Kansas 2023-2024 Regular Session

Kansas Senate Bill SB406 Compare Versions

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1	1	Session of 2024
2	2	SENATE BILL No. 406
3	3	By Committee on Financial Institutions and Insurance
4	4	1-29
5	5	AN ACT concerning financial institutions; enacting the Kansas money
6	6	transmission act; relating to the electronic transmission of money;
7	7	oversight thereof by the state bank commissioner; establishing powers,
8	8	duties and responsibilities of the state bank commissioner; licensing
9	9	and renewal processes; penalties; repealing K.S.A. 9-508, 9-509, 9-510,
10	10	9-510a, 9-511, 9-513, 9-513a, 9-513b, 9-513c, 9-513d, 9-513e and
11	11	K.S.A. 2023 Supp. 9-512
12	12	Be it enacted by the Legislature of the State of Kansas:
13	13	Section 1. (a) Sections 1 through 42, and amendments thereto, shall
14	14	be known and may be cited as the Kansas money transmission act.
15	15	(b) As used in the Kansas money transmission act:
16	16	(1) "Act" means the Kansas money transmission act.
17	17	(2) "Acting in concert" means persons knowingly acting together
18	18	with a common goal of jointly acquiring control of a licensee whether or
19	19	not pursuant to an express agreement.
20	20	(3) "Authorized delegate" means a person designated by a licensee to
21	21	engage in money transmission on behalf of the licensee.
22	22	(4) "Average daily money transmission liability" means the amount of
23	23	the licensee's outstanding money transmission obligations in Kansas at the
24	24	end of each day in a given period of time added together and divided by
25	25	the total number of days in the given period of time. For any licensee
26	26	required to calculate "average daily money transmission liability" pursuant
27	27	to this act, the given period of time shall be the calendar quarters ending
28	28	March 31, June 30, September 30 and December 31.
29	29	(5) "Closed loop stored value" means stored value that is redeemable
30	30	by the issuer only for goods or services provided by the issuer or the
31	31	issuer's affiliates or franchisees of the issuer or the franchisees's affiliates,
32	32	except to the extent required by applicable law to be redeemable in cash
33	33	for its cash value.
34	34	(6) "Commissioner" means the state bank commissioner, or a person
35	35	designated by the state bank commissioner to enforce this act.
36	36	(7) "Control" means the power to:
37	37	(A) Vote directly or indirectly at least 25% of the outstanding voting
38	38	shares or voting interests of a licensee or person in control of a licensee;
39	39	(B) elect or appoint a majority of key individuals or executive
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76	76	officers, managers, directors, trustees or other persons exercising
77	77	managerial authority of a person in control of a licensee; or
78	78	(C) exercise, directly or indirectly, a controlling influence over the
79	79	management or policies of a licensee or person in control of a licensee.
80	80	(8) "Eligible rating" means a credit rating from any of the three
81	81	highest rating categories provided by an eligible rating service. Each rating
82	82	category may include rating category modifiers such as plus or minus for
83	83	Standard & Poor or the equivalent for any other eligible rating service.
84	84	"Eligible rating" shall be determined as follows:
85	85	(A) Long-term credit ratings shall be deemed eligible if the rating is
86	86	equal to A- or higher by Standard & Poor or the equivalent from any other
87	87	eligible rating service.
88	88	(B) Short-term credit ratings are deemed eligible if the rating is equal
89	89	to or higher than A-2 or SP-2 by Standard & Poor or the equivalent from
90	90	any other eligible rating service. If ratings differ among eligible rating
91	91	services, the highest rating shall apply when determining whether a
92	92	security bears an eligible rating.
93	93	(9) "Eligible rating service" means any nationally recognized
94	94	statistical rating organization that has been registered by the securities and
95	95	exchange commission or any organization designated by the commissioner
96	96	through order or rules and regulations as an eligible rating service.
97	97	(10) "Federally insured depository financial institution" means a
98	98	bank, credit union, savings and loan association, trust company, savings
99	99	association, savings bank, industrial bank or industrial loan company
100	100	organized under the laws of the United States or any state of the United
101	101	States, when such bank, credit union, savings and loan association, trust
102	102	company, savings association, savings bank, industrial bank or industrial
103	103	loan company has federally insured deposits.
104	104	(11) "In Kansas" means the:
105	105	(A) Physical location of a person who is requesting a transaction in
106	106	person in the state of Kansas; or
107	107	(B) person's residential address or the principal place of business for a
108	108	person requesting a transaction electronically or by telephone if such
109	109	residential address or principal place of business is in the state of Kansas.
110	110	(12) "Individual" means a natural person.
111	111	(13) "Key individual" means any individual ultimately responsible for
112	112	establishing or directing policies and procedures of the licensee, including,
113	113	but not limited to, an executive officer, manager, director or trustee.
114	114	(14) "Licensee" means a person licensed under this act.
115	115	(15) "Material litigation" means litigation, that according to United
116	116	States generally accepted accounting principles, is significant to a person's
117	117	financial health and would be a required disclosure in the person's annual
118	118	audited financial statements, report to shareholders or similar records.
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162	162	(16) "Money" means a medium of exchange that is authorized or
163	163	adopted by the United States or a foreign government. "Money" includes a
164	164	monetary unit of account established by an intergovernmental organization
165	165	or by agreement between two or more governments.
166	166	(17) "Monetary value" means a medium of exchange, whether or not
167	167	redeemable in money.
168	168	(18) (A) "Money transmission" means any of the following:
169	169	(i) Selling or issuing payment instruments to a person located in
170	170	Kansas;
171	171	(ii) selling or issuing stored value to a person located in Kansas;
172	172	(iii) receiving money for transmission from a person located in
173	173	Kansas; or
174	174	(iv) payroll processing services.
175	175	(B) "Money transmission" does not include the provision of solely
176	176	online or telecommunications services or network access.
177	177	(19) "Money service business accredited state" means a state agency
178	178	that is accredited by the conference of state bank supervisors and money
179	179	transmitter regulators association for money transmission licensing and
180	180	supervision.
181	181	(20) "Multistate licensing process" means any agreement entered into
182	182	by state regulators relating to coordinated processing of applications for
183	183	money transmission licenses, applications for the acquisition of control of
184	184	a licensee, control determinations or notice and information requirements
185	185	for a change of key individuals.
186	186	(21) "Nationwide multistate licensing system and registry" means a
187	187	licensing system developed by the conference of state bank supervisors
188	188	and the American association of residential mortgage regulators and
189	189	owned and operated by the state regulatory registry, limited liability
190	190	company or any successor or affiliated entity for the licensing and
191	191	registration of persons in financial services industries.
192	192	(22) (A) "Outstanding money transmission obligation" means:
193	193	(i) Any payment instrument or stored value issued or sold by the
194	194	licensee to a person located in the United States or reported as sold by an
195	195	authorized delegate of the licensee to a person that is located in the United
196	196	States that has not yet been paid or refunded by or for the licensee or
197	197	escheated in accordance with applicable abandoned property laws; or
198	198	(ii) any money received for transmission by the licensee or an
199	199	authorized delegate in the United States from a person located in the
200	200	United States that has not been received by the payee or refunded to the
201	201	sender or escheated in accordance with applicable abandoned property
202	202	laws.
203	203	(B) "In the United States" includes a person in any state, territory or
204	204	possession of the United States, the District of Columbia, the
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248	248	commonwealth of Puerto Rico or a United States military installation that
249	249	is located in a foreign country.
250	250	(23) "Passive investor" means a person that:
251	251	(A) Does not have the power to elect a majority of key individuals or
252	252	executive officers, managers, directors, trustees or other persons exercising
253	253	managerial authority of a person in control of a licensee;
254	254	(B) is not employed by and does not have any managerial duties of
255	255	the licensee or person in control of a licensee; or
256	256	(C) does not have the power to exercise, directly or indirectly, a
257	257	controlling influence over the management or policies of a licensee or
258	258	person in control of a licensee; and
259	259	(D) (i) Either attests to subparagraphs (A), (B) and (C) in a form and
260	260	in a manner prescribed by the commissioner; or
261	261	(ii) commits to the passivity characteristics of subparagraphs (A), (B)
262	262	and (C) in a written document.
263	263	(24) (A) "Payment instrument" means a written or electronic check,
264	264	draft, money order, traveler's check or other written or electronic
265	265	instrument for the transmission or payment of money or monetary value,
266	266	regardless of negotiability.
267	267	(B) "Payment instrument" does not include stored value or any
268	268	instrument that is:
269	269	(i) Redeemable by the issuer only for goods or services provided by
270	270	the issuer or the issuer's affiliate or franchisees of the issuer or the
271	271	franchisees' affiliate, except to the extent required by applicable law to be
272	272	redeemable in cash for its cash value; or
273	273	(ii) not sold to the public but issued and distributed as part of a
274	274	loyalty, rewards or promotional program.
275	275	(25) "Payroll processing services" means the receipt of money for
276	276	transmission pursuant to a contract with a person to deliver wages or
277	277	salaries, make payment of payroll taxes to state and federal agencies, make
278	278	payments relating to employee benefit plans or make distributions of other
279	279	authorized deductions from wages or salaries. "Payroll processing
280	280	services" does not include an employer performing payroll processing
281	281	services on the employer's own behalf or on behalf of an affiliate.
282	282	(26) "Person" means any individual, general partnership, limited
283	283	partnership, limited liability company, corporation, trust, association, joint
284	284	stock corporation or other corporate entity identified or recognized by the
285	285	commissioner.
286	286	(27) "Receiving money for transmission" or "money received for
287	287	transmission" means the receipt of money or monetary value in the United
288	288	States for transmission within or outside the United States by electronic or
289	289	other means.
290	290	(28) "Stored value" means monetary value representing a claim
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334	334	against the issuer evidenced by an electronic or digital record and that is
335	335	intended and accepted for use as a means of redemption for money or
336	336	monetary value or payment for goods or services. "Stored value" includes,
337	337	but is not limited to, prepaid access as defined by 31 C.F.R. § 1010.100.
338	338	"Stored value" does not include a payment instrument or closed loop
339	339	stored value or stored value not sold to the public but issued and
340	340	distributed as part of a loyalty, rewards or promotional program.
341	341	(29) "Tangible net worth" means the aggregate assets of a licensee
342	342	excluding all intangible assets, less liabilities, as determined in accordance
343	343	with United States generally accepted accounting principles.
344	344	Sec. 2. (a) This act does not apply to:
345	345	(1) An operator of a payment system to the extent that such operator
346	346	provides processing, clearing or settlement services between persons
347	347	exempted under this subsection or licensees in connection with wire
348	348	transfers, credit card transactions, debit card transactions, stored value
349	349	transactions, automated clearing house transfers or similar funds transfers.
350	350	(2) A person appointed as an agent of a payee to collect and process a
351	351	payment from a payor to the payee for goods or services other than money
352	352	transmission provided to the payor by the payee if:
353	353	(A) A written agreement exists between the payee and the agent
354	354	directing the agent to collect and process payments from payors on the
355	355	payee's behalf;
356	356	(B) the payee holds the agent out to the public as accepting payments
357	357	for goods or services on the payee's behalf; and
358	358	(C) payment for the goods and services is treated as received by the
359	359	payee upon receipt by the agent so that the payor's obligation is
360	360	extinguished and there is no risk of loss to the payor if the agent fails to
361	361	remit the funds to the payee.
362	362	(3) A person that acts as an intermediary by processing payments
363	363	between an entity that has directly incurred an outstanding money
364	364	transmission obligation to a sender and the sender's designated recipient, if
365	365	the entity:
366	366	(A) Is properly licensed or exempt from licensing requirements under
367	367	this act;
368	368	(B) provides a receipt, electronic record or other written confirmation
369	369	to the sender identifying the entity as the provider of money transmission
370	370	in the transaction; and
371	371	(C) bears sole responsibility to satisfy the outstanding money
372	372	transmission obligation to the sender, including the obligation to make the
373	373	sender whole in connection with any failure to transmit the funds to the
374	374	sender's designated recipient.
375	375	(4) The United States government and any agency, bureau,
376	376	department, office or instrumentality, corporate or otherwise, thereof,
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420	420	including any official, employee or agent of any such entity.
421	421	(5) Money transmission by the United States postal service or by an
422	422	agent of the United States postal service.
423	423	(6) Any state office or officer, department, board, commission,
424	424	bureau, division, authority, agency or institution of this state, including any
425	425	political subdivision thereof, and any county, city or other municipality.
426	426	(7) A federally insured depository financial institution, bank holding
427	427	company, office of an international banking corporation, foreign bank that
428	428	establishes a federal branch pursuant to 12 U.S.C. § 3102, a corporation
429	429	organized pursuant to 12 U.S.C. §§ 1861 through 1867 or a corporation
430	430	organized under 12 U.S.C. §§ 611 through 633.
431	431	(8) Electronic funds transfer of governmental benefits for a federal,
432	432	state, county or governmental agency by a contractor on behalf of the
433	433	United States or a department, agency or instrumentality thereof or on
434	434	behalf of a state or governmental subdivision, agency or instrumentality
435	435	thereof.
436	436	(9) A board of trade designated as a contract market under 7 U.S.C.
437	437	§§ 1 through 25 or a person that in the ordinary course of business
438	438	provides clearance and settlement services for a board of trade to the
439	439	extent of the board of trade's operation as or for such a board.
440	440	(10) A futures commission merchant registered under federal
441	441	commodities law to the extent of the registrant's operation as such a
442	442	futures commission merchant.
443	443	(11) A person registered as a securities broker-dealer under federal or
444	444	state securities law to the extent of such registrant's operation as such a
445	445	securities broker-dealer.
446	446	(12) An individual employed by a licensee, authorized delegate or
447	447	any person exempted from the licensing requirements of the act when
448	448	acting within the scope of employment and under the supervision of the
449	449	licensee, authorized delegate or exempted person as an employee and not
450	450	as an independent contractor.
451	451	(13) A person expressly appointed as a third-party service provider to
452	452	or agent of an entity exempt under paragraph (a)(6) solely to the extent
453	453	that:
454	454	(A) Such service provider or agent is engaging in money transmission
455	455	on behalf of and pursuant to a written agreement with the exempt entity
456	456	that sets forth the specific functions that the service provider or agent is to
457	457	perform; and
458	458	(B) the exempt entity assumes all risk of loss and all legal
459	459	responsibility for satisfying the outstanding money transmission
460	460	obligations owed to purchasers and holders of the outstanding money
461	461	transmission obligations upon receipt of the purchaser's or holder's money
462	462	or monetary value by the service provider or agent.
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506	506	(14) A person exempt by any rules or regulations adopted or by an
507	507	order issued if the commissioner finds such exemption to be in the public
508	508	interest and that the regulation of such person is not necessary for the
509	509	purposes of this act.
510	510	(b) The commissioner may require that any person claiming to be
511	511	exempt from licensing pursuant to this section provide information and
512	512	documentation to the commissioner demonstrating that such person
513	513	qualifies for any claimed exemption.
514	514	Sec. 3. (a) To carry out the purposes of this act, the commissioner
515	515	may:
516	516	(1) Enter into agreements or relationships with other government
517	517	officials or federal and state regulatory agencies and regulatory
518	518	associations to improve efficiencies and reduce regulatory burden by
519	519	standardizing methods or procedures and sharing resources, records or
520	520	related information obtained under this act;
521	521	(2) use, hire, contract or employ analytical systems, methods or
522	522	software to examine or investigate any person subject to this act;
523	523	(3) accept from other state or federal government agencies or
524	524	officials, licensing, examination or investigation reports made by such
525	525	other state or federal government agencies or officials; and
526	526	(4) accept audit reports made by an independent certified public
527	527	accountant or other qualified third-party auditor for an applicant or
528	528	licensee and incorporate the audit report in any report of examination or
529	529	investigation.
530	530	(b) The commissioner shall have the broad administrative authority to
531	531	administer, interpret and enforce this act, promulgate rules and regulations
532	532	necessary to implement this act and set proportionate and equitable fees
533	533	and costs associated with applications, examinations, investigations and
534	534	other actions required to provide sufficient funds to meet the budget
535	535	requirements of administering and enforcing the act for each fiscal year
536	536	and to achieve the purposes of this act.
537	537	Sec. 4. (a) (1) Except as otherwise provided in subsection (b), all
538	538	information or reports obtained by the commissioner from an applicant,
539	539	licensee or authorized delegate and all information contained in or related
540	540	to an examination, investigation, operating report or condition report
541	541	prepared by, on behalf of or for the use of the commissioner or financial
542	542	statements, balance sheets or authorized delegate information, are
543	543	confidential and are not subject to disclosure under the Kansas open
544	544	records act, K.S.A. 45-215 et seq., and amendments thereto.
545	545	(2) The provisions of this subsection providing for the confidentiality
546	546	of public records shall expire on July 1, 2030, unless the legislature
547	547	reviews and reenacts such provisions in accordance with K.S.A. 45-229,
548	548	and amendments thereto, prior to July 1, 2030.
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592	592	(b) The commissioner may disclose information not otherwise subject
593	593	to disclosure under subsection (a) to representatives of state or federal
594	594	agencies who promise in a record that such representatives will maintain
595	595	the confidentiality of the information or where the commissioner finds that
596	596	the release is reasonably necessary for the protection and interest of the
597	597	public in accordance with the Kansas open records act.
598	598	(c) The following information contained in the records of the office
599	599	of the state bank commissioner that is not confidential and may be made
600	600	available to the public:
601	601	(1) The name, business address, telephone number and unique
602	602	identifier of a licensee;
603	603	(2) the business address of a licensee's registered agent for service;
604	604	(3) the name, business address and telephone number of all
605	605	authorized delegates;
606	606	(4) the terms of or a copy of any bond filed by a licensee, provided
607	607	that confidential information, including, but not limited to, prices and fees
608	608	for such bond is redacted; or
609	609	(5) copies of any orders of the office of the state bank commissioner
610	610	relating to any violation of this act or regulations implementing this act.
611	611	(d) This section shall not be construed to prohibit the commissioner
612	612	from disclosing to the public a list of all licensees or the aggregated
613	613	financial or transactional data concerning those licensees.
614	614	Sec. 5. (a) The commissioner may conduct an examination or
615	615	investigation of a licensee or authorized delegate or otherwise take
616	616	independent action authorized by this act or by any rules and regulations
617	617	adopted or an order issued under this act as reasonably necessary or
618	618	appropriate to administer and enforce this act, regulations implementing
619	619	this act and other applicable federal law. The commissioner may:
620	620	(1) Conduct an examination on-site or off-site as the commissioner
621	621	may reasonably require;
622	622	(2) conduct an examination in conjunction with an examination
623	623	conducted by representatives of other state agencies, agencies of another
624	624	state or the federal government;
625	625	(3) accept the examination report of another state agency or an
626	626	agency of another state or the federal government or a report prepared by
627	627	an independent accounting firm, which, on being accepted, is considered
628	628	for all purposes as an official report of the commissioner; and
629	629	(4) summon and examine under oath or subpoena a key individual or
630	630	employee of a licensee or authorized delegate and require such individual
631	631	or employee to produce records regarding any matter related to the
632	632	condition and business of the licensee or authorized delegate.
633	633	(b) A licensee or authorized delegate shall provide the commissioner
634	634	with full and complete access to all records the commissioner may
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678	678	reasonably require to conduct a complete examination. The records shall
679	679	be provided at the location and in the format specified by the
680	680	commissioner. The commissioner may utilize multistate record production
681	681	standards and examination procedures when such standards will
682	682	reasonably achieve the requirements of this section.
683	683	(c) Unless otherwise directed by the commissioner, a licensee shall
684	684	pay all costs reasonably incurred in connection with an examination of the
685	685	licensee or the licensee's authorized delegates.
686	686	Sec. 6. (a) To administer and enforce the provisions of this act and
687	687	minimize the regulatory burden, the commissioner is hereby authorized to
688	688	participate in multistate supervisory processes established between states
689	689	and coordinated through the conference of state bank supervisors, money
690	690	transmitter regulators associations and affiliates and successors thereof for
691	691	all licensees that hold licenses in Kansas or other states. As a participant in
692	692	such established multistate supervisory processes, the commissioner may:
693	693	(1) Cooperate, coordinate and share information with other state and
694	694	federal regulators in accordance with section 5, and amendments thereto;
695	695	(2) enter into written cooperation, coordination or information-
696	696	sharing contracts or agreements with organizations, the membership of
697	697	which is made up of state or federal governmental agencies; and
698	698	(3) cooperate, coordinate and share information with organizations,
699	699	the membership of which is made up of state or federal governmental
700	700	agencies, if the organizations agree in writing to maintain the
701	701	confidentiality and security of the shared information in accordance with
702	702	section 4, and amendments thereto.
703	703	(b) The commissioner shall not waive, and nothing in this section
704	704	shall constitute a waiver of, the commissioner's authority to conduct an
705	705	examination or investigation or otherwise take independent action
706	706	authorized by this act or rules and regulations adopted or an order issued
707	707	under this act to enforce compliance with applicable state or federal law.
708	708	(c) A joint examination or investigation or acceptance of an
709	709	examination or investigation report shall not be construed to waive an
710	710	examination assessment provided for in this act.
711	711	Sec. 7. (a) If the jurisdiction of state money transmission is
712	712	conditioned on federal law, any inconsistencies between a provision of
713	713	this act and such federal law governing money transmission shall be
714	714	governed by the applicable federal law to the extent of such inconsistency.
715	715	(b) If there are any inconsistencies between this act and any federal
716	716	law that governs pursuant to subsection (a), the commissioner may provide
717	717	interpretive guidance that identifies the:
718	718	(1) Inconsistency; and
719	719	(2) appropriate means of compliance with federal law.
720	720	Sec. 8. (a) A person may not engage in the business of money
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764	764	transmission or advertise, solicit or hold itself out as providing money
765	765	transmission unless the person is licensed under this act.
766	766	(b) Subsection (a) shall not apply to a person that is:
767	767	(1) An authorized delegate of a person licensed under this act acting
768	768	within the scope of authority conferred by a written contract with the
769	769	licensee; or
770	770	(2) exempt pursuant to section 2, and amendments thereto, and does
771	771	not engage in money transmission outside the scope of such exemption.
772	772	(c) A license issued pursuant to section 13, and amendments thereto,
773	773	shall not be transferable or assignable.
774	774	Sec. 9. (a) To establish consistent licensing practices between Kansas
775	775	and other states, the commissioner is hereby authorized to:
776	776	(1) Implement all licensing provisions of this act in a manner
777	777	consistent with other states that have adopted this act or multistate
778	778	licensing processes; and
779	779	(2) participate in nationwide protocols for licensing cooperation and
780	780	coordination among state regulators, if such protocols are consistent with
781	781	this act.
782	782	(b) The commissioner is authorized to establish relationships or
783	783	contracts with the national multistate licensing system and registry or other
784	784	entities designated by the national multistate licensing system and registry
785	785	to:
786	786	(1) Collect and maintain records;
787	787	(2) coordinate multistate licensing processes and supervision
788	788	processes;
789	789	(3) process fees; and
790	790	(4) facilitate communication between the commissioner and licensees
791	791	or other persons subject to this act.
792	792	(c) The commissioner may utilize the nationwide multistate licensing
793	793	system and registry for all aspects of licensing in accordance with this act,
794	794	including, but not limited to, license applications, applications for
795	795	acquisitions of control, surety bonds, reporting, criminal history
796	796	background checks, credit checks, fee processing and examinations.
797	797	(d) The commissioner may utilize nationwide multistate licensing
798	798	system and registry forms, processes and functionalities in accordance
799	799	with this act. If the nationwide multistate licensing system and registry
800	800	does not provide functionality, forms or processes for the provision of this
801	801	act, the commissioner is authorized to implement the requirements in a
802	802	manner that facilitates uniformity regarding the licensing, supervision,
803	803	reporting and regulation of licensees that are licensed in multiple
804	804	jurisdictions.
805	805	(e) The commissioner may establish new requirements or waive or
806	806	modify, in whole or in part, any or all of the existing requirements as
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850	850	reasonably necessary to participate in the nationwide multistate licensing
851	851	system and registry through the adoption of any rules and regulations
852	852	adopted or an order issued or the issuance of an order.
853	853	Sec. 10. (a) Applicants for a license shall submit a completed
854	854	application in a form and manner as prescribed by the commissioner. Each
855	855	such application shall contain content as set forth by rules and regulations,
856	856	instruction or procedure of the commissioner and may be changed or
857	857	updated by the commissioner in accordance with applicable law to carry
858	858	out the purposes of this act and maintain consistency with nationwide
859	859	multistate licensing system and registry licensing standards and practices.
860	860	The application shall state or contain, as applicable:
861	861	(1) The legal name and any fictitious or trade name used by the
862	862	applicant in conducting business and the residential and business addresses
863	863	of the applicant;
864	864	(2) a list of any criminal convictions of the applicant and any material
865	865	litigation in which the applicant was involved in the 10-year period
866	866	immediately preceding the submission of the application;
867	867	(3) a description of any money transmission services previously
868	868	provided by the applicant and the money transmission services the
869	869	applicant seeks to provide in Kansas;
870	870	(4) a list of the applicant's proposed authorized delegates and the
871	871	locations in Kansas where the applicant and the applicant's authorized
872	872	delegates propose to engage in money transmission;
873	873	(5) a list of all other states where the applicant is licensed to engage
874	874	in money transmission and any license revocations, suspensions or other
875	875	disciplinary action taken against the applicant in other states;
876	876	(6) information concerning any bankruptcy or receivership
877	877	proceedings affecting the licensee or a person in control of a licensee;
878	878	(7) a sample form of the contract for authorized delegates, if
879	879	applicable;
880	880	(8) a sample form of the payment instrument or stored value, as
881	881	applicable;
882	882	(9) the name and address of any federally insured depository financial
883	883	institution through which the applicant plans to conduct money
884	884	transmission; and
885	885	(10) any other information the commissioner or the nationwide
886	886	multistate licensing system and registry reasonably requires regarding the
887	887	applicant.
888	888	(b) If an applicant is a corporation, limited liability company,
889	889	partnership or other legal entity, the applicant shall also provide:
890	890	(1) The date of the applicant's incorporation or formation and state or
891	891	country of incorporation or formation;
892	892	(2) a certificate of good standing from the state or country where the
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936	936	applicant is incorporated or formed, if applicable;
937	937	(3) a brief description of the business structure or organization of the
938	938	applicant, including any parents or subsidiaries of the applicant and
939	939	whether any such parents or subsidiaries are publicly traded;
940	940	(4) the legal name, any fictitious or trade name, all business and
941	941	residential addresses and the employment, as applicable, for the 10-year
942	942	period immediately preceding the submission of the application for each
943	943	key individual and person in control of the applicant;
944	944	(5) for any person in control of the applicant, a list of any felony
945	945	convictions and for the 10-year period immediately preceding the
946	946	submission of the application, a list of any criminal misdemeanor
947	947	convictions of a crime of dishonesty, fraud or deceit and any material
948	948	litigation in which the person involved is in control of an applicant that is
949	949	not an individual;
950	950	(6) a copy of the applicant's audited financial statements for the most
951	951	recent fiscal year and for the two-year period immediately preceding the
952	952	most recent fiscal year or, if acceptable to the commissioner, certified
953	953	unaudited financial statements for the most recent fiscal year or other
954	954	period acceptable to the commissioner;
955	955	(7) a certified copy of the applicant's unaudited financial statements
956	956	for the most recent fiscal quarter;
957	957	(8) if the applicant is a publicly traded corporation, a copy of the most
958	958	recent report filed with the securities and exchange commission pursuant
959	959	to 15 U.S.C. § 78m;
960	960	(9) if the applicant is a wholly owned subsidiary of:
961	961	(A) A corporation publicly traded in the United States, a copy of the
962	962	parent corporation's audited financial statements for the most recent fiscal
963	963	year or a copy of the parent corporation's most recent financial report filed
964	964	with the securities and exchange commission pursuant to 15 U.S.C. § 78m;
965	965	or
966	966	(B) a corporation publicly traded outside the United States, a copy of
967	967	documentation similar to the requirements of paragraph (A) filed with the
968	968	regulator of the parent corporation's domicile outside the United States;
969	969	(10) the name and address of the applicant's registered agent in
970	970	Kansas; and
971	971	(11) any other information that the commissioner reasonably requires
972	972	regarding the applicant.
973	973	(c) The commissioner shall set a nonrefundable new application fee
974	974	each year pursuant to section 3(b), and amendments thereto.
975	975	(d) The commissioner may waive one or more requirements of
976	976	subsections (a) or (b) or permit an applicant to submit other information in
977	977	lieu of the required information.
978	978	Sec. 11. (a) As a part of any original application, any individual in
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1022	1022	control of a licensee, any applicant in control of a licensee and each key
1023	1023	individual shall provide the commissioner with the following items
1024	1024	through the nationwide multistate licensing system and registry:
1025	1025	(1) (A) The office of the state bank commissioner may require an
1026	1026	individual to be fingerprinted and submit to a state and national criminal
1027	1027	history record check. The fingerprints shall be used to identify the
1028	1028	individual and to determine whether such individual has a record of
1029	1029	criminal history in this state or other jurisdictions. The office of the state
1030	1030	bank commissioner is authorized to submit the fingerprints to the Kansas
1031	1031	bureau of investigation and the federal bureau of investigation for a state
1032	1032	and national criminal history record check. The office of the state bank
1033	1033	commissioner may use the information obtained from fingerprinting and
1034	1034	the criminal history for purposes of verifying the identification of the
1035	1035	individual and in the official determination of the qualifications and fitness
1036	1036	of the individual to be issued or to maintain a license;
1037	1037	(B) Local and state law enforcement officers and agencies shall assist
1038	1038	the office of the state bank commissioner in taking and processing of
1039	1039	fingerprints of applicants for and holders of any license, registration,
1040	1040	permit or certificate;
1041	1041	(C) The Kansas bureau of investigation shall release all records of
1042	1042	adult convictions and nonconvictions in Kansas and adult convictions,
1043	1043	adjudications and nonconvictions of another state or country to the office
1044	1044	of the state bank commissioner. Disclosure or use of any information
1045	1045	received for any purpose other than provided in this section shall be a class
1046	1046	A misdemeanor and shall constitute grounds for removal from office or
1047	1047	termination of employment; and
1048	1048	(D) Any individual that currently resides and has continuously
1049	1049	resided outside of the United States for the past 10 years shall not be
1050	1050	required to comply with this subsection; and
1051	1051	(2) a description of the individual's personal history and experience
1052	1052	provided in a form and manner prescribed by the commissioner to obtain
1053	1053	the following:
1054	1054	(A) An independent credit report from a consumer reporting agency.
1055	1055	This requirement shall be waived if the individual does not have a social
1056	1056	security number;
1057	1057	(B) information related to any criminal convictions or pending
1058	1058	charges; and
1059	1059	(C) information related to any regulatory or administrative action and
1060	1060	any civil litigation involving claims of fraud, misrepresentation,
1061	1061	conversion, mismanagement of funds, breach of fiduciary duty or breach
1062	1062	of contract.
1063	1063	(b) (1) If the individual has resided outside of the United States at any
1064	1064	time during the 10-year period immediately preceding the individual's
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1108	1108	application, the individual shall also provide an investigative background
1109	1109	report prepared by an independent search firm.
1110	1110	(2) At a minimum, the search firm shall:
1111	1111	(A) Demonstrate that it has sufficient knowledge and resources and
1112	1112	that such firm employs accepted and reasonable methodologies to conduct
1113	1113	the research of the background report; and
1114	1114	(B) not be affiliated with or have an interest with the individual it is
1115	1115	researching.
1116	1116	(3) The investigative background report shall be provided in English
1117	1117	and, at a minimum, shall contain the following:
1118	1118	(A) A comprehensive credit report or any equivalent information
1119	1119	obtained or generated by the independent search firm to accomplish such
1120	1120	report, including a search of the court data in the countries, provinces,
1121	1121	states, cities, towns and contiguous areas where the individual resided and
1122	1122	worked if such report is available in the individual's current jurisdiction of
1123	1123	residency;
1124	1124	(B) criminal records information for the 10-year period immediately
1125	1125	preceding the individual's application, including, but not limited to,
1126	1126	felonies, misdemeanors or similar convictions for violations of law in the
1127	1127	countries, provinces, states, cities, towns and contiguous areas where the
1128	1128	individual resided and worked;
1129	1129	(C) employment history;
1130	1130	(D) media history including an electronic search of national and local
1131	1131	publications, wire services and business applications; and
1132	1132	(E) financial services-related regulatory history, including, but not
1133	1133	limited to, money transmission, securities, banking, insurance and
1134	1134	mortgage-related industries.
1135	1135	(c) Any information required by this section may be used by the
1136	1136	commissioner in making an official determination of the qualifications and
1137	1137	fitness of the person in control or who seeks to gain control of the licensee.
1138	1138	Sec. 12. (a) A person is presumed to exercise a controlling influence
1139	1139	when such person holds the power to vote, directly or indirectly, at least
1140	1140	10% of the outstanding voting shares or voting interests of a licensee or
1141	1141	person in control of a licensee.
1142	1142	(b) A person presumed to exercise a controlling influence pursuant to
1143	1143	this section may rebut the presumption of control if the person is a passive
1144	1144	investor.
1145	1145	(c) For purposes of determining the percentage of a person controlled
1146	1146	by any individual, the individual's interest shall be aggregated with the
1147	1147	interest of any other immediate family member, including the individual's
1148	1148	spouse, parents, children, siblings, mothers-in-law and fathers-in-law,
1149	1149	sons-in-law and daughters-in-law, brothers-in-law and sisters-in-law and
1150	1150	any other person who shares such individual's home.
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1194	1194	Sec. 13. (a) (1) When an application for an original license under this
1195	1195	act appears to include all the items and addresses all of the matters that are
1196	1196	required, the application shall be deemed complete, and the commissioner
1197	1197	shall promptly notify the applicant of the date the application is deemed
1198	1198	complete. The commissioner shall approve or deny the application within
1199	1199	120 days after the completion date.
1200	1200	(2) If the application has not been approved or denied within 120
1201	1201	days after the completion date:
1202	1202	(A) The application shall be considered approved; and
1203	1203	(B) the license shall take effect as of the first business day after
1204	1204	expiration of the 120-day period.
1205	1205	(3) The commissioner may extend the application period for good
1206	1206	cause.
1207	1207	(b) A determination by the commissioner that an application is
1208	1208	complete and accepted for processing means that the application, on its
1209	1209	face, appears to include all of the items, including the criminal history
1210	1210	background check response from the Kansas bureau of investigation and
1211	1211	that such application addresses all of the matters that are required. A
1212	1212	determination of completion by the commissioner shall not be deemed to
1213	1213	be an assessment of the substance of the application or of the sufficiency
1214	1214	of the information provided.
1215	1215	(c) When an application is filed and considered complete under this
1216	1216	section, the commissioner shall investigate the applicant's financial
1217	1217	condition and responsibility, financial and business experience, character
1218	1218	and general fitness. The commissioner may conduct an on-site
1219	1219	investigation of the applicant at the applicant's expense. The commissioner
1220	1220	shall issue a license to an applicant under this section if the commissioner
1221	1221	finds that the following conditions have been fulfilled:
1222	1222	(1) The applicant has complied with sections 10 and 11, and
1223	1223	amendments thereto; and
1224	1224	(2) the financial condition and responsibility, financial and business
1225	1225	experience, competence, character and general fitness of the applicant and
1226	1226	key individuals and persons in control of the applicant indicate that it is in
1227	1227	the interest of the public to permit the applicant to engage in money
1228	1228	transmission.
1229	1229	(d) If an applicant avails itself or is otherwise subject to a multistate
1230	1230	licensing process:
1231	1231	(1) The commissioner is hereby authorized to accept the investigation
1232	1232	results of a lead investigative state to satisfy the requirements of
1233	1233	subsection (c) if such lead investigative state has sufficient staffing,
1234	1234	expertise and minimum standards; or
1235	1235	(2) if Kansas is the lead investigative state, the commissioner is
1236	1236	hereby authorized to investigate the applicant pursuant to subsection (c)
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1280	1280	utilizing the timeframes established by agreement through the multistate
1281	1281	licensing process. No such timeframes shall be considered noncompliant
1282	1282	with the application period in subsection (a)(1).
1283	1283	(e) The commissioner shall issue a formal written notice of the denial
1284	1284	of a license application within 14 days of the decision to deny the
1285	1285	application. The commissioner shall state in the notice of denial the
1286	1286	specific reasons for the denial of the application. An applicant whose
1287	1287	application is denied by the commissioner under this subsection may
1288	1288	appeal within 14 days of receiving the notice and request a hearing in
1289	1289	accordance with the Kansas administrative procedure act, K.S.A. 77-501 et
1290	1290	seq., and amendments thereto.
1291	1291	(f) The initial license term shall begin on the day the application is
1292	1292	approved. The license shall expire on December 31 of the year in which
1293	1293	the license term began, unless the initial license date is between November
1294	1294	1 and December 31, in which case the initial license term shall run through
1295	1295	December 31 of the following year.
1296	1296	Sec. 14. (a) (1) A license issued under this act shall be renewed
1297	1297	annually.
1298	1298	(2) An annual renewal fee set by the commissioner shall be paid not
1299	1299	more than 60 days before the license expiration.
1300	1300	(3) The renewal term shall be for a period of one year and shall begin
1301	1301	on January 1 of each year after the initial license term and shall expire on
1302	1302	December 31 of the year the renewal term begins.
1303	1303	(b) A licensee shall submit a complete renewal report with the
1304	1304	renewal fee, in a form and manner determined by the commissioner. The
1305	1305	renewal report shall contain a description of each material change in
1306	1306	information submitted by the licensee in the licensee's original license
1307	1307	application that has not been reported to the commissioner.
1308	1308	(c) Renewal applications received within 30 days of the expiration of
1309	1309	the license and incomplete applications as of 30 days prior to the
1310	1310	expiration of the license shall be subject to a late fee set by the
1311	1311	commissioner.
1312	1312	(d) The commissioner may grant an extension of the renewal date for
1313	1313	good cause.
1314	1314	(e) The commissioner is hereby authorized to utilize the nationwide
1315	1315	multistate licensing system and registry to process license renewals, if
1316	1316	such utilization satisfies the requirements of this section.
1317	1317	(f) Renewal applications submitted between November 1, 2024 and
1318	1318	December 31, 2024, considered complete pursuant to K.S.A. 9-509, and
1319	1319	amendments thereto, shall be considered complete under this section.
1320	1320	Sec. 15. (a) If a licensee does not continue to meet the qualifications
1321	1321	or satisfy the requirements of an applicant for a new money transmission
1322	1322	license, the commissioner may suspend or revoke the licensee's license in
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1366	1366	accordance with the procedures established by this act or other applicable
1367	1367	state law for such suspension or revocation.
1368	1368	(b) An applicant for a money transmission license shall demonstrate
1369	1369	that such applicant meets or will meet and a money transmission licensee
1370	1370	shall at all times meet, the requirements of sections 32, 33 and 34, and
1371	1371	amendments thereto.
1372	1372	Sec. 16. (a) The commissioner shall have the discretion to determine
1373	1373	the completeness of any application submitted pursuant to this act. In
1374	1374	making such a determination, the commissioner shall consider the
1375	1375	applicant's compliance with the requirements of the act and any other facts
1376	1376	and circumstances that the commissioner deems appropriate.
1377	1377	(b) If an applicant fails to complete the application for a new license
1378	1378	or for a change of control of a license within 60 days after the
1379	1379	commissioner provides written notice of the incomplete application, the
1380	1380	application will be deemed abandoned and the application fee shall be
1381	1381	nonrefundable. An applicant whose application is abandoned under this
1382	1382	section may reapply to obtain a new license.
1383	1383	Sec. 17. (a) When any person or group of persons acting in concert
1384	1384	are seeking to acquire control of a licensee, the licensee shall obtain the
1385	1385	written approval of the commissioner prior to the change of control. An
1386	1386	individual is not deemed to acquire control of a licensee and is not subject
1387	1387	to this section when that individual becomes a key individual in the
1388	1388	ordinary course of business.
1389	1389	(b) A person or group of persons acting in concert that seeks to
1390	1390	acquire control of a licensee in cooperation with such licensee shall submit
1391	1391	an application in the form and manner prescribed by the commissioner.
1392	1392	Such application shall be accompanied by a nonrefundable fee set by the
1393	1393	commissioner.
1394	1394	(c) Upon request, the commissioner may permit a licensee, the person
1395	1395	or group of persons acting in concert to submit some or all information
1396	1396	required by the commissioner pursuant to subsection (b) without using the
1397	1397	nationwide multistate licensing system and registry.
1398	1398	(d) The application required by subsection (b) shall include all
1399	1399	information required by section 11, and amendments thereto, for any new
1400	1400	key individuals who have not previously completed the requirements of
1401	1401	section 11, and amendments thereto, for a licensee.
1402	1402	(e) (1) When an application for acquisition of control under this
1403	1403	section appears to include all the items and addresses all of the matters that
1404	1404	are required, the application shall be deemed complete and the
1405	1405	commissioner shall promptly notify the applicant of the date on which the
1406	1406	application was so deemed, and the commissioner shall approve or deny
1407	1407	the application within 60 days after the completion date.
1408	1408	(2) If the application is not approved or denied within 60 days after
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1452	1452	the completion date:
1453	1453	(A) The application shall be deemed approved; and
1454	1454	(B) the person or group of persons acting in concert shall not be
1455	1455	prohibited from acquiring control.
1456	1456	(3) The commissioner may extend the application period for good
1457	1457	cause.
1458	1458	(f) A determination by the commissioner that an application is
1459	1459	complete and is accepted for processing means only that the application,
1460	1460	on its face, appears to include all of the items and addresses all of the
1461	1461	matters that are required. A determination of completion by the
1462	1462	commissioner shall not be deemed to be an assessment of the substance of
1463	1463	the application or of the sufficiency of the information provided.
1464	1464	(g) When an application is filed and considered complete under
1465	1465	subsection (e), the commissioner shall investigate the financial condition
1466	1466	and responsibility, financial and business experience, character and general
1467	1467	fitness of the person or group of persons acting in concert who seek to
1468	1468	acquire control. The commissioner shall approve an acquisition of control
1469	1469	pursuant to this section if the commissioner finds that all of the following
1470	1470	conditions have been fulfilled:
1471	1471	(1) The requirements of subsections (b) and (d) have been met, as
1472	1472	applicable; and
1473	1473	(2) the financial condition and responsibility, financial and business
1474	1474	experience, competence, character and general fitness of the person or
1475	1475	group of persons acting in concert seeking to acquire control and the key
1476	1476	individuals and persons that would be in control of the licensee after the
1477	1477	acquisition of control indicate that it is in the interest of the public to
1478	1478	permit the person or group of persons acting in concert to control the
1479	1479	licensee.
1480	1480	(h) If an applicant avails itself or is otherwise subject to a multistate
1481	1481	licensing process:
1482	1482	(1) The commissioner shall be authorized to accept the investigation
1483	1483	results of a lead investigative state for the purposes of subsection (g) if the
1484	1484	lead investigative state has sufficient staffing, expertise and minimum
1485	1485	standards; or
1486	1486	(2) if Kansas is a lead investigative state, the commissioner shall be
1487	1487	authorized to investigate the applicant pursuant to subsection (g) and the
1488	1488	timeframes established by agreement through the multistate licensing
1489	1489	process.
1490	1490	(i) The commissioner shall issue a formal written notice of the denial
1491	1491	of an application to acquire control within 30 days of the decision to deny
1492	1492	the application. The commissioner shall state in the notice of denial the
1493	1493	specific reasons for the denial of the application. An applicant whose
1494	1494	application is denied by the commissioner under this subsection may
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1538	1538	appeal within 14 days and request a hearing in accordance with the Kansas
1539	1539	administrative procedure act, K.S.A. 77-501 et seq., and amendments
1540	1540	thereto.
1541	1541	(j) The requirements of subsections (a) and (b) shall not apply to any
1542	1542	of the following:
1543	1543	(1) A person that acts as a proxy for the sole purpose of voting at a
1544	1544	designated meeting of the shareholders or holders of voting shares or
1545	1545	voting interests of a licensee or a person in control of a licensee;
1546	1546	(2) a person that acquires control of a licensee by devise or descent;
1547	1547	(3) a person that acquires control of a licensee as a personal
1548	1548	representative, custodian, guardian, conservator or trustee or as an officer
1549	1549	appointed by a court of competent jurisdiction or by operation of law;
1550	1550	(4) a person that is exempt under subsection (l);
1551	1551	(5) a person that the commissioner determines is not subject to
1552	1552	subsection (a) based on the public interest;
1553	1553	(6) a public offering of securities of a licensee or a person in control
1554	1554	of a licensee; or
1555	1555	(7) an internal reorganization of a person in control of the licensee if
1556	1556	the ultimate person in control of the licensee remains the same.
1557	1557	(k) Persons meeting the requirements of subsections (j)(2), (j)(3), (j)
1558	1558	(4), (j)(6) or (j)(7) in cooperation with the licensee shall notify the
1559	1559	commissioner within 15 days after the acquisition of control.
1560	1560	(l) (1) The requirements of subsections (a) and (b) shall not apply to a
1561	1561	person that has complied with and received approval to engage in money
1562	1562	transmission under this act or was identified as a person in control in a
1563	1563	prior application filed with and approved by the commissioner or by a
1564	1564	money service business-accredited state pursuant to a multistate licensing
1565	1565	process, if:
1566	1566	(A) The person has not had a license revoked or suspended or
1567	1567	controlled a licensee that has had a license revoked or suspended while the
1568	1568	person was in control of the licensee in the previous five years;
1569	1569	(B) the person is a licensee, such person is well managed and has
1570	1570	received at least a satisfactory rating for compliance at such person's most
1571	1571	recent examination by an money service business accredited state if such
1572	1572	rating was given;
1573	1573	(C) the licensee to be acquired is expected to meet the requirements
1574	1574	of sections 32, 33 and 34, and amendments thereto, after the acquisition of
1575	1575	control is completed. If the person acquiring control is a licensee, such
1576	1576	licensee shall also be expected to meet the requirements of sections 32, 33
1577	1577	and 34, and amendments thereto, after the acquisition of control is
1578	1578	completed;
1579	1579	(D) the licensee to be acquired shall not implement any material
1580	1580	changes to such licensee's business plan as a result of the acquisition of
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1624	1624	control. If the person acquiring control is a licensee, such licensee shall not
1625	1625	implement any material changes to such licensee's business plan as a result
1626	1626	of the acquisition of control; and
1627	1627	(E) the person provides notice of the acquisition in cooperation with
1628	1628	the licensee and attests to the provisions of this subsection in a form and
1629	1629	manner prescribed by the commissioner.
1630	1630	(2) If the notice is not disapproved within 30 days after the date on
1631	1631	which the notice was determined to be complete, the notice shall be
1632	1632	deemed approved.
1633	1633	(m) Before filing an application for approval to acquire control of a
1634	1634	licensee, a person may request in writing a determination from the
1635	1635	commissioner as to whether such person would be considered a person in
1636	1636	control of a licensee upon consummation of a proposed transaction. If the
1637	1637	commissioner determines that the person would not be a person in control
1638	1638	of a licensee, the person and the proposed transaction shall not be subject
1639	1639	to the requirements of subsections (a) and (b).
1640	1640	(n) If a multistate licensing process includes a determination pursuant
1641	1641	to subsection (m) and an applicant avails itself or is otherwise subject to
1642	1642	the multistate licensing process:
1643	1643	(1) The commissioner is hereby authorized to accept the control
1644	1644	determination of a lead investigative state with sufficient staffing,
1645	1645	expertise and minimum standards for the purpose of subsection (m); or
1646	1646	(2) if Kansas is a lead investigative state, the commissioner is hereby
1647	1647	authorized to investigate the applicant pursuant to subsection (m) and the
1648	1648	timeframes established by agreement through the multistate licensing
1649	1649	process.
1650	1650	Sec. 18. (a) A licensee adding or replacing a key individual shall
1651	1651	provide:
1652	1652	(1) Notice in the manner prescribed by the commissioner within 15
1653	1653	days after the effective date of the appointment of the new key individual;
1654	1654	and
1655	1655	(2) information as required by section 10, and amendments thereto,
1656	1656	within 45 days of the effective date of the appointment of the new key
1657	1657	individual.
1658	1658	(b) Within 90 days of the date on which the notice provided pursuant
1659	1659	to subsection (a) was determined to be complete, the commissioner may
1660	1660	issue a notice of disapproval of a key individual if the competence,
1661	1661	experience, character or integrity of the individual would not be in the best
1662	1662	interests of the public or the customers of the licensee to permit the
1663	1663	individual to be a key individual of such licensee.
1664	1664	(c) A notice of disapproval shall state the basis for disapproval and
1665	1665	shall be sent to the licensee and the disapproved individual. A licensee may
1666	1666	appeal a notice of disapproval pursuant to the Kansas administrative
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1710	1710	procedure act, K.S.A. 77-501 et seq., and amendments thereto, within 14
1711	1711	days.
1712	1712	(d) If the notice provided pursuant to subsection (a) is not
1713	1713	disapproved within 90 days after the date when the notice was determined
1714	1714	to be complete, the key individual shall be deemed approved.
1715	1715	(e) If a multistate licensing process includes a key individual notice
1716	1716	review and disapproval process pursuant to this section and the licensee
1717	1717	avails itself or is otherwise subject to the multistate licensing process:
1718	1718	(1) The commissioner is hereby authorized to accept the
1719	1719	determination of another state if the investigating state has sufficient
1720	1720	staffing, expertise and minimum standards for the purpose of this section;
1721	1721	or
1722	1722	(2) if Kansas is a lead investigative state, the commissioner is
1723	1723	authorized to investigate the applicant pursuant to subsection (b) and the
1724	1724	timeframes established by agreement through the multistate licensing
1725	1725	process.
1726	1726	Sec. 19. (a) Every licensee shall submit a report of condition within
1727	1727	45 days of the end of the calendar quarter or within any extended time as
1728	1728	the commissioner may prescribe.
1729	1729	(b) The report of condition shall include:
1730	1730	(1) Financial information at the licensee level;
1731	1731	(2) nationwide and state-specific money transmission transaction
1732	1732	information in every jurisdiction in the United States where the licensee is
1733	1733	licensed to engage in money transmission;
1734	1734	(3) the permissible investments report;
1735	1735	(4) transaction destination country reporting for money received for
1736	1736	transmission, if applicable; and
1737	1737	(5) any other information the commissioner reasonably requires
1738	1738	regarding the licensee.
1739	1739	(c) The commissioner may utilize the nationwide multistate licensing
1740	1740	system and registry for the submission of the report required by subsection
1741	1741	(a) and is authorized to change or update as necessary the requirements of
1742	1742	this section to carry out the purposes of this act and maintain consistency
1743	1743	with nationwide multistate licensing system and registry reporting.
1744	1744	(d) The information required by subsection (b)(4) shall only be
1745	1745	included in a report of condition submitted within 45 days of the end of the
1746	1746	fourth calendar quarter.
1747	1747	Sec. 20. (a) Within 90 days after the end of each fiscal year or within
1748	1748	any extended time as the commissioner may prescribe through rules and
1749	1749	regulations, every licensee shall file with the commissioner:
1750	1750	(1) An audited financial statement of the licensee for the fiscal year
1751	1751	prepared in accordance with United States generally accepted accounting
1752	1752	principles; and
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1796	1796	(2) any other information as the commissioner may reasonably
1797	1797	require.
1798	1798	(b) The audited financial statements shall be prepared by an
1799	1799	independent certified public accountant or independent public accountant
1800	1800	who has been deemed satisfactory by the commissioner.
1801	1801	(c) The audited financial statements shall include or be accompanied
1802	1802	by a certificate of opinion of the independent certified public accountant or
1803	1803	independent public accountant in a form and manner determined by the
1804	1804	commissioner. If the certificate or opinion is qualified, the commissioner
1805	1805	may order the licensee to take any action as the commissioner may find
1806	1806	necessary to enable the independent certified public accountant or
1807	1807	independent public accountant to remove the qualification.
1808	1808	Sec. 21. (a) Each licensee shall submit a report of authorized
1809	1809	delegates within 45 days of the end of each calendar quarter. The
1810	1810	commissioner is authorized to utilize the nationwide multistate licensing
1811	1811	system and registry for the submission of the report required by this
1812	1812	subsection if such utilization is consistent with the requirements of this
1813	1813	section.
1814	1814	(b) The authorized delegate report shall include, at a minimum, each
1815	1815	authorized delegate's:
1816	1816	(1) Company legal name;
1817	1817	(2) taxpayer employer identification number;
1818	1818	(3) principal provider identifier;
1819	1819	(4) physical address;
1820	1820	(5) mailing address;
1821	1821	(6) any business conducted in other states;
1822	1822	(7) any fictitious or trade name;
1823	1823	(8) contact person's name, phone number and email;
1824	1824	(9) start date as the licensee's authorized delegate;
1825	1825	(10) end date acting as the licensee's authorized delegate, if
1826	1826	applicable; and
1827	1827	(11) any other information the commissioner reasonably requires
1828	1828	regarding the authorized delegate.
1829	1829	Sec. 22. (a) A licensee shall file a report with the commissioner
1830	1830	within one business day after the licensee has reason to know of the:
1831	1831	(1) Filing of a bankruptcy or reorganization petition by or against the
1832	1832	licensee;
1833	1833	(2) filing of a petition by or against the licensee for receivership, the
1834	1834	commencement of any other judicial or administrative proceeding for the
1835	1835	licensee's dissolution or reorganization or the making of a general
1836	1836	assignment for the benefit of the licensee's creditors; or
1837	1837	(3) commencement of a proceeding to revoke or suspend the
1838	1838	licensee's license in a state or country where the licensee engages in
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1882	1882	business or is licensed.
1883	1883	(b) A licensee shall file a report with the commissioner within three
1884	1884	business days after the licensee has reason to know of a felony conviction
1885	1885	of:
1886	1886	(1) The licensee or a key individual or person in control of the
1887	1887	licensee; or
1888	1888	(2) an authorized delegate.
1889	1889	Sec. 23. A licensee and an authorized delegate shall file all reports
1890	1890	required by federal currency reporting, recordkeeping and suspicious
1891	1891	activity reporting requirements as set forth in federal and state laws
1892	1892	pertaining to money laundering. The timely filing of a complete and
1893	1893	accurate report required under this section with the appropriate federal
1894	1894	agency is deemed compliant with the requirements of this section.
1895	1895	Sec. 24. (a) Every licensee shall maintain the following records for at
1896	1896	least three years:
1897	1897	(1) A record of each outstanding money transmission obligation sold;
1898	1898	(2) a general ledger posted at least monthly containing all assets,
1899	1899	liability, capital, income and expense accounts;
1900	1900	(3) bank statements and bank reconciliation records;
1901	1901	(4) records of all outstanding money transmission obligations;
1902	1902	(5) records of each outstanding money transmission obligation paid
1903	1903	within the three-year period the records are maintained;
1904	1904	(6) a list of the last known names and addresses of all the licensee's
1905	1905	authorized delegates; and
1906	1906	(7) any other records the commissioner reasonably requires in rules
1907	1907	and regulations.
1908	1908	(b) Records specified in subsection (a) may be maintained:
1909	1909	(1) In any form of record; and
1910	1910	(2) outside this state, if such records are made accessible to the
1911	1911	commissioner on seven business days' notice.
1912	1912	(c) All records maintained by the licensee as required in this section
1913	1913	are open to inspection by the commissioner pursuant to section 5(a), and
1914	1914	amendments thereto.
1915	1915	Sec. 25. (a) As used in this section, "remit" means to make direct
1916	1916	payments of money to a licensee or the licensee's representative authorized
1917	1917	to receive money or to deposit money in a bank in an account specified by
1918	1918	the licensee.
1919	1919	(b) Before a licensee is authorized to conduct business through an
1920	1920	authorized delegate or allows a person to act as the licensee's authorized
1921	1921	delegate, the licensee shall:
1922	1922	(1) Adopt and update as necessary all written policies and procedures
1923	1923	reasonably designed to ensure that the licensee's authorized delegates
1924	1924	comply with applicable state and federal law;
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1968	1968	(2) enter into a written contract that complies with subsection (d); and
1969	1969	(3) conduct a reasonable risk-based background investigation
1970	1970	sufficient for the licensee to determine if the authorized delegate has
1971	1971	complied and will likely comply with applicable state and federal law.
1972	1972	(c) An authorized delegate shall comply with this act.
1973	1973	(d) The written contract required by subsection (b) shall be signed by
1974	1974	the licensee and the authorized delegate and, at a minimum, shall:
1975	1975	(1) Appoint the person signing the contract as the licensee's
1976	1976	authorized delegate with the authority to conduct money transmission on
1977	1977	behalf of the licensee;
1978	1978	(2) set forth the nature and scope of the relationship between the
1979	1979	licensee and the authorized delegate and the respective rights and
1980	1980	responsibilities of each party;
1981	1981	(3) require the authorized delegate to agree to fully comply with all
1982	1982	applicable state and federal laws and rules and regulations pertaining to
1983	1983	money transmission;
1984	1984	(4) require the authorized delegate to remit and handle money and
1985	1985	any monetary value in accordance with the terms of the contract between
1986	1986	the licensee and the authorized delegate;
1987	1987	(5) impose a trust on money and any monetary value net of fees
1988	1988	received for money transmission for the benefit of the licensee;
1989	1989	(6) require the authorized delegate to prepare and maintain records as
1990	1990	required by this act or rules and regulations adopted pursuant to this act or
1991	1991	as reasonably required by the commissioner;
1992	1992	(7) acknowledge that the authorized delegate consents to examination
1993	1993	or investigation by the commissioner;
1994	1994	(8) state that the licensee is subject to regulation by the commissioner
1995	1995	and, as part of such regulation, the commissioner may suspend or revoke
1996	1996	an authorized delegate designation or require the licensee to terminate an
1997	1997	authorized delegate designation; and
1998	1998	(9) acknowledge receipt of the written policies and procedures
1999	1999	required under subsection (b).
2000	2000	(e) Within five business days after the suspension, revocation,
2001	2001	surrender or expiration of a licensee's license, the licensee shall provide
2002	2002	documentation to the commissioner that the licensee has notified all
2003	2003	applicable authorized delegates of the licensee whose names are in a
2004	2004	record filed with the commissioner of the suspension, revocation,
2005	2005	surrender or expiration of a license. Upon suspension, revocation,
2006	2006	surrender or expiration of a license, all applicable authorized delegates
2007	2007	shall immediately cease to provide money transmission as an authorized
2008	2008	delegate of the licensee.
2009	2009	(f) An authorized delegate of a licensee holds in trust for the benefit
2010	2010	of the licensee all money net of fees received from money transmission. If
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2054	2054	an authorized delegate commingles any funds received from money
2055	2055	transmission with any other funds or property owned or controlled by the
2056	2056	authorized delegate, all commingled funds and other property shall be
2057	2057	considered held in trust in favor of the licensee in an amount equal to the
2058	2058	amount of money net of fees received from money transmission.
2059	2059	(g) No authorized delegate shall use a subdelegate to conduct money
2060	2060	transmission on behalf of a licensee.
2061	2061	Sec. 26. No person shall engage in the business of money
2062	2062	transmission on behalf of a person who is not licensed or exempt from
2063	2063	licensing under this act. If a person engages in such activity, such person
2064	2064	shall be deemed to have provided money transmission to the same extent
2065	2065	that such person were a licensee and shall be jointly and severally liable
2066	2066	with the unlicensed or nonexempt person.
2067	2067	Sec. 27. (a) Every licensee shall forward all moneys received for
2068	2068	transmission in accordance with the terms of the agreement between the
2069	2069	licensee and the sender unless the licensee reasonably believes or has a
2070	2070	reasonable basis to believe that the sender may be a victim of fraud or that
2071	2071	a crime or violation of law or any rules and regulations has occurred, is
2072	2072	occurring or may occur.
2073	2073	(b) If a licensee fails to forward money received for transmission in
2074	2074	accordance with this section, the licensee shall respond to inquiries by the
2075	2075	sender with the reason for the failure unless providing a response would
2076	2076	violate a state or federal law or rules and regulations.
2077	2077	Sec. 28. (a) This section does not apply to moneys received for
2078	2078	transmission:
2079	2079	(1) Subject to 12 C.F.R. §§ 1005.30 through 1005.36; or
2080	2080	(2) pursuant to a written agreement between the licensee and payee to
2081	2081	process payments for goods or services provided by the payee.
2082	2082	(b) Within 10 days of receipt of the sender's written request for a
2083	2083	refund of all money received for transmission, the licensee shall refund
2084	2084	such money to the sender, unless:
2085	2085	(1) The money has been forwarded within 10 days of the date when
2086	2086	the money was received for transmission;
2087	2087	(2) instructions have been given committing an equivalent amount of
2088	2088	money to the person designated by the sender within 10 days of the date
2089	2089	when the money was received for transmission;
2090	2090	(3) the agreement between the licensee and the sender instructs the
2091	2091	licensee to forward the money after 10 days of the date when the money
2092	2092	was received for transmission. If funds have not yet been forwarded in
2093	2093	accordance with the terms of the agreement between the licensee and the
2094	2094	sender, the licensee shall issue a refund in accordance with this section; or
2095	2095	(4) the refund is requested for a transaction that the licensee has not
2096	2096	completed based on a reasonable belief or a reasonable basis to believe
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2140	2140	that a crime or violation of law, rules and regulations has occurred, is
2141	2141	occurring or may occur.
2142	2142	(c) The refund request shall not be construed to enable the licensee to
2143	2143	identify the:
2144	2144	(1) Sender's name and address or telephone number; or
2145	2145	(2) particular transaction to be refunded if the sender has multiple
2146	2146	outstanding transactions.
2147	2147	Sec. 29. (a) This section shall not apply to:
2148	2148	(1) Money received for transmission subject to 12 C.F.R. §§ 1005.30
2149	2149	through 1005.36;
2150	2150	(2) money received for transmission that is not primarily for personal,
2151	2151	family or household purposes;
2152	2152	(3) money received for transmission pursuant to a written agreement
2153	2153	between the licensee and payee to process payments for goods or services
2154	2154	provided by the payee; or
2155	2155	(4) payroll processing services.
2156	2156	(b) As used in this section, "receipt" means a paper or electronic
2157	2157	receipt.
2158	2158	(c) (1) For a transaction conducted in person, the receipt may be
2159	2159	provided electronically if the sender requests or agrees to receive an
2160	2160	electronic receipt.
2161	2161	(2) For a transaction conducted electronically or by phone, a receipt
2162	2162	may be provided electronically. All electronic receipts shall be provided in
2163	2163	a retainable form.
2164	2164	(d) (1) Every licensee or the licensee's authorized delegate shall
2165	2165	provide the sender a receipt for money received for transmission.
2166	2166	(2) The receipt shall contain the:
2167	2167	(A) Name of the sender;
2168	2168	(B) name of the designated recipient;
2169	2169	(C) date of the transaction;
2170	2170	(D) unique transaction or identification number;
2171	2171	(E) name of the licensee, the licensee's nationwide multistate
2172	2172	licensing system and registry unique identification number, the licensee's
2173	2173	business address and the licensee's customer service telephone number;
2174	2174	(F) amount of the transaction in United States dollars;
2175	2175	(G) fee charged, if any, by the licensee to the sender for the
2176	2176	transaction; and
2177	2177	(H) taxes collected, if any, by the licensee from the sender for the
2178	2178	transaction.
2179	2179	(3) The receipt required by this section shall be written in English and
2180	2180	in the language principally used by the licensee or authorized delegate to
2181	2181	advertise, solicit or negotiate, either orally or in writing, for a transaction
2182	2182	conducted in person, electronically or by phone, if other than English.
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2226	2226	Sec. 30. Every licensee or authorized delegate shall include on a
2227	2227	receipt or disclose on the licensee's website or mobile application the name
2228	2228	of the office of the state bank commissioner and a statement that the
2229	2229	licensee's Kansas customers can contact the office of the state bank
2230	2230	commissioner with questions or complaints about the licensee's money
2231	2231	transmission services.
2232	2232	Sec. 31. (a) A licensee that provides payroll processing services shall:
2233	2233	(1) Issue reports to clients detailing client payroll obligations in
2234	2234	advance of the payroll funds being deducted from an account; and
2235	2235	(2) make available worker paystubs or an equivalent statement to
2236	2236	workers.
2237	2237	(b) This section shall not apply to a licensee providing payroll
2238	2238	processing services where the licensee's client designates the intended
2239	2239	recipients to the licensee and is responsible for providing the disclosures.
2240	2240	Sec. 32. (a) Every licensee shall maintain at all times a tangible net
2241	2241	worth of:
2242	2242	(1) The greater of $100,000 or 3% of such licensee's total assets up to
2243	2243	$100,000,000;
2244	2244	(2) 2% of such licensee's additional assets of $100,000,000 to
2245	2245	$1,000,000,000; and
2246	2246	(3) 0.5% of such licensee's additional assets of over $1,000,000,000.
2247	2247	(b) The licensee's tangible net worth shall be demonstrated at initial
2248	2248	application by the applicant's most recent audited or unaudited financial
2249	2249	statements pursuant to section 10, and amendments thereto.
2250	2250	(c) Notwithstanding the provisions of this section, the commissioner
2251	2251	shall have the authority to exempt any applicant or licensee, in part or in
2252	2252	whole, from the requirements of this section.
2253	2253	Sec. 33. (a) An applicant for a money transmission license shall
2254	2254	provide and a licensee at all times shall maintain security consisting of a
2255	2255	surety bond in a form satisfactory to the commissioner or, with the
2256	2256	commissioner's approval, a deposit instead of a bond in accordance with
2257	2257	this section.
2258	2258	(b) The amount of the required security shall be:
2259	2259	(1) The greater of $200,000 or an amount equal to 100% of the
2260	2260	licensee's average daily money transmission liability in Kansas calculated
2261	2261	for the most recently completed three-month period, up to a maximum of
2262	2262	$1,000,000; or
2263	2263	(2) $200,000, if the licensee's tangible net worth exceeds 10% of total
2264	2264	assets.
2265	2265	(c) A licensee that maintains a bond in the maximum amount
2266	2266	provided for in subsection (b) shall not be required to calculate its average
2267	2267	daily money transmission liability in Kansas for purposes of this section.
2268	2268	(d) A licensee may exceed the maximum required bond amount
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2311	2311	43 SB 406 28
2312	2312	pursuant to section 35, and amendments thereto.
2313	2313	Sec. 34. (a) A licensee shall maintain permissible investments that
2314	2314	have a market value computed in accordance with United States generally
2315	2315	accepted accounting principles of not less than the aggregate amount of the
2316	2316	total of the licensee's outstanding money transmission obligations.
2317	2317	(b) Except for the permissible investments described in section 35,
2318	2318	and amendments thereto, the commissioner may by rules and regulations
2319	2319	or order limit the extent to which a specific investment maintained by a
2320	2320	licensee within a class of permissible investments may be considered a
2321	2321	permissible investment, if the specific investment represents undue risk to
2322	2322	customers not reflected in the market value of investments.
2323	2323	(c) Permissible investments, even if commingled with other assets of
2324	2324	the licensee, shall be held in trust for the benefit of the purchasers and
2325	2325	holders of the licensee's outstanding money transmission obligations in the
2326	2326	event of insolvency, the filing of a petition by or against the licensee under
2327	2327	11 U.S.C. §§ 101 through 110 for bankruptcy or reorganization, the filing
2328	2328	of a petition by or against the licensee for receivership, the commencement
2329	2329	of any other judicial or administrative proceeding for such licensee's
2330	2330	dissolution or reorganization or in the event of an action by a creditor
2331	2331	against the licensee who is not a beneficiary of this statutory trust. No
2332	2332	permissible investments impressed with a trust pursuant to this subsection
2333	2333	shall be subject to attachment, levy of execution or sequestration by order
2334	2334	of any court, except for a beneficiary of this statutory trust.
2335	2335	(d) Upon the establishment of a statutory trust in accordance with
2336	2336	subsection (c) or when any funds are drawn on a letter of credit pursuant to
2337	2337	section 35, and amendments thereto, the commissioner shall notify the
2338	2338	applicable regulator of each state where the licensee is licensed to engage
2339	2339	in money transmission, if any, of the establishment of the trust or the funds
2340	2340	drawn on the letter of credit, as applicable. Notice shall be deemed
2341	2341	satisfied if performed pursuant to a multistate agreement or through the
2342	2342	nationwide multistate licensing system and registry. Funds drawn on a
2343	2343	letter of credit and any other permissible investments held in trust for the
2344	2344	benefit of the purchasers and holders of the licensee's outstanding money
2345	2345	transmission obligations shall be deemed held in trust for the benefit of
2346	2346	such purchasers and holders on a pro rata and equitable basis in
2347	2347	accordance with statutes pursuant to which permissible investments are
2348	2348	required to be held in Kansas and other states, as applicable. Any statutory
2349	2349	trust established under this section shall be terminated upon
2350	2350	extinguishment of all of the licensee's outstanding money transmission
2351	2351	obligations.
2352	2352	(e) The commissioner by rules and regulations or by order may allow
2353	2353	other types of investments that the commissioner determines are of
2354	2354	sufficient liquidity and quality to be a permissible investment. The
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2398	2398	commissioner is hereby authorized to participate in efforts with other state
2399	2399	regulators to determine which other types of investments are of sufficient
2400	2400	liquidity and quality to be a permissible investment.
2401	2401	Sec. 35. (a) The following investments are permissible under this
2402	2402	section:
2403	2403	(1) Cash, including demand deposits, savings deposits and funds in
2404	2404	accounts held for the benefit of the licensee's customers in a federally
2405	2405	insured depository financial institution and cash equivalents including
2406	2406	automated clearing house items in transit to the licensee and automated
2407	2407	clearing house items or international wires in transit to a payee, cash in
2408	2408	transit via armored car, cash in smart safes, cash in licensee-owned
2409	2409	locations, debit card or credit card-funded transmission receivables owed
2410	2410	by any bank or money market mutual funds rated AAA by Standard &
2411	2411	Poor or the equivalent from any eligible rating service;
2412	2412	(2) certificates of deposit or senior debt obligations of a federally
2413	2413	insured depository institution;
2414	2414	(3) an obligation of the United States or a commission, agency or
2415	2415	instrumentality thereof, an obligation that is guaranteed fully as to
2416	2416	principal and interest by the United States or an obligation of a state or a
2417	2417	governmental subdivision, agency or instrumentality thereof;
2418	2418	(4) (A) the full drawable amount of an irrevocable standby letter of
2419	2419	credit for which the stated beneficiary is the commissioner that stipulates
2420	2420	that the beneficiary need only draw a sight draft under the letter of credit
2421	2421	and present it to obtain funds up to the letter of credit amount within seven
2422	2422	days of presentation of the items required by subparagraph (D);
2423	2423	(B) the letter of credit shall:
2424	2424	(i) Be issued by a federally insured depository financial institution, a
2425	2425	foreign bank that is authorized under federal law to maintain a federal
2426	2426	agency or federal branch office in a state or states or a foreign bank that is
2427	2427	authorized under state law to maintain a branch in a state that:
2428	2428	(a) Bears an eligible rating or whose parent company bears an eligible
2429	2429	rating; and
2430	2430	(b) is regulated, supervised and examined by United States federal or
2431	2431	state authorities having regulatory authority over banks, credit unions and
2432	2432	trust companies;
2433	2433	(ii) be irrevocable, unconditional and indicate that such letter of credit
2434	2434	is not subject to any condition or qualifications outside of such letter of
2435	2435	credit;
2436	2436	(iii) contain no references to any other agreements, documents or
2437	2437	entities or otherwise provide for a security interest in the licensee; and
2438	2438	(iv) contain an issue date and expiration date and expressly provide
2439	2439	for automatic extension, without a written amendment, for an additional
2440	2440	period of one year from the present or each future expiration date unless
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2484	2484	the issuer of the letter of credit notifies the commissioner in writing by
2485	2485	certified or registered mail or courier mail or other receipted means at least
2486	2486	60 days prior to any expiration date, that the irrevocable letter of credit
2487	2487	will not be extended;
2488	2488	(C) if any notice of expiration or non-extension of a letter of credit is
2489	2489	issued under clause (a)(4)(B)(iv), the licensee shall be required to
2490	2490	demonstrate to the satisfaction of the commissioner, 15 days prior to
2491	2491	expiration, that the licensee maintains and shall maintain permissible
2492	2492	investments in accordance with section 36(a), and amendments thereto,
2493	2493	upon the expiration of the letter of credit. If the licensee is not able to do
2494	2494	so, the commissioner may draw on the letter of credit in an amount up to
2495	2495	the amount necessary to meet the licensee's requirements to maintain
2496	2496	permissible investments in accordance with section 34(a), and
2497	2497	amendments thereto. Any such draw shall be offset against the licensee's
2498	2498	outstanding money transmission obligations. The drawn funds shall be
2499	2499	held in trust by the commissioner or the commissioner's designated agent,
2500	2500	to the extent authorized by law, as agent for the benefit of the purchasers
2501	2501	and holders of the licensee's outstanding money transmission obligations;
2502	2502	(D) the letter of credit shall provide that the issuer of such letter of
2503	2503	credit shall honor, at sight, a presentation made of the following
2504	2504	documents by the beneficiary to the issuer on or prior to the expiration
2505	2505	date of the letter of credit:
2506	2506	(i) The original letter of credit, including any amendments; and
2507	2507	(ii) a written statement from the beneficiary stating that any of the
2508	2508	following events have occurred:
2509	2509	(a) The filing of a bankruptcy or reorganization petition by or against
2510	2510	the licensee;
2511	2511	(b) the filing of a petition by or against the licensee for receivership
2512	2512	or the commencement of any other judicial or administrative proceeding
2513	2513	for such licensee's dissolution or reorganization;
2514	2514	(c) the seizure of assets of a licensee by a commissioner pursuant to
2515	2515	an emergency order issued in accordance with applicable law, on the basis
2516	2516	of an action, violation or condition that has caused or is likely to cause the
2517	2517	insolvency of the licensee; or
2518	2518	(d) the beneficiary has received notice of expiration or non-extension
2519	2519	of a letter of credit and the licensee failed to demonstrate to the satisfaction
2520	2520	of the beneficiary that the licensee will maintain permissible investments
2521	2521	in accordance with section 36(a), and amendments thereto, upon the
2522	2522	expiration or non-extension of the letter of credit;
2523	2523	(E) the commissioner may designate an agent to serve on the
2524	2524	commissioner's behalf as beneficiary to a letter of credit if the agent and
2525	2525	letter of credit meet requirements established by the commissioner. The
2526	2526	commissioner's agent may serve as agent for multiple licensing authorities
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2570	2570	for a single irrevocable letter of credit if the proceeds of the drawable
2571	2571	amount for the purposes of subsection (a)(4) are assigned to the
2572	2572	commissioner; and
2573	2573	(F) the commissioner is hereby authorized to participate in multistate
2574	2574	processes designed to facilitate the issuance and administration of letters
2575	2575	of credit, including, but not limited to, services provided by the nationwide
2576	2576	multistate licensing system and registry and state regulatory registry, LLC;
2577	2577	and
2578	2578	(5) 100% of the surety bond provided for under section 33, and
2579	2579	amendments thereto, that exceeds the average daily money transmission
2580	2580	liability in Kansas.
2581	2581	(b) (1) Unless permitted by the commissioner by rules and
2582	2582	regulations adopted or by order issued to exceed the limit as set forth
2583	2583	herein, the following investments are permissible under section 35, and
2584	2584	amendments thereto, to the extent specified:
2585	2585	(A) Receivables payable to a licensee from the licensee's authorized
2586	2586	delegates in the ordinary course of business that are less than seven days
2587	2587	old up to 50% of the aggregate value of the licensee's total permissible
2588	2588	investments; and
2589	2589	(B) of the receivables permissible under subparagraph (A),
2590	2590	receivables payable to a licensee from a single authorized delegate in the
2591	2591	ordinary course of business may not exceed 10% of the aggregate value of
2592	2592	the licensee's total permissible investments.
2593	2593	(2) The following investments are permissible up to 20% per
2594	2594	category and up to 50% combined of the aggregate value of the licensee's
2595	2595	total permissible investments:
2596	2596	(A) A short-term investment of up to six months, bearing an eligible
2597	2597	rating;
2598	2598	(B) commercial paper bearing an eligible rating;
2599	2599	(C) a bill, note, bond or debenture bearing an eligible rating;
2600	2600	(D) United States tri-party repurchase agreements collateralized at
2601	2601	100% or more with United States government or agency securities,
2602	2602	municipal bonds or other securities bearing an eligible rating;
2603	2603	(E) money market mutual funds rated less than AAA and equal to or
2604	2604	higher than A- by Standard & Poor or the equivalent from any other
2605	2605	eligible rating service; and
2606	2606	(F) a mutual fund or other investment fund composed solely and
2607	2607	exclusively of one or more permissible investments listed in subsection (a)
2608	2608	(1) through (3).
2609	2609	(3) Cash, including demand deposits, savings deposits and funds in
2610	2610	such accounts held for the benefit of the licensee's customers, at foreign
2611	2611	depository institutions are permissible up to 10% of the aggregate value of
2612	2612	the licensee's total permissible investments if the licensee has received a
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2656	2656	satisfactory rating in the licensee's most recent examination and the
2657	2657	foreign depository institution:
2658	2658	(A) Has an eligible rating;
2659	2659	(B) is registered under the foreign account tax compliance act;
2660	2660	(C) is not located in any country subject to sanctions from the office
2661	2661	of foreign asset control; and
2662	2662	(D) is not located in a high-risk or non-cooperative jurisdiction as
2663	2663	designated by the financial action task force.
2664	2664	Sec. 36. (a) The commissioner may, after notice and an opportunity
2665	2665	for a hearing conducted in accordance with the Kansas administrative
2666	2666	procedure act, K.S.A. 77-501 et seq., and amendments thereto, suspend or
2667	2667	revoke a license or order a licensee to revoke the designation of an
2668	2668	authorized delegate if:
2669	2669	(1) The licensee violates this act or any rules and regulations adopted
2670	2670	or an order issued under this act;
2671	2671	(2) the licensee does not cooperate with an examination or
2672	2672	investigation by the commissioner;
2673	2673	(3) the licensee engages in fraud, intentional misrepresentation or
2674	2674	gross negligence;
2675	2675	(4) an authorized delegate is convicted of a violation of a state or
2676	2676	federal anti-money laundering statute or violates any rules or regulations
2677	2677	adopted or an order issued under this act, as a result of the licensee's
2678	2678	willful misconduct or willful blindness;
2679	2679	(5) the competence, experience, character or general fitness of the
2680	2680	licensee, authorized delegate, person in control of a licensee, key
2681	2681	individual or responsible person of the authorized delegate indicates that it
2682	2682	is not in the public interest to permit the person to provide money
2683	2683	transmission;
2684	2684	(6) the licensee engages in an unsafe or unsound practice as
2685	2685	determined by the commissioner pursuant to subsection (b);
2686	2686	(7) the licensee is insolvent, suspends payment of the licensee's
2687	2687	obligations or makes a general assignment for the benefit of the licensee's
2688	2688	creditors;
2689	2689	(8) the licensee does not remove an authorized delegate after the
2690	2690	commissioner issues and serves upon the licensee a final order that
2691	2691	includes a finding that the authorized delegate has violated this act;
2692	2692	(9) a fact or condition exists that, if it had existed when the licensee
2693	2693	applied for a license, would have been grounds for denying the
2694	2694	application;
2695	2695	(10) the licensee's net worth becomes inadequate and the licensee,
2696	2696	after 10 days, fails to take steps to remedy the deficiency;
2697	2697	(11) the licensee demonstrated a pattern of failing to promptly pay
2698	2698	obligations;
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2742	2742	(12) the licensee applied for adjudication, reorganization or other
2743	2743	relief under bankruptcy; or
2744	2744	(13) the licensee lied or made false or misleading statements to any
2745	2745	material fact or omitted any material fact.
2746	2746	(b) In determining whether a licensee is engaging in an unsafe or
2747	2747	unsound practice, the commissioner may consider the size and condition of
2748	2748	the licensee's money transmission, the magnitude of the loss, the gravity of
2749	2749	the violation of this act and the previous conduct of the person involved.
2750	2750	Sec. 37. (a) The commissioner may issue an order suspending or
2751	2751	revoking the designation of an authorized delegate, if the commissioner
2752	2752	finds that the:
2753	2753	(1) Authorized delegate violated this act or any rules and regulations
2754	2754	adopted or an order issued under this act;
2755	2755	(2) authorized delegate did not cooperate with an examination or
2756	2756	investigation by the commissioner;
2757	2757	(3) authorized delegate engaged in fraud, intentional
2758	2758	misrepresentation or gross negligence;
2759	2759	(4) authorized delegate is convicted of a violation of a state or federal
2760	2760	anti-money laundering statute;
2761	2761	(5) the competence, experience, character or general fitness of the
2762	2762	authorized delegate or a person in control of the authorized delegate
2763	2763	indicates that it is not in the public interest to permit the authorized
2764	2764	delegate to provide money transmission; or
2765	2765	(6) the authorized delegate is engaging in an unsafe or unsound
2766	2766	practice as determined by the commissioner pursuant to subsection (b).
2767	2767	(b) In determining whether an authorized delegate is engaging in an
2768	2768	unsafe or unsound practice, the commissioner may consider the size and
2769	2769	condition of the authorized delegate's provision of money transmission, the
2770	2770	magnitude of the loss, the gravity of the violation of this act or any rules
2771	2771	and regulations adopted or an order issued under this act and the previous
2772	2772	conduct of the authorized delegate.
2773	2773	(c) An authorized delegate may apply for relief from a suspension or
2774	2774	revocation of designation as an authorized delegate according to
2775	2775	procedures prescribed by the commissioner in rules and regulations.
2776	2776	Sec. 38. (a) If the commissioner determines that a violation of this act
2777	2777	or of any rules and regulations adopted or an order issued under this act by
2778	2778	a licensee, a person required to be licensed or authorized delegate is likely
2779	2779	to cause immediate and irreparable harm to the licensee, the licensee's
2780	2780	customers or the public as a result of the violation or cause insolvency or
2781	2781	significant dissipation of assets of the licensee, the commissioner may
2782	2782	issue an order requiring the licensee or authorized delegate to cease and
2783	2783	desist from the violation. The order shall become effective upon service of
2784	2784	the order on the licensee or authorized delegate.
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2828	2828	(b) The commissioner may issue an order against a licensee to cease
2829	2829	and desist from providing money transmission through an authorized
2830	2830	delegate that is the subject of a separate order by the commissioner.
2831	2831	(c) An order to cease and desist shall remain effective and
2832	2832	enforceable pending the completion of an administrative proceeding
2833	2833	pursuant to the Kansas administrative procedure act, K.S.A. 77-501 et
2834	2834	seq., and amendments thereto.
2835	2835	(d) An order to cease and desist shall be considered a final order
2836	2836	unless the licensee or authorized delegate requests a hearing within 14
2837	2837	days after the cease and desist order is issued.
2838	2838	Sec. 39. The commissioner may enter into a consent order at any time
2839	2839	with a person to resolve a matter arising under this act or any rules and
2840	2840	regulations adopted or order issued under this act. A consent order shall be
2841	2841	signed by the person to whom such consent order is issued or by the
2842	2842	person's authorized representative and shall indicate agreement with the
2843	2843	terms contained in the order. A consent order may provide that such
2844	2844	consent order does not constitute an admission by a person that this act or
2845	2845	rules and regulations adopted or an order issued under this act has been
2846	2846	violated.
2847	2847	Sec. 40. (a) Any person that intentionally makes a false statement,
2848	2848	misrepresentation or false certification in a record filed or required to be
2849	2849	maintained under this act or that intentionally makes a false entry or omits
2850	2850	a material entry in such a record is guilty of a severity level 9, nonperson
2851	2851	felony.
2852	2852	(b) Any person that knowingly engages in an activity for which a
2853	2853	license is required under this act without being licensed under this act and
2854	2854	who receives more than $500 in compensation within a 30-day period
2855	2855	from this activity is guilty of a severity level 9, nonperson felony.
2856	2856	(c) Any person that knowingly engages in an activity for which a
2857	2857	license is required under this act without being licensed under this act and
2858	2858	who receives not more than $500 in compensation within a 30-day period
2859	2859	from this activity is guilty of a class A nonperson misdemeanor.
2860	2860	Sec. 41. (a) As part of any summary order or consent order, the
2861	2861	commissioner may:
2862	2862	(1) Assess a fine against any person who violates this act or any rules
2863	2863	and regulations adopted hereunder in an amount not to exceed $5,000 per
2864	2864	violation. The commissioner may designate any fine collected pursuant to
2865	2865	this section be used for consumer education;
2866	2866	(2) assess the agency's operating costs and expenses for investigating
2867	2867	and enforcing this act;
2868	2868	(3) require the person to pay restitution for any loss arising from the
2869	2869	violation or requiring the person to reimburse any profits arising from the
2870	2870	violation;
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2914	2914	(4) prohibit the person from future application for licensure pursuant
2915	2915	to the act; and
2916	2916	(5) require such affirmative action as determined by the
2917	2917	commissioner to carry out the purposes of this act.
2918	2918	(b) (1) The commissioner may enter into an informal agreement at
2919	2919	any time with a person to resolve a matter arising under this act, rules and
2920	2920	regulations adopted hereunder or an order issued pursuant to this act.
2921	2921	(2) Any informal agreement authorized by this subsection shall be
2922	2922	considered confidential examination material. The adoption of an informal
2923	2923	agreement authorized by this subsection shall not be:
2924	2924	(A) Subject to the provisions of K.S.A. 77-501 et seq., and
2925	2925	amendments thereto, or K.S.A. 77-601 et seq., and amendments thereto;
2926	2926	(B) considered an order or other agency action;
2927	2927	(C) subject to the Kansas open records act, K.S.A. 45-215 et seq., and
2928	2928	amendments thereto; or
2929	2929	(D) discovery or be admissible in evidence in any private civil action.
2930	2930	(3) The provisions of this subsection providing for the confidentiality
2931	2931	of public records shall expire on July 1, 2030, unless the legislature
2932	2932	reviews and reenacts such provisions in accordance with the Kansas open
2933	2933	records act, K.S.A. 45-229, and amendments thereto, prior to July 1, 2030.
2934	2934	(c) Through an examination finding, the commissioner may:
2935	2935	(1) Assess a fine against any licensee who violates this act or rules
2936	2936	and regulations adopted thereto, in an amount not to exceed $5,000 per
2937	2937	violation. The commissioner may designate any fine collected pursuant to
2938	2938	this section be used for consumer education; or
2939	2939	(2) require the licensee to pay restitution for any loss arising from the
2940	2940	violation or require the person to reimburse any profits arising from the
2941	2941	violation.
2942	2942	Sec. 42. The provisions of this act are severable. If any portion of the
2943	2943	act is declared unconstitutional or invalid, or the application of any portion
2944	2944	of the act to any person or circumstance is held unconstitutional or invalid,
2945	2945	the invalidity shall not affect other portions of the act that can be given
2946	2946	effect without the invalid portion or application, and the applicability of
2947	2947	such other portions of the act to any person or circumstance shall remain
2948	2948	valid and enforceable.
2949	2949	Sec. 43. K.S.A. 9-508, 9-509, 9-510, 9-510a, 9-511, 9-513, 9-513a, 9-
2950	2950	513b, 9-513c, 9-513d, 9-513e and K.S.A. 2023 Supp. 9-512 are hereby
2951	2951	repealed.
2952	2952	Sec. 44. This act shall take effect and be in force from and after
2953	2953	January 1, 2025, and its publication in the statute book.
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