless of
age, may become a depositor in any bank and shall be subject to the
same duties and liabilities respecting such person's deposits. Whenever
a deposit is accepted by any bank in the name of any person, regardless
of age, the deposit may be withdrawn by the depositor by any of the
following methods:
(1) Check or other instrument in writing. The check or other
instrument in writing constitutes a receipt or acquittance if the check or HOUSE BILL No. 2560—page 37
other instrument in writing is signed by the depositor and constitutes a
valid release and discharge to the bank for all payments made; or
(2) electronic means through:
(A) Preauthorized direct withdrawal;
(B) an automatic teller machine;
(C) a debit card;
(D) a transfer by telephone;
(E) a network, including the internet; or
(F) any electronic terminal, computer, magnetic tape or other
electronic means.
(b) Any bank that accepts deposits from minors 16 years of age or
older in the custody of the secretary for children and families, a
federally recognized Indian tribe in this state or the secretary of
corrections shall not require a cosigner or the funds to be deposited
with the consent of the custodian. Such minor shall be responsible for
banking costs or penalties associated with such deposits. The secretary,
or their designee, or any foster or biological parent shall not be
responsible for banking costs or penalties associated with such
deposits.
(c) Any person, regardless of age, individually or with others may
enter into an agreement with a bank for the lease of a safe deposit box
and shall be bound by the terms of such agreement.
(d) This section shall not be construed to affect the rights,
liabilities or responsibilities of participants in an electronic fund
transfer under the federal electronic fund transfer act, 15 U.S.C. §
1693 et seq., as in effect on July 1, 2024, and shall not affect the legal
relationship between a minor and any person other than the bank.
Sec. 62. K.S.A. 9-1721 is hereby amended to read as follows: 9-
1721. (a) The person proposing to acquire control or a bank or trust
company undertaking a merger transaction, hereinafter referred to as
the applicant, shall file an a complete application with the
commissioner at least 60 days prior to the proposed change of control
or merger transaction. If the commissioner does not act on the complete
application within the 60-day time period and the applicant has
received approval from all other applicable federal and state agencies,
the application shall stand approved. The commissioner may, for any
reason, extend the time period to act on an application for an additional
30 days. The time period to act on an application may be further
extended if the commissioner determines that the applicant has not
furnished all the information required under K.S.A. 9-1722, and
amendments thereto, or that, in the commissioner's judgment, any
material information submitted is substantially inaccurate. The
commissioner may waive the 60-day prior notice requirement if the
acquired bank or trust company is under a formal corrective action.
(b) Upon the filing of an application, the commissioner shall make
an investigation of the applicant for the change of control or merger
transaction. The commissioner may deny the application if the
commissioner finds the:
(1) Proposed change of control or merger transaction would result
in a monopoly or would be in furtherance of any combination or
conspiracy to monopolize or attempt to monopolize the business of
banking or trust services in any part of this state;
(2) financial condition of the applicant might jeopardize the
financial stability of the bank or trust company or prejudice the
interests of the depositors of a bank;
(3) competence, experience or integrity of the applicant or of any
of the proposed management personnel of the bank or trust company or
resulting bank or trust company indicates it would not be in the interest
of the depositors of the bank, the clients of trust services, or in the
interest of the public; or
(4) applicant neglects, fails or refuses to furnish the commissioner
with all of the information required by the commissioner.
(c) Upon service of an order denying an application, the applicant
shall have the right to a hearing to be conducted in accordance with the HOUSE BILL No. 2560—page 38
Kansas administrative procedure act before the state banking board.
Any final order of the commissioner pursuant to this section is subject
to review in accordance with the Kansas judicial review act.
Sec. 63. K.S.A. 9-2107 is hereby amended to read as follows: 9-
2107. (a) As used in this section:
(1) "Contracting trustee" means any trust company, as defined in
K.S.A. 9-701, and amendments thereto, any bank that has been granted
trust authority by the commissioner under K.S.A. 9-1602, and
amendments thereto, any national bank chartered to do business in
Kansas that has been granted trust authority by the comptroller of the
currency under 12 U.S.C. § 92a, any bank that has been granted trust
authority or any trust company, regardless of where such bank or trust
company is located, that is controlled, as defined in K.S.A. 9-1612, and
amendments thereto, by the same bank holding company as any trust
company, state bank or national bank chartered to do business in
Kansas, which accepts or succeeds to any fiduciary responsibility as
provided in this section;
(2) "originating trustee" means any trust company, bank, national
banking association, savings and loan association or savings bank
which that has trust powers and its principal place of business is in this
state and which places or transfers any fiduciary responsibility to a
contracting trustee as provided in this section; and
(3) "financial institution" means any bank, national banking
association, savings and loan association or savings bank which that
has its principal place of business in this state but which that does not
have trust powers.
(b) Any contracting trustee and any originating trustee may enter
into an agreement by which the contracting trustee, without any further
authorization of any kind, succeeds to and is substituted for the
originating trustee as to all fiduciary powers, rights, duties, privileges
and liabilities with respect to all accounts for which the originating
trustee serves in any fiduciary capacity, except as may be provided
otherwise in the agreement. Notwithstanding the provisions of this
section, no contracting trustee with a home office outside the state of
Kansas shall enter into an agreement except with an originating trustee
which is commonly controlled as defined in K.S.A. 9-1612, and
amendments thereto, by the same bank holding company either the
contracting trustee or the originating trustee shall have its principal
place of business in this state.
(c) Unless the agreement expressly provides otherwise, upon the
effective date of the substitution:
(1) The contracting trustee shall be deemed to be named as the
fiduciary in all writings, including, without limitation, trust agreements,
wills and court orders, which pertain to the affected fiduciary accounts;
and
(2) the originating trustee is absolved from all fiduciary duties and
obligations arising under such writings and shall discontinue the
exercise of any fiduciary duties with respect to such writings, except
that the originating trustee is not absolved or discharged from any duty
to account required by K.S.A. 59-1709, and amendments thereto, or
any other applicable statute, rule of law, rules and regulations or court
order, nor shall the originating trustee be absolved from any breach of
fiduciary duty or obligation occurring prior to the effective date of the
agreement.
(d) The agreement may authorize the contracting trustee:
(1) To establish a trust service desk at any office of the originating
trustee at which the contracting trustee may conduct any trust business
and any business incidental thereto and which the contracting trustee
may otherwise conduct at its principal place of business; and
(2) to engage the originating trustee as the agent of the contracting
trustee, on a disclosed basis to customers, for the purposes of providing
administrative, advertising and safekeeping services incident to the
fiduciary services provided by the contracting trustee.
(e) Any contracting trustee may enter into an agreement with a HOUSE BILL No. 2560—page 39
financial institution providing that the contracting trustee may establish
a trust service desk as authorized by subsection (d) in the offices of
such financial institution and which provides such financial institution,
on a disclosed basis to customers, may act as the agent of contracting
trustee for purposes of providing administrative services and
advertising incident to the fiduciary services to be performed by the
contracting trustee.
(f) No activity authorized by subsections (b) through (e) shall be
conducted by any contracting trustee, originating trustee or financial
institution until an application for such authority has been submitted to
and approved by the commissioner. The application shall be in the form
and contain the information required by the commissioner, which shall
at a minimum include certified copies of the following documents:
(1) The agreement;
(2) the written action taken by the board of directors of the
originating trustee or financial institution approving the agreement;
(3) all other required regulatory approvals;
(4) proof of publication of notice that the applicant intends to file
or has filed an application pursuant to this section. The notice shall be
published in a newspaper of general circulation in the county where the
principal office of the originating trustee or financial institution is
located. The notice shall be in the form prescribed by the commissioner
and shall contain the name of the applicant contracting trustee and the
originating trustee, and a solicitation for written comments. The notice
shall be published on the same day for two consecutive weeks and
provide for a comment period of not less than 10 days after the date of
the second publication; and
(5) a certification by the parties to the agreement that written
notice of the proposed substitution was sent by first-class mail to each
co-fiduciary, each surviving settlor of a trust, each ward of a
guardianship, each person that has sole or shared power to remove the
originating trustee as fiduciary and each adult beneficiary currently
receiving or entitled to receive a distribution of principle or income
from a fiduciary account affected by the agreement, and that such
notice was sent to each such person's address as shown in the
originating trustee's records. An unintentional failure to give such
notice shall not impair the validity or effect of any such agreement,
except an intentional failure to give such notice shall render the
agreement null and void as to the party not receiving the notice of
substitution.
(g) A contracting trustee making application to the commissioner
for approval of any agreement pursuant to this section shall pay to the
commissioner a fee, in an amount established pursuant to K.S.A. 9-
1726, and amendments thereto, to defray the expenses of the
commissioner in the examination and investigation of the application.
The commissioner shall remit all moneys received under this section to
the state treasurer in accordance with the provisions of K.S.A. 75-4215,
and amendments thereto. Upon receipt of each such remittance, the
state treasurer shall deposit the entire amount in the state treasury to the
credit of the bank investigation fund. The moneys in the bank
investigation fund shall be used to pay the expenses of the
commissioner, or designee, in the examination and investigation of
such applications and any unused balance shall be transferred to the
bank commissioner fee fund.
(h) Upon the filing of a complete application with the
commissioner, the commissioner shall make or cause to be made, a
careful examination and investigation of the proposed agreement. If the
commissioner finds any of the following matters unfavorably, the
commissioner may deny the application:
(1) The reasonable probability of usefulness and success of the
contracting trustee; and
(2) the financial history and condition of the contracting trustee
including the character, qualifications and experience of the officers
employed by the contracting trustee. HOUSE BILL No. 2560—page 40
(i) The commissioner shall render approval or disapproval of the
application within 90 days of receiving a complete application.
(j) Upon service of an order denying an application, the applicant
shall have the right to a hearing to be conducted in accordance with the
Kansas administrative procedure act before the state banking board.
Any final order of the commissioner pursuant to this section is subject
to review in accordance with the Kansas judicial review act.
(k) When the commissioner determines that any contracting
trustee domiciled in this state has entered into a contracting agreement
in violation of the laws governing the operation of such contracting
trustee, the commissioner may take such action as available under
K.S.A. 9-1714, 9-1805, 9-1807 or 9-1809, and amendments thereto, to
remedy such violation.
(l) Any party entitled to receive a notice under subsection (f)(5)
may file a petition in the court having jurisdiction over the fiduciary
relationship, or if none, in the district court in the county where the
originating trustee has its principal office, seeking to remove any
contracting trustee substituted or about to be substituted as fiduciary
pursuant to this section. Unless the contracting trustee files a written
consent to its removal or a written declination to act subsequent to the
filing of the petition, the court, upon notice and hearing, shall
determine the best interest of the petitioner and all other parties
concerned and shall fashion such relief as the court deems appropriate
in the circumstances, including the awarding of reasonable attorney
fees. The right to file a petition under this subsection shall be in
addition to any other rights to remove the fiduciary provided by any
other statute or regulation or by the writing creating the fiduciary
relationship. If the removal of the fiduciary is prompted solely as a
result of the contracting agreement, any reasonable cost associated with
such removal and transfer shall be paid by the originating trustee or
financial institution entering into the agreement.
Sec. 64. K.S.A. 9-535, 9-806, 9-1204, 9-1721 and 9-2107 are
hereby repealed.
Sec. 65. On and after January 1, 2025, K.S.A. 9-508, 9-509, 9-
510, 9-510a, 9-511, 9-513, 9-513a, 9-513b, 9-513c, 9-513d and 9-513e
and K.S.A. 2023 Supp. 9-512 are hereby repealed. HOUSE BILL No. 2560—page 41
Sec. 66. This act shall take effect and be in force from and after its
publication in the statute book.
I hereby certify that the above BILL originated in the HOUSE, and was
adopted by that body
HOUSE adopted
Conference Committee Report
Speaker of the House.
Chief Clerk of the House.
Passed the SENATE
as amended
SENATE adopted
Conference Committee Report
President of the Senate.
Secretary of the Senate.
APPROVED
Governor.