KS
Kansas House Bill HB2560

Kansas 2023-2024 Regular Session

Kansas House Bill HB2560 Compare Versions

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1+Session of 2024
12 HOUSE BILL No. 2560
2-AN ACT concerning financial institutions; relating to entities regulated by the office of the
3-state bank commissioner; pertaining to the state banking code; providing when an
4-application is considered abandoned or expired; allowing an originating trustee to
5-have such trustee's principal place of business outside of Kansas; relating to bank
6-deposits, withdrawals and safe deposit box lease agreements; authorizing any person
7-to become a depositor or enter into an agreement for the lease of a safe deposit box;
8-providing methods in which bank deposits may be withdrawn by a depositor;
9-prohibiting banks from requiring a cosigner for an account of a child in the custody
10-of the secretary for children and families, the secretary of corrections or a federally
11-recognized Indian tribe; enacting the Kansas money transmission act; providing
12-oversight thereof by the commissioner; establishing powers, duties and
13-responsibilities of the commissioner; enacting the Kansas earned wage access
14-services act; establishing the administration of such act by the office of the state bank
15-commissioner; providing for registration, bond requirements; duties, prohibited acts,
16-reports, records retention, orders, civil fines, criminal penalties and fees; amending
17-K.S.A. 9-535, 9-806, 9-1204, 9-1721 and 9-2107 and repealing the existing sections;
18-also repealing K.S.A. 9-508, 9-509, 9-510, 9-510a, 9-511, 9-513, 9-513a, 9-513b, 9-
19-513c, 9-513d and 9-513e and K.S.A. 2023 Supp. 9-512.
3+By Committee on Financial Institutions and Pensions
4+Requested by Brock Roehler on behalf of the State Bank Commissioner
5+1-22
6+AN ACT concerning financial institutions; relating to the state banking
7+code; providing when an application is considered abandoned or
8+expired; allowing an originating trustee to have such trustee's principal
9+place of business outside of Kansas; amending K.S.A. 9-535, 9-806, 9-
10+1721 and 9-2107 and repealing the existing sections.
2011 Be it enacted by the Legislature of the State of Kansas:
21-New Section 1. (a) Sections 1 through 42, and amendments
22-thereto, shall be known and may be cited as the Kansas money
23-transmission act.
24-(b) As used in the Kansas money transmission act:
25-(1) "Act" means the Kansas money transmission act.
26-(2) "Acting in concert" means persons knowingly acting together
27-with a common goal of jointly acquiring control of a licensee whether
28-or not pursuant to an express agreement.
29-(3) "Authorized delegate" means a person designated by a licensee
30-to engage in money transmission on behalf of the licensee.
31-(4) "Average daily money transmission liability" means the
32-amount of the licensee's outstanding money transmission obligations in
33-Kansas at the end of each day in a given period of time added together
34-and divided by the total number of days in the given period of time. For
35-any licensee required to calculate "average daily money transmission
36-liability" pursuant to this act, the given period of time shall be the
37-calendar quarters ending March 31, June 30, September 30 and
38-December 31.
39-(5) "Closed loop stored value" means stored value that is
40-redeemable by the issuer only for goods or services provided by the
41-issuer or the issuer's affiliates or franchisees of the issuer or the
42-franchisees's affiliates, except to the extent required by applicable law
43-to be redeemable in cash for its cash value.
44-(6) "Commissioner" means the state bank commissioner, or a
45-person designated by the state bank commissioner to enforce this act.
46-(7) "Control" means the power to:
47-(A) Vote directly or indirectly at least 25% of the outstanding
48-voting shares or voting interests of a licensee or person in control of a
49-licensee;
50-(B) elect or appoint a majority of key individuals or executive
51-officers, managers, directors, trustees or other persons exercising
52-managerial authority of a person in control of a licensee; or
53-(C) exercise, directly or indirectly, a controlling influence over the
54-management or policies of a licensee or person in control of a licensee.
55-(8) "Eligible rating" means a credit rating from any of the three
56-highest rating categories provided by an eligible rating service. Each
57-rating category may include rating category modifiers such as plus or
58-minus for Standard & Poor or the equivalent for any other eligible
59-rating service. "Eligible rating" shall be determined as follows:
60-(A) Long-term credit ratings shall be deemed eligible if the rating
61-is equal to A- or higher by Standard & Poor or the equivalent from any
62-other eligible rating service.
63-(B) Short-term credit ratings are deemed eligible if the rating is
64-equal to or higher than A-2 or SP-2 by Standard & Poor or the
65-equivalent from any other eligible rating service. If ratings differ
66-among eligible rating services, the highest rating shall apply when
67-determining whether a security bears an eligible rating. HOUSE BILL No. 2560—page 2
68-(9) "Eligible rating service" means any nationally recognized
69-statistical rating organization that has been registered by the securities
70-and exchange commission or any organization designated by the
71-commissioner through order or rules and regulations as an eligible
72-rating service.
73-(10) "Federally insured depository financial institution" means a
74-bank, credit union, savings and loan association, trust company, savings
75-association, savings bank, industrial bank or industrial loan company
76-organized under the laws of the United States or any state of the United
77-States, when such bank, credit union, savings and loan association, trust
78-company, savings association, savings bank, industrial bank or
79-industrial loan company has federally insured deposits.
80-(11) "In Kansas" means the:
81-(A) Physical location of a person who is requesting a transaction
82-in person in the state of Kansas; or
83-(B) person's residential address or the principal place of business
84-for a person requesting a transaction electronically or by telephone if
85-such residential address or principal place of business is in the state of
86-Kansas.
87-(12) "Individual" means a natural person.
88-(13) "Key individual" means any individual ultimately responsible
89-for establishing or directing policies and procedures of the licensee,
90-including, but not limited to, an executive officer, manager, director or
91-trustee.
92-(14) "Licensee" means a person licensed under this act.
93-(15) "Material litigation" means litigation, that according to
94-United States generally accepted accounting principles, is significant to
95-a person's financial health and would be a required disclosure in the
96-person's annual audited financial statements, report to shareholders or
97-similar records.
98-(16) "Money" means a medium of exchange that is authorized or
99-adopted by the United States or a foreign government. "Money"
100-includes a monetary unit of account established by an
101-intergovernmental organization or by agreement between two or more
102-governments.
103-(17) "Monetary value" means a medium of exchange, whether or
104-not redeemable in money.  
105-(18) (A) "Money transmission" means any of the following:
106-(i) Selling or issuing payment instruments to a person located in
107-Kansas;
108-(ii) selling or issuing stored value to a person located in Kansas;
109-(iii) receiving money for transmission from a person located in
110-Kansas; or
111-(iv) payroll processing services.
112-(B) "Money transmission" does not include the provision of solely
113-online or telecommunications services or network access.
114-(19) "Money service business accredited state" means a state
115-agency that is accredited by the conference of state bank supervisors
116-and money transmitter regulators association for money transmission
117-licensing and supervision.
118-(20) "Multistate licensing process" means any agreement entered
119-into by state regulators relating to coordinated processing of
120-applications for money transmission licenses, applications for the
121-acquisition of control of a licensee, control determinations or notice and
122-information requirements for a change of key individuals.
123-(21) "Nationwide multistate licensing system and registry" means
124-a licensing system developed by the conference of state bank
125-supervisors and the American association of residential mortgage
126-regulators and owned and operated by the state regulatory registry,
127-limited liability company or any successor or affiliated entity for the
128-licensing and registration of persons in financial services industries.
129-(22) (A) "Outstanding money transmission obligation" means:
130-(i) Any payment instrument or stored value issued or sold by the
131-licensee to a person located in the United States or reported as sold by HOUSE BILL No. 2560—page 3
132-an authorized delegate of the licensee to a person that is located in the
133-United States that has not yet been paid or refunded by or for the
134-licensee or escheated in accordance with applicable abandoned
135-property laws; or
136-(ii) any money received for transmission by the licensee or an
137-authorized delegate in the United States from a person located in the
138-United States that has not been received by the payee or refunded to the
139-sender or escheated in accordance with applicable abandoned property
140-laws.
141-(B) "In the United States" includes a person in any state, territory
142-or possession of the United States, the District of Columbia, the
143-commonwealth of Puerto Rico or a United States military installation
144-that is located in a foreign country.
145-(23) "Passive investor" means a person that:
146-(A) Does not have the power to elect a majority of key individuals
147-or executive officers, managers, directors, trustees or other persons
148-exercising managerial authority of a person in control of a licensee;
149-(B) is not employed by and does not have any managerial duties
150-of the licensee or person in control of a licensee; or
151-(C) does not have the power to exercise, directly or indirectly, a
152-controlling influence over the management or policies of a licensee or
153-person in control of a licensee; and
154-(D) (i)  Either attests to subparagraphs (A), (B) and (C) in a form
155-and in a manner prescribed by the commissioner; or
156-(ii) commits to the passivity characteristics of subparagraphs (A),
157-(B) and (C) in a written document.
158-(24) (A) "Payment instrument" means a written or electronic
159-check, draft, money order, traveler's check or other written or electronic
160-instrument for the transmission or payment of money or monetary
161-value, regardless of negotiability.
162-(B) "Payment instrument" does not include stored value or any
163-instrument that is:
164-(i) Redeemable by the issuer only for goods or services provided
165-by the issuer or the issuer's affiliate or franchisees of the issuer or the
166-franchisees' affiliate, except to the extent required by applicable law to
167-be redeemable in cash for its cash value; or
168-(ii) not sold to the public but issued and distributed as part of a
169-loyalty, rewards or promotional program.
170-(25) "Payroll processing services" means the receipt of money for
171-transmission pursuant to a contract with a person to deliver wages or
172-salaries, make payment of payroll taxes to state and federal agencies,
173-make payments relating to employee benefit plans or make
174-distributions of other authorized deductions from wages or salaries.
175-"Payroll processing services" does not include an employer performing
176-payroll processing services on the employer's own behalf or on behalf
177-of an affiliate.
178-(26) "Person" means any individual, general partnership, limited
179-partnership, limited liability company, corporation, trust, association,
180-joint stock corporation or other corporate entity identified or recognized
181-by the commissioner.
182-(27) "Receiving money for transmission" or "money received for
183-transmission" means the receipt of money or monetary value in the
184-United States for transmission within or outside the United States by
185-electronic or other means.
186-(28) "Stored value" means monetary value representing a claim
187-against the issuer evidenced by an electronic or digital record and that
188-is intended and accepted for use as a means of redemption for money or
189-monetary value or payment for goods or services. "Stored value"
190-includes, but is not limited to, prepaid access as defined by 31 C.F.R. §
191-1010.100. "Stored value" does not include a payment instrument or
192-closed loop stored value or stored value not sold to the public but
193-issued and distributed as part of a loyalty, rewards or promotional
194-program.
195-(29) "Tangible net worth" means the aggregate assets of a licensee HOUSE BILL No. 2560—page 4
196-excluding all intangible assets, less liabilities, as determined in
197-accordance with United States generally accepted accounting
198-principles.
199-(c) This section shall take effect on and after January 1, 2025.
200-New Sec. 2. (a) This act does not apply to:
201-(1) An operator of a payment system to the extent that such
202-operator provides processing, clearing or settlement services between
203-persons exempted under this subsection or licensees in connection with
204-wire transfers, credit card transactions, debit card transactions, stored
205-value transactions, automated clearing house transfers or similar funds
206-transfers.
207-(2) A person appointed as an agent of a payee to collect and
208-process a payment from a payor to the payee for goods or services
209-other than money transmission provided to the payor by the payee if:
210-(A) A written agreement exists between the payee and the agent
211-directing the agent to collect and process payments from payors on the
212-payee's behalf;
213-(B) the payee holds the agent out to the public as accepting
214-payments for goods or services on the payee's behalf; and
215-(C) payment for the goods and services is treated as received by
216-the payee upon receipt by the agent so that the payor's obligation is
217-extinguished and there is no risk of loss to the payor if the agent fails to
218-remit the funds to the payee.
219-(3) A person that acts as an intermediary by processing payments
220-between an entity that has directly incurred an outstanding money
221-transmission obligation to a sender and the sender's designated
222-recipient, if the entity:
223-(A) Is properly licensed or exempt from licensing requirements
224-under this act;
225-(B) provides a receipt, electronic record or other written
226-confirmation to the sender identifying the entity as the provider of
227-money transmission in the transaction; and
228-(C) bears sole responsibility to satisfy the outstanding money
229-transmission obligation to the sender, including the obligation to make
230-the sender whole in connection with any failure to transmit the funds to
231-the sender's designated recipient.
232-(4) The United States government and any agency, bureau,
233-department, office or instrumentality, corporate or otherwise, thereof,
234-including any official, employee or agent of any such entity.
235-(5) Money transmission by the United States postal service or by
236-an agent of the United States postal service.
237-(6) Any state office or officer, department, board, commission,
238-bureau, division, authority, agency or institution of this state, including
239-any political subdivision thereof, and any county, city or other
240-municipality.
241-(7) A federally insured depository financial institution, bank
242-holding company, office of an international banking corporation,
243-foreign bank that establishes a federal branch pursuant to 12 U.S.C. §
244-3102, a corporation organized pursuant to 12 U.S.C. §§ 1861 through
245-1867 or a corporation organized under 12 U.S.C. §§ 611 through 633.
246-(8) Electronic funds transfer of governmental benefits for a
247-federal, state, county or governmental agency by a contractor on behalf
248-of the United States or a department, agency or instrumentality thereof
249-or on behalf of a state or governmental subdivision, agency or
250-instrumentality thereof.
251-(9) A board of trade designated as a contract market under 7
252-U.S.C. §§ 1 through 25 or a person that in the ordinary course of
253-business provides clearance and settlement services for a board of trade
254-to the extent of the board of trade's operation as or for such a board.
255-(10) A futures commission merchant registered under federal
256-commodities law to the extent of the registrant's operation as such a
257-futures commission merchant.
258-(11) A person registered as a securities broker-dealer under federal
259-or state securities law to the extent of such registrant's operation as such HOUSE BILL No. 2560—page 5
260-a securities broker-dealer.
261-(12) An individual employed by a licensee, authorized delegate or
262-any person exempted from the licensing requirements of the act when
263-acting within the scope of employment and under the supervision of the
264-licensee, authorized delegate or exempted person as an employee and
265-not as an independent contractor.
266-(13) A person expressly appointed as a third-party service provider
267-to or agent of an entity exempt under paragraph (a)(6) solely to the
268-extent that:
269-(A) Such service provider or agent is engaging in money
270-transmission on behalf of and pursuant to a written agreement with the
271-exempt entity that sets forth the specific functions that the service
272-provider or agent is to perform; and
273-(B) the exempt entity assumes all risk of loss and all legal
274-responsibility for satisfying the outstanding money transmission
275-obligations owed to purchasers and holders of the outstanding money
276-transmission obligations upon receipt of the purchaser's or holder's
277-money or monetary value by the service provider or agent.
278-(14) A person engaging in the practice of law, bookkeeping,
279-accounting, real estate sales or brokerage.
280-(15) A person appointed as an agent of a payor for purposes of
281-providing payroll processing services for which such agent would
282-otherwise need to be licensed if:
283-(A) There is a written agreement between the payor and the agent
284-that directs the agent to provide payroll processing services on the
285-payor's behalf;
286-(B) the payor holds the agent out to employees and other payees
287-as providing payroll processing services on the payor's behalf; and
288-(C) the payor's obligation to a payee, including an employee or
289-any other party entitled to receive funds via the payroll processing
290-services provided by the agent, is not extinguished if such agent fails to
291-remit such funds to the payee.
292-(16) A person exempt by any rules or regulations adopted or by an
293-order issued if the commissioner finds such exemption to be in the
294-public interest and that the regulation of such person is not necessary
295-for the purposes of this act.
296-(b) The commissioner may require that any person claiming to be
297-exempt from licensing pursuant to this section provide information and
298-documentation to the commissioner demonstrating that such person
299-qualifies for any claimed exemption.
300-(c) This section shall take effect on and after January 1, 2025.
301-New Sec. 3. (a) To carry out the purposes of this act, the
302-commissioner may:
303-(1) Enter into agreements or relationships with other government
304-officials or federal and state regulatory agencies and regulatory
305-associations to improve efficiencies and reduce regulatory burden by
306-standardizing methods or procedures and sharing resources, records or
307-related information obtained under this act;
308-(2) use, hire, contract or employ analytical systems, methods or
309-software to examine or investigate any person subject to this act;
310-(3) accept from other state or federal government agencies or
311-officials, licensing, examination or investigation reports made by such
312-other state or federal government agencies or officials; and
313-(4) accept audit reports made by an independent certified public
314-accountant or other qualified third-party auditor for an applicant or
315-licensee and incorporate the audit report in any report of examination or
316-investigation.
317-(b) The commissioner shall have the broad administrative
318-authority to administer, interpret and enforce this act, promulgate rules
319-and regulations necessary to implement this act and set proportionate
320-and equitable fees and costs associated with applications, examinations,
321-investigations and other actions required to provide sufficient funds to
322-meet the budget requirements of administering and enforcing the act for
323-each fiscal year and to achieve the purposes of this act. HOUSE BILL No. 2560—page 6
324-(c) This section shall take effect on and after January 1, 2025.
325-New Sec. 4. (a) (1) Except as otherwise provided in subsection
326-(b), all information or reports obtained by the commissioner from an
327-applicant, licensee or authorized delegate and all information contained
328-in or related to an examination, investigation, operating report or
329-condition report prepared by, on behalf of or for the use of the
330-commissioner or financial statements, balance sheets or authorized
331-delegate information, are confidential and are not subject to disclosure
332-under the Kansas open records act, K.S.A. 45-215 et seq., and
333-amendments thereto.
334-(2) The provisions of this subsection providing for the
335-confidentiality of public records shall expire on July 1, 2030, unless the
336-legislature reviews and reenacts such provisions in accordance with
337-K.S.A. 45-229, and amendments thereto, prior to July 1, 2030.
338-(b) The commissioner may disclose information not otherwise
339-subject to disclosure under subsection (a) to representatives of state or
340-federal agencies who promise in a record that such representatives will
341-maintain the confidentiality of the information or where the
342-commissioner finds that the release is reasonably necessary for the
343-protection and interest of the public in accordance with the Kansas
344-open records act.
345-(c) The following information contained in the records of the
346-office of the state bank commissioner that is not confidential and may
347-be made available to the public:
348-(1) The name, business address, telephone number and unique
349-identifier of a licensee;
350-(2) the business address of a licensee's registered agent for service;
351-(3) the name, business address and telephone number of all
352-authorized delegates;
353-(4) the terms of or a copy of any bond filed by a licensee, provided
354-that confidential information, including, but not limited to, prices and
355-fees for such bond is redacted; or
356-(5) copies of any orders of the office of the state bank
357-commissioner relating to any violation of this act or regulations
358-implementing this act.
359-(d) This section shall not be construed to prohibit the
360-commissioner from disclosing to the public a list of all licensees or the
361-aggregated financial or transactional data concerning those licensees.
362-(e) This section shall take effect on and after January 1, 2025.
363-New Sec. 5. (a) The commissioner may conduct an examination or
364-investigation of a licensee or authorized delegate or otherwise take
365-independent action authorized by this act or by any rules and
366-regulations adopted or an order issued under this act as reasonably
367-necessary or appropriate to administer and enforce this act, regulations
368-implementing this act and other applicable federal law. The
369-commissioner may:
370-(1) Conduct an examination on-site or off-site as the
371-commissioner may reasonably require;
372-(2) conduct an examination in conjunction with an examination
373-conducted by representatives of other state agencies, agencies of
374-another state or the federal government;
375-(3) accept the examination report of another state agency or an
376-agency of another state or the federal government or a report prepared
377-by an independent accounting firm, which, on being accepted, is
378-considered for all purposes as an official report of the commissioner;
379-and
380-(4) summon and examine under oath or subpoena a key individual
381-or employee of a licensee or authorized delegate and require such
382-individual or employee to produce records regarding any matter related
383-to the condition and business of the licensee or authorized delegate.
384-(b) A licensee or authorized delegate shall provide the
385-commissioner with full and complete access to all records the
386-commissioner may reasonably require to conduct a complete
387-examination. The records shall be provided at the location and in the HOUSE BILL No. 2560—page 7
388-format specified by the commissioner. The commissioner may utilize
389-multistate record production standards and examination procedures
390-when such standards will reasonably achieve the requirements of this
391-section.
392-(c) Unless otherwise directed by the commissioner, a licensee
393-shall pay all costs reasonably incurred in connection with an
394-examination of the licensee or the licensee's authorized delegates.
395-(d) This section shall take effect on and after January 1, 2025.
396-New Sec. 6. (a) To administer and enforce the provisions of this
397-act and minimize the regulatory burden, the commissioner is hereby
398-authorized to participate in multistate supervisory processes established
399-between states and coordinated through the conference of state bank
400-supervisors, money transmitter regulators associations and affiliates
401-and successors thereof for all licensees that hold licenses in Kansas or
402-other states. As a participant in such established multistate supervisory
403-processes, the commissioner may:
404-(1) Cooperate, coordinate and share information with other state
405-and federal regulators in accordance with section 5, and amendments
406-thereto;
407-(2) enter into written cooperation, coordination or information-
408-sharing contracts or agreements with organizations, the membership of
409-which is made up of state or federal governmental agencies; and
410-(3) cooperate, coordinate and share information with
411-organizations, the membership of which is made up of state or federal
412-governmental agencies, if the organizations agree in writing to maintain
413-the confidentiality and security of the shared information in accordance
414-with section 4, and amendments thereto.
415-(b) The commissioner shall not waive, and nothing in this section
416-shall constitute a waiver of, the commissioner's authority to conduct an
417-examination or investigation or otherwise take independent action
418-authorized by this act or rules and regulations adopted or an order
419-issued under this act to enforce compliance with applicable state or
420-federal law.
421-(c) A joint examination or investigation or acceptance of an
422-examination or investigation report shall not be construed to waive an
423-examination assessment provided for in this act.
424-(d) This section shall take effect on and after January 1, 2025.
425-New Sec. 7. (a) If the jurisdiction of state money transmission is
426-conditioned on federal law, any inconsistencies between a provision of
427-this act and such federal law governing money transmission shall be
428-governed by the applicable federal law to the extent of such
429-inconsistency.
430-(b) If there are any inconsistencies between this act and any
431-federal law that governs pursuant to subsection (a), the commissioner
432-may provide interpretive guidance that identifies the:
433-(1) Inconsistency; and
434-(2) appropriate means of compliance with federal law.
435-(c) This section shall take effect on and after January 1, 2025.
436-New Sec. 8. (a) A person may not engage in the business of money
437-transmission or advertise, solicit or hold itself out as providing money
438-transmission unless the person is licensed under this act.
439-(b) Subsection (a) shall not apply to a person that is:
440-(1) An authorized delegate of a person licensed under this act
441-acting within the scope of authority conferred by a written contract with
442-the licensee; or
443-(2) exempt pursuant to section 2, and amendments thereto, and
444-does not engage in money transmission outside the scope of such
445-exemption.
446-(c) A license issued pursuant to section 13, and amendments
447-thereto, shall not be transferable or assignable.
448-(d) This section shall take effect on and after January 1, 2025.
449-New Sec. 9. (a) To establish consistent licensing practices between
450-Kansas and other states, the commissioner is hereby authorized to:
451-(1) Implement all licensing provisions of this act in a manner HOUSE BILL No. 2560—page 8
452-consistent with other states that have adopted this act or multistate
453-licensing processes; and
454-(2) participate in nationwide protocols for licensing cooperation
455-and coordination among state regulators, if such protocols are
456-consistent with this act.
457-(b) The commissioner is authorized to establish relationships or
458-contracts with the national multistate licensing system and registry or
459-other entities designated by the national multistate licensing system and
460-registry to:
461-(1) Collect and maintain records;
462-(2) coordinate multistate licensing processes and supervision
463-processes;
464-(3) process fees; and
465-(4) facilitate communication between the commissioner and
466-licensees or other persons subject to this act.
467-(c) The commissioner may utilize the nationwide multistate
468-licensing system and registry for all aspects of licensing in accordance
469-with this act, including, but not limited to, license applications,
470-applications for acquisitions of control, surety bonds, reporting,
471-criminal history background checks, credit checks, fee processing and
472-examinations.
473-(d) The commissioner may utilize nationwide multistate licensing
474-system and registry forms, processes and functionalities in accordance
475-with this act. If the nationwide multistate licensing system and registry
476-does not provide functionality, forms or processes for the provision of
477-this act, the commissioner is authorized to implement the requirements
478-in a manner that facilitates uniformity regarding the licensing,
479-supervision, reporting and regulation of licensees that are licensed in
480-multiple jurisdictions.
481-(e) The commissioner may establish new requirements or waive or
482-modify, in whole or in part, any or all of the existing requirements as
483-reasonably necessary to participate in the nationwide multistate
484-licensing system and registry through the adoption of any rules and
485-regulations adopted or an order issued or the issuance of an order.
486-(f) This section shall take effect on and after January 1, 2025.
487-New Sec. 10. (a) Applicants for a license shall submit a completed
488-application in a form and manner as prescribed by the commissioner.
489-Each such application shall contain content as set forth by rules and
490-regulations, instruction or procedure of the commissioner and may be
491-changed or updated by the commissioner in accordance with applicable
492-law to carry out the purposes of this act and maintain consistency with
493-nationwide multistate licensing system and registry licensing standards
494-and practices. The application shall state or contain, as applicable:
495-(1) The legal name and any fictitious or trade name used by the
496-applicant in conducting business and the residential and business
497-addresses of the applicant;
498-(2) a list of any criminal convictions of the applicant and any
499-material litigation in which the applicant was involved in the 10-year
500-period immediately preceding the submission of the application;
501-(3) a description of any money transmission services previously
502-provided by the applicant and the money transmission services the
503-applicant seeks to provide in Kansas;
504-(4) a list of the applicant's proposed authorized delegates and the
505-locations in Kansas where the applicant and the applicant's authorized
506-delegates propose to engage in money transmission;
507-(5) a list of all other states where the applicant is licensed to
508-engage in money transmission and any license revocations, suspensions
509-or other disciplinary action taken against the applicant in other states;
510-(6) information concerning any bankruptcy or receivership
511-proceedings affecting the licensee or a person in control of a licensee;
512-(7) a sample form of the contract for authorized delegates, if
513-applicable;
514-(8) a sample form of the payment instrument or stored value, as
515-applicable; HOUSE BILL No. 2560—page 9
516-(9) the name and address of any federally insured depository
517-financial institution through which the applicant plans to conduct
518-money transmission; and
519-(10) any other information the commissioner or the nationwide
520-multistate licensing system and registry reasonably requires regarding
521-the applicant.
522-(b) If an applicant is a corporation, limited liability company,
523-partnership or other legal entity, the applicant shall also provide:
524-(1) The date of the applicant's incorporation or formation and state
525-or country of incorporation or formation;
526-(2) a certificate of good standing from the state or country where
527-the applicant is incorporated or formed, if applicable;
528-(3) a brief description of the business structure or organization of
529-the applicant, including any parents or subsidiaries of the applicant and
530-whether any such parents or subsidiaries are publicly traded;
531-(4) the legal name, any fictitious or trade name, all business and
532-residential addresses and the employment, as applicable, for the 10-year
533-period immediately preceding the submission of the application for
534-each key individual and person in control of the applicant;
535-(5) for any person in control of the applicant, a list of any felony
536-convictions and for the 10-year period immediately preceding the
537-submission of the application, a list of any criminal misdemeanor
538-convictions of a crime of dishonesty, fraud or deceit and any material
539-litigation in which the person involved is in control of an applicant that
540-is not an individual;
541-(6) a copy of the applicant's audited financial statements for the
542-most recent fiscal year and for the two-year period immediately
543-preceding the most recent fiscal year or, if acceptable to the
544-commissioner, certified unaudited financial statements for the most
545-recent fiscal year or other period acceptable to the commissioner;
546-(7) a certified copy of the applicant's unaudited financial
547-statements for the most recent fiscal quarter;
548-(8) if the applicant is a publicly traded corporation, a copy of the
549-most recent report filed with the securities and exchange commission
550-pursuant to 15 U.S.C. § 78m;
551-(9) if the applicant is a wholly owned subsidiary of:
552-(A) A corporation publicly traded in the United States, a copy of
553-the parent corporation's audited financial statements for the most recent
554-fiscal year or a copy of the parent corporation's most recent financial
555-report filed with the securities and exchange commission pursuant to 15
556-U.S.C. § 78m; or
557-(B) a corporation publicly traded outside the United States, a copy
558-of documentation similar to the requirements of paragraph (A) filed
559-with the regulator of the parent corporation's domicile outside the
560-United States;
561-(10) the name and address of the applicant's registered agent in
562-Kansas; and
563-(11) any other information that the commissioner reasonably
564-requires regarding the applicant.
565-(c) The commissioner shall set a nonrefundable new application
566-fee each year pursuant to section 3(b), and amendments thereto.
567-(d) The commissioner may waive one or more requirements of
568-subsections (a) or (b) or permit an applicant to submit other information
569-in lieu of the required information.
570-(e) This section shall take effect on and after January 1, 2025.
571-New Sec. 11. (a) As a part of any original application, any
572-individual in control of a licensee, any applicant in control of a licensee
573-and each key individual shall provide the commissioner with the
574-following items through the nationwide multistate licensing system and
575-registry:
576-(1) (A) The office of the state bank commissioner may require an
577-individual to be fingerprinted and submit to a state and national
578-criminal history record check. The fingerprints shall be used to identify
579-the individual and to determine whether such individual has a record of HOUSE BILL No. 2560—page 10
580-criminal history in this state or other jurisdictions. The office of the
581-state bank commissioner is authorized to submit the fingerprints to the
582-Kansas bureau of investigation and the federal bureau of investigation
583-for a state and national criminal history record check. The office of the
584-state bank commissioner may use the information obtained from
585-fingerprinting and the criminal history for purposes of verifying the
586-identification of the individual and in the official determination of the
587-qualifications and fitness of the individual to be issued or to maintain a
588-license;
589-(B) Local and state law enforcement officers and agencies shall
590-assist the office of the state bank commissioner in taking and
591-processing of fingerprints of applicants for and holders of any license,
592-registration, permit or certificate;
593-(C) The Kansas bureau of investigation shall release all records of
594-adult convictions and nonconvictions in Kansas and adult convictions,
595-adjudications and nonconvictions of another state or country to the
596-office of the state bank commissioner. Disclosure or use of any
597-information received for any purpose other than provided in this section
598-shall be a class A misdemeanor and shall constitute grounds for
599-removal from office or termination of employment; and
600-(D) Any individual that currently resides and has continuously
601-resided outside of the United States for the past 10 years shall not be
602-required to comply with this subsection; and
603-(2) a description of the individual's personal history and
604-experience provided in a form and manner prescribed by the
605-commissioner to obtain the following:
606-(A) An independent credit report from a consumer reporting
607-agency. This requirement shall be waived if the individual does not
608-have a social security number;
609-(B) information related to any criminal convictions or pending
610-charges; and
611-(C) information related to any regulatory or administrative action
612-and any civil litigation involving claims of fraud, misrepresentation,
613-conversion, mismanagement of funds, breach of fiduciary duty or
614-breach of contract.
615-(b) (1) If the individual has resided outside of the United States at
616-any time during the 10-year period immediately preceding the
617-individual's application, the individual shall also provide an
618-investigative background report prepared by an independent search
619-firm.
620-(2) At a minimum, the search firm shall:
621-(A) Demonstrate that it has sufficient knowledge and resources
622-and that such firm employs accepted and reasonable methodologies to
623-conduct the research of the background report; and
624-(B) not be affiliated with or have an interest with the individual it
625-is researching.
626-(3) The investigative background report shall be provided in
627-English and, at a minimum, shall contain the following:
628-(A) A comprehensive credit report or any equivalent information
629-obtained or generated by the independent search firm to accomplish
630-such report, including a search of the court data in the countries,
631-provinces, states, cities, towns and contiguous areas where the
632-individual resided and worked if such report is available in the
633-individual's current jurisdiction of residency;
634-(B) criminal records information for the 10-year period
635-immediately preceding the individual's application, including, but not
636-limited to, felonies, misdemeanors or similar convictions for violations
637-of law in the countries, provinces, states, cities, towns and contiguous
638-areas where the individual resided and worked;
639-(C) employment history;
640-(D) media history including an electronic search of national and
641-local publications, wire services and business applications; and
642-(E) financial services-related regulatory history, including, but not
643-limited to, money transmission, securities, banking, insurance and HOUSE BILL No. 2560—page 11
644-mortgage-related industries.
645-(c) Any information required by this section may be used by the
646-commissioner in making an official determination of the qualifications
647-and fitness of the person in control or who seeks to gain control of the
648-licensee.
649-(d) This section shall take effect on and after January 1, 2025.
650-New Sec. 12. (a) A person is presumed to exercise a controlling
651-influence when such person holds the power to vote, directly or
652-indirectly, at least 10% of the outstanding voting shares or voting
653-interests of a licensee or person in control of a licensee.
654-(b) A person presumed to exercise a controlling influence pursuant
655-to this section may rebut the presumption of control if the person is a
656-passive investor.
657-(c) For purposes of determining the percentage of a person
658-controlled by any individual, the individual's interest shall be
659-aggregated with the interest of any other immediate family member,
660-including the individual's spouse, parents, children, siblings, mothers-
661-in-law and fathers-in-law, sons-in-law and daughters-in-law, brothers-
662-in-law and sisters-in-law and any other person who shares such
663-individual's home.
664-(d) This section shall take effect on and after January 1, 2025.
665-New Sec. 13. (a) (1) When an application for an original license
666-under this act appears to include all the items and addresses all of the
667-matters that are required, the application shall be deemed complete, and
668-the commissioner shall promptly notify the applicant of the date the
669-application is deemed complete. The commissioner shall approve or
670-deny the application within 120 days after the completion date.
671-(2) If the application has not been approved or denied within 120
672-days after the completion date:
673-(A) The application shall be considered approved; and
674-(B) the license shall take effect as of the first business day after
675-expiration of the 120-day period.
676-(3) The commissioner may extend the application period for good
677-cause.
678-(b) A determination by the commissioner that an application is
679-complete and accepted for processing means that the application, on its
680-face, appears to include all of the items, including the criminal history
681-background check response from the Kansas bureau of investigation
682-and that such application addresses all of the matters that are required.
683-A determination of completion by the commissioner shall not be
684-deemed to be an assessment of the substance of the application or of the
685-sufficiency of the information provided.
686-(c) When an application is filed and considered complete under
687-this section, the commissioner shall investigate the applicant's financial
688-condition and responsibility, financial and business experience,
689-character and general fitness. The commissioner may conduct an on-
690-site investigation of the applicant at the applicant's expense. The
691-commissioner shall issue a license to an applicant under this section if
692-the commissioner finds that the following conditions have been
693-fulfilled:
694-(1) The applicant has complied with sections 10 and 11, and
695-amendments thereto; and
696-(2) the financial condition and responsibility, financial and
697-business experience, competence, character and general fitness of the
698-applicant and key individuals and persons in control of the applicant
699-indicate that it is in the interest of the public to permit the applicant to
700-engage in money transmission.
701-(d) If an applicant avails itself or is otherwise subject to a
702-multistate licensing process:
703-(1) The commissioner is hereby authorized to accept the
704-investigation results of a lead investigative state to satisfy the
705-requirements of subsection (c) if such lead investigative state has
706-sufficient staffing, expertise and minimum standards; or
707-(2) if Kansas is the lead investigative state, the commissioner is HOUSE BILL No. 2560—page 12
708-hereby authorized to investigate the applicant pursuant to subsection (c)
709-utilizing the timeframes established by agreement through the
710-multistate licensing process. No such timeframes shall be considered
711-noncompliant with the application period in subsection (a)(1).
712-(e) The commissioner shall issue a formal written notice of the
713-denial of a license application within 14 days of the decision to deny
714-the application. The commissioner shall state in the notice of denial the
715-specific reasons for the denial of the application. An applicant whose
716-application is denied by the commissioner under this subsection may
717-appeal within 14 days of receiving the notice and request a hearing in
718-accordance with the Kansas administrative procedure act, K.S.A. 77-
719-501 et seq., and amendments thereto.
720-(f) The initial license term shall begin on the day the application is
721-approved. The license shall expire on December 31 of the year in which
722-the license term began, unless the initial license date is between
723-November 1 and December 31, in which case the initial license term
724-shall run through December 31 of the following year.
725-(g) This section shall take effect on and after January 1, 2025.
726-New Sec. 14. (a) (1) A license issued under this act shall be
727-renewed annually.
728-(2) An annual renewal fee set by the commissioner shall be paid
729-not more than 60 days before the license expiration.
730-(3) The renewal term shall be for a period of one year and shall
731-begin on January 1 of each year after the initial license term and shall
732-expire on December 31 of the year the renewal term begins.
733-(b) A licensee shall submit a complete renewal report with the
734-renewal fee, in a form and manner determined by the commissioner.
735-The renewal report shall contain a description of each material change
736-in information submitted by the licensee in the licensee's original
737-license application that has not been reported to the commissioner.
738-(c) Renewal applications received within 30 days of the expiration
739-of the license and incomplete applications as of 30 days prior to the
740-expiration of the license shall be subject to a late fee set by the
741-commissioner.
742-(d) The commissioner may grant an extension of the renewal date
743-for good cause.
744-(e) The commissioner is hereby authorized to utilize the
745-nationwide multistate licensing system and registry to process license
746-renewals, if such utilization satisfies the requirements of this section.
747-(f) Renewal applications submitted between November 1, 2024
748-and December 31, 2024, considered complete pursuant to K.S.A. 9-
749-509, and amendments thereto, shall be considered complete under this
750-section.
751-(g) This section shall take effect on and after January 1, 2025.
752-New Sec. 15. (a) If a licensee does not continue to meet the
753-qualifications or satisfy the requirements of an applicant for a new
754-money transmission license, the commissioner may suspend or revoke
755-the licensee's license in accordance with the procedures established by
756-this act or other applicable state law for such suspension or revocation.
757-(b) An applicant for a money transmission license shall
758-demonstrate that such applicant meets or will meet and a money
759-transmission licensee shall at all times meet, the requirements of
760-sections 32, 33 and 34, and amendments thereto.
761-(c) This section shall take effect on and after January 1, 2025.
762-New Sec. 16. (a) The commissioner shall have the discretion to
763-determine the completeness of any application submitted pursuant to
764-this act. In making such a determination, the commissioner shall
765-consider the applicant's compliance with the requirements of the act
766-and any other facts and circumstances that the commissioner deems
767-appropriate.
768-(b) If an applicant fails to complete the application for a new
769-license or for a change of control of a license within 60 days after the
770-commissioner provides written notice of the incomplete application, the
771-application will be deemed abandoned and the application fee shall be HOUSE BILL No. 2560—page 13
772-nonrefundable. An applicant whose application is abandoned under this
773-section may reapply to obtain a new license.
774-(c) This section shall take effect on and after January 1, 2025.
775-New Sec. 17. (a) When any person or group of persons acting in
776-concert are seeking to acquire control of a licensee, the licensee shall
777-obtain the written approval of the commissioner prior to the change of
778-control. An individual is not deemed to acquire control of a licensee
779-and is not subject to this section when that individual becomes a key
780-individual in the ordinary course of business.
781-(b) A person or group of persons acting in concert that seeks to
782-acquire control of a licensee in cooperation with such licensee shall
783-submit an application in the form and manner prescribed by the
784-commissioner. Such application shall be accompanied by a
785-nonrefundable fee set by the commissioner.
786-(c) Upon request, the commissioner may permit a licensee, the
787-person or group of persons acting in concert to submit some or all
788-information required by the commissioner pursuant to subsection (b)
789-without using the nationwide multistate licensing system and registry.
790-(d) The application required by subsection (b) shall include all
791-information required by section 11, and amendments thereto, for any
792-new key individuals who have not previously completed the
793-requirements of section 11, and amendments thereto, for a licensee.
794-(e) (1) When an application for acquisition of control under this
795-section appears to include all the items and addresses all of the matters
796-that are required, the application shall be deemed complete and the
797-commissioner shall promptly notify the applicant of the date on which
798-the application was so deemed, and the commissioner shall approve or
799-deny the application within 60 days after the completion date.
800-(2) If the application is not approved or denied within 60 days
801-after the completion date:
802-(A) The application shall be deemed approved; and
803-(B) the person or group of persons acting in concert shall not be
804-prohibited from acquiring control.
805-(3) The commissioner may extend the application period for good
806-cause.
807-(f) A determination by the commissioner that an application is
808-complete and is accepted for processing means only that the
809-application, on its face, appears to include all of the items and
810-addresses all of the matters that are required. A determination of
811-completion by the commissioner shall not be deemed to be an
812-assessment of the substance of the application or of the sufficiency of
813-the information provided.
814-(g) When an application is filed and considered complete under
815-subsection (e), the commissioner shall investigate the financial
816-condition and responsibility, financial and business experience,
817-character and general fitness of the person or group of persons acting in
818-concert who seek to acquire control. The commissioner shall approve
819-an acquisition of control pursuant to this section if the commissioner
820-finds that all of the following conditions have been fulfilled:
821-(1) The requirements of subsections (b) and (d) have been met, as
822-applicable; and
823-(2) the financial condition and responsibility, financial and
824-business experience, competence, character and general fitness of the
825-person or group of persons acting in concert seeking to acquire control
826-and the key individuals and persons that would be in control of the
827-licensee after the acquisition of control indicate that it is in the interest
828-of the public to permit the person or group of persons acting in concert
829-to control the licensee.
830-(h) If an applicant avails itself or is otherwise subject to a
831-multistate licensing process:
832-(1) The commissioner shall be authorized to accept the
833-investigation results of a lead investigative state for the purposes of
834-subsection (g) if the lead investigative state has sufficient staffing,
835-expertise and minimum standards; or HOUSE BILL No. 2560—page 14
836-(2) if Kansas is a lead investigative state, the commissioner shall
837-be authorized to investigate the applicant pursuant to subsection (g) and
838-the timeframes established by agreement through the multistate
839-licensing process.
840-(i) The commissioner shall issue a formal written notice of the
841-denial of an application to acquire control within 30 days of the
842-decision to deny the application. The commissioner shall state in the
843-notice of denial the specific reasons for the denial of the application. An
844-applicant whose application is denied by the commissioner under this
845-subsection may appeal within 14 days and request a hearing in
846-accordance with the Kansas administrative procedure act, K.S.A. 77-
847-501 et seq., and amendments thereto.
848-(j) The requirements of subsections (a) and (b) shall not apply to
849-any of the following:
850-(1) A person that acts as a proxy for the sole purpose of voting at a
851-designated meeting of the shareholders or holders of voting shares or
852-voting interests of a licensee or a person in control of a licensee;
853-(2) a person that acquires control of a licensee by devise or
854-descent;
855-(3) a person that acquires control of a licensee as a personal
856-representative, custodian, guardian, conservator or trustee or as an
857-officer appointed by a court of competent jurisdiction or by operation
858-of law;
859-(4) a person that is exempt under subsection (l);
860-(5) a person that the commissioner determines is not subject to
861-subsection (a) based on the public interest;
862-(6) a public offering of securities of a licensee or a person in
863-control of a licensee; or
864-(7) an internal reorganization of a person in control of the licensee
865-if the ultimate person in control of the licensee remains the same.
866-(k) Persons meeting the requirements of subsections (j)(2), (j)(3),
867-(j)(4), (j)(6) or (j)(7) in cooperation with the licensee shall notify the
868-commissioner within 15 days after the acquisition of control.
869-(l) (1) The requirements of subsections (a) and (b) shall not apply
870-to a person that has complied with and received approval to engage in
871-money transmission under this act or was identified as a person in
872-control in a prior application filed with and approved by the
873-commissioner or by a money service business-accredited state pursuant
874-to a multistate licensing process, if:
875-(A) The person has not had a license revoked or suspended or
876-controlled a licensee that has had a license revoked or suspended while
877-the person was in control of the licensee in the previous five years;
878-(B) the person is a licensee, such person is well managed and has
879-received at least a satisfactory rating for compliance at such person's
880-most recent examination by an money service business accredited state
881-if such rating was given;
882-(C) the licensee to be acquired is expected to meet the
883-requirements of sections 32, 33 and 34, and amendments thereto, after
884-the acquisition of control is completed. If the person acquiring control
885-is a licensee, such licensee shall also be expected to meet the
886-requirements of sections 32, 33 and 34, and amendments thereto, after
887-the acquisition of control is completed;
888-(D) the licensee to be acquired shall not implement any material
889-changes to such licensee's business plan as a result of the acquisition of
890-control. If the person acquiring control is a licensee, such licensee shall
891-not implement any material changes to such licensee's business plan as
892-a result of the acquisition of control; and
893-(E) the person provides notice of the acquisition in cooperation
894-with the licensee and attests to the provisions of this subsection in a
895-form and manner prescribed by the commissioner.
896-(2) If the notice is not disapproved within 30 days after the date on
897-which the notice was determined to be complete, the notice shall be
898-deemed approved.
899-(m) Before filing an application for approval to acquire control of HOUSE BILL No. 2560—page 15
900-a licensee, a person may request in writing a determination from the
901-commissioner as to whether such person would be considered a person
902-in control of a licensee upon consummation of a proposed transaction.
903-If the commissioner determines that the person would not be a person
904-in control of a licensee, the person and the proposed transaction shall
905-not be subject to the requirements of subsections (a) and (b).
906-(n) If a multistate licensing process includes a determination
907-pursuant to subsection (m) and an applicant avails itself or is otherwise
908-subject to the multistate licensing process:
909-(1) The commissioner is hereby authorized to accept the control
910-determination of a lead investigative state with sufficient staffing,
911-expertise and minimum standards for the purpose of subsection (m); or
912-(2) if Kansas is a lead investigative state, the commissioner is
913-hereby authorized to investigate the applicant pursuant to subsection
914-(m) and the timeframes established by agreement through the multistate
915-licensing process.
916-(o) This section shall take effect on and after January 1, 2025.
917-New Sec. 18. (a) A licensee adding or replacing a key individual
918-shall provide:
919-(1) Notice in the manner prescribed by the commissioner within
920-15 days after the effective date of the appointment of the new key
921-individual; and
922-(2) information as required by section 10, and amendments
923-thereto, within 45 days of the effective date of the appointment of the
924-new key individual.
925-(b) Within 90 days of the date on which the notice provided
926-pursuant to subsection (a) was determined to be complete, the
927-commissioner may issue a notice of disapproval of a key individual if
928-the competence, experience, character or integrity of the individual
929-would not be in the best interests of the public or the customers of the
930-licensee to permit the individual to be a key individual of such licensee.
931-(c) A notice of disapproval shall state the basis for disapproval and
932-shall be sent to the licensee and the disapproved individual. A licensee
933-may appeal a notice of disapproval pursuant to the Kansas
934-administrative procedure act, K.S.A. 77-501 et seq., and amendments
935-thereto, within 14 days.
936-(d) If the notice provided pursuant to subsection (a) is not
937-disapproved within 90 days after the date when the notice was
938-determined to be complete, the key individual shall be deemed
939-approved.
940-(e) If a multistate licensing process includes a key individual
941-notice review and disapproval process pursuant to this section and the
942-licensee avails itself or is otherwise subject to the multistate licensing
943-process:
944-(1) The commissioner is hereby authorized to accept the
945-determination of another state if the investigating state has sufficient
946-staffing, expertise and minimum standards for the purpose of this
947-section; or
948-(2) if Kansas is a lead investigative state, the commissioner is
949-authorized to investigate the applicant pursuant to subsection (b) and
950-the timeframes established by agreement through the multistate
951-licensing process.
952-(f) This section shall take effect on and after January 1, 2025.
953-New Sec. 19. (a) Every licensee shall submit a report of condition
954-within 45 days of the end of the calendar quarter or within any
955-extended time as the commissioner may prescribe.
956-(b) The report of condition shall include:
957-(1) Financial information at the licensee level;
958-(2) nationwide and state-specific money transmission transaction
959-information in every jurisdiction in the United States where the licensee
960-is licensed to engage in money transmission;
961-(3) the permissible investments report;
962-(4) transaction destination country reporting for money received
963-for transmission, if applicable; and HOUSE BILL No. 2560—page 16
964-(5) any other information the commissioner reasonably requires
965-regarding the licensee.
966-(c) The commissioner may utilize the nationwide multistate
967-licensing system and registry for the submission of the report required
968-by subsection (a) and is authorized to change or update as necessary the
969-requirements of this section to carry out the purposes of this act and
970-maintain consistency with nationwide multistate licensing system and
971-registry reporting.
972-(d) The information required by subsection (b)(4) shall only be
973-included in a report of condition submitted within 45 days of the end of
974-the fourth calendar quarter.
975-(e) This section shall take effect on and after January 1, 2025.
976-New Sec. 20. (a) Within 90 days after the end of each fiscal year
977-or within any extended time as the commissioner may prescribe
978-through rules and regulations, every licensee shall file with the
979-commissioner:
980-(1) An audited financial statement of the licensee for the fiscal
981-year prepared in accordance with United States generally accepted
982-accounting principles; and
983-(2) any other information as the commissioner may reasonably
984-require.
985-(b) The audited financial statements shall be prepared by an
986-independent certified public accountant or independent public
987-accountant who has been deemed satisfactory by the commissioner.
988-(c) The audited financial statements shall include or be
989-accompanied by a certificate of opinion of the independent certified
990-public accountant or independent public accountant in a form and
991-manner determined by the commissioner. If the certificate or opinion is
992-qualified, the commissioner may order the licensee to take any action
993-as the commissioner may find necessary to enable the independent
994-certified public accountant or independent public accountant to remove
995-the qualification.
996-(d) This section shall take effect on and after January 1, 2025.
997-New Sec. 21. (a) Each licensee shall submit a report of authorized
998-delegates within 45 days of the end of each calendar quarter. The
999-commissioner is authorized to utilize the nationwide multistate
1000-licensing system and registry for the submission of the report required
1001-by this subsection if such utilization is consistent with the requirements
1002-of this section.
1003-(b) The authorized delegate report shall include, at a minimum,
1004-each authorized delegate's:
1005-(1) Company legal name;
1006-(2) taxpayer employer identification number;
1007-(3) principal provider identifier;
1008-(4) physical address;
1009-(5) mailing address;
1010-(6) any business conducted in other states;
1011-(7) any fictitious or trade name;
1012-(8) contact person's name, phone number and email;
1013-(9) start date as the licensee's authorized delegate;
1014-(10) end date acting as the licensee's authorized delegate, if
1015-applicable; and
1016-(11) any other information the commissioner reasonably requires
1017-regarding the authorized delegate.
1018-(c) This section shall take effect on and after January 1, 2025.
1019-New Sec. 22. (a) A licensee shall file a report with the
1020-commissioner within one business day after the licensee has reason to
1021-know of the:
1022-(1) Filing of a bankruptcy or reorganization petition by or against
1023-the licensee;
1024-(2) filing of a petition by or against the licensee for receivership,
1025-the commencement of any other judicial or administrative proceeding
1026-for the licensee's dissolution or reorganization or the making of a
1027-general assignment for the benefit of the licensee's creditors; or HOUSE BILL No. 2560—page 17
1028-(3) commencement of a proceeding to revoke or suspend the
1029-licensee's license in a state or country where the licensee engages in
1030-business or is licensed.
1031-(b) A licensee shall file a report with the commissioner within
1032-three business days after the licensee has reason to know of a felony
1033-conviction of:
1034-(1) The licensee or a key individual or person in control of the
1035-licensee; or
1036-(2) an authorized delegate.
1037-(c) This section shall take effect on and after January 1, 2025.
1038-New Sec. 23. (a) A licensee and an authorized delegate shall file
1039-all reports required by federal currency reporting, recordkeeping and
1040-suspicious activity reporting requirements as set forth in federal and
1041-state laws pertaining to money laundering. The timely filing of a
1042-complete and accurate report required under this section with the
1043-appropriate federal agency is deemed compliant with the requirements
1044-of this section.
1045-(b) This section shall take effect on and after January 1, 2025.
1046-New Sec. 24. (a) Every licensee shall maintain the following
1047-records for at least three years:
1048-(1) A record of each outstanding money transmission obligation
1049-sold;
1050-(2) a general ledger posted at least monthly containing all assets,
1051-liability, capital, income and expense accounts;
1052-(3) bank statements and bank reconciliation records;
1053-(4) records of all outstanding money transmission obligations;
1054-(5) records of each outstanding money transmission obligation
1055-paid within the three-year period the records are maintained;
1056-(6) a list of the last known names and addresses of all the
1057-licensee's authorized delegates; and
1058-(7) any other records the commissioner reasonably requires in
1059-rules and regulations.
1060-(b) Records specified in subsection (a) may be maintained:
1061-(1) In any form of record; and
1062-(2) outside this state, if such records are made accessible to the
1063-commissioner on seven business days' notice.
1064-(c) All records maintained by the licensee as required in this
1065-section are open to inspection by the commissioner pursuant to section
1066-5(a), and amendments thereto.
1067-(d) This section shall take effect on and after January 1, 2025.
1068-New Sec. 25. (a) As used in this section, "remit" means to make
1069-direct payments of money to a licensee or the licensee's representative
1070-authorized to receive money or to deposit money in a bank in an
1071-account specified by the licensee.
1072-(b) Before a licensee is authorized to conduct business through an
1073-authorized delegate or allows a person to act as the licensee's
1074-authorized delegate, the licensee shall:
1075-(1) Adopt and update as necessary all written policies and
1076-procedures reasonably designed to ensure that the licensee's authorized
1077-delegates comply with applicable state and federal law;
1078-(2) enter into a written contract that complies with subsection (d);
1079-and
1080-(3) conduct a reasonable risk-based background investigation
1081-sufficient for the licensee to determine if the authorized delegate has
1082-complied and will likely comply with applicable state and federal law.
1083-(c) An authorized delegate shall comply with this act.
1084-(d) The written contract required by subsection (b) shall be signed
1085-by the licensee and the authorized delegate and, at a minimum, shall:
1086-(1) Appoint the person signing the contract as the licensee's
1087-authorized delegate with the authority to conduct money transmission
1088-on behalf of the licensee;
1089-(2) set forth the nature and scope of the relationship between the
1090-licensee and the authorized delegate and the respective rights and
1091-responsibilities of each party; HOUSE BILL No. 2560—page 18
1092-(3) require the authorized delegate to agree to fully comply with
1093-all applicable state and federal laws and rules and regulations
1094-pertaining to money transmission;
1095-(4) require the authorized delegate to remit and handle money and
1096-any monetary value in accordance with the terms of the contract
1097-between the licensee and the authorized delegate;
1098-(5) impose a trust on money and any monetary value net of fees
1099-received for money transmission for the benefit of the licensee;
1100-(6) require the authorized delegate to prepare and maintain records
1101-as required by this act or rules and regulations adopted pursuant to this
1102-act or as reasonably required by the commissioner;
1103-(7) acknowledge that the authorized delegate consents to
1104-examination or investigation by the commissioner;
1105-(8) state that the licensee is subject to regulation by the
1106-commissioner and, as part of such regulation, the commissioner may
1107-suspend or revoke an authorized delegate designation or require the
1108-licensee to terminate an authorized delegate designation; and
1109-(9) acknowledge receipt of the written policies and procedures
1110-required under subsection (b).
1111-(e) Within five business days after the suspension, revocation,
1112-surrender or expiration of a licensee's license, the licensee shall provide
1113-documentation to the commissioner that the licensee has notified all
1114-applicable authorized delegates of the licensee whose names are in a
1115-record filed with the commissioner of the suspension, revocation,
1116-surrender or expiration of a license. Upon suspension, revocation,
1117-surrender or expiration of a license, all applicable authorized delegates
1118-shall immediately cease to provide money transmission as an
1119-authorized delegate of the licensee.
1120-(f) An authorized delegate of a licensee holds in trust for the
1121-benefit of the licensee all money net of fees received from money
1122-transmission. If an authorized delegate commingles any funds received
1123-from money transmission with any other funds or property owned or
1124-controlled by the authorized delegate, all commingled funds and other
1125-property shall be considered held in trust in favor of the licensee in an
1126-amount equal to the amount of money net of fees received from money
1127-transmission.
1128-(g) No authorized delegate shall use a subdelegate to conduct
1129-money transmission on behalf of a licensee.
1130-(h) This section shall take effect on and after January 1, 2025.
1131-New Sec. 26. (a) No person shall engage in the business of money
1132-transmission on behalf of a person who is not licensed or exempt from
1133-licensing under this act. If a person engages in such activity, such
1134-person shall be deemed to have provided money transmission to the
1135-same extent that such person were a licensee and shall be jointly and
1136-severally liable with the unlicensed or nonexempt person.
1137-(b) This section shall take effect on and after January 1, 2025.
1138-New Sec. 27. (a) Every licensee shall forward all moneys received
1139-for transmission in accordance with the terms of the agreement between
1140-the licensee and the sender unless the licensee reasonably believes or
1141-has a reasonable basis to believe that the sender may be a victim of
1142-fraud or that a crime or violation of law or any rules and regulations has
1143-occurred, is occurring or may occur.
1144-(b) If a licensee fails to forward money received for transmission
1145-in accordance with this section, the licensee shall respond to inquiries
1146-by the sender with the reason for the failure unless providing a response
1147-would violate a state or federal law or rules and regulations.
1148-(c) This section shall take effect on and after January 1, 2025.
1149-New Sec. 28. (a) This section does not apply to moneys received
1150-for transmission:
1151-(1) Subject to 12 C.F.R. §§ 1005.30 through 1005.36; or
1152-(2) pursuant to a written agreement between the licensee and
1153-payee to process payments for goods or services provided by the payee.
1154-(b) Within 10 days of receipt of the sender's written request for a
1155-refund of all money received for transmission, the licensee shall refund HOUSE BILL No. 2560—page 19
1156-such money to the sender, unless:
1157-(1) The money has been forwarded within 10 days of the date
1158-when the money was received for transmission;
1159-(2) instructions have been given committing an equivalent amount
1160-of money to the person designated by the sender within 10 days of the
1161-date when the money was received for transmission;
1162-(3) the agreement between the licensee and the sender instructs the
1163-licensee to forward the money after 10 days of the date when the
1164-money was received for transmission. If funds have not yet been
1165-forwarded in accordance with the terms of the agreement between the
1166-licensee and the sender, the licensee shall issue a refund in accordance
1167-with this section; or
1168-(4) the refund is requested for a transaction that the licensee has
1169-not completed based on a reasonable belief or a reasonable basis to
1170-believe that a crime or violation of law, rules and regulations has
1171-occurred, is occurring or may occur.
1172-(c) The refund request shall not be construed to enable the licensee
1173-to identify the:
1174-(1) Sender's name and address or telephone number; or
1175-(2) particular transaction to be refunded if the sender has multiple
1176-outstanding transactions.
1177-(d) This section shall take effect on and after January 1, 2025.
1178-New Sec. 29. (a) This section shall not apply to:
1179-(1) Money received for transmission subject to 12 C.F.R. §§
1180-1005.30 through 1005.36;
1181-(2) money received for transmission that is not primarily for
1182-personal, family or household purposes;
1183-(3) money received for transmission pursuant to a written
1184-agreement between the licensee and payee to process payments for
1185-goods or services provided by the payee; or
1186-(4) payroll processing services.
1187-(b) As used in this section, "receipt" means a paper or electronic
1188-receipt.
1189-(c) (1) For a transaction conducted in person, the receipt may be
1190-provided electronically if the sender requests or agrees to receive an
1191-electronic receipt.
1192-(2) For a transaction conducted electronically or by phone, a
1193-receipt may be provided electronically. All electronic receipts shall be
1194-provided in a retainable form.
1195-(d) (1) Every licensee or the licensee's authorized delegate shall
1196-provide the sender a receipt for money received for transmission.
1197-(2) The receipt shall contain the:
1198-(A) Name of the sender;
1199-(B) name of the designated recipient;
1200-(C) date of the transaction;
1201-(D) unique transaction or identification number;
1202-(E) name of the licensee, the licensee's nationwide multistate
1203-licensing system and registry unique identification number, the
1204-licensee's business address and the licensee's customer service
1205-telephone number;
1206-(F) amount of the transaction in United States dollars;
1207-(G) fee charged, if any, by the licensee to the sender for the
1208-transaction; and
1209-(H) taxes collected, if any, by the licensee from the sender for the
1210-transaction.
1211-(3) The receipt required by this section shall be written in English
1212-and in the language principally used by the licensee or authorized
1213-delegate to advertise, solicit or negotiate, either orally or in writing, for
1214-a transaction conducted in person, electronically or by phone, if other
1215-than English.
1216-(e) This section shall take effect on and after January 1, 2025.
1217-New Sec. 30. (a) Every licensee or authorized delegate shall
1218-include on a receipt or disclose on the licensee's website or mobile
1219-application the name of the office of the state bank commissioner and a HOUSE BILL No. 2560—page 20
1220-statement that the licensee's Kansas customers can contact the office of
1221-the state bank commissioner with questions or complaints about the
1222-licensee's money transmission services.
1223-(b) This section shall take effect on and after January 1, 2025.
1224-New Sec. 31. (a) A licensee that provides payroll processing
1225-services shall:
1226-(1) Issue reports to clients detailing client payroll obligations in
1227-advance of the payroll funds being deducted from an account; and
1228-(2) make available worker paystubs or an equivalent statement to
1229-workers.
1230-(b) This section shall not apply to a licensee providing payroll
1231-processing services where the licensee's client designates the intended
1232-recipients to the licensee and is responsible for providing the
1233-disclosures.
1234-(c) This section shall take effect on and after January 1, 2025.
1235-New Sec. 32. (a) Every licensee shall maintain at all times a
1236-tangible net worth of:
1237-(1) The greater of $100,000 or 3% of such licensee's total assets
1238-up to $100,000,000;
1239-(2) 2% of such licensee's additional assets of $100,000,000 to
1240-$1,000,000,000; and
1241-(3) 0.5% of such licensee's additional assets of over
1242-$1,000,000,000.
1243-(b) The licensee's tangible net worth shall be demonstrated at
1244-initial application by the applicant's most recent audited or unaudited
1245-financial statements pursuant to section 10, and amendments thereto.
1246-(c) Notwithstanding the provisions of this section, the
1247-commissioner shall have the authority to exempt any applicant or
1248-licensee, in part or in whole, from the requirements of this section.
1249-(d) This section shall take effect on and after January 1, 2025.
1250-New Sec. 33. (a) An applicant for a money transmission license
1251-shall provide and a licensee at all times shall maintain security
1252-consisting of a surety bond in a form satisfactory to the commissioner
1253-or, with the commissioner's approval, a deposit instead of a bond in
1254-accordance with this section.
1255-(b) The amount of the required security shall be:
1256-(1) The greater of $200,000 or an amount equal to 100% of the
1257-licensee's average daily money transmission liability in Kansas
1258-calculated for the most recently completed three-month period, up to a
1259-maximum of $1,000,000; or
1260-(2) $200,000, if the licensee's tangible net worth exceeds 10% of
1261-total assets.
1262-(c) A licensee that maintains a bond in the maximum amount
1263-provided for in subsection (b) shall not be required to calculate its
1264-average daily money transmission liability in Kansas for purposes of
1265-this section.
1266-(d) A licensee may exceed the maximum required bond amount
1267-pursuant to section 35, and amendments thereto.
1268-(e) This section shall take effect on and after January 1, 2025.
1269-New Sec. 34. (a) A licensee shall maintain permissible
1270-investments that have a market value computed in accordance with
1271-United States generally accepted accounting principles of not less than
1272-the aggregate amount of the total of the licensee's outstanding money
1273-transmission obligations.
1274-(b) Except for the permissible investments described in section 35,
1275-and amendments thereto, the commissioner may by rules and
1276-regulations or order limit the extent to which a specific investment
1277-maintained by a licensee within a class of permissible investments may
1278-be considered a permissible investment, if the specific investment
1279-represents undue risk to customers not reflected in the market value of
1280-investments.
1281-(c) Permissible investments, even if commingled with other assets
1282-of the licensee, shall be held in trust for the benefit of the purchasers
1283-and holders of the licensee's outstanding money transmission HOUSE BILL No. 2560—page 21
1284-obligations in the event of insolvency, the filing of a petition by or
1285-against the licensee under 11 U.S.C. §§ 101 through 110 for bankruptcy
1286-or reorganization, the filing of a petition by or against the licensee for
1287-receivership, the commencement of any other judicial or administrative
1288-proceeding for such licensee's dissolution or reorganization or in the
1289-event of an action by a creditor against the licensee who is not a
1290-beneficiary of this statutory trust. No permissible investments
1291-impressed with a trust pursuant to this subsection shall be subject to
1292-attachment, levy of execution or sequestration by order of any court,
1293-except for a beneficiary of this statutory trust.
1294-(d) Upon the establishment of a statutory trust in accordance with
1295-subsection (c) or when any funds are drawn on a letter of credit
1296-pursuant to section 35, and amendments thereto, the commissioner shall
1297-notify the applicable regulator of each state where the licensee is
1298-licensed to engage in money transmission, if any, of the establishment
1299-of the trust or the funds drawn on the letter of credit, as applicable.
1300-Notice shall be deemed satisfied if performed pursuant to a multistate
1301-agreement or through the nationwide multistate licensing system and
1302-registry. Funds drawn on a letter of credit and any other permissible
1303-investments held in trust for the benefit of the purchasers and holders of
1304-the licensee's outstanding money transmission obligations shall be
1305-deemed held in trust for the benefit of such purchasers and holders on a
1306-pro rata and equitable basis in accordance with statutes pursuant to
1307-which permissible investments are required to be held in Kansas and
1308-other states, as applicable. Any statutory trust established under this
1309-section shall be terminated upon extinguishment of all of the licensee's
1310-outstanding money transmission obligations.
1311-(e) The commissioner by rules and regulations or by order may
1312-allow other types of investments that the commissioner determines are
1313-of sufficient liquidity and quality to be a permissible investment. The
1314-commissioner is hereby authorized to participate in efforts with other
1315-state regulators to determine which other types of investments are of
1316-sufficient liquidity and quality to be a permissible investment.
1317-(f) This section shall take effect on and after January 1, 2025.
1318-New Sec. 35. (a) The following investments are permissible under
1319-this section:
1320-(1) Cash, including demand deposits, savings deposits and funds
1321-in accounts held for the benefit of the licensee's customers in a
1322-federally insured depository financial institution and cash equivalents
1323-including automated clearing house items in transit to the licensee and
1324-automated clearing house items or international wires in transit to a
1325-payee, cash in transit via armored car, cash in smart safes, cash in
1326-licensee-owned locations, debit card or credit card-funded transmission
1327-receivables owed by any bank or money market mutual funds rated
1328-AAA by Standard & Poor or the equivalent from any eligible rating
1329-service;
1330-(2) certificates of deposit or senior debt obligations of a federally
1331-insured depository institution;
1332-(3) an obligation of the United States or a commission, agency or
1333-instrumentality thereof, an obligation that is guaranteed fully as to
1334-principal and interest by the United States or an obligation of a state or
1335-a governmental subdivision, agency or instrumentality thereof;
1336-(4) (A) the full drawable amount of an irrevocable standby letter
1337-of credit for which the stated beneficiary is the commissioner that
1338-stipulates that the beneficiary need only draw a sight draft under the
1339-letter of credit and present it to obtain funds up to the letter of credit
1340-amount within seven days of presentation of the items required by
1341-subparagraph (D);
1342-(B) the letter of credit shall:
1343-(i) Be issued by a federally insured depository financial
1344-institution, a foreign bank that is authorized under federal law to
1345-maintain a federal agency or federal branch office in a state or states or
1346-a foreign bank that is authorized under state law to maintain a branch in
1347-a state that: HOUSE BILL No. 2560—page 22
1348-(a) Bears an eligible rating or whose parent company bears an
1349-eligible rating; and
1350-(b) is regulated, supervised and examined by United States federal
1351-or state authorities having regulatory authority over banks, credit
1352-unions and trust companies;
1353-(ii) be irrevocable, unconditional and indicate that such letter of
1354-credit is not subject to any condition or qualifications outside of such
1355-letter of credit;
1356-(iii) contain no references to any other agreements, documents or
1357-entities or otherwise provide for a security interest in the licensee; and
1358-(iv) contain an issue date and expiration date and expressly
1359-provide for automatic extension, without a written amendment, for an
1360-additional period of one year from the present or each future expiration
1361-date unless the issuer of the letter of credit notifies the commissioner in
1362-writing by certified or registered mail or courier mail or other receipted
1363-means at least 60 days prior to any expiration date, that the irrevocable
1364-letter of credit will not be extended;
1365-(C) if any notice of expiration or non-extension of a letter of credit
1366-is issued under clause (a)(4)(B)(iv), the licensee shall be required to
1367-demonstrate to the satisfaction of the commissioner, 15 days prior to
1368-expiration, that the licensee maintains and shall maintain permissible
1369-investments in accordance with section 36(a), and amendments thereto,
1370-upon the expiration of the letter of credit. If the licensee is not able to
1371-do so, the commissioner may draw on the letter of credit in an amount
1372-up to the amount necessary to meet the licensee's requirements to
1373-maintain permissible investments in accordance with section 34(a), and
1374-amendments thereto. Any such draw shall be offset against the
1375-licensee's outstanding money transmission obligations. The drawn
1376-funds shall be held in trust by the commissioner or the commissioner's
1377-designated agent, to the extent authorized by law, as agent for the
1378-benefit of the purchasers and holders of the licensee's outstanding
1379-money transmission obligations;
1380-(D) the letter of credit shall provide that the issuer of such letter of
1381-credit shall honor, at sight, a presentation made of the following
1382-documents by the beneficiary to the issuer on or prior to the expiration
1383-date of the letter of credit:
1384-(i) The original letter of credit, including any amendments; and
1385-(ii) a written statement from the beneficiary stating that any of the
1386-following events have occurred:
1387-(a) The filing of a bankruptcy or reorganization petition by or
1388-against the licensee;
1389-(b) the filing of a petition by or against the licensee for
1390-receivership or the commencement of any other judicial or
1391-administrative proceeding for such licensee's dissolution or
1392-reorganization;
1393-(c) the seizure of assets of a licensee by a commissioner pursuant
1394-to an emergency order issued in accordance with applicable law, on the
1395-basis of an action, violation or condition that has caused or is likely to
1396-cause the insolvency of the licensee; or
1397-(d) the beneficiary has received notice of expiration or non-
1398-extension of a letter of credit and the licensee failed to demonstrate to
1399-the satisfaction of the beneficiary that the licensee will maintain
1400-permissible investments in accordance with section 36(a), and
1401-amendments thereto, upon the expiration or non-extension of the letter
1402-of credit;
1403-(E) the commissioner may designate an agent to serve on the
1404-commissioner's behalf as beneficiary to a letter of credit if the agent
1405-and letter of credit meet requirements established by the commissioner.
1406-The commissioner's agent may serve as agent for multiple licensing
1407-authorities for a single irrevocable letter of credit if the proceeds of the
1408-drawable amount for the purposes of subsection (a)(4) are assigned to
1409-the commissioner; and
1410-(F) the commissioner is hereby authorized to participate in
1411-multistate processes designed to facilitate the issuance and HOUSE BILL No. 2560—page 23
1412-administration of letters of credit, including, but not limited to, services
1413-provided by the nationwide multistate licensing system and registry and
1414-state regulatory registry, LLC; and
1415-(5) 100% of the surety bond provided for under section 33, and
1416-amendments thereto, that exceeds the average daily money
1417-transmission liability in Kansas.
1418-(b) (1) Unless permitted by the commissioner by rules and
1419-regulations adopted or by order issued to exceed the limit as set forth
1420-herein, the following investments are permissible under section 35, and
1421-amendments thereto, to the extent specified:
1422-(A) Receivables payable to a licensee from the licensee's
1423-authorized delegates in the ordinary course of business that are less
1424-than seven days old up to 50% of the aggregate value of the licensee's
1425-total permissible investments; and
1426-(B) of the receivables permissible under subparagraph (A),
1427-receivables payable to a licensee from a single authorized delegate in
1428-the ordinary course of business may not exceed 10% of the aggregate
1429-value of the licensee's total permissible investments.
1430-(2) The following investments are permissible up to 20% per
1431-category and up to 50% combined of the aggregate value of the
1432-licensee's total permissible investments:
1433-(A) A short-term investment of up to six months, bearing an
1434-eligible rating;
1435-(B) commercial paper bearing an eligible rating;
1436-(C) a bill, note, bond or debenture bearing an eligible rating;
1437-(D) United States tri-party repurchase agreements collateralized at
1438-100% or more with United States government or agency securities,
1439-municipal bonds or other securities bearing an eligible rating;
1440-(E) money market mutual funds rated less than AAA and equal to
1441-or higher than A- by Standard & Poor or the equivalent from any other
1442-eligible rating service; and
1443-(F) a mutual fund or other investment fund composed solely and
1444-exclusively of one or more permissible investments listed in subsection
1445-(a)(1) through (3).
1446-(3) Cash, including demand deposits, savings deposits and funds
1447-in such accounts held for the benefit of the licensee's customers, at
1448-foreign depository institutions are permissible up to 10% of the
1449-aggregate value of the licensee's total permissible investments if the
1450-licensee has received a satisfactory rating in the licensee's most recent
1451-examination and the foreign depository institution:
1452-(A) Has an eligible rating;
1453-(B) is registered under the foreign account tax compliance act;
1454-(C) is not located in any country subject to sanctions from the
1455-office of foreign asset control; and
1456-(D) is not located in a high-risk or non-cooperative jurisdiction as
1457-designated by the financial action task force.
1458-(c) This section shall take effect on and after January 1, 2025.
1459-New Sec. 36. (a) The commissioner may, after notice and an
1460-opportunity for a hearing conducted in accordance with the Kansas
1461-administrative procedure act, K.S.A. 77-501 et seq., and amendments
1462-thereto, suspend or revoke a license or order a licensee to revoke the
1463-designation of an authorized delegate if:
1464-(1) The licensee violates this act or any rules and regulations
1465-adopted or an order issued under this act;
1466-(2) the licensee does not cooperate with an examination or
1467-investigation by the commissioner;
1468-(3) the licensee engages in fraud, intentional misrepresentation or
1469-gross negligence;
1470-(4) an authorized delegate is convicted of a violation of a state or
1471-federal anti-money laundering statute or violates any rules or
1472-regulations adopted or an order issued under this act, as a result of the
1473-licensee's willful misconduct or willful blindness;
1474-(5) the competence, experience, character or general fitness of the
1475-licensee, authorized delegate, person in control of a licensee, key HOUSE BILL No. 2560—page 24
1476-individual or responsible person of the authorized delegate indicates
1477-that it is not in the public interest to permit the person to provide money
1478-transmission;
1479-(6) the licensee engages in an unsafe or unsound practice as
1480-determined by the commissioner pursuant to subsection (b);
1481-(7) the licensee is insolvent, suspends payment of the licensee's
1482-obligations or makes a general assignment for the benefit of the
1483-licensee's creditors;
1484-(8) the licensee does not remove an authorized delegate after the
1485-commissioner issues and serves upon the licensee a final order that
1486-includes a finding that the authorized delegate has violated this act;
1487-(9) a fact or condition exists that, if it had existed when the
1488-licensee applied for a license, would have been grounds for denying the
1489-application;
1490-(10) the licensee's net worth becomes inadequate and the licensee,
1491-after 10 days, fails to take steps to remedy the deficiency;
1492-(11) the licensee demonstrated a pattern of failing to promptly pay
1493-obligations;
1494-(12) the licensee applied for adjudication, reorganization or other
1495-relief under bankruptcy; or
1496-(13) the licensee lied or made false or misleading statements to
1497-any material fact or omitted any material fact.
1498-(b) In determining whether a licensee is engaging in an unsafe or
1499-unsound practice, the commissioner may consider the size and
1500-condition of the licensee's money transmission, the magnitude of the
1501-loss, the gravity of the violation of this act and the previous conduct of
1502-the person involved.
1503-(c) This section shall take effect on and after January 1, 2025.
1504-New Sec. 37. (a) The commissioner may issue an order
1505-suspending or revoking the designation of an authorized delegate, if the
1506-commissioner finds that the:
1507-(1) Authorized delegate violated this act or any rules and
1508-regulations adopted or an order issued under this act;
1509-(2) authorized delegate did not cooperate with an examination or
1510-investigation by the commissioner;
1511-(3) authorized delegate engaged in fraud, intentional
1512-misrepresentation or gross negligence;
1513-(4) authorized delegate is convicted of a violation of a state or
1514-federal anti-money laundering statute;
1515-(5) the competence, experience, character or general fitness of the
1516-authorized delegate or a person in control of the authorized delegate
1517-indicates that it is not in the public interest to permit the authorized
1518-delegate to provide money transmission; or
1519-(6) the authorized delegate is engaging in an unsafe or unsound
1520-practice as determined by the commissioner pursuant to subsection (b).
1521-(b) In determining whether an authorized delegate is engaging in
1522-an unsafe or unsound practice, the commissioner may consider the size
1523-and condition of the authorized delegate's provision of money
1524-transmission, the magnitude of the loss, the gravity of the violation of
1525-this act or any rules and regulations adopted or an order issued under
1526-this act and the previous conduct of the authorized delegate.
1527-(c) An authorized delegate may apply for relief from a suspension
1528-or revocation of designation as an authorized delegate according to
1529-procedures prescribed by the commissioner in rules and regulations.
1530-(d) This section shall take effect on and after January 1, 2025.
1531-New Sec. 38. (a) If the commissioner determines that a violation
1532-of this act or of any rules and regulations adopted or an order issued
1533-under this act by a licensee, a person required to be licensed or
1534-authorized delegate is likely to cause immediate and irreparable harm
1535-to the licensee, the licensee's customers or the public as a result of the
1536-violation or cause insolvency or significant dissipation of assets of the
1537-licensee, the commissioner may issue an order requiring the licensee or
1538-authorized delegate to cease and desist from the violation. The order
1539-shall become effective upon service of the order on the licensee or HOUSE BILL No. 2560—page 25
1540-authorized delegate.
1541-(b) The commissioner may issue an order against a licensee to
1542-cease and desist from providing money transmission through an
1543-authorized delegate that is the subject of a separate order by the
1544-commissioner.
1545-(c) An order to cease and desist shall remain effective and
1546-enforceable pending the completion of an administrative proceeding
1547-pursuant to the Kansas administrative procedure act, K.S.A. 77-501 et
1548-seq., and amendments thereto.
1549-(d) An order to cease and desist shall be considered a final order
1550-unless the licensee or authorized delegate requests a hearing within 14
1551-days after the cease and desist order is issued.
1552-(e) This section shall take effect on and after January 1, 2025.
1553-New Sec. 39. (a) The commissioner may enter into a consent order
1554-at any time with a person to resolve a matter arising under this act or
1555-any rules and regulations adopted or order issued under this act. A
1556-consent order shall be signed by the person to whom such consent order
1557-is issued or by the person's authorized representative and shall indicate
1558-agreement with the terms contained in the order. A consent order may
1559-provide that such consent order does not constitute an admission by a
1560-person that this act or rules and regulations adopted or an order issued
1561-under this act has been violated.
1562-(b) This section shall take effect on and after January 1, 2025.
1563-New Sec. 40. (a) Any person that intentionally makes a false
1564-statement, misrepresentation or false certification in a record filed or
1565-required to be maintained under this act or that intentionally makes a
1566-false entry or omits a material entry in such a record is guilty of a
1567-severity level 9, nonperson felony.
1568-(b) Any person that knowingly engages in an activity for which a
1569-license is required under this act without being licensed under this act
1570-and who receives more than $500 in compensation within a 30-day
1571-period from this activity is guilty of a severity level 9, nonperson
1572-felony.
1573-(c) Any person that knowingly engages in an activity for which a
1574-license is required under this act without being licensed under this act
1575-and who receives not more than $500 in compensation within a 30-day
1576-period from this activity is guilty of a class A nonperson misdemeanor.
1577-(d) This section shall take effect on and after January 1, 2025.
1578-New Sec. 41. (a) As part of any summary order or consent order,
1579-the commissioner may:
1580-(1) Assess a fine against any person who violates this act or any
1581-rules and regulations adopted hereunder in an amount not to exceed
1582-$5,000 per violation. The commissioner may designate any fine
1583-collected pursuant to this section be used for consumer education;
1584-(2) assess the agency's operating costs and expenses for
1585-investigating and enforcing this act;
1586-(3) require the person to pay restitution for any loss arising from
1587-the violation or requiring the person to reimburse any profits arising
1588-from the violation;
1589-(4) prohibit the person from future application for licensure
1590-pursuant to the act; and
1591-(5) require such affirmative action as determined by the
1592-commissioner to carry out the purposes of this act.
1593-(b) (1) The commissioner may enter into an informal agreement at
1594-any time with a person to resolve a matter arising under this act, rules
1595-and regulations adopted hereunder or an order issued pursuant to this
1596-act.
1597-(2) Any informal agreement authorized by this subsection shall be
1598-considered confidential examination material. The adoption of an
1599-informal agreement authorized by this subsection shall not be:
1600-(A) Subject to the provisions of K.S.A. 77-501 et seq., and
1601-amendments thereto, or K.S.A. 77-601 et seq., and amendments
1602-thereto;
1603-(B) considered an order or other agency action; HOUSE BILL No. 2560—page 26
1604-(C) subject to the Kansas open records act, K.S.A. 45-215 et seq.,
1605-and amendments thereto; or
1606-(D) discovery or be admissible in evidence in any private civil
1607-action.
1608-(3) The provisions of this subsection providing for the
1609-confidentiality of public records shall expire on July 1, 2030, unless the
1610-legislature reviews and reenacts such provisions in accordance with the
1611-Kansas open records act, K.S.A. 45-229, and amendments thereto, prior
1612-to July 1, 2030.
1613-(c) Through an examination finding, the commissioner may:
1614-(1) Assess a fine against any licensee who violates this act or rules
1615-and regulations adopted thereto, in an amount not to exceed $5,000 per
1616-violation. The commissioner may designate any fine collected pursuant
1617-to this section be used for consumer education; or
1618-(2) require the licensee to pay restitution for any loss arising from
1619-the violation or require the person to reimburse any profits arising from
1620-the violation.
1621-(d) This section shall take effect on and after January 1, 2025.
1622-New Sec. 42. (a) The provisions of this act are severable. If any
1623-portion of the act is declared unconstitutional or invalid, or the
1624-application of any portion of the act to any person or circumstance is
1625-held unconstitutional or invalid, the invalidity shall not affect other
1626-portions of the act that can be given effect without the invalid portion
1627-or application, and the applicability of such other portions of the act to
1628-any person or circumstance shall remain valid and enforceable.
1629-(b) This section shall take effect on and after January 1, 2025.
1630-New Sec. 43. (a) Sections 43 through 58, and amendments thereto,
1631-shall be known and may be cited as the Kansas earned wage access
1632-services act.
1633-(b) This act shall not apply to a:
1634-(1) Bank holding company regulated by the federal reserve;
1635-(2) depository institution regulated by a federal banking agency;
1636-or
1637-(3) a subsidiary of either paragraph (1) or (2) if such subsidiary
1638-directly owns 25% of the bank holding company or depository
1639-institution's common stock.
1640-New Sec. 44. As used in sections 43 through 58, and amendments
1641-thereto:
1642-(a) "Act" means the Kansas earned wage access services act.
1643-(b) "Commissioner" means the state bank commissioner or the
1644-commissioner's designee, who shall be the deputy commissioner of the
1645-consumer and mortgage lending division of the office of the state bank
1646-commissioner.
1647-(c) "Consumer" means an individual who is a resident of this state.
1648-A provider may use the mailing address provided by a consumer to
1649-determine such consumer's state of residence for purposes of this act.
1650-(d) "Consumer-directed wage access services" means offering or
1651-providing earned wage access services directly to consumers based on
1652-the consumer's representations and the provider's reasonable
1653-determination of the consumer's earned but unpaid income.
1654-(e) "Director" means a member of the registrant's or applicant's
1655-board of directors.
1656-(f) "Earned but unpaid income" means salary, wages,
1657-compensation or other income that a consumer has represented, and
1658-that a provider has reasonably determined, to have been earned or to
1659-have accrued to the benefit of the consumer in exchange for the
1660-consumer's provision of services to an employer or on behalf of an
1661-employer, including on an hourly, project-based, piecework or other
1662-basis and including where the consumer is acting as an independent
1663-contractor of the employer, but, at the time of the payment of proceeds,
1664-have not been paid to the consumer by the employer.
1665-(g) "Earned wage access services" means the business of
1666-providing consumer-directed wage access services or employer-
1667-integrated wage access services, or both. HOUSE BILL No. 2560—page 27
1668-(h) "Employer-integrated wage access services" means the
1669-business of delivering to consumers access to earned but unpaid income
1670-that is based on employment, income and attendance data obtained
1671-directly or indirectly from an employer.
1672-(i) "Fee" means a fee imposed by a provider for delivery or
1673-expedited delivery of proceeds to a consumer or a subscription or
1674-membership fee imposed by a provider for a bona fide group of
1675-services that include earned wage access services. A voluntary tip,
1676-gratuity or donation shall not be deemed a fee.
1677-(j) "Member" means someone who has the right to receive upon
1678-dissolution, or has contributed 10% or more of the capital, of a limited
1679-liability corporation or a limited liability partnership of the registrant or
1680-applicant.
1681-(k) "Nationwide multistate licensing system and registry" or
1682-"registry" means a multistate licensing system developed by the
1683-conference of state bank supervisors and the American association of
1684-residential mortgage regulators and operated by the state regulatory
1685-agency, LLC, for the licensing and registration of non-depository
1686-financial service entities by participating state agencies or any
1687-successor to the nationwide multisystem licensing system and registry.
1688-(l) "Non-mandatory payment" means the following:
1689-(1) A charge imposed by a provider for delivery or expedited
1690-delivery of proceeds to a consumer so long as a provider offers the
1691-consumer at least one option to receive proceeds at no cost to the
1692-consumer;
1693-(2) an amount paid by an obligor to a provider on a consumer's
1694-behalf that entitles the consumer to receive proceeds at no cost to the
1695-consumer;
1696-(3) a subscription or membership charge imposed by a provider
1697-for a group of services that include earned wage access services so long
1698-as the provider offers the consumer at least one option to receive
1699-proceeds at no cost to the consumer; or
1700-(4) a tip or gratuity paid by a consumer to a provider so long as the
1701-provider offers the consumer at least one option to receive proceeds at
1702-no cost to the consumer.
1703-(m) "Nonrecourse" means a provider shall not compel or attempt
1704-to compel repayment by a consumer of outstanding proceeds or fees
1705-owed by such consumer to such provider through any of the following
1706-means:
1707-(1) A civil suit against the consumer in a court of competent
1708-jurisdiction;
1709-(2) use of a third party to pursue collection of outstanding
1710-proceeds or fees on the provider's behalf; or
1711-(3) sale of outstanding amounts to a third-party collector or debt
1712-buyer.
1713-(n) "Obligor" means an employer or other person who employs a
1714-consumer or any other person who is contractually obligated to pay a
1715-consumer earned but unpaid income in exchange for a consumer's
1716-provision of services to the employer or on behalf of the employer,
1717-including on an hourly, project-based, piecework or other basis, and
1718-including where the consumer is acting as an independent contractor.
1719-(o) "Officer" means a person who participates or has authority to
1720-participate, other than in the capacity of a director, in major
1721-policymaking functions of the registrant or applicant, whether or not
1722-the person has an official title. "Officer" includes, but is not limited to,
1723-the chief executive officer, chief financial officer, chief operations
1724-officer, chief legal officer, chief credit officer, chief compliance officer
1725-and every vice president. 
1726-(p) "Outstanding proceeds" means proceeds remitted to a
1727-consumer by a provider that have not yet been repaid to such provider.
1728-(q) "Owner" means an individual who holds, directly or indirectly,
1729-at least 10% or more of a class of voting securities or the power to
1730-direct the management or policies of a registrant or an applicant.
1731-(r) "Partner" means a person that has the right to receive upon HOUSE BILL No. 2560—page 28
1732-dissolution, or has contributed, 10% or more of the capital of a
1733-partnership of the registrant or applicant. 
1734-(s) "Person" means any individual, corporation, partnership,
1735-association or other commercial entity.
1736-(t) "Principal" of a registrant means a person that oversees the
1737-daily operations of a registrant or applicant and is not an owner or key
1738-individual of such registrant or applicant.
1739-(u) "Proceeds" means a payment to a consumer by a provider that
1740-is based on earned but unpaid income.
1741-(v) "Provider" means a person who is in the business of offering
1742-and providing earned wage access services to consumers.
1743-(w) "Registrant" means a person who is registered with the
1744-commissioner as an earned wage access services provider.
1745-New Sec. 45. (a) No person shall engage in or hold such person
1746-out as willing to engage in any earned wage access services business
1747-with a consumer without registering with the commissioner. Any
1748-person required to be registered as an earned wage access services
1749-provider shall submit to the commissioner an application for
1750-registration on forms prescribed and provided by the commissioner.
1751-Such application for registration shall include:
1752-(1) The applicant's name, business address, telephone number and,
1753-if any, website address;
1754-(2) the name and address of each owner, officer, director, member,
1755-partner or principal of the applicant;
1756-(3) a description of the ownership interest of any officer, director,
1757-member, partner, agent or employee of the applicant in any affiliate or
1758-subsidiary of the applicant or in any other entity that provides any
1759-service to the applicant or any consumer relating to the applicant's
1760-earned wage access services business; and
1761-(4) any other information the commissioner may deem necessary
1762-to evaluate the financial responsibility, financial condition, character,
1763-qualifications and fitness of the applicant.
1764-(b) Each application for registration shall be accompanied by a
1765-nonrefundable fee.
1766-(c) The commissioner shall approve an application and shall issue
1767-a nontransferable and nonassignable registration to the applicant when
1768-the commissioner:
1769-(1) Receives the complete application and fee required by this
1770-section; and
1771-(2) determines the financial responsibility, financial condition,
1772-character, qualifications and fitness warrants a belief that the business
1773-of the applicant will be conducted competently, honestly, fairly and in
1774-accordance with all applicable state and federal laws.
1775-(d) Each earned wage access services registration issued under this
1776-section shall expire on December 31 of each year. A registration shall
1777-be renewed by filing a complete renewal application with the
1778-commissioner at least 30 calendar days prior to the expiration of the
1779-registration. Such renewal application shall contain all information the
1780-commissioner requires to determine the existence and effect of any
1781-material change from the information contained in the applicant's
1782-original application, annual reports or prior renewal applications. Each
1783-renewal application shall be accompanied by a nonrefundable renewal
1784-fee.
1785-(e) If the commissioner fails to issue a registration within 60
1786-calendar days after a filed application is deemed complete by the
1787-commissioner, the applicant may make written request for a hearing.
1788-Upon receipt of such written request for a hearing, the commissioner
1789-shall conduct a hearing in accordance with the Kansas administrative
1790-procedure act.
1791-(f) Not later than the first day of the sixth month beginning after
1792-the effective date of this act, the commissioner shall prescribe the form
1793-and content of an application for registration to provide earned wage
1794-access services pursuant to this act.
1795-(g) Notwithstanding the provisions of subsection (a), a person HOUSE BILL No. 2560—page 29
1796-who, as of January 1, 2024, was engaged in the business of providing
1797-earned wage access services in this state may, until the commissioner
1798-has processed the person's application for registration, continue to
1799-engage in the business of providing earned wage access services in this
1800-state without registering if the person has submitted an application for
1801-registration within three months after the commissioner has prescribed
1802-the form and content of an application pursuant to subsection (f) and
1803-otherwise complies with this act.
1804-(h) The registration requirements of this act shall not apply to
1805-individuals acting as employees or independent contractors of business
1806-entities required to register.
1807-New Sec. 46. Each applicant or registrant shall file with the
1808-commissioner a surety bond in a form acceptable to the commissioner.
1809-Such surety bond shall be issued by a surety or insurance company
1810-authorized to conduct business in this state, securing the applicant's or
1811-registrant's faithful performance of all duties and obligations of a
1812-registrant. The surety bond shall:
1813-(a) Be payable to the office of the state bank commissioner;
1814-(b) provide that the bond may not be terminated without 30
1815-calendar days' prior written notice to the commissioner, that such
1816-termination shall not affect the surety's liability for violations of this act
1817-occurring prior to the effective date of cancellation, and principal and
1818-surety shall be and remain liable for a period of two years from the date
1819-of any action or inaction of principal that gives rise to a claim under the
1820-bond;
1821-(c) provide that the bond shall not expire for two years after the
1822-date of surrender, revocation or expiration of the applicant's or
1823-registrant's registration, whichever occurs first;
1824-(d) be available for:
1825-(1) The recovery of expenses, fines and fees levied by the
1826-commissioner under this act; and
1827-(2) payment of losses or damages that are determined by the
1828-commissioner to have been incurred by any consumer as a result of the
1829-applicant's or registrant's failure to comply with the requirements of this
1830-act; and
1831-(e) be in the amount of $100,000.
1832-New Sec. 47. A provider that is registered in the state of Kansas
1833-shall be subject to the following requirements:
1834-(a) The registrant shall provide all proceeds on a non-recourse
1835-basis and shall treat all fees and non-mandatory payments as non-
1836-recourse payment obligations.
1837-(b) The registrant shall develop and implement policies and
1838-procedures to respond to questions raised by consumers and address
1839-complaints from consumers in an expedient manner.
1840-(c) Before entering into an agreement with a consumer for the
1841-provision of earned wage access services, the registrant shall:
1842-(1) Inform the consumer of their rights under the agreement;
1843-(2) fully and clearly disclose all fees associated with the earned
1844-wage access services; and
1845-(3) clearly and conspicuously describe how the consumer may
1846-obtain proceeds at no cost to such consumer.
1847-(d) A registrant shall inform the consumer of any material changes
1848-to the terms and conditions of the earned wage access services before
1849-implementing such changes for such consumer.
1850-(e) The registrant shall provide proceeds to a consumer via any
1851-means mutually agreed upon by the consumer and registrant.
1852-(f) The registrant shall allow a consumer to cancel the use of the
1853-provider's earned wage access services at any time without incurring a
1854-cancellation fee or penalty imposed by the provider.
1855-(g) The registrant shall comply with all applicable federal, state
1856-and local privacy and information security laws.
1857-(h) If a registrant solicits, charges or receives a tip, gratuity or
1858-other donation from a consumer, the registrant shall disclose:
1859-(1) To the consumer immediately prior to each transaction that a HOUSE BILL No. 2560—page 30
1860-tip, gratuity or other donation amount may be zero and is voluntary;
1861-and
1862-(2) in its agreement with the consumer and elsewhere that tips,
1863-gratuities or other donations are voluntary and that the offering of
1864-earned wage access services, including the amount of proceeds a
1865-consumer is eligible to request and the frequency with which proceeds
1866-are provided to a consumer, is not contingent on whether the consumer
1867-pays any tip, gratuity or donation or on the size of any tip, gratuity or
1868-other donation.
1869-(i) If a registrant will seek repayment of outstanding proceeds or
1870-payment of fees or other amounts owed, including voluntary tips,
1871-gratuities or other donations, in connection with earned wage access
1872-services from a consumer's depository institution, including by means
1873-of electronic funds transfer, the registrant shall do all of the following:
1874-(1) Inform the consumer when the provider will make each
1875-attempt to seek repayment of the proceeds from the consumer;
1876-(2) comply with applicable provisions of the federal electronic
1877-fund transfer act, 15 U.S.C. § 1693 et seq., and any regulations adopted
1878-thereunder; and
1879-(3) reimburse the consumer for the full amount of any overdraft or
1880-nonsufficient funds fees imposed on a consumer by the consumer's
1881-depository institution that were caused by the provider attempting to
1882-seek payment of any outstanding proceeds, fees or other payments in
1883-connection with earned wage access services, including voluntary tips,
1884-gratuities or other donations, on a date before, or in an incorrect amount
1885-from, the date or amount disclosed to the consumer. Notwithstanding
1886-the provisions of this paragraph, no provider shall be subject to the
1887-requirements of this paragraph with respect to payments of outstanding
1888-proceeds or fees incurred by a consumer through fraudulent or other
1889-unlawful means.
1890-New Sec. 48. No person required to be registered under this act
1891-shall:
1892-(a) Compel or attempt to compel repayment by a consumer of
1893-outstanding proceeds or payments owed by such consumer to the
1894-registrant through any of the following means:
1895-(1) A civil suit against the consumer in a court of competent
1896-jurisdiction;
1897-(2) use of a third party to pursue collection of outstanding
1898-proceeds or payments on the provider's behalf;
1899-(3) use of outbound telephone calls to attempt collection; or
1900-(4) sale of outstanding amounts to a third-party debt collector or
1901-debt purchaser;
1902-(b) charge a late fee, a deferral fee, interest or any other penalty or
1903-charge for failure to repay outstanding proceeds, fees, voluntary tips,
1904-gratuitites or other donations;
1905-(c) charge interest or finance charges:
1906-(d) charge an unreasonable fee to provide expedited delivery of
1907-proceeds to a consumer;
1908-(e) share with an employer a portion of any fees, voluntary tips,
1909-gratuities or other donations that were received from or charged to a
1910-consumer for earned wage access services;
1911-(f) condition the amount of proceeds that a consumer is eligible to
1912-request or the frequency with which a consumer is eligible to request
1913-proceeds on whether such consumer pays fees, voluntary tips, gratuities
1914-or other donations or on the size of any fee, voluntary tip, gratuity or
1915-other donation that such consumer may make to such registrant in
1916-connection with the provision of earned wage access services;
1917-(g) mislead or deceive consumers about the voluntary nature of
1918-tips, gratuities or other donations or make representations that tips,
1919-gratuities or other donations will benefit any specific individuals if the
1920-registrant solicits, charges or receives tips, gratuities or other donations
1921-from a consumer;
1922-(h) charge a deferral fee or any other charge in connection with
1923-deferring the collection of any outstanding proceeds beyond the HOUSE BILL No. 2560—page 31
1924-original scheduled repayment date;
1925-(i) accept credit of any kind as payment from a consumer of
1926-outstanding proceeds or non-mandatory payments;
1927-(j) report a consumer's payment or failed repayment of
1928-outstanding proceeds to a consumer credit reporting agency or a debt
1929-collector; or
1930-(k) require a credit score to determine a consumer's eligibility for
1931-earned wage access services.
1932-New Sec. 49. (a) For purposes of the laws of this state:
1933-(1) Earned wage access services provided by a registrant in
1934-accordance with this chapter shall not be considered to be:
1935-(A) A loan or other form of credit or the registrant a creditor or
1936-lender with respect thereto;
1937-(B) in violation of or noncompliant with the laws of this state
1938-governing the sale or assignment of, or an order for, earned but unpaid
1939-income; or
1940-(C) money transmission or the registrant a money transmitter with
1941-respect thereto.
1942-(2) Fees, voluntary tips, gratuities or other donations paid to such
1943-a registrant in accordance with this chapter shall not be considered
1944-interest or finance charges.
1945-(b) A registrant that provides proceeds to a consumer in
1946-accordance with this act shall not be subject to the provisions of the
1947-uniform consumer credit code in connection with such registrant's
1948-earned wage access services.
1949-(c) If there is a conflict between the provisions of this act and any
1950-other state statute, the provisions of this act control.
1951-New Sec. 50. (a) (1) On or before April 1 of each year, each
1952-registrant shall file with the commissioner an annual report relating to
1953-earned wage access services provided by the registrant in this state
1954-during the preceding calendar year. The annual report shall be on a
1955-form prescribed by the commissioner.
1956-(2) The information contained in the annual report shall be
1957-confidential and shall not be subject to the open records act, K.S.A. 45-
1958-215 et seq., and amendments thereto. The commissioner may publish
1959-aggregate annual report information for multiple registrants in
1960-composite form. The provisions of this paragraph shall expire on July
1961-1, 2029, unless the legislature reviews and acts to continue such
1962-provisions pursuant to K.S.A. 45-229, and amendments thereto, prior to
1963-July 1, 2029.
1964-(b) Within 15 calendar days of any of the following events, a
1965-registrant shall file a written report with the commissioner describing
1966-the event and such event's expected impact on the registrant's business:
1967-(1) The filing for bankruptcy or reorganization by the registrant;
1968-(2) the institution of a revocation, suspension or other proceeding
1969-against the registrant by a governmental authority that is related to the
1970-registrant's earned wage access services business in any state;
1971-(3) the addition or loss of any owner, officer, partner, member,
1972-principal or director of the registrant;
1973-(4) a felony conviction of the registrant or any of such registrant's
1974-owners, officers, members, principals, directors or partners;
1975-(5) a change in the registrant's name or legal entity status; or
1976-(6) the closing or relocation of the registrant's principal place of
1977-business.
1978-(c) If a registrant fails to make any report to the commissioner as
1979-required by this section, the commissioner may require the registrant to
1980-pay a late penalty of $100 for each day such report is overdue.
1981-New Sec. 51. (a) Each registrant shall maintain and preserve
1982-complete and adequate business records, including a general ledger
1983-containing all assets, liabilities, capital, income and expense accounts
1984-for a period of three years.
1985-(b) Each registrant shall maintain and preserve complete and
1986-adequate records of each earned wage access services contract during
1987-the term of the contract and for a period of five years from the date on HOUSE BILL No. 2560—page 32
1988-which the registrant last provides proceeds to the consumer.
1989-(c) The registrant shall provide the records to the commissioner
1990-within three business days of the commissioner's request or, at the
1991-commissioner's discretion, pay reasonable and necessary expenses for
1992-the commissioner or commissioner's designee to examine them at the
1993-place where such records are maintained. The registrant may provide
1994-such records electronically to the commissioner in a manner prescribed
1995-by the commissioner.
1996-New Sec. 52.  The commissioner may deny, suspend, revoke or
1997-refuse to renew a registration issued pursuant to this act if the
1998-commissioner finds, after notice and opportunity for a hearing
1999-conducted in accordance with the provisions of the Kansas
2000-administrative procedure act, that:
2001-(a) The applicant or registrant has repeatedly or willfully violated
2002-any provision of this act, any rules and regulations adopted thereunder
2003-or any order lawfully issued by the commissioner pursuant to this act;
2004-(b) the applicant or registrant has failed to file and maintain the
2005-surety bond required under this act;
2006-(c) the applicant or registrant is insolvent;
2007-(d) the applicant or registrant has filed with the commissioner any
2008-document or statement containing any false representation of a material
2009-fact or omitting to state a material fact;
2010-(e) the applicant, registrant or any officer, director, member,
2011-owner, partner or principal of the applicant or registrant has been
2012-convicted of any crime;
2013-(f) the applicant or registrant fails to keep and maintain sufficient
2014-records to permit an audit satisfactorily disclosing to the commissioner
2015-the applicant's or registrant's compliance with the provisions of this act
2016-and applicable federal law;
2017-(g) the applicant, registrant or an employee of the applicant or
2018-registrant has been the subject of any disciplinary action by the
2019-commissioner or any other state or federal regulatory agency;
2020-(h) a final judgment has been entered against the applicant or
2021-registrant in a civil action and the commissioner finds that the conduct
2022-on which the judgment is based indicates that it would be contrary to
2023-the public interest to permit such person to be registered;
2024-(i) the applicant or registrant has engaged in any deceptive
2025-business practice;
2026-(j) facts or conditions exist that would have justified the denial of
2027-the registration or renewal had such facts or conditions existed or been
2028-known to exist at the time the application for registration or renewal
2029-was made; or
2030-(k) the applicant or registrant has refused to furnish information
2031-required by the commissioner within a reasonable period of time as
2032-established by the commissioner.
2033-New Sec. 53. (a) The commissioner shall administer the
2034-provisions of this act. In addition to other powers granted by this act,
2035-the commissioner, within the limitations provided by law, may exercise
2036-the following powers:
2037-(1) Adopt, amend and revoke rules and regulations as necessary to
2038-carry out the intent and purpose of this act;
2039-(2) make any investigation and examination of the operations,
2040-books and records of an earned wage access services provider as the
2041-commissioner deems necessary to aid in the enforcement of this act;
2042-(3) have free and reasonable access to the offices, places of
2043-business and all records of the registrant that will enable the
2044-commissioner to determine whether the registrant is complying with the
2045-provisions of this act. The commissioner may designate persons,
2046-including comparable officials of the state in which the records are
2047-located, to inspect the records on the commissioner's behalf;
2048-(4) establish, charge and collect fees from applicants or registrants
2049-for reasonable costs of investigation, examination and administration of
2050-this act, in such amounts as the commissioner may determine to be
2051-sufficient to meet the budget requirements of the commissioner for HOUSE BILL No. 2560—page 33
2052-each fiscal year. The commissioner may maintain an action in any court
2053-to recover such costs;
2054-(5) order any registrant or person to cease any activity or practice
2055-that the commissioner deems to be deceptive, dishonest, a violation of
2056-this act, or of any other state or federal law, or unduly harmful to the
2057-interests of the public;
2058-(6) exchange any information regarding the administration of this
2059-act with any agency of the United States or any state that regulates the
2060-applicant or registrant or administers statutes, rules and regulations or
2061-programs related to earned wage access services laws with any attorney
2062-general or district attorney with jurisdiction to enforce criminal
2063-violations of this act;
2064-(7) disclose to any person or entity that an applicant's or
2065-registrant's application or registration has been denied, suspended,
2066-revoked or refused renewal;
2067-(8) require or permit any person to file a written statement, under
2068-oath or otherwise as the commissioner may direct, setting forth all the
2069-facts and circumstances concerning any apparent violation of this act,
2070-any rule and regulation adopted thereunder or any order issued pursuant
2071-to this act;
2072-(9) receive, as a condition in settlement of any investigation or
2073-examination, a payment designated for consumer education to be
2074-expended for such purpose as directed by the commissioner;
2075-(10) delegate the authority to sign any orders, official documents
2076-or papers issued under or related to this act to the deputy of consumer
2077-and mortgage lending division of the office of the state bank
2078-commissioner;
2079-(11) (A) require fingerprinting of any officer, partner, member,
2080-owner, principal or director of an applicant or registrant. Such
2081-fingerprints may be submitted to the Kansas bureau of investigation
2082-and the federal bureau of investigation for a state and national criminal
2083-history record check to be submitted to the office of the state bank
2084-commissioner. The fingerprints shall be used to identify the person and
2085-to determine whether the person has a record of arrests and convictions
2086-in this state or other jurisdictions. The office of the state bank
2087-commissioner may use information obtained from fingerprinting and
2088-the criminal history for purposes of verifying the identification of the
2089-person and in the official determination of the qualifications and fitness
2090-of the persons associated with the applicant. Whenever the office of the
2091-state bank commissioner requires fingerprinting, any associated costs
2092-shall be paid by the applicant or the parties to the application.
2093-(B) The Kansas bureau of investigation shall release all records of
2094-adult convictions, adjudications, and juvenile adjudications in Kansas
2095-and of another state or country to the office of the state bank
2096-commissioner. The office of the state bank commissioner shall not
2097-disclose or use a state and national criminal history record check for
2098-any purpose except as provided for in this section. Unauthorized use of
2099-a state or national criminal history record check shall constitute a class
2100-A nonperson misdemeanor.
2101-(C) Each state and national criminal history record check shall be
2102-confidential, not subject to the open records act, K.S.A. 45-215 et seq.,
2103-and amendments thereto, and not be disclosed to any applicant or
2104-registrant. The provisions of this subparagraph shall expire on July 1,
2105-2029, unless the legislature reviews and acts to continue such
2106-provisions pursuant to K.S.A. 45-229, and amendments thereto, prior to
2107-July 1, 2029;
2108-(12) issue, amend and revoke written administrative guidance
2109-documents in accordance with the applicable provisions of the Kansas
2110-rules and regulations filing act;
2111-(13) enter into any informal agreement with any person for a plan
2112-of action to address violations of this act; and
2113-(14) require use of a nationwide multi-state licensing system and
2114-registry for processing applications, renewals, amendments, surrenders
2115-and any other activity that the commissioner deems appropriate. The HOUSE BILL No. 2560—page 34
2116-commissioner may establish relationships or contracts with the
2117-nationwide multi-state licensing system and registry or other entities to
2118-collect and maintain records and process transaction fees or other fees
2119-related to applicants and licensees, as may be reasonably necessary to
2120-participate in the nationwide multi-state licensing system and registry.
2121-The commissioner may report violations of the law, as well as
2122-enforcement actions and other relevant information to the nationwide
2123-multi-state licensing system and registry. The commissioner may
2124-require any applicant or licensee to file reports with the nationwide
2125-multi-state licensing system and registry in the form prescribed by the
2126-commissioner.
2127-(b) Examination reports and correspondence regarding such
2128-reports made by the commissioner or the commissioner's designees
2129-shall be confidential and shall not be subject to the provisions of the
2130-open records act, K.S.A. 45-215 et seq., and amendments thereto. The
2131-commissioner may release examination reports and correspondence
2132-regarding the reports in connection with a disciplinary proceeding
2133-conducted by the commissioner, a liquidation proceeding or a criminal
2134-investigation or proceeding. Additionally, the commissioner may
2135-furnish to federal or other state regulatory agencies or any officer or
2136-examiner thereof, a copy of any or all examination reports and
2137-correspondence regarding the reports made by the commissioner or the
2138-commissioner's designees. The provisions of this subsection shall
2139-expire on July 1, 2029, unless the legislature reviews and acts to
2140-continue such provisions pursuant to K.S.A. 45-229, and amendments
2141-thereto, prior to July 1, 2029.
2142-(c) For the purpose of any examination, investigation or
2143-proceeding under this act, the commissioner or the commissioner's
2144-designee may administer oaths and affirmations, subpoena witnesses,
2145-compel such witnesses' attendance, introduce evidence and require the
2146-production of any matter that is relevant to the examination or
2147-investigation, including the existence, description, nature, custody,
2148-condition and location of any books, documents or other tangible things
2149-and the identity and location of persons having knowledge of relevant
2150-facts or any other matter reasonably calculated to lead to the discovery
2151-of relevant information or items.
2152-(d) The adoption of an informal agreement authorized by this
2153-section shall not be subject to the provisions of the Kansas
2154-administrative procedure act or the Kansas judicial review act. Any
2155-informal agreement authorized by this subsection shall not be
2156-considered an order or other agency action and shall be considered
2157-confidential examination material. All such examination material shall
2158-be confidential by law and privileged, shall not be subject to the
2159-provisions of the open records act, K.S.A. 45-215 et seq., and
2160-amendments thereto, shall not be subject to subpoena and shall not be
2161-subject to discovery or admissible in evidence in any private civil
2162-action. The provisions of this subsection shall expire on July 1, 2029,
2163-unless the legislature reviews and acts to continue such provisions
2164-pursuant to K.S.A. 45-229, and amendments thereto, prior to July 1,
2165-2029.
2166-New Sec. 54. (a) If the commissioner determines after notice and
2167-opportunity for a hearing pursuant to the Kansas administrative
2168-procedure act that any person has engaged, is engaging or is about to
2169-engage in any act or practice constituting a violation of any provision
2170-of this act, any rules and regulations adopted or order issued
2171-thereunder, the commissioner may issue an order requiring any or all of
2172-the following:
2173-(1) That the person cease and desist from the unlawful act or
2174-practice;
2175-(2) that the person pay a fine not to exceed $5,000 per incident for
2176-the unlawful act or practice;
2177-(3) if any person is found to have violated any provision of this act
2178-and such violation is committed against elder or disabled persons as
2179-defined in K.S.A. 50-676, and amendments thereto, the commissioner HOUSE BILL No. 2560—page 35
2180-may impose an additional penalty not to exceed $5,000 for each such
2181-violation, in addition to any civil penalty otherwise provided by law;
2182-(4) that the person to pay restitution for any loss arising from the
2183-violation or requiring the person to disgorge any profits arising from
2184-the violation. Such order may include the assessment of interest not to
2185-exceed 8% per annum from the date of the violation;
2186-(5) that the person take such action as in the judgment of the
2187-commissioner will carry out the purposes of this act; or
2188-(6) that the person be barred from subsequently applying for
2189-registration under this act.
2190-(b) (1) If the commissioner makes written findings of fact that the
2191-public interest will be irreparably harmed by delay in issuing an order
2192-under subsection (a), the commissioner may issue an emergency cease
2193-and desist order.
2194-(2) Such emergency order, even if not an order within the meaning
2195-of K.S.A. 77-502, and amendments thereto, shall be subject to the same
2196-procedures as an emergency order issued under K.S.A. 77-536, and
2197-amendments thereto.
2198-(3) Upon the entry of such an emergency order, the commissioner
2199-shall promptly notify the person subject to the order that such order has
2200-been entered, the reasons for such order and that a hearing will be held
2201-upon written request by such person.
2202-(4) If such person requests a hearing or, in the absence of any
2203-request, if the commissioner determines that a hearing should be held,
2204-the matter shall be set for a hearing that shall be conducted in
2205-accordance with the provisions of the Kansas administrative procedure
2206-act. Upon completion of the hearing the commissioner shall, by written
2207-findings of fact and conclusions of law, vacate, modify or make
2208-permanent the emergency order.
2209-(5) If no hearing is requested and none is ordered by the
2210-commissioner, the emergency order shall remain in effect until such
2211-order is modified or vacated by the commissioner.
2212-(6) Fines and penalties collected pursuant to paragraphs (2) and
2213-(3) shall be designated for use by the commissioner for consumer
2214-education.
2215-New Sec. 55. (a) In case of failure or refusal to obey a subpoena
2216-issued to any person, any court of competent jurisdiction, upon
2217-application by the commissioner, may issue an order requiring such
2218-person to appear before the commissioner, or the commissioner's
2219-designee, to produce documentary evidence if so ordered or to give
2220-evidence relating to the matter under investigation or in question. Any
2221-failure to obey the order of the court may be punished by the court as
2222-contempt of court.
2223-(b) No person shall be excused from attending, testifying or
2224-producing any document or record before the commissioner or in
2225-obedience to the subpoena of the commissioner or the commissioner's
2226-designee, or in any proceeding instituted by the commissioner, on the
2227-ground that such testimony or evidence, documentary or otherwise,
2228-required of the person may tend to incriminate the person or subject the
2229-person to a penalty or forfeiture. No individual may be prosecuted or
2230-subjected to any penalty or forfeiture for or on account of any
2231-transaction, matter or thing concerning which such person is compelled,
2232-after claiming privilege against self-incrimination, to testify or produce
2233-evidence, documentary or otherwise, except that the individual so
2234-testifying shall not be exempt from prosecution and punishment for
2235-perjury committed in so testifying.
2236-New Sec. 56. It is unlawful for any person to violate the
2237-provisions of this act, any rules and regulations adopted or any order
2238-issued under this act. A conviction for an intentional violation is a class
2239-A nonperson misdemeanor. A second or subsequent conviction of this
2240-section is a severity level 7, nonperson felony. No person may be
2241-imprisoned for the violation of this section if such person proves that
2242-such person had no knowledge of the act, rules and regulations or order.
2243-New Sec. 57. The commissioner, attorney general or a county or HOUSE BILL No. 2560—page 36
2244-district attorney may bring an action in a district court to enjoin any
2245-violation of this act or any rules and regulations adopted thereunder.
2246-New Sec. 58. All fees collected by the commissioner pursuant to
2247-this act shall be subject to the provisions of K.S.A. 75-1308, and
2248-amendments thereto.
2249-Sec. 59. K.S.A. 9-535 is hereby amended to read as follows: 9-
2250-535. (a) The commissioner shall approve the application if the
2251-commissioner determines that the application favorably meets each and
2252-every factor prescribed in K.S.A. 9-534, and amendments thereto, the
2253-proposed acquisition is in the interest of the depositors and creditors of
2254-the Kansas state chartered bank or bank holding company that has an
2255-ownership interest in a Kansas state chartered bank which that is the
2256-subject of the proposed acquisition and in the public interest generally.
2257-Otherwise, the application shall be denied.
12+Section 1. K.S.A. 9-535 is hereby amended to read as follows: 9-535.
13+(a) The commissioner shall approve the application if the commissioner
14+determines that the application favorably meets each and every factor
15+prescribed in K.S.A. 9-534, and amendments thereto, the proposed
16+acquisition is in the interest of the depositors and creditors of the Kansas
17+state chartered bank or bank holding company that has an ownership
18+interest in a Kansas state chartered bank which that is the subject of the
19+proposed acquisition and in the public interest generally. Otherwise, the
20+application shall be denied.
225821 (b) If the commissioner denies the application, the applicant shall
2259-have the right to a hearing before the state banking board to be
2260-conducted in accordance with the Kansas administrative procedure act.
2261-The state banking board shall render the board's decision affirming or
2262-rescinding the determination of the commissioner. Any action of the
2263-state banking board pursuant to this section is subject to review in
2264-accordance with the Kansas judicial review act.
2265-Sec. 60. K.S.A. 9-806 is hereby amended to read as follows: 9-
2266-806. (a) If the applicant fails to complete any application under the
2267-state banking code within 60 days after being notified that the
2268-application is incomplete, such application shall be considered
2269-abandoned and the application fee shall not be refunded. An applicant
2270-whose application is abandoned under this section may reapply at any
2271-time.
2272-(b) Except as provided by subsection (c), the bank or trust
2273-company shall engage in the activity requiring an application and
2274-approval by the commissioner or state banking board within 18 months
2275-from the date of approval. If the bank or trust company fails to engage
2276-in the activity within 18 months from the date of the approval, the
2277-application shall be deemed expired and a new application, application
2278-fee and approval is required. The provisions of this subsection do not
2279-apply to applications approved under K.S.A. 9-1601, and amendments
2280-thereto.
22+have the right to a hearing before the state banking board to be conducted
23+in accordance with the Kansas administrative procedure act. The state
24+banking board shall render the board's decision affirming or rescinding the
25+determination of the commissioner. Any action of the state banking board
26+pursuant to this section is subject to review in accordance with the Kansas
27+judicial review act.
28+Sec. 2. K.S.A. 9-806 is hereby amended to read as follows: 9-806. (a)
29+If the applicant fails to complete any application under the state banking
30+code within 60 days after being notified that the application is incomplete,
31+such application shall be considered abandoned and the application fee
32+shall not be refunded. An applicant whose application is abandoned under
33+this section may reapply at any time.
34+(b) Except as provided by subsection (c), the bank or trust company
35+shall engage in the activity requiring an application and approval by the
36+commissioner or state banking board within 18 months from the date of
37+approval. If the bank or trust company fails to engage in the activity
38+within 18 months from the date of the approval, the application shall be
39+deemed expired and a new application, application fee and approval is
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74+35 HB 2560 2
75+required. The provisions of this subsection do not apply to applications
76+approved under K.S.A. 9-1601, and amendments thereto.
228177 (c) Any newly organized bank or trust company which that did not
228278 begin business within 120 days after a certificate of authority has been
228379 issued to such bank or trust company by the commissioner shall not
2284-engage in the banking business or the business of a trust company
2285-without again obtaining a certificate of authority from the
2286-commissioner.
2287-(d) The commissioner may extend the deadline under subsection
2288-(b) or (c):
2289-(1) Indefinitely, if approval from another state or federal regulator
2290-is necessary for the bank or trust company to engage in the activity; or
80+engage in the banking business or the business of a trust company without
81+again obtaining a certificate of authority from the commissioner.
82+(d) The commissioner may extend the deadline under subsection (b)
83+or (c):
84+(1) Indefinitely, if approval from another state or federal regulator is
85+necessary for the bank or trust company to engage in the activity; or
229186 (2) up to 180 days for good cause.
229287 (e) The state banking board may designate the commissioner to
229388 determine the completeness of any application requiring state banking
229489 board approval or deem as expired any state banking board approved
229590 application.
2296-Sec. 61. K.S.A. 9-1204 is hereby amended to read as follows: 9-
2297-1204. (a) Any bank may receive deposits from minors or in the name of
2298-minors and pay the same upon the order of such minors whether or not
2299-such minors are emancipated. Payments so made shall discharge the
2300-bank from any further liability on the account person, regardless of
2301-age, may become a depositor in any bank and shall be subject to the
2302-same duties and liabilities respecting such person's deposits. Whenever
2303-a deposit is accepted by any bank in the name of any person, regardless
2304-of age, the deposit may be withdrawn by the depositor by any of the
2305-following methods:
2306-(1) Check or other instrument in writing. The check or other
2307-instrument in writing constitutes a receipt or acquittance if the check or HOUSE BILL No. 2560—page 37
2308-other instrument in writing is signed by the depositor and constitutes a
2309-valid release and discharge to the bank for all payments made; or
2310-(2) electronic means through:
2311-(A) Preauthorized direct withdrawal;
2312-(B) an automatic teller machine;
2313-(C) a debit card;
2314-(D) a transfer by telephone;
2315-(E) a network, including the internet; or
2316-(F) any electronic terminal, computer, magnetic tape or other
2317-electronic means.
2318-(b) Any bank that accepts deposits from minors 16 years of age or
2319-older in the custody of the secretary for children and families, a
2320-federally recognized Indian tribe in this state or the secretary of
2321-corrections shall not require a cosigner or the funds to be deposited
2322-with the consent of the custodian. Such minor shall be responsible for
2323-banking costs or penalties associated with such deposits. The secretary,
2324-or their designee, or any foster or biological parent shall not be
2325-responsible for banking costs or penalties associated with such
2326-deposits.
2327-(c) Any person, regardless of age, individually or with others may
2328-enter into an agreement with a bank for the lease of a safe deposit box
2329-and shall be bound by the terms of such agreement.
2330-(d) This section shall not be construed to affect the rights,
2331-liabilities or responsibilities of participants in an electronic fund
2332-transfer under the federal electronic fund transfer act, 15 U.S.C. §
2333-1693 et seq., as in effect on July 1, 2024, and shall not affect the legal
2334-relationship between a minor and any person other than the bank.
2335-Sec. 62. K.S.A. 9-1721 is hereby amended to read as follows: 9-
2336-1721. (a) The person proposing to acquire control or a bank or trust
2337-company undertaking a merger transaction, hereinafter referred to as
2338-the applicant, shall file an a complete application with the
2339-commissioner at least 60 days prior to the proposed change of control
2340-or merger transaction. If the commissioner does not act on the complete
2341-application within the 60-day time period and the applicant has
2342-received approval from all other applicable federal and state agencies,
2343-the application shall stand approved. The commissioner may, for any
2344-reason, extend the time period to act on an application for an additional
2345-30 days. The time period to act on an application may be further
2346-extended if the commissioner determines that the applicant has not
2347-furnished all the information required under K.S.A. 9-1722, and
2348-amendments thereto, or that, in the commissioner's judgment, any
2349-material information submitted is substantially inaccurate. The
91+Sec. 3. K.S.A. 9-1721 is hereby amended to read as follows: 9-1721.
92+(a) The person proposing to acquire control or a bank or trust company
93+undertaking a merger transaction, hereinafter referred to as the applicant,
94+shall file an a complete application with the commissioner at least 60 days
95+prior to the proposed change of control or merger transaction. If the
96+commissioner does not act on the complete application within the 60-day
97+time period and the applicant has received approval from all other
98+applicable federal and state agencies, the application shall stand approved.
99+The commissioner may, for any reason, extend the time period to act on an
100+application for an additional 30 days. The time period to act on an
101+application may be further extended if the commissioner determines that
102+the applicant has not furnished all the information required under K.S.A.
103+9-1722, and amendments thereto, or that, in the commissioner's judgment,
104+any material information submitted is substantially inaccurate. The
2350105 commissioner may waive the 60-day prior notice requirement if the
2351106 acquired bank or trust company is under a formal corrective action.
2352-(b) Upon the filing of an application, the commissioner shall make
2353-an investigation of the applicant for the change of control or merger
107+(b) Upon the filing of an application, the commissioner shall make an
108+investigation of the applicant for the change of control or merger
2354109 transaction. The commissioner may deny the application if the
2355110 commissioner finds the:
2356-(1) Proposed change of control or merger transaction would result
2357-in a monopoly or would be in furtherance of any combination or
2358-conspiracy to monopolize or attempt to monopolize the business of
2359-banking or trust services in any part of this state;
2360-(2) financial condition of the applicant might jeopardize the
2361-financial stability of the bank or trust company or prejudice the
2362-interests of the depositors of a bank;
2363-(3) competence, experience or integrity of the applicant or of any
2364-of the proposed management personnel of the bank or trust company or
2365-resulting bank or trust company indicates it would not be in the interest
2366-of the depositors of the bank, the clients of trust services, or in the
2367-interest of the public; or
111+(1) Proposed change of control or merger transaction would result in
112+a monopoly or would be in furtherance of any combination or conspiracy
113+to monopolize or attempt to monopolize the business of banking or trust
114+services in any part of this state;
115+(2) financial condition of the applicant might jeopardize the financial
116+stability of the bank or trust company or prejudice the interests of the
117+depositors of a bank;
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161+(3) competence, experience or integrity of the applicant or of any of
162+the proposed management personnel of the bank or trust company or
163+resulting bank or trust company indicates it would not be in the interest of
164+the depositors of the bank, the clients of trust services, or in the interest of
165+the public; or
2368166 (4) applicant neglects, fails or refuses to furnish the commissioner
2369167 with all of the information required by the commissioner.
2370168 (c) Upon service of an order denying an application, the applicant
2371-shall have the right to a hearing to be conducted in accordance with the HOUSE BILL No. 2560—page 38
2372-Kansas administrative procedure act before the state banking board.
2373-Any final order of the commissioner pursuant to this section is subject
2374-to review in accordance with the Kansas judicial review act.
2375-Sec. 63. K.S.A. 9-2107 is hereby amended to read as follows: 9-
2376-2107. (a) As used in this section:
169+shall have the right to a hearing to be conducted in accordance with the
170+Kansas administrative procedure act before the state banking board. Any
171+final order of the commissioner pursuant to this section is subject to
172+review in accordance with the Kansas judicial review act.
173+Sec. 4. K.S.A. 9-2107 is hereby amended to read as follows: 9-2107.
174+(a) As used in this section:
2377175 (1) "Contracting trustee" means any trust company, as defined in
2378176 K.S.A. 9-701, and amendments thereto, any bank that has been granted
2379-trust authority by the commissioner under K.S.A. 9-1602, and
2380-amendments thereto, any national bank chartered to do business in
2381-Kansas that has been granted trust authority by the comptroller of the
2382-currency under 12 U.S.C. § 92a, any bank that has been granted trust
2383-authority or any trust company, regardless of where such bank or trust
2384-company is located, that is controlled, as defined in K.S.A. 9-1612, and
2385-amendments thereto, by the same bank holding company as any trust
2386-company, state bank or national bank chartered to do business in
2387-Kansas, which accepts or succeeds to any fiduciary responsibility as
2388-provided in this section;
177+trust authority by the commissioner under K.S.A. 9-1602, and amendments
178+thereto, any national bank chartered to do business in Kansas that has been
179+granted trust authority by the comptroller of the currency under 12 U.S.C.
180+§ 92a, any bank that has been granted trust authority or any trust company,
181+regardless of where such bank or trust company is located, that is
182+controlled, as defined in K.S.A. 9-1612, and amendments thereto, by the
183+same bank holding company as any trust company, state bank or national
184+bank chartered to do business in Kansas, which accepts or succeeds to any
185+fiduciary responsibility as provided in this section;
2389186 (2) "originating trustee" means any trust company, bank, national
2390-banking association, savings and loan association or savings bank
2391-which that has trust powers and its principal place of business is in this
2392-state and which places or transfers any fiduciary responsibility to a
2393-contracting trustee as provided in this section; and
187+banking association, savings and loan association or savings bank which
188+that has trust powers and its principal place of business is in this state and
189+which places or transfers any fiduciary responsibility to a contracting
190+trustee as provided in this section; and
2394191 (3) "financial institution" means any bank, national banking
2395-association, savings and loan association or savings bank which that
2396-has its principal place of business in this state but which that does not
2397-have trust powers.
2398-(b) Any contracting trustee and any originating trustee may enter
2399-into an agreement by which the contracting trustee, without any further
2400-authorization of any kind, succeeds to and is substituted for the
2401-originating trustee as to all fiduciary powers, rights, duties, privileges
2402-and liabilities with respect to all accounts for which the originating
2403-trustee serves in any fiduciary capacity, except as may be provided
2404-otherwise in the agreement. Notwithstanding the provisions of this
2405-section, no contracting trustee with a home office outside the state of
2406-Kansas shall enter into an agreement except with an originating trustee
2407-which is commonly controlled as defined in K.S.A. 9-1612, and
2408-amendments thereto, by the same bank holding company either the
2409-contracting trustee or the originating trustee shall have its principal
2410-place of business in this state.
192+association, savings and loan association or savings bank which that has
193+its principal place of business in this state but which that does not have
194+trust powers.
195+(b) Any contracting trustee and any originating trustee may enter into
196+an agreement by which the contracting trustee, without any further
197+authorization of any kind, succeeds to and is substituted for the originating
198+trustee as to all fiduciary powers, rights, duties, privileges and liabilities
199+with respect to all accounts for which the originating trustee serves in any
200+fiduciary capacity, except as may be provided otherwise in the agreement.
201+Notwithstanding the provisions of this section, no contracting trustee with
202+a home office outside the state of Kansas shall enter into an agreement
203+except with an originating trustee which is commonly controlled as
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247+defined in K.S.A. 9-1612, and amendments thereto, by the same bank
248+holding company either the contracting trustee or the originating trustee
249+shall have its principal place of business in this state.
2411250 (c) Unless the agreement expressly provides otherwise, upon the
2412251 effective date of the substitution:
2413252 (1) The contracting trustee shall be deemed to be named as the
2414253 fiduciary in all writings, including, without limitation, trust agreements,
2415254 wills and court orders, which pertain to the affected fiduciary accounts;
2416255 and
2417256 (2) the originating trustee is absolved from all fiduciary duties and
2418-obligations arising under such writings and shall discontinue the
2419-exercise of any fiduciary duties with respect to such writings, except
2420-that the originating trustee is not absolved or discharged from any duty
2421-to account required by K.S.A. 59-1709, and amendments thereto, or
2422-any other applicable statute, rule of law, rules and regulations or court
2423-order, nor shall the originating trustee be absolved from any breach of
2424-fiduciary duty or obligation occurring prior to the effective date of the
2425-agreement.
257+obligations arising under such writings and shall discontinue the exercise
258+of any fiduciary duties with respect to such writings, except that the
259+originating trustee is not absolved or discharged from any duty to account
260+required by K.S.A. 59-1709, and amendments thereto, or any other
261+applicable statute, rule of law, rules and regulations or court order, nor
262+shall the originating trustee be absolved from any breach of fiduciary duty
263+or obligation occurring prior to the effective date of the agreement.
2426264 (d) The agreement may authorize the contracting trustee:
2427265 (1) To establish a trust service desk at any office of the originating
2428-trustee at which the contracting trustee may conduct any trust business
2429-and any business incidental thereto and which the contracting trustee
2430-may otherwise conduct at its principal place of business; and
266+trustee at which the contracting trustee may conduct any trust business and
267+any business incidental thereto and which the contracting trustee may
268+otherwise conduct at its principal place of business; and
2431269 (2) to engage the originating trustee as the agent of the contracting
2432270 trustee, on a disclosed basis to customers, for the purposes of providing
2433271 administrative, advertising and safekeeping services incident to the
2434272 fiduciary services provided by the contracting trustee.
2435-(e) Any contracting trustee may enter into an agreement with a HOUSE BILL No. 2560—page 39
2436-financial institution providing that the contracting trustee may establish
2437-a trust service desk as authorized by subsection (d) in the offices of
2438-such financial institution and which provides such financial institution,
2439-on a disclosed basis to customers, may act as the agent of contracting
2440-trustee for purposes of providing administrative services and
2441-advertising incident to the fiduciary services to be performed by the
2442-contracting trustee.
273+(e) Any contracting trustee may enter into an agreement with a
274+financial institution providing that the contracting trustee may establish a
275+trust service desk as authorized by subsection (d) in the offices of such
276+financial institution and which provides such financial institution, on a
277+disclosed basis to customers, may act as the agent of contracting trustee for
278+purposes of providing administrative services and advertising incident to
279+the fiduciary services to be performed by the contracting trustee.
2443280 (f) No activity authorized by subsections (b) through (e) shall be
2444281 conducted by any contracting trustee, originating trustee or financial
2445-institution until an application for such authority has been submitted to
2446-and approved by the commissioner. The application shall be in the form
2447-and contain the information required by the commissioner, which shall
2448-at a minimum include certified copies of the following documents:
282+institution until an application for such authority has been submitted to and
283+approved by the commissioner. The application shall be in the form and
284+contain the information required by the commissioner, which shall at a
285+minimum include certified copies of the following documents:
2449286 (1) The agreement;
2450287 (2) the written action taken by the board of directors of the
2451288 originating trustee or financial institution approving the agreement;
2452289 (3) all other required regulatory approvals;
2453-(4) proof of publication of notice that the applicant intends to file
2454-or has filed an application pursuant to this section. The notice shall be
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333+(4) proof of publication of notice that the applicant intends to file or
334+has filed an application pursuant to this section. The notice shall be
2455335 published in a newspaper of general circulation in the county where the
2456-principal office of the originating trustee or financial institution is
2457-located. The notice shall be in the form prescribed by the commissioner
2458-and shall contain the name of the applicant contracting trustee and the
2459-originating trustee, and a solicitation for written comments. The notice
2460-shall be published on the same day for two consecutive weeks and
2461-provide for a comment period of not less than 10 days after the date of
2462-the second publication; and
2463-(5) a certification by the parties to the agreement that written
2464-notice of the proposed substitution was sent by first-class mail to each
2465-co-fiduciary, each surviving settlor of a trust, each ward of a
2466-guardianship, each person that has sole or shared power to remove the
2467-originating trustee as fiduciary and each adult beneficiary currently
2468-receiving or entitled to receive a distribution of principle or income
2469-from a fiduciary account affected by the agreement, and that such
2470-notice was sent to each such person's address as shown in the
2471-originating trustee's records. An unintentional failure to give such
2472-notice shall not impair the validity or effect of any such agreement,
2473-except an intentional failure to give such notice shall render the
2474-agreement null and void as to the party not receiving the notice of
2475-substitution.
2476-(g) A contracting trustee making application to the commissioner
2477-for approval of any agreement pursuant to this section shall pay to the
2478-commissioner a fee, in an amount established pursuant to K.S.A. 9-
2479-1726, and amendments thereto, to defray the expenses of the
2480-commissioner in the examination and investigation of the application.
2481-The commissioner shall remit all moneys received under this section to
2482-the state treasurer in accordance with the provisions of K.S.A. 75-4215,
2483-and amendments thereto. Upon receipt of each such remittance, the
2484-state treasurer shall deposit the entire amount in the state treasury to the
2485-credit of the bank investigation fund. The moneys in the bank
2486-investigation fund shall be used to pay the expenses of the
2487-commissioner, or designee, in the examination and investigation of
2488-such applications and any unused balance shall be transferred to the
2489-bank commissioner fee fund.
2490-(h) Upon the filing of a complete application with the
2491-commissioner, the commissioner shall make or cause to be made, a
2492-careful examination and investigation of the proposed agreement. If the
2493-commissioner finds any of the following matters unfavorably, the
2494-commissioner may deny the application:
336+principal office of the originating trustee or financial institution is located.
337+The notice shall be in the form prescribed by the commissioner and shall
338+contain the name of the applicant contracting trustee and the originating
339+trustee, and a solicitation for written comments. The notice shall be
340+published on the same day for two consecutive weeks and provide for a
341+comment period of not less than 10 days after the date of the second
342+publication; and
343+(5) a certification by the parties to the agreement that written notice
344+of the proposed substitution was sent by first-class mail to each co-
345+fiduciary, each surviving settlor of a trust, each ward of a guardianship,
346+each person that has sole or shared power to remove the originating trustee
347+as fiduciary and each adult beneficiary currently receiving or entitled to
348+receive a distribution of principle or income from a fiduciary account
349+affected by the agreement, and that such notice was sent to each such
350+person's address as shown in the originating trustee's records. An
351+unintentional failure to give such notice shall not impair the validity or
352+effect of any such agreement, except an intentional failure to give such
353+notice shall render the agreement null and void as to the party not
354+receiving the notice of substitution.
355+(g) A contracting trustee making application to the commissioner for
356+approval of any agreement pursuant to this section shall pay to the
357+commissioner a fee, in an amount established pursuant to K.S.A. 9-1726,
358+and amendments thereto, to defray the expenses of the commissioner in
359+the examination and investigation of the application. The commissioner
360+shall remit all moneys received under this section to the state treasurer in
361+accordance with the provisions of K.S.A. 75-4215, and amendments
362+thereto. Upon receipt of each such remittance, the state treasurer shall
363+deposit the entire amount in the state treasury to the credit of the bank
364+investigation fund. The moneys in the bank investigation fund shall be
365+used to pay the expenses of the commissioner, or designee, in the
366+examination and investigation of such applications and any unused balance
367+shall be transferred to the bank commissioner fee fund.
368+(h) Upon the filing of a complete application with the commissioner,
369+the commissioner shall make or cause to be made, a careful examination
370+and investigation of the proposed agreement. If the commissioner finds
371+any of the following matters unfavorably, the commissioner may deny the
372+application:
2495373 (1) The reasonable probability of usefulness and success of the
2496374 contracting trustee; and
2497375 (2) the financial history and condition of the contracting trustee
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2498419 including the character, qualifications and experience of the officers
2499-employed by the contracting trustee. HOUSE BILL No. 2560—page 40
420+employed by the contracting trustee.
2500421 (i) The commissioner shall render approval or disapproval of the
2501422 application within 90 days of receiving a complete application.
2502423 (j) Upon service of an order denying an application, the applicant
2503424 shall have the right to a hearing to be conducted in accordance with the
2504-Kansas administrative procedure act before the state banking board.
2505-Any final order of the commissioner pursuant to this section is subject
2506-to review in accordance with the Kansas judicial review act.
2507-(k) When the commissioner determines that any contracting
2508-trustee domiciled in this state has entered into a contracting agreement
2509-in violation of the laws governing the operation of such contracting
2510-trustee, the commissioner may take such action as available under
2511-K.S.A. 9-1714, 9-1805, 9-1807 or 9-1809, and amendments thereto, to
2512-remedy such violation.
2513-(l) Any party entitled to receive a notice under subsection (f)(5)
2514-may file a petition in the court having jurisdiction over the fiduciary
425+Kansas administrative procedure act before the state banking board. Any
426+final order of the commissioner pursuant to this section is subject to
427+review in accordance with the Kansas judicial review act.
428+(k) When the commissioner determines that any contracting trustee
429+domiciled in this state has entered into a contracting agreement in violation
430+of the laws governing the operation of such contracting trustee, the
431+commissioner may take such action as available under K.S.A. 9-1714, 9-
432+1805, 9-1807 or 9-1809, and amendments thereto, to remedy such
433+violation.
434+(l) Any party entitled to receive a notice under subsection (f)(5) may
435+file a petition in the court having jurisdiction over the fiduciary
2515436 relationship, or if none, in the district court in the county where the
2516437 originating trustee has its principal office, seeking to remove any
2517438 contracting trustee substituted or about to be substituted as fiduciary
2518439 pursuant to this section. Unless the contracting trustee files a written
2519440 consent to its removal or a written declination to act subsequent to the
2520-filing of the petition, the court, upon notice and hearing, shall
2521-determine the best interest of the petitioner and all other parties
2522-concerned and shall fashion such relief as the court deems appropriate
2523-in the circumstances, including the awarding of reasonable attorney
2524-fees. The right to file a petition under this subsection shall be in
2525-addition to any other rights to remove the fiduciary provided by any
2526-other statute or regulation or by the writing creating the fiduciary
2527-relationship. If the removal of the fiduciary is prompted solely as a
2528-result of the contracting agreement, any reasonable cost associated with
2529-such removal and transfer shall be paid by the originating trustee or
2530-financial institution entering into the agreement.
2531-Sec. 64. K.S.A. 9-535, 9-806, 9-1204, 9-1721 and 9-2107 are
2532-hereby repealed.
2533-Sec. 65. On and after January 1, 2025, K.S.A. 9-508, 9-509, 9-
2534-510, 9-510a, 9-511, 9-513, 9-513a, 9-513b, 9-513c, 9-513d and 9-513e
2535-and K.S.A. 2023 Supp. 9-512 are hereby repealed. HOUSE BILL No. 2560—page 41
2536-Sec. 66. This act shall take effect and be in force from and after its
441+filing of the petition, the court, upon notice and hearing, shall determine
442+the best interest of the petitioner and all other parties concerned and shall
443+fashion such relief as the court deems appropriate in the circumstances,
444+including the awarding of reasonable attorney fees. The right to file a
445+petition under this subsection shall be in addition to any other rights to
446+remove the fiduciary provided by any other statute or regulation or by the
447+writing creating the fiduciary relationship. If the removal of the fiduciary
448+is prompted solely as a result of the contracting agreement, any reasonable
449+cost associated with such removal and transfer shall be paid by the
450+originating trustee or financial institution entering into the agreement.
451+Sec. 5. K.S.A. 9-535, 9-806, 9-1721 and 9-2107 are hereby repealed.
452+Sec. 6. This act shall take effect and be in force from and after its
2537453 publication in the statute book.
2538-I hereby certify that the above BILL originated in the HOUSE, and was
2539-adopted by that body
2540-
2541-HOUSE adopted
2542-Conference Committee Report
2543-
2544-Speaker of the House.
2545-
2546-Chief Clerk of the House.
2547-Passed the SENATE
2548- as amended
2549-SENATE adopted
2550-Conference Committee Report
2551-
2552-President of the Senate.
2553-
2554-Secretary of the Senate.
2555-APPROVED
2556-
2557-
2558-Governor.
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