Session of 2024
SENATE BILL No. 406
By Committee on Financial Institutions and Insurance
1-29
AN ACT concerning financial institutions; enacting the Kansas money
transmission act; relating to the electronic transmission of money;
oversight thereof by the state bank commissioner; establishing powers,
duties and responsibilities of the state bank commissioner; licensing
and renewal processes; penalties; repealing K.S.A. 9-508, 9-509, 9-510,
9-510a, 9-511, 9-513, 9-513a, 9-513b, 9-513c, 9-513d, 9-513e and
K.S.A. 2023 Supp. 9-512
Be it enacted by the Legislature of the State of Kansas:
Section 1. (a) Sections 1 through 42, and amendments thereto, shall
be known and may be cited as the Kansas money transmission act.
(b) As used in the Kansas money transmission act:
(1) "Act" means the Kansas money transmission act.
(2) "Acting in concert" means persons knowingly acting together
with a common goal of jointly acquiring control of a licensee whether or
not pursuant to an express agreement.
(3) "Authorized delegate" means a person designated by a licensee to
engage in money transmission on behalf of the licensee.
(4) "Average daily money transmission liability" means the amount of
the licensee's outstanding money transmission obligations in Kansas at the
end of each day in a given period of time added together and divided by
the total number of days in the given period of time. For any licensee
required to calculate "average daily money transmission liability" pursuant
to this act, the given period of time shall be the calendar quarters ending
March 31, June 30, September 30 and December 31.
(5) "Closed loop stored value" means stored value that is redeemable
by the issuer only for goods or services provided by the issuer or the
issuer's affiliates or franchisees of the issuer or the franchisees's affiliates,
except to the extent required by applicable law to be redeemable in cash
for its cash value.
(6) "Commissioner" means the state bank commissioner, or a person
designated by the state bank commissioner to enforce this act.
(7) "Control" means the power to:
(A) Vote directly or indirectly at least 25% of the outstanding voting
shares or voting interests of a licensee or person in control of a licensee;
(B) elect or appoint a majority of key individuals or executive
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officers, managers, directors, trustees or other persons exercising
managerial authority of a person in control of a licensee; or
(C) exercise, directly or indirectly, a controlling influence over the
management or policies of a licensee or person in control of a licensee.
(8) "Eligible rating" means a credit rating from any of the three
highest rating categories provided by an eligible rating service. Each rating
category may include rating category modifiers such as plus or minus for
Standard & Poor or the equivalent for any other eligible rating service.
"Eligible rating" shall be determined as follows:
(A) Long-term credit ratings shall be deemed eligible if the rating is
equal to A- or higher by Standard & Poor or the equivalent from any other
eligible rating service.
(B) Short-term credit ratings are deemed eligible if the rating is equal
to or higher than A-2 or SP-2 by Standard & Poor or the equivalent from
any other eligible rating service. If ratings differ among eligible rating
services, the highest rating shall apply when determining whether a
security bears an eligible rating.
(9) "Eligible rating service" means any nationally recognized
statistical rating organization that has been registered by the securities and
exchange commission or any organization designated by the commissioner
through order or rules and regulations as an eligible rating service.
(10) "Federally insured depository financial institution" means a
bank, credit union, savings and loan association, trust company, savings
association, savings bank, industrial bank or industrial loan company
organized under the laws of the United States or any state of the United
States, when such bank, credit union, savings and loan association, trust
company, savings association, savings bank, industrial bank or industrial
loan company has federally insured deposits.
(11) "In Kansas" means the:
(A) Physical location of a person who is requesting a transaction in
person in the state of Kansas; or
(B) person's residential address or the principal place of business for a
person requesting a transaction electronically or by telephone if such
residential address or principal place of business is in the state of Kansas.
(12) "Individual" means a natural person.
(13) "Key individual" means any individual ultimately responsible for
establishing or directing policies and procedures of the licensee, including,
but not limited to, an executive officer, manager, director or trustee.
(14) "Licensee" means a person licensed under this act.
(15) "Material litigation" means litigation, that according to United
States generally accepted accounting principles, is significant to a person's
financial health and would be a required disclosure in the person's annual
audited financial statements, report to shareholders or similar records.
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(16) "Money" means a medium of exchange that is authorized or
adopted by the United States or a foreign government. "Money" includes a
monetary unit of account established by an intergovernmental organization
or by agreement between two or more governments.
(17) "Monetary value" means a medium of exchange, whether or not
redeemable in money.
(18) (A) "Money transmission" means any of the following:
(i) Selling or issuing payment instruments to a person located in
Kansas;
(ii) selling or issuing stored value to a person located in Kansas;
(iii) receiving money for transmission from a person located in
Kansas; or
(iv) payroll processing services.
(B) "Money transmission" does not include the provision of solely
online or telecommunications services or network access.
(19) "Money service business accredited state" means a state agency
that is accredited by the conference of state bank supervisors and money
transmitter regulators association for money transmission licensing and
supervision.
(20) "Multistate licensing process" means any agreement entered into
by state regulators relating to coordinated processing of applications for
money transmission licenses, applications for the acquisition of control of
a licensee, control determinations or notice and information requirements
for a change of key individuals.
(21) "Nationwide multistate licensing system and registry" means a
licensing system developed by the conference of state bank supervisors
and the American association of residential mortgage regulators and
owned and operated by the state regulatory registry, limited liability
company or any successor or affiliated entity for the licensing and
registration of persons in financial services industries.
(22) (A) "Outstanding money transmission obligation" means:
(i) Any payment instrument or stored value issued or sold by the
licensee to a person located in the United States or reported as sold by an
authorized delegate of the licensee to a person that is located in the United
States that has not yet been paid or refunded by or for the licensee or
escheated in accordance with applicable abandoned property laws; or
(ii) any money received for transmission by the licensee or an
authorized delegate in the United States from a person located in the
United States that has not been received by the payee or refunded to the
sender or escheated in accordance with applicable abandoned property
laws.
(B) "In the United States" includes a person in any state, territory or
possession of the United States, the District of Columbia, the
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commonwealth of Puerto Rico or a United States military installation that
is located in a foreign country.
(23) "Passive investor" means a person that:
(A) Does not have the power to elect a majority of key individuals or
executive officers, managers, directors, trustees or other persons exercising
managerial authority of a person in control of a licensee;
(B) is not employed by and does not have any managerial duties of
the licensee or person in control of a licensee; or
(C) does not have the power to exercise, directly or indirectly, a
controlling influence over the management or policies of a licensee or
person in control of a licensee; and
(D) (i) Either attests to subparagraphs (A), (B) and (C) in a form and
in a manner prescribed by the commissioner; or
(ii) commits to the passivity characteristics of subparagraphs (A), (B)
and (C) in a written document.
(24) (A) "Payment instrument" means a written or electronic check,
draft, money order, traveler's check or other written or electronic
instrument for the transmission or payment of money or monetary value,
regardless of negotiability.
(B) "Payment instrument" does not include stored value or any
instrument that is:
(i) Redeemable by the issuer only for goods or services provided by
the issuer or the issuer's affiliate or franchisees of the issuer or the
franchisees' affiliate, except to the extent required by applicable law to be
redeemable in cash for its cash value; or
(ii) not sold to the public but issued and distributed as part of a
loyalty, rewards or promotional program.
(25) "Payroll processing services" means the receipt of money for
transmission pursuant to a contract with a person to deliver wages or
salaries, make payment of payroll taxes to state and federal agencies, make
payments relating to employee benefit plans or make distributions of other
authorized deductions from wages or salaries. "Payroll processing
services" does not include an employer performing payroll processing
services on the employer's own behalf or on behalf of an affiliate.
(26) "Person" means any individual, general partnership, limited
partnership, limited liability company, corporation, trust, association, joint
stock corporation or other corporate entity identified or recognized by the
commissioner.
(27) "Receiving money for transmission" or "money received for
transmission" means the receipt of money or monetary value in the United
States for transmission within or outside the United States by electronic or
other means.
(28) "Stored value" means monetary value representing a claim
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against the issuer evidenced by an electronic or digital record and that is
intended and accepted for use as a means of redemption for money or
monetary value or payment for goods or services. "Stored value" includes,
but is not limited to, prepaid access as defined by 31 C.F.R. § 1010.100.
"Stored value" does not include a payment instrument or closed loop
stored value or stored value not sold to the public but issued and
distributed as part of a loyalty, rewards or promotional program.
(29) "Tangible net worth" means the aggregate assets of a licensee
excluding all intangible assets, less liabilities, as determined in accordance
with United States generally accepted accounting principles.
Sec. 2. (a) This act does not apply to:
(1) An operator of a payment system to the extent that such operator
provides processing, clearing or settlement services between persons
exempted under this subsection or licensees in connection with wire
transfers, credit card transactions, debit card transactions, stored value
transactions, automated clearing house transfers or similar funds transfers.
(2) A person appointed as an agent of a payee to collect and process a
payment from a payor to the payee for goods or services other than money
transmission provided to the payor by the payee if:
(A) A written agreement exists between the payee and the agent
directing the agent to collect and process payments from payors on the
payee's behalf;
(B) the payee holds the agent out to the public as accepting payments
for goods or services on the payee's behalf; and
(C) payment for the goods and services is treated as received by the
payee upon receipt by the agent so that the payor's obligation is
extinguished and there is no risk of loss to the payor if the agent fails to
remit the funds to the payee.
(3) A person that acts as an intermediary by processing payments
between an entity that has directly incurred an outstanding money
transmission obligation to a sender and the sender's designated recipient, if
the entity:
(A) Is properly licensed or exempt from licensing requirements under
this act;
(B) provides a receipt, electronic record or other written confirmation
to the sender identifying the entity as the provider of money transmission
in the transaction; and
(C) bears sole responsibility to satisfy the outstanding money
transmission obligation to the sender, including the obligation to make the
sender whole in connection with any failure to transmit the funds to the
sender's designated recipient.
(4) The United States government and any agency, bureau,
department, office or instrumentality, corporate or otherwise, thereof,
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including any official, employee or agent of any such entity.
(5) Money transmission by the United States postal service or by an
agent of the United States postal service.
(6) Any state office or officer, department, board, commission,
bureau, division, authority, agency or institution of this state, including any
political subdivision thereof, and any county, city or other municipality.
(7) A federally insured depository financial institution, bank holding
company, office of an international banking corporation, foreign bank that
establishes a federal branch pursuant to 12 U.S.C. § 3102, a corporation
organized pursuant to 12 U.S.C. §§ 1861 through 1867 or a corporation
organized under 12 U.S.C. §§ 611 through 633.
(8) Electronic funds transfer of governmental benefits for a federal,
state, county or governmental agency by a contractor on behalf of the
United States or a department, agency or instrumentality thereof or on
behalf of a state or governmental subdivision, agency or instrumentality
thereof.
(9) A board of trade designated as a contract market under 7 U.S.C.
§§ 1 through 25 or a person that in the ordinary course of business
provides clearance and settlement services for a board of trade to the
extent of the board of trade's operation as or for such a board.
(10) A futures commission merchant registered under federal
commodities law to the extent of the registrant's operation as such a
futures commission merchant.
(11) A person registered as a securities broker-dealer under federal or
state securities law to the extent of such registrant's operation as such a
securities broker-dealer.
(12) An individual employed by a licensee, authorized delegate or
any person exempted from the licensing requirements of the act when
acting within the scope of employment and under the supervision of the
licensee, authorized delegate or exempted person as an employee and not
as an independent contractor.
(13) A person expressly appointed as a third-party service provider to
or agent of an entity exempt under paragraph (a)(6) solely to the extent
that:
(A) Such service provider or agent is engaging in money transmission
on behalf of and pursuant to a written agreement with the exempt entity
that sets forth the specific functions that the service provider or agent is to
perform; and
(B) the exempt entity assumes all risk of loss and all legal
responsibility for satisfying the outstanding money transmission
obligations owed to purchasers and holders of the outstanding money
transmission obligations upon receipt of the purchaser's or holder's money
or monetary value by the service provider or agent.
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(14) A person exempt by any rules or regulations adopted or by an
order issued if the commissioner finds such exemption to be in the public
interest and that the regulation of such person is not necessary for the
purposes of this act.
(b) The commissioner may require that any person claiming to be
exempt from licensing pursuant to this section provide information and
documentation to the commissioner demonstrating that such person
qualifies for any claimed exemption.
Sec. 3. (a) To carry out the purposes of this act, the commissioner
may:
(1) Enter into agreements or relationships with other government
officials or federal and state regulatory agencies and regulatory
associations to improve efficiencies and reduce regulatory burden by
standardizing methods or procedures and sharing resources, records or
related information obtained under this act;
(2) use, hire, contract or employ analytical systems, methods or
software to examine or investigate any person subject to this act;
(3) accept from other state or federal government agencies or
officials, licensing, examination or investigation reports made by such
other state or federal government agencies or officials; and
(4) accept audit reports made by an independent certified public
accountant or other qualified third-party auditor for an applicant or
licensee and incorporate the audit report in any report of examination or
investigation.
(b) The commissioner shall have the broad administrative authority to
administer, interpret and enforce this act, promulgate rules and regulations
necessary to implement this act and set proportionate and equitable fees
and costs associated with applications, examinations, investigations and
other actions required to provide sufficient funds to meet the budget
requirements of administering and enforcing the act for each fiscal year
and to achieve the purposes of this act.
Sec. 4. (a) (1) Except as otherwise provided in subsection (b), all
information or reports obtained by the commissioner from an applicant,
licensee or authorized delegate and all information contained in or related
to an examination, investigation, operating report or condition report
prepared by, on behalf of or for the use of the commissioner or financial
statements, balance sheets or authorized delegate information, are
confidential and are not subject to disclosure under the Kansas open
records act, K.S.A. 45-215 et seq., and amendments thereto.
(2) The provisions of this subsection providing for the confidentiality
of public records shall expire on July 1, 2030, unless the legislature
reviews and reenacts such provisions in accordance with K.S.A. 45-229,
and amendments thereto, prior to July 1, 2030.
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(b) The commissioner may disclose information not otherwise subject
to disclosure under subsection (a) to representatives of state or federal
agencies who promise in a record that such representatives will maintain
the confidentiality of the information or where the commissioner finds that
the release is reasonably necessary for the protection and interest of the
public in accordance with the Kansas open records act.
(c) The following information contained in the records of the office
of the state bank commissioner that is not confidential and may be made
available to the public:
(1) The name, business address, telephone number and unique
identifier of a licensee;
(2) the business address of a licensee's registered agent for service;
(3) the name, business address and telephone number of all
authorized delegates;
(4) the terms of or a copy of any bond filed by a licensee, provided
that confidential information, including, but not limited to, prices and fees
for such bond is redacted; or
(5) copies of any orders of the office of the state bank commissioner
relating to any violation of this act or regulations implementing this act.
(d) This section shall not be construed to prohibit the commissioner
from disclosing to the public a list of all licensees or the aggregated
financial or transactional data concerning those licensees.
Sec. 5. (a) The commissioner may conduct an examination or
investigation of a licensee or authorized delegate or otherwise take
independent action authorized by this act or by any rules and regulations
adopted or an order issued under this act as reasonably necessary or
appropriate to administer and enforce this act, regulations implementing
this act and other applicable federal law. The commissioner may:
(1) Conduct an examination on-site or off-site as the commissioner
may reasonably require;
(2) conduct an examination in conjunction with an examination
conducted by representatives of other state agencies, agencies of another
state or the federal government;
(3) accept the examination report of another state agency or an
agency of another state or the federal government or a report prepared by
an independent accounting firm, which, on being accepted, is considered
for all purposes as an official report of the commissioner; and
(4) summon and examine under oath or subpoena a key individual or
employee of a licensee or authorized delegate and require such individual
or employee to produce records regarding any matter related to the
condition and business of the licensee or authorized delegate.
(b) A licensee or authorized delegate shall provide the commissioner
with full and complete access to all records the commissioner may
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reasonably require to conduct a complete examination. The records shall
be provided at the location and in the format specified by the
commissioner. The commissioner may utilize multistate record production
standards and examination procedures when such standards will
reasonably achieve the requirements of this section.
(c) Unless otherwise directed by the commissioner, a licensee shall
pay all costs reasonably incurred in connection with an examination of the
licensee or the licensee's authorized delegates.
Sec. 6. (a) To administer and enforce the provisions of this act and
minimize the regulatory burden, the commissioner is hereby authorized to
participate in multistate supervisory processes established between states
and coordinated through the conference of state bank supervisors, money
transmitter regulators associations and affiliates and successors thereof for
all licensees that hold licenses in Kansas or other states. As a participant in
such established multistate supervisory processes, the commissioner may:
(1) Cooperate, coordinate and share information with other state and
federal regulators in accordance with section 5, and amendments thereto;
(2) enter into written cooperation, coordination or information-
sharing contracts or agreements with organizations, the membership of
which is made up of state or federal governmental agencies; and
(3) cooperate, coordinate and share information with organizations,
the membership of which is made up of state or federal governmental
agencies, if the organizations agree in writing to maintain the
confidentiality and security of the shared information in accordance with
section 4, and amendments thereto.
(b) The commissioner shall not waive, and nothing in this section
shall constitute a waiver of, the commissioner's authority to conduct an
examination or investigation or otherwise take independent action
authorized by this act or rules and regulations adopted or an order issued
under this act to enforce compliance with applicable state or federal law.
(c) A joint examination or investigation or acceptance of an
examination or investigation report shall not be construed to waive an
examination assessment provided for in this act.
Sec. 7. (a) If the jurisdiction of state money transmission is
conditioned on federal law, any inconsistencies between a provision of
this act and such federal law governing money transmission shall be
governed by the applicable federal law to the extent of such inconsistency.
(b) If there are any inconsistencies between this act and any federal
law that governs pursuant to subsection (a), the commissioner may provide
interpretive guidance that identifies the:
(1) Inconsistency; and
(2) appropriate means of compliance with federal law.
Sec. 8. (a) A person may not engage in the business of money
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transmission or advertise, solicit or hold itself out as providing money
transmission unless the person is licensed under this act.
(b) Subsection (a) shall not apply to a person that is:
(1) An authorized delegate of a person licensed under this act acting
within the scope of authority conferred by a written contract with the
licensee; or
(2) exempt pursuant to section 2, and amendments thereto, and does
not engage in money transmission outside the scope of such exemption.
(c) A license issued pursuant to section 13, and amendments thereto,
shall not be transferable or assignable.
Sec. 9. (a) To establish consistent licensing practices between Kansas
and other states, the commissioner is hereby authorized to:
(1) Implement all licensing provisions of this act in a manner
consistent with other states that have adopted this act or multistate
licensing processes; and
(2) participate in nationwide protocols for licensing cooperation and
coordination among state regulators, if such protocols are consistent with
this act.
(b) The commissioner is authorized to establish relationships or
contracts with the national multistate licensing system and registry or other
entities designated by the national multistate licensing system and registry
to:
(1) Collect and maintain records;
(2) coordinate multistate licensing processes and supervision
processes;
(3) process fees; and
(4) facilitate communication between the commissioner and licensees
or other persons subject to this act.
(c) The commissioner may utilize the nationwide multistate licensing
system and registry for all aspects of licensing in accordance with this act,
including, but not limited to, license applications, applications for
acquisitions of control, surety bonds, reporting, criminal history
background checks, credit checks, fee processing and examinations.
(d) The commissioner may utilize nationwide multistate licensing
system and registry forms, processes and functionalities in accordance
with this act. If the nationwide multistate licensing system and registry
does not provide functionality, forms or processes for the provision of this
act, the commissioner is authorized to implement the requirements in a
manner that facilitates uniformity regarding the licensing, supervision,
reporting and regulation of licensees that are licensed in multiple
jurisdictions.
(e) The commissioner may establish new requirements or waive or
modify, in whole or in part, any or all of the existing requirements as
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reasonably necessary to participate in the nationwide multistate licensing
system and registry through the adoption of any rules and regulations
adopted or an order issued or the issuance of an order.
Sec. 10. (a) Applicants for a license shall submit a completed
application in a form and manner as prescribed by the commissioner. Each
such application shall contain content as set forth by rules and regulations,
instruction or procedure of the commissioner and may be changed or
updated by the commissioner in accordance with applicable law to carry
out the purposes of this act and maintain consistency with nationwide
multistate licensing system and registry licensing standards and practices.
The application shall state or contain, as applicable:
(1) The legal name and any fictitious or trade name used by the
applicant in conducting business and the residential and business addresses
of the applicant;
(2) a list of any criminal convictions of the applicant and any material
litigation in which the applicant was involved in the 10-year period
immediately preceding the submission of the application;
(3) a description of any money transmission services previously
provided by the applicant and the money transmission services the
applicant seeks to provide in Kansas;
(4) a list of the applicant's proposed authorized delegates and the
locations in Kansas where the applicant and the applicant's authorized
delegates propose to engage in money transmission;
(5) a list of all other states where the applicant is licensed to engage
in money transmission and any license revocations, suspensions or other
disciplinary action taken against the applicant in other states;
(6) information concerning any bankruptcy or receivership
proceedings affecting the licensee or a person in control of a licensee;
(7) a sample form of the contract for authorized delegates, if
applicable;
(8) a sample form of the payment instrument or stored value, as
applicable;
(9) the name and address of any federally insured depository financial
institution through which the applicant plans to conduct money
transmission; and
(10) any other information the commissioner or the nationwide
multistate licensing system and registry reasonably requires regarding the
applicant.
(b) If an applicant is a corporation, limited liability company,
partnership or other legal entity, the applicant shall also provide:
(1) The date of the applicant's incorporation or formation and state or
country of incorporation or formation;
(2) a certificate of good standing from the state or country where the
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applicant is incorporated or formed, if applicable;
(3) a brief description of the business structure or organization of the
applicant, including any parents or subsidiaries of the applicant and
whether any such parents or subsidiaries are publicly traded;
(4) the legal name, any fictitious or trade name, all business and
residential addresses and the employment, as applicable, for the 10-year
period immediately preceding the submission of the application for each
key individual and person in control of the applicant;
(5) for any person in control of the applicant, a list of any felony
convictions and for the 10-year period immediately preceding the
submission of the application, a list of any criminal misdemeanor
convictions of a crime of dishonesty, fraud or deceit and any material
litigation in which the person involved is in control of an applicant that is
not an individual;
(6) a copy of the applicant's audited financial statements for the most
recent fiscal year and for the two-year period immediately preceding the
most recent fiscal year or, if acceptable to the commissioner, certified
unaudited financial statements for the most recent fiscal year or other
period acceptable to the commissioner;
(7) a certified copy of the applicant's unaudited financial statements
for the most recent fiscal quarter;
(8) if the applicant is a publicly traded corporation, a copy of the most
recent report filed with the securities and exchange commission pursuant
to 15 U.S.C. § 78m;
(9) if the applicant is a wholly owned subsidiary of:
(A) A corporation publicly traded in the United States, a copy of the
parent corporation's audited financial statements for the most recent fiscal
year or a copy of the parent corporation's most recent financial report filed
with the securities and exchange commission pursuant to 15 U.S.C. § 78m;
or
(B) a corporation publicly traded outside the United States, a copy of
documentation similar to the requirements of paragraph (A) filed with the
regulator of the parent corporation's domicile outside the United States;
(10) the name and address of the applicant's registered agent in
Kansas; and
(11) any other information that the commissioner reasonably requires
regarding the applicant.
(c) The commissioner shall set a nonrefundable new application fee
each year pursuant to section 3(b), and amendments thereto.
(d) The commissioner may waive one or more requirements of
subsections (a) or (b) or permit an applicant to submit other information in
lieu of the required information.
Sec. 11. (a) As a part of any original application, any individual in
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control of a licensee, any applicant in control of a licensee and each key
individual shall provide the commissioner with the following items
through the nationwide multistate licensing system and registry:
(1) (A) The office of the state bank commissioner may require an
individual to be fingerprinted and submit to a state and national criminal
history record check. The fingerprints shall be used to identify the
individual and to determine whether such individual has a record of
criminal history in this state or other jurisdictions. The office of the state
bank commissioner is authorized to submit the fingerprints to the Kansas
bureau of investigation and the federal bureau of investigation for a state
and national criminal history record check. The office of the state bank
commissioner may use the information obtained from fingerprinting and
the criminal history for purposes of verifying the identification of the
individual and in the official determination of the qualifications and fitness
of the individual to be issued or to maintain a license;
(B) Local and state law enforcement officers and agencies shall assist
the office of the state bank commissioner in taking and processing of
fingerprints of applicants for and holders of any license, registration,
permit or certificate;
(C) The Kansas bureau of investigation shall release all records of
adult convictions and nonconvictions in Kansas and adult convictions,
adjudications and nonconvictions of another state or country to the office
of the state bank commissioner. Disclosure or use of any information
received for any purpose other than provided in this section shall be a class
A misdemeanor and shall constitute grounds for removal from office or
termination of employment; and
(D) Any individual that currently resides and has continuously
resided outside of the United States for the past 10 years shall not be
required to comply with this subsection; and
(2) a description of the individual's personal history and experience
provided in a form and manner prescribed by the commissioner to obtain
the following:
(A) An independent credit report from a consumer reporting agency.
This requirement shall be waived if the individual does not have a social
security number;
(B) information related to any criminal convictions or pending
charges; and
(C) information related to any regulatory or administrative action and
any civil litigation involving claims of fraud, misrepresentation,
conversion, mismanagement of funds, breach of fiduciary duty or breach
of contract.
(b) (1) If the individual has resided outside of the United States at any
time during the 10-year period immediately preceding the individual's
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application, the individual shall also provide an investigative background
report prepared by an independent search firm.
(2) At a minimum, the search firm shall:
(A) Demonstrate that it has sufficient knowledge and resources and
that such firm employs accepted and reasonable methodologies to conduct
the research of the background report; and
(B) not be affiliated with or have an interest with the individual it is
researching.
(3) The investigative background report shall be provided in English
and, at a minimum, shall contain the following:
(A) A comprehensive credit report or any equivalent information
obtained or generated by the independent search firm to accomplish such
report, including a search of the court data in the countries, provinces,
states, cities, towns and contiguous areas where the individual resided and
worked if such report is available in the individual's current jurisdiction of
residency;
(B) criminal records information for the 10-year period immediately
preceding the individual's application, including, but not limited to,
felonies, misdemeanors or similar convictions for violations of law in the
countries, provinces, states, cities, towns and contiguous areas where the
individual resided and worked;
(C) employment history;
(D) media history including an electronic search of national and local
publications, wire services and business applications; and
(E) financial services-related regulatory history, including, but not
limited to, money transmission, securities, banking, insurance and
mortgage-related industries.
(c) Any information required by this section may be used by the
commissioner in making an official determination of the qualifications and
fitness of the person in control or who seeks to gain control of the licensee.
Sec. 12. (a) A person is presumed to exercise a controlling influence
when such person holds the power to vote, directly or indirectly, at least
10% of the outstanding voting shares or voting interests of a licensee or
person in control of a licensee.
(b) A person presumed to exercise a controlling influence pursuant to
this section may rebut the presumption of control if the person is a passive
investor.
(c) For purposes of determining the percentage of a person controlled
by any individual, the individual's interest shall be aggregated with the
interest of any other immediate family member, including the individual's
spouse, parents, children, siblings, mothers-in-law and fathers-in-law,
sons-in-law and daughters-in-law, brothers-in-law and sisters-in-law and
any other person who shares such individual's home.
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Sec. 13. (a) (1) When an application for an original license under this
act appears to include all the items and addresses all of the matters that are
required, the application shall be deemed complete, and the commissioner
shall promptly notify the applicant of the date the application is deemed
complete. The commissioner shall approve or deny the application within
120 days after the completion date.
(2) If the application has not been approved or denied within 120
days after the completion date:
(A) The application shall be considered approved; and
(B) the license shall take effect as of the first business day after
expiration of the 120-day period.
(3) The commissioner may extend the application period for good
cause.
(b) A determination by the commissioner that an application is
complete and accepted for processing means that the application, on its
face, appears to include all of the items, including the criminal history
background check response from the Kansas bureau of investigation and
that such application addresses all of the matters that are required. A
determination of completion by the commissioner shall not be deemed to
be an assessment of the substance of the application or of the sufficiency
of the information provided.
(c) When an application is filed and considered complete under this
section, the commissioner shall investigate the applicant's financial
condition and responsibility, financial and business experience, character
and general fitness. The commissioner may conduct an on-site
investigation of the applicant at the applicant's expense. The commissioner
shall issue a license to an applicant under this section if the commissioner
finds that the following conditions have been fulfilled:
(1) The applicant has complied with sections 10 and 11, and
amendments thereto; and
(2) the financial condition and responsibility, financial and business
experience, competence, character and general fitness of the applicant and
key individuals and persons in control of the applicant indicate that it is in
the interest of the public to permit the applicant to engage in money
transmission.
(d) If an applicant avails itself or is otherwise subject to a multistate
licensing process:
(1) The commissioner is hereby authorized to accept the investigation
results of a lead investigative state to satisfy the requirements of
subsection (c) if such lead investigative state has sufficient staffing,
expertise and minimum standards; or
(2) if Kansas is the lead investigative state, the commissioner is
hereby authorized to investigate the applicant pursuant to subsection (c)
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utilizing the timeframes established by agreement through the multistate
licensing process. No such timeframes shall be considered noncompliant
with the application period in subsection (a)(1).
(e) The commissioner shall issue a formal written notice of the denial
of a license application within 14 days of the decision to deny the
application. The commissioner shall state in the notice of denial the
specific reasons for the denial of the application. An applicant whose
application is denied by the commissioner under this subsection may
appeal within 14 days of receiving the notice and request a hearing in
accordance with the Kansas administrative procedure act, K.S.A. 77-501 et
seq., and amendments thereto.
(f) The initial license term shall begin on the day the application is
approved. The license shall expire on December 31 of the year in which
the license term began, unless the initial license date is between November
1 and December 31, in which case the initial license term shall run through
December 31 of the following year.
Sec. 14. (a) (1) A license issued under this act shall be renewed
annually.
(2) An annual renewal fee set by the commissioner shall be paid not
more than 60 days before the license expiration.
(3) The renewal term shall be for a period of one year and shall begin
on January 1 of each year after the initial license term and shall expire on
December 31 of the year the renewal term begins.
(b) A licensee shall submit a complete renewal report with the
renewal fee, in a form and manner determined by the commissioner. The
renewal report shall contain a description of each material change in
information submitted by the licensee in the licensee's original license
application that has not been reported to the commissioner.
(c) Renewal applications received within 30 days of the expiration of
the license and incomplete applications as of 30 days prior to the
expiration of the license shall be subject to a late fee set by the
commissioner.
(d) The commissioner may grant an extension of the renewal date for
good cause.
(e) The commissioner is hereby authorized to utilize the nationwide
multistate licensing system and registry to process license renewals, if
such utilization satisfies the requirements of this section.
(f) Renewal applications submitted between November 1, 2024 and
December 31, 2024, considered complete pursuant to K.S.A. 9-509, and
amendments thereto, shall be considered complete under this section.
Sec. 15. (a) If a licensee does not continue to meet the qualifications
or satisfy the requirements of an applicant for a new money transmission
license, the commissioner may suspend or revoke the licensee's license in
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accordance with the procedures established by this act or other applicable
state law for such suspension or revocation.
(b) An applicant for a money transmission license shall demonstrate
that such applicant meets or will meet and a money transmission licensee
shall at all times meet, the requirements of sections 32, 33 and 34, and
amendments thereto.
Sec. 16. (a) The commissioner shall have the discretion to determine
the completeness of any application submitted pursuant to this act. In
making such a determination, the commissioner shall consider the
applicant's compliance with the requirements of the act and any other facts
and circumstances that the commissioner deems appropriate.
(b) If an applicant fails to complete the application for a new license
or for a change of control of a license within 60 days after the
commissioner provides written notice of the incomplete application, the
application will be deemed abandoned and the application fee shall be
nonrefundable. An applicant whose application is abandoned under this
section may reapply to obtain a new license.
Sec. 17. (a) When any person or group of persons acting in concert
are seeking to acquire control of a licensee, the licensee shall obtain the
written approval of the commissioner prior to the change of control. An
individual is not deemed to acquire control of a licensee and is not subject
to this section when that individual becomes a key individual in the
ordinary course of business.
(b) A person or group of persons acting in concert that seeks to
acquire control of a licensee in cooperation with such licensee shall submit
an application in the form and manner prescribed by the commissioner.
Such application shall be accompanied by a nonrefundable fee set by the
commissioner.
(c) Upon request, the commissioner may permit a licensee, the person
or group of persons acting in concert to submit some or all information
required by the commissioner pursuant to subsection (b) without using the
nationwide multistate licensing system and registry.
(d) The application required by subsection (b) shall include all
information required by section 11, and amendments thereto, for any new
key individuals who have not previously completed the requirements of
section 11, and amendments thereto, for a licensee.
(e) (1) When an application for acquisition of control under this
section appears to include all the items and addresses all of the matters that
are required, the application shall be deemed complete and the
commissioner shall promptly notify the applicant of the date on which the
application was so deemed, and the commissioner shall approve or deny
the application within 60 days after the completion date.
(2) If the application is not approved or denied within 60 days after
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the completion date:
(A) The application shall be deemed approved; and
(B) the person or group of persons acting in concert shall not be
prohibited from acquiring control.
(3) The commissioner may extend the application period for good
cause.
(f) A determination by the commissioner that an application is
complete and is accepted for processing means only that the application,
on its face, appears to include all of the items and addresses all of the
matters that are required. A determination of completion by the
commissioner shall not be deemed to be an assessment of the substance of
the application or of the sufficiency of the information provided.
(g) When an application is filed and considered complete under
subsection (e), the commissioner shall investigate the financial condition
and responsibility, financial and business experience, character and general
fitness of the person or group of persons acting in concert who seek to
acquire control. The commissioner shall approve an acquisition of control
pursuant to this section if the commissioner finds that all of the following
conditions have been fulfilled:
(1) The requirements of subsections (b) and (d) have been met, as
applicable; and
(2) the financial condition and responsibility, financial and business
experience, competence, character and general fitness of the person or
group of persons acting in concert seeking to acquire control and the key
individuals and persons that would be in control of the licensee after the
acquisition of control indicate that it is in the interest of the public to
permit the person or group of persons acting in concert to control the
licensee.
(h) If an applicant avails itself or is otherwise subject to a multistate
licensing process:
(1) The commissioner shall be authorized to accept the investigation
results of a lead investigative state for the purposes of subsection (g) if the
lead investigative state has sufficient staffing, expertise and minimum
standards; or
(2) if Kansas is a lead investigative state, the commissioner shall be
authorized to investigate the applicant pursuant to subsection (g) and the
timeframes established by agreement through the multistate licensing
process.
(i) The commissioner shall issue a formal written notice of the denial
of an application to acquire control within 30 days of the decision to deny
the application. The commissioner shall state in the notice of denial the
specific reasons for the denial of the application. An applicant whose
application is denied by the commissioner under this subsection may
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appeal within 14 days and request a hearing in accordance with the Kansas
administrative procedure act, K.S.A. 77-501 et seq., and amendments
thereto.
(j) The requirements of subsections (a) and (b) shall not apply to any
of the following:
(1) A person that acts as a proxy for the sole purpose of voting at a
designated meeting of the shareholders or holders of voting shares or
voting interests of a licensee or a person in control of a licensee;
(2) a person that acquires control of a licensee by devise or descent;
(3) a person that acquires control of a licensee as a personal
representative, custodian, guardian, conservator or trustee or as an officer
appointed by a court of competent jurisdiction or by operation of law;
(4) a person that is exempt under subsection (l);
(5) a person that the commissioner determines is not subject to
subsection (a) based on the public interest;
(6) a public offering of securities of a licensee or a person in control
of a licensee; or
(7) an internal reorganization of a person in control of the licensee if
the ultimate person in control of the licensee remains the same.
(k) Persons meeting the requirements of subsections (j)(2), (j)(3), (j)
(4), (j)(6) or (j)(7) in cooperation with the licensee shall notify the
commissioner within 15 days after the acquisition of control.
(l) (1) The requirements of subsections (a) and (b) shall not apply to a
person that has complied with and received approval to engage in money
transmission under this act or was identified as a person in control in a
prior application filed with and approved by the commissioner or by a
money service business-accredited state pursuant to a multistate licensing
process, if:
(A) The person has not had a license revoked or suspended or
controlled a licensee that has had a license revoked or suspended while the
person was in control of the licensee in the previous five years;
(B) the person is a licensee, such person is well managed and has
received at least a satisfactory rating for compliance at such person's most
recent examination by an money service business accredited state if such
rating was given;
(C) the licensee to be acquired is expected to meet the requirements
of sections 32, 33 and 34, and amendments thereto, after the acquisition of
control is completed. If the person acquiring control is a licensee, such
licensee shall also be expected to meet the requirements of sections 32, 33
and 34, and amendments thereto, after the acquisition of control is
completed;
(D) the licensee to be acquired shall not implement any material
changes to such licensee's business plan as a result of the acquisition of
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control. If the person acquiring control is a licensee, such licensee shall not
implement any material changes to such licensee's business plan as a result
of the acquisition of control; and
(E) the person provides notice of the acquisition in cooperation with
the licensee and attests to the provisions of this subsection in a form and
manner prescribed by the commissioner.
(2) If the notice is not disapproved within 30 days after the date on
which the notice was determined to be complete, the notice shall be
deemed approved.
(m) Before filing an application for approval to acquire control of a
licensee, a person may request in writing a determination from the
commissioner as to whether such person would be considered a person in
control of a licensee upon consummation of a proposed transaction. If the
commissioner determines that the person would not be a person in control
of a licensee, the person and the proposed transaction shall not be subject
to the requirements of subsections (a) and (b).
(n) If a multistate licensing process includes a determination pursuant
to subsection (m) and an applicant avails itself or is otherwise subject to
the multistate licensing process:
(1) The commissioner is hereby authorized to accept the control
determination of a lead investigative state with sufficient staffing,
expertise and minimum standards for the purpose of subsection (m); or
(2) if Kansas is a lead investigative state, the commissioner is hereby
authorized to investigate the applicant pursuant to subsection (m) and the
timeframes established by agreement through the multistate licensing
process.
Sec. 18. (a) A licensee adding or replacing a key individual shall
provide:
(1) Notice in the manner prescribed by the commissioner within 15
days after the effective date of the appointment of the new key individual;
and
(2) information as required by section 10, and amendments thereto,
within 45 days of the effective date of the appointment of the new key
individual.
(b) Within 90 days of the date on which the notice provided pursuant
to subsection (a) was determined to be complete, the commissioner may
issue a notice of disapproval of a key individual if the competence,
experience, character or integrity of the individual would not be in the best
interests of the public or the customers of the licensee to permit the
individual to be a key individual of such licensee.
(c) A notice of disapproval shall state the basis for disapproval and
shall be sent to the licensee and the disapproved individual. A licensee may
appeal a notice of disapproval pursuant to the Kansas administrative
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procedure act, K.S.A. 77-501 et seq., and amendments thereto, within 14
days.
(d) If the notice provided pursuant to subsection (a) is not
disapproved within 90 days after the date when the notice was determined
to be complete, the key individual shall be deemed approved.
(e) If a multistate licensing process includes a key individual notice
review and disapproval process pursuant to this section and the licensee
avails itself or is otherwise subject to the multistate licensing process:
(1) The commissioner is hereby authorized to accept the
determination of another state if the investigating state has sufficient
staffing, expertise and minimum standards for the purpose of this section;
or
(2) if Kansas is a lead investigative state, the commissioner is
authorized to investigate the applicant pursuant to subsection (b) and the
timeframes established by agreement through the multistate licensing
process.
Sec. 19. (a) Every licensee shall submit a report of condition within
45 days of the end of the calendar quarter or within any extended time as
the commissioner may prescribe.
(b) The report of condition shall include:
(1) Financial information at the licensee level;
(2) nationwide and state-specific money transmission transaction
information in every jurisdiction in the United States where the licensee is
licensed to engage in money transmission;
(3) the permissible investments report;
(4) transaction destination country reporting for money received for
transmission, if applicable; and
(5) any other information the commissioner reasonably requires
regarding the licensee.
(c) The commissioner may utilize the nationwide multistate licensing
system and registry for the submission of the report required by subsection
(a) and is authorized to change or update as necessary the requirements of
this section to carry out the purposes of this act and maintain consistency
with nationwide multistate licensing system and registry reporting.
(d) The information required by subsection (b)(4) shall only be
included in a report of condition submitted within 45 days of the end of the
fourth calendar quarter.
Sec. 20. (a) Within 90 days after the end of each fiscal year or within
any extended time as the commissioner may prescribe through rules and
regulations, every licensee shall file with the commissioner:
(1) An audited financial statement of the licensee for the fiscal year
prepared in accordance with United States generally accepted accounting
principles; and
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(2) any other information as the commissioner may reasonably
require.
(b) The audited financial statements shall be prepared by an
independent certified public accountant or independent public accountant
who has been deemed satisfactory by the commissioner.
(c) The audited financial statements shall include or be accompanied
by a certificate of opinion of the independent certified public accountant or
independent public accountant in a form and manner determined by the
commissioner. If the certificate or opinion is qualified, the commissioner
may order the licensee to take any action as the commissioner may find
necessary to enable the independent certified public accountant or
independent public accountant to remove the qualification.
Sec. 21. (a) Each licensee shall submit a report of authorized
delegates within 45 days of the end of each calendar quarter. The
commissioner is authorized to utilize the nationwide multistate licensing
system and registry for the submission of the report required by this
subsection if such utilization is consistent with the requirements of this
section.
(b) The authorized delegate report shall include, at a minimum, each
authorized delegate's:
(1) Company legal name;
(2) taxpayer employer identification number;
(3) principal provider identifier;
(4) physical address;
(5) mailing address;
(6) any business conducted in other states;
(7) any fictitious or trade name;
(8) contact person's name, phone number and email;
(9) start date as the licensee's authorized delegate;
(10) end date acting as the licensee's authorized delegate, if
applicable; and
(11) any other information the commissioner reasonably requires
regarding the authorized delegate.
Sec. 22. (a) A licensee shall file a report with the commissioner
within one business day after the licensee has reason to know of the:
(1) Filing of a bankruptcy or reorganization petition by or against the
licensee;
(2) filing of a petition by or against the licensee for receivership, the
commencement of any other judicial or administrative proceeding for the
licensee's dissolution or reorganization or the making of a general
assignment for the benefit of the licensee's creditors; or
(3) commencement of a proceeding to revoke or suspend the
licensee's license in a state or country where the licensee engages in
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business or is licensed.
(b) A licensee shall file a report with the commissioner within three
business days after the licensee has reason to know of a felony conviction
of:
(1) The licensee or a key individual or person in control of the
licensee; or
(2) an authorized delegate.
Sec. 23. A licensee and an authorized delegate shall file all reports
required by federal currency reporting, recordkeeping and suspicious
activity reporting requirements as set forth in federal and state laws
pertaining to money laundering. The timely filing of a complete and
accurate report required under this section with the appropriate federal
agency is deemed compliant with the requirements of this section.
Sec. 24. (a) Every licensee shall maintain the following records for at
least three years:
(1) A record of each outstanding money transmission obligation sold;
(2) a general ledger posted at least monthly containing all assets,
liability, capital, income and expense accounts;
(3) bank statements and bank reconciliation records;
(4) records of all outstanding money transmission obligations;
(5) records of each outstanding money transmission obligation paid
within the three-year period the records are maintained;
(6) a list of the last known names and addresses of all the licensee's
authorized delegates; and
(7) any other records the commissioner reasonably requires in rules
and regulations.
(b) Records specified in subsection (a) may be maintained:
(1) In any form of record; and
(2) outside this state, if such records are made accessible to the
commissioner on seven business days' notice.
(c) All records maintained by the licensee as required in this section
are open to inspection by the commissioner pursuant to section 5(a), and
amendments thereto.
Sec. 25. (a) As used in this section, "remit" means to make direct
payments of money to a licensee or the licensee's representative authorized
to receive money or to deposit money in a bank in an account specified by
the licensee.
(b) Before a licensee is authorized to conduct business through an
authorized delegate or allows a person to act as the licensee's authorized
delegate, the licensee shall:
(1) Adopt and update as necessary all written policies and procedures
reasonably designed to ensure that the licensee's authorized delegates
comply with applicable state and federal law;
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(2) enter into a written contract that complies with subsection (d); and
(3) conduct a reasonable risk-based background investigation
sufficient for the licensee to determine if the authorized delegate has
complied and will likely comply with applicable state and federal law.
(c) An authorized delegate shall comply with this act.
(d) The written contract required by subsection (b) shall be signed by
the licensee and the authorized delegate and, at a minimum, shall:
(1) Appoint the person signing the contract as the licensee's
authorized delegate with the authority to conduct money transmission on
behalf of the licensee;
(2) set forth the nature and scope of the relationship between the
licensee and the authorized delegate and the respective rights and
responsibilities of each party;
(3) require the authorized delegate to agree to fully comply with all
applicable state and federal laws and rules and regulations pertaining to
money transmission;
(4) require the authorized delegate to remit and handle money and
any monetary value in accordance with the terms of the contract between
the licensee and the authorized delegate;
(5) impose a trust on money and any monetary value net of fees
received for money transmission for the benefit of the licensee;
(6) require the authorized delegate to prepare and maintain records as
required by this act or rules and regulations adopted pursuant to this act or
as reasonably required by the commissioner;
(7) acknowledge that the authorized delegate consents to examination
or investigation by the commissioner;
(8) state that the licensee is subject to regulation by the commissioner
and, as part of such regulation, the commissioner may suspend or revoke
an authorized delegate designation or require the licensee to terminate an
authorized delegate designation; and
(9) acknowledge receipt of the written policies and procedures
required under subsection (b).
(e) Within five business days after the suspension, revocation,
surrender or expiration of a licensee's license, the licensee shall provide
documentation to the commissioner that the licensee has notified all
applicable authorized delegates of the licensee whose names are in a
record filed with the commissioner of the suspension, revocation,
surrender or expiration of a license. Upon suspension, revocation,
surrender or expiration of a license, all applicable authorized delegates
shall immediately cease to provide money transmission as an authorized
delegate of the licensee.
(f) An authorized delegate of a licensee holds in trust for the benefit
of the licensee all money net of fees received from money transmission. If
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an authorized delegate commingles any funds received from money
transmission with any other funds or property owned or controlled by the
authorized delegate, all commingled funds and other property shall be
considered held in trust in favor of the licensee in an amount equal to the
amount of money net of fees received from money transmission.
(g) No authorized delegate shall use a subdelegate to conduct money
transmission on behalf of a licensee.
Sec. 26. No person shall engage in the business of money
transmission on behalf of a person who is not licensed or exempt from
licensing under this act. If a person engages in such activity, such person
shall be deemed to have provided money transmission to the same extent
that such person were a licensee and shall be jointly and severally liable
with the unlicensed or nonexempt person.
Sec. 27. (a) Every licensee shall forward all moneys received for
transmission in accordance with the terms of the agreement between the
licensee and the sender unless the licensee reasonably believes or has a
reasonable basis to believe that the sender may be a victim of fraud or that
a crime or violation of law or any rules and regulations has occurred, is
occurring or may occur.
(b) If a licensee fails to forward money received for transmission in
accordance with this section, the licensee shall respond to inquiries by the
sender with the reason for the failure unless providing a response would
violate a state or federal law or rules and regulations.
Sec. 28. (a) This section does not apply to moneys received for
transmission:
(1) Subject to 12 C.F.R. §§ 1005.30 through 1005.36; or
(2) pursuant to a written agreement between the licensee and payee to
process payments for goods or services provided by the payee.
(b) Within 10 days of receipt of the sender's written request for a
refund of all money received for transmission, the licensee shall refund
such money to the sender, unless:
(1) The money has been forwarded within 10 days of the date when
the money was received for transmission;
(2) instructions have been given committing an equivalent amount of
money to the person designated by the sender within 10 days of the date
when the money was received for transmission;
(3) the agreement between the licensee and the sender instructs the
licensee to forward the money after 10 days of the date when the money
was received for transmission. If funds have not yet been forwarded in
accordance with the terms of the agreement between the licensee and the
sender, the licensee shall issue a refund in accordance with this section; or
(4) the refund is requested for a transaction that the licensee has not
completed based on a reasonable belief or a reasonable basis to believe
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that a crime or violation of law, rules and regulations has occurred, is
occurring or may occur.
(c) The refund request shall not be construed to enable the licensee to
identify the:
(1) Sender's name and address or telephone number; or
(2) particular transaction to be refunded if the sender has multiple
outstanding transactions.
Sec. 29. (a) This section shall not apply to:
(1) Money received for transmission subject to 12 C.F.R. §§ 1005.30
through 1005.36;
(2) money received for transmission that is not primarily for personal,
family or household purposes;
(3) money received for transmission pursuant to a written agreement
between the licensee and payee to process payments for goods or services
provided by the payee; or
(4) payroll processing services.
(b) As used in this section, "receipt" means a paper or electronic
receipt.
(c) (1) For a transaction conducted in person, the receipt may be
provided electronically if the sender requests or agrees to receive an
electronic receipt.
(2) For a transaction conducted electronically or by phone, a receipt
may be provided electronically. All electronic receipts shall be provided in
a retainable form.
(d) (1) Every licensee or the licensee's authorized delegate shall
provide the sender a receipt for money received for transmission.
(2) The receipt shall contain the:
(A) Name of the sender;
(B) name of the designated recipient;
(C) date of the transaction;
(D) unique transaction or identification number;
(E) name of the licensee, the licensee's nationwide multistate
licensing system and registry unique identification number, the licensee's
business address and the licensee's customer service telephone number;
(F) amount of the transaction in United States dollars;
(G) fee charged, if any, by the licensee to the sender for the
transaction; and
(H) taxes collected, if any, by the licensee from the sender for the
transaction.
(3) The receipt required by this section shall be written in English and
in the language principally used by the licensee or authorized delegate to
advertise, solicit or negotiate, either orally or in writing, for a transaction
conducted in person, electronically or by phone, if other than English.
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Sec. 30. Every licensee or authorized delegate shall include on a
receipt or disclose on the licensee's website or mobile application the name
of the office of the state bank commissioner and a statement that the
licensee's Kansas customers can contact the office of the state bank
commissioner with questions or complaints about the licensee's money
transmission services.
Sec. 31. (a) A licensee that provides payroll processing services shall:
(1) Issue reports to clients detailing client payroll obligations in
advance of the payroll funds being deducted from an account; and
(2) make available worker paystubs or an equivalent statement to
workers.
(b) This section shall not apply to a licensee providing payroll
processing services where the licensee's client designates the intended
recipients to the licensee and is responsible for providing the disclosures.
Sec. 32. (a) Every licensee shall maintain at all times a tangible net
worth of:
(1) The greater of $100,000 or 3% of such licensee's total assets up to
$100,000,000;
(2) 2% of such licensee's additional assets of $100,000,000 to
$1,000,000,000; and
(3) 0.5% of such licensee's additional assets of over $1,000,000,000.
(b) The licensee's tangible net worth shall be demonstrated at initial
application by the applicant's most recent audited or unaudited financial
statements pursuant to section 10, and amendments thereto.
(c) Notwithstanding the provisions of this section, the commissioner
shall have the authority to exempt any applicant or licensee, in part or in
whole, from the requirements of this section.
Sec. 33. (a) An applicant for a money transmission license shall
provide and a licensee at all times shall maintain security consisting of a
surety bond in a form satisfactory to the commissioner or, with the
commissioner's approval, a deposit instead of a bond in accordance with
this section.
(b) The amount of the required security shall be:
(1) The greater of $200,000 or an amount equal to 100% of the
licensee's average daily money transmission liability in Kansas calculated
for the most recently completed three-month period, up to a maximum of
$1,000,000; or
(2) $200,000, if the licensee's tangible net worth exceeds 10% of total
assets.
(c) A licensee that maintains a bond in the maximum amount
provided for in subsection (b) shall not be required to calculate its average
daily money transmission liability in Kansas for purposes of this section.
(d) A licensee may exceed the maximum required bond amount
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pursuant to section 35, and amendments thereto.
Sec. 34. (a) A licensee shall maintain permissible investments that
have a market value computed in accordance with United States generally
accepted accounting principles of not less than the aggregate amount of the
total of the licensee's outstanding money transmission obligations.
(b) Except for the permissible investments described in section 35,
and amendments thereto, the commissioner may by rules and regulations
or order limit the extent to which a specific investment maintained by a
licensee within a class of permissible investments may be considered a
permissible investment, if the specific investment represents undue risk to
customers not reflected in the market value of investments.
(c) Permissible investments, even if commingled with other assets of
the licensee, shall be held in trust for the benefit of the purchasers and
holders of the licensee's outstanding money transmission obligations in the
event of insolvency, the filing of a petition by or against the licensee under
11 U.S.C. §§ 101 through 110 for bankruptcy or reorganization, the filing
of a petition by or against the licensee for receivership, the commencement
of any other judicial or administrative proceeding for such licensee's
dissolution or reorganization or in the event of an action by a creditor
against the licensee who is not a beneficiary of this statutory trust. No
permissible investments impressed with a trust pursuant to this subsection
shall be subject to attachment, levy of execution or sequestration by order
of any court, except for a beneficiary of this statutory trust.
(d) Upon the establishment of a statutory trust in accordance with
subsection (c) or when any funds are drawn on a letter of credit pursuant to
section 35, and amendments thereto, the commissioner shall notify the
applicable regulator of each state where the licensee is licensed to engage
in money transmission, if any, of the establishment of the trust or the funds
drawn on the letter of credit, as applicable. Notice shall be deemed
satisfied if performed pursuant to a multistate agreement or through the
nationwide multistate licensing system and registry. Funds drawn on a
letter of credit and any other permissible investments held in trust for the
benefit of the purchasers and holders of the licensee's outstanding money
transmission obligations shall be deemed held in trust for the benefit of
such purchasers and holders on a pro rata and equitable basis in
accordance with statutes pursuant to which permissible investments are
required to be held in Kansas and other states, as applicable. Any statutory
trust established under this section shall be terminated upon
extinguishment of all of the licensee's outstanding money transmission
obligations.
(e) The commissioner by rules and regulations or by order may allow
other types of investments that the commissioner determines are of
sufficient liquidity and quality to be a permissible investment. The
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commissioner is hereby authorized to participate in efforts with other state
regulators to determine which other types of investments are of sufficient
liquidity and quality to be a permissible investment.
Sec. 35. (a) The following investments are permissible under this
section:
(1) Cash, including demand deposits, savings deposits and funds in
accounts held for the benefit of the licensee's customers in a federally
insured depository financial institution and cash equivalents including
automated clearing house items in transit to the licensee and automated
clearing house items or international wires in transit to a payee, cash in
transit via armored car, cash in smart safes, cash in licensee-owned
locations, debit card or credit card-funded transmission receivables owed
by any bank or money market mutual funds rated AAA by Standard &
Poor or the equivalent from any eligible rating service;
(2) certificates of deposit or senior debt obligations of a federally
insured depository institution;
(3) an obligation of the United States or a commission, agency or
instrumentality thereof, an obligation that is guaranteed fully as to
principal and interest by the United States or an obligation of a state or a
governmental subdivision, agency or instrumentality thereof;
(4) (A) the full drawable amount of an irrevocable standby letter of
credit for which the stated beneficiary is the commissioner that stipulates
that the beneficiary need only draw a sight draft under the letter of credit
and present it to obtain funds up to the letter of credit amount within seven
days of presentation of the items required by subparagraph (D);
(B) the letter of credit shall:
(i) Be issued by a federally insured depository financial institution, a
foreign bank that is authorized under federal law to maintain a federal
agency or federal branch office in a state or states or a foreign bank that is
authorized under state law to maintain a branch in a state that:
(a) Bears an eligible rating or whose parent company bears an eligible
rating; and
(b) is regulated, supervised and examined by United States federal or
state authorities having regulatory authority over banks, credit unions and
trust companies;
(ii) be irrevocable, unconditional and indicate that such letter of credit
is not subject to any condition or qualifications outside of such letter of
credit;
(iii) contain no references to any other agreements, documents or
entities or otherwise provide for a security interest in the licensee; and
(iv) contain an issue date and expiration date and expressly provide
for automatic extension, without a written amendment, for an additional
period of one year from the present or each future expiration date unless
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the issuer of the letter of credit notifies the commissioner in writing by
certified or registered mail or courier mail or other receipted means at least
60 days prior to any expiration date, that the irrevocable letter of credit
will not be extended;
(C) if any notice of expiration or non-extension of a letter of credit is
issued under clause (a)(4)(B)(iv), the licensee shall be required to
demonstrate to the satisfaction of the commissioner, 15 days prior to
expiration, that the licensee maintains and shall maintain permissible
investments in accordance with section 36(a), and amendments thereto,
upon the expiration of the letter of credit. If the licensee is not able to do
so, the commissioner may draw on the letter of credit in an amount up to
the amount necessary to meet the licensee's requirements to maintain
permissible investments in accordance with section 34(a), and
amendments thereto. Any such draw shall be offset against the licensee's
outstanding money transmission obligations. The drawn funds shall be
held in trust by the commissioner or the commissioner's designated agent,
to the extent authorized by law, as agent for the benefit of the purchasers
and holders of the licensee's outstanding money transmission obligations;
(D) the letter of credit shall provide that the issuer of such letter of
credit shall honor, at sight, a presentation made of the following
documents by the beneficiary to the issuer on or prior to the expiration
date of the letter of credit:
(i) The original letter of credit, including any amendments; and
(ii) a written statement from the beneficiary stating that any of the
following events have occurred:
(a) The filing of a bankruptcy or reorganization petition by or against
the licensee;
(b) the filing of a petition by or against the licensee for receivership
or the commencement of any other judicial or administrative proceeding
for such licensee's dissolution or reorganization;
(c) the seizure of assets of a licensee by a commissioner pursuant to
an emergency order issued in accordance with applicable law, on the basis
of an action, violation or condition that has caused or is likely to cause the
insolvency of the licensee; or
(d) the beneficiary has received notice of expiration or non-extension
of a letter of credit and the licensee failed to demonstrate to the satisfaction
of the beneficiary that the licensee will maintain permissible investments
in accordance with section 36(a), and amendments thereto, upon the
expiration or non-extension of the letter of credit;
(E) the commissioner may designate an agent to serve on the
commissioner's behalf as beneficiary to a letter of credit if the agent and
letter of credit meet requirements established by the commissioner. The
commissioner's agent may serve as agent for multiple licensing authorities
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for a single irrevocable letter of credit if the proceeds of the drawable
amount for the purposes of subsection (a)(4) are assigned to the
commissioner; and
(F) the commissioner is hereby authorized to participate in multistate
processes designed to facilitate the issuance and administration of letters
of credit, including, but not limited to, services provided by the nationwide
multistate licensing system and registry and state regulatory registry, LLC;
and
(5) 100% of the surety bond provided for under section 33, and
amendments thereto, that exceeds the average daily money transmission
liability in Kansas.
(b) (1) Unless permitted by the commissioner by rules and
regulations adopted or by order issued to exceed the limit as set forth
herein, the following investments are permissible under section 35, and
amendments thereto, to the extent specified:
(A) Receivables payable to a licensee from the licensee's authorized
delegates in the ordinary course of business that are less than seven days
old up to 50% of the aggregate value of the licensee's total permissible
investments; and
(B) of the receivables permissible under subparagraph (A),
receivables payable to a licensee from a single authorized delegate in the
ordinary course of business may not exceed 10% of the aggregate value of
the licensee's total permissible investments.
(2) The following investments are permissible up to 20% per
category and up to 50% combined of the aggregate value of the licensee's
total permissible investments:
(A) A short-term investment of up to six months, bearing an eligible
rating;
(B) commercial paper bearing an eligible rating;
(C) a bill, note, bond or debenture bearing an eligible rating;
(D) United States tri-party repurchase agreements collateralized at
100% or more with United States government or agency securities,
municipal bonds or other securities bearing an eligible rating;
(E) money market mutual funds rated less than AAA and equal to or
higher than A- by Standard & Poor or the equivalent from any other
eligible rating service; and
(F) a mutual fund or other investment fund composed solely and
exclusively of one or more permissible investments listed in subsection (a)
(1) through (3).
(3) Cash, including demand deposits, savings deposits and funds in
such accounts held for the benefit of the licensee's customers, at foreign
depository institutions are permissible up to 10% of the aggregate value of
the licensee's total permissible investments if the licensee has received a
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satisfactory rating in the licensee's most recent examination and the
foreign depository institution:
(A) Has an eligible rating;
(B) is registered under the foreign account tax compliance act;
(C) is not located in any country subject to sanctions from the office
of foreign asset control; and
(D) is not located in a high-risk or non-cooperative jurisdiction as
designated by the financial action task force.
Sec. 36. (a) The commissioner may, after notice and an opportunity
for a hearing conducted in accordance with the Kansas administrative
procedure act, K.S.A. 77-501 et seq., and amendments thereto, suspend or
revoke a license or order a licensee to revoke the designation of an
authorized delegate if:
(1) The licensee violates this act or any rules and regulations adopted
or an order issued under this act;
(2) the licensee does not cooperate with an examination or
investigation by the commissioner;
(3) the licensee engages in fraud, intentional misrepresentation or
gross negligence;
(4) an authorized delegate is convicted of a violation of a state or
federal anti-money laundering statute or violates any rules or regulations
adopted or an order issued under this act, as a result of the licensee's
willful misconduct or willful blindness;
(5) the competence, experience, character or general fitness of the
licensee, authorized delegate, person in control of a licensee, key
individual or responsible person of the authorized delegate indicates that it
is not in the public interest to permit the person to provide money
transmission;
(6) the licensee engages in an unsafe or unsound practice as
determined by the commissioner pursuant to subsection (b);
(7) the licensee is insolvent, suspends payment of the licensee's
obligations or makes a general assignment for the benefit of the licensee's
creditors;
(8) the licensee does not remove an authorized delegate after the
commissioner issues and serves upon the licensee a final order that
includes a finding that the authorized delegate has violated this act;
(9) a fact or condition exists that, if it had existed when the licensee
applied for a license, would have been grounds for denying the
application;
(10) the licensee's net worth becomes inadequate and the licensee,
after 10 days, fails to take steps to remedy the deficiency;
(11) the licensee demonstrated a pattern of failing to promptly pay
obligations;
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(12) the licensee applied for adjudication, reorganization or other
relief under bankruptcy; or
(13) the licensee lied or made false or misleading statements to any
material fact or omitted any material fact.
(b) In determining whether a licensee is engaging in an unsafe or
unsound practice, the commissioner may consider the size and condition of
the licensee's money transmission, the magnitude of the loss, the gravity of
the violation of this act and the previous conduct of the person involved.
Sec. 37. (a) The commissioner may issue an order suspending or
revoking the designation of an authorized delegate, if the commissioner
finds that the:
(1) Authorized delegate violated this act or any rules and regulations
adopted or an order issued under this act;
(2) authorized delegate did not cooperate with an examination or
investigation by the commissioner;
(3) authorized delegate engaged in fraud, intentional
misrepresentation or gross negligence;
(4) authorized delegate is convicted of a violation of a state or federal
anti-money laundering statute;
(5) the competence, experience, character or general fitness of the
authorized delegate or a person in control of the authorized delegate
indicates that it is not in the public interest to permit the authorized
delegate to provide money transmission; or
(6) the authorized delegate is engaging in an unsafe or unsound
practice as determined by the commissioner pursuant to subsection (b).
(b) In determining whether an authorized delegate is engaging in an
unsafe or unsound practice, the commissioner may consider the size and
condition of the authorized delegate's provision of money transmission, the
magnitude of the loss, the gravity of the violation of this act or any rules
and regulations adopted or an order issued under this act and the previous
conduct of the authorized delegate.
(c) An authorized delegate may apply for relief from a suspension or
revocation of designation as an authorized delegate according to
procedures prescribed by the commissioner in rules and regulations.
Sec. 38. (a) If the commissioner determines that a violation of this act
or of any rules and regulations adopted or an order issued under this act by
a licensee, a person required to be licensed or authorized delegate is likely
to cause immediate and irreparable harm to the licensee, the licensee's
customers or the public as a result of the violation or cause insolvency or
significant dissipation of assets of the licensee, the commissioner may
issue an order requiring the licensee or authorized delegate to cease and
desist from the violation. The order shall become effective upon service of
the order on the licensee or authorized delegate.
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(b) The commissioner may issue an order against a licensee to cease
and desist from providing money transmission through an authorized
delegate that is the subject of a separate order by the commissioner.
(c) An order to cease and desist shall remain effective and
enforceable pending the completion of an administrative proceeding
pursuant to the Kansas administrative procedure act, K.S.A. 77-501 et
seq., and amendments thereto.
(d) An order to cease and desist shall be considered a final order
unless the licensee or authorized delegate requests a hearing within 14
days after the cease and desist order is issued.
Sec. 39. The commissioner may enter into a consent order at any time
with a person to resolve a matter arising under this act or any rules and
regulations adopted or order issued under this act. A consent order shall be
signed by the person to whom such consent order is issued or by the
person's authorized representative and shall indicate agreement with the
terms contained in the order. A consent order may provide that such
consent order does not constitute an admission by a person that this act or
rules and regulations adopted or an order issued under this act has been
violated.
Sec. 40. (a) Any person that intentionally makes a false statement,
misrepresentation or false certification in a record filed or required to be
maintained under this act or that intentionally makes a false entry or omits
a material entry in such a record is guilty of a severity level 9, nonperson
felony.
(b) Any person that knowingly engages in an activity for which a
license is required under this act without being licensed under this act and
who receives more than $500 in compensation within a 30-day period
from this activity is guilty of a severity level 9, nonperson felony.
(c) Any person that knowingly engages in an activity for which a
license is required under this act without being licensed under this act and
who receives not more than $500 in compensation within a 30-day period
from this activity is guilty of a class A nonperson misdemeanor.
Sec. 41. (a) As part of any summary order or consent order, the
commissioner may:
(1) Assess a fine against any person who violates this act or any rules
and regulations adopted hereunder in an amount not to exceed $5,000 per
violation. The commissioner may designate any fine collected pursuant to
this section be used for consumer education;
(2) assess the agency's operating costs and expenses for investigating
and enforcing this act;
(3) require the person to pay restitution for any loss arising from the
violation or requiring the person to reimburse any profits arising from the
violation;
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(4) prohibit the person from future application for licensure pursuant
to the act; and
(5) require such affirmative action as determined by the
commissioner to carry out the purposes of this act.
(b) (1) The commissioner may enter into an informal agreement at
any time with a person to resolve a matter arising under this act, rules and
regulations adopted hereunder or an order issued pursuant to this act.
(2) Any informal agreement authorized by this subsection shall be
considered confidential examination material. The adoption of an informal
agreement authorized by this subsection shall not be:
(A) Subject to the provisions of K.S.A. 77-501 et seq., and
amendments thereto, or K.S.A. 77-601 et seq., and amendments thereto;
(B) considered an order or other agency action;
(C) subject to the Kansas open records act, K.S.A. 45-215 et seq., and
amendments thereto; or
(D) discovery or be admissible in evidence in any private civil action.
(3) The provisions of this subsection providing for the confidentiality
of public records shall expire on July 1, 2030, unless the legislature
reviews and reenacts such provisions in accordance with the Kansas open
records act, K.S.A. 45-229, and amendments thereto, prior to July 1, 2030.
(c) Through an examination finding, the commissioner may:
(1) Assess a fine against any licensee who violates this act or rules
and regulations adopted thereto, in an amount not to exceed $5,000 per
violation. The commissioner may designate any fine collected pursuant to
this section be used for consumer education; or
(2) require the licensee to pay restitution for any loss arising from the
violation or require the person to reimburse any profits arising from the
violation.
Sec. 42. The provisions of this act are severable. If any portion of the
act is declared unconstitutional or invalid, or the application of any portion
of the act to any person or circumstance is held unconstitutional or invalid,
the invalidity shall not affect other portions of the act that can be given
effect without the invalid portion or application, and the applicability of
such other portions of the act to any person or circumstance shall remain
valid and enforceable.
Sec. 43. K.S.A. 9-508, 9-509, 9-510, 9-510a, 9-511, 9-513, 9-513a, 9-
513b, 9-513c, 9-513d, 9-513e and K.S.A. 2023 Supp. 9-512 are hereby
repealed.
Sec. 44. This act shall take effect and be in force from and after
January 1, 2025, and its publication in the statute book.
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