89R18477 MLH-F
By: Lambert H.B. No. 3833
Substitute the following for H.B. No. 3833:
By: Plesa C.S.H.B. No. 3833
A BILL TO BE ENTITLED
AN ACT
relating to the regulation of money services businesses.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Sections 152.105(a) and (b), Finance Code, are
amended to read as follows:
(a) An [In addition to the requirements of Section 152.104,
an applicant shall provide additional information to the
commissioner if the applicant is an] individual who[:
[(1)] is in control of a money services licensee or
applicant, who[;
[(2)] seeks to acquire control of a money services
licensee,[;] or who
[(3)] is a key individual of a money services licensee
or applicant shall provide[.
[(b) Additional information provided] to the commissioner
[by an individual under this section must include] the
individual's:
(1) fingerprints for submission to the Federal Bureau
of Investigation and the commissioner for purposes of a national
criminal history background check unless the person currently
resides outside of the United States and has resided outside of the
United States for the 10-year period preceding the submission of
the application; and
(2) personal history and experience, in a form and
medium prescribed by the commissioner, that contains the following
information:
(A) if the individual has a social security
number, an independent credit report for the individual from a
consumer reporting agency;
(B) information related to any criminal
convictions or pending charges against the individual; and
(C) information related to any regulatory or
administrative action and any civil litigation against the
individual involving claims of fraud, misrepresentation,
conversion, mismanagement of funds, breach of fiduciary duty, or
breach of contract.
SECTION 2. Section 152.106(c), Finance Code, is amended to
read as follows:
(c) A determination by the commissioner under Subsection
(a) that an application is complete and is accepted for processing
is not an assessment of the substance of the application or of the
sufficiency of the information provided, and means only that the
application, on its face, appears to include all of the items,
including the national criminal history background check response
from the Federal Bureau of Investigation under Section 152.105
[152.105(b)], and address all of the matters that are required
under Sections 152.104 and 152.105.
SECTION 3. Sections 152.107(c) and (i), Finance Code, are
amended to read as follows:
(c) An applicant for a currency exchange license must
demonstrate that it meets or will meet the requirements in Sections
152.353 and[,] 152.354[, and 152.355]. A currency exchange
licensee must at all times continue to meet the requirements of
those sections.
(i) The holder, a key individual [principal], or a person in
control of the holder of a license issued under this chapter that
has expired or that the holder has surrendered under Section
152.108 that wishes to conduct activities for which a license is
required under this chapter must file a new license application
under Section 152.104 and satisfy all requirements for licensure
that apply at the time the new application is filed.
SECTION 4. Section 152.152(a), Finance Code, is amended to
read as follows:
(a) The requirements of Section 152.151 do not apply to a
person who has complied with and received approval to engage in
money services under this chapter or was identified as a person in
control in a previous application filed with and approved by the
commissioner or by an MSB-accredited state under a multistate
licensing process, provided that:
(1) the person has not:
(A) had a money services license revoked or
suspended; or
(B) controlled a money services licensee that has
had a money services license revoked or suspended while the person
was in control of the licensee in the previous five years;
(2) if the person is a money services licensee, the
person:
(A) is well managed; and
(B) if a rating for compliance has been given to
the person by an MSB-accredited state, received a satisfactory
rating in its most recent examination;
(3) in the case of a money transmission licensee, the
person to be acquired is [and the person acquiring control are both
money transmission licensees] projected to meet the requirements of
Sections 152.351, 152.352, 152.354, and 152.355, and if the person
acquiring control is a money transmission licensee, that person
acquiring control is also projected to meet the requirements of
those sections, after the acquisition of control is completed;
(4) in the case of a currency exchange licensee, the
person to be acquired is [and the person acquiring control are both
currency exchange licensees] projected to meet the requirements of
Sections 152.353 and 152.354, and if the person acquiring control
is a currency exchange licensee, that person acquiring control is
also projected to meet the requirements of those sections, after
the acquisition of control is completed;
(5) the money services licensee to be acquired will
not implement any material changes to the licensee's business plan
as a result of the acquisition of control, and if the person
acquiring control is a money services licensee, the acquiring
licensee also will not implement any material changes to its
business plan as a result of the acquisition of control; and
(6) the person provides notice of the acquisition in
cooperation with the money services licensee and attests to
Subdivisions (1) through (5), as applicable, in a form and medium
prescribed by the commissioner.
SECTION 5. Section 152.203(a), Finance Code, is amended to
read as follows:
(a) A money services licensee shall, not later than the 90th
day after the end of each fiscal year, or within an extended time
prescribed by the commissioner, file with the commissioner:
(1) for a money transmission licensee, an audited
unconsolidated financial statement of the licensee for the fiscal
year prepared in accordance with United States generally accepted
accounting principles;
(2) for a currency exchange licensee, a financial
statement, audited or unaudited, dated as of the last day of the
licensee's fiscal year that ended in the immediately preceding
calendar year, prepared in accordance with United States generally
accepted accounting principles; and
(3) any other information as the commissioner may
reasonably require.
SECTION 6. Section 152.351(b), Finance Code, is amended to
read as follows:
(b) Tangible net worth under this section must be
demonstrated at the initial application by the applicant's most
recent audited or unaudited financial statements pursuant to
[under] Section 152.104(c)(6) or (7).
SECTION 7. Section 152.353(a), Finance Code, is amended to
read as follows:
(a) A currency exchange licensee shall at all times maintain
security in the amount applicable to the licensee under this
section consisting of a surety bond in a form satisfactory to the
commissioner. The security must satisfy the requirements of and is
subject to Section 152.354. With the commissioner's approval, a
currency exchange licensee may maintain a deposit in lieu of a bond
under this section.
SECTION 8. Sections 152.354(a) and (g), Finance Code, are
amended to read as follows:
(a) In addition to the requirements of Section 152.352 or
152.353, a security under this subchapter must:
(1) be in a form satisfactory to the commissioner;
(2) be payable to any claimant or to the commissioner,
on behalf of a claimant or this state, for any liability arising out
of a money transmission licensee's money transmission business in
this state, incurred under, subject to, or by virtue of this
chapter; and
(3) if the security is a bond, be issued by a qualified
surety company authorized to engage in business in this state and
acceptable to the commissioner [or, if the security is an
irrevocable letter of credit, be issued by a financial institution
acceptable to the commissioner].
(g) Instead of providing all or part of the amount of the
security required by this section, an applicant for a money
services license or a money services licensee may, with the prior
approval of the commissioner, deposit, with a financial institution
possessing trust powers that is authorized to conduct a trust
business in this state and is acceptable to the commissioner, an
aggregate amount of United States currency, certificates of
deposit, or other cash equivalents that equals the total amount of
the required security or the remaining part of the security.
SECTION 9. Section 152.356, Finance Code, is amended by
amending Subsections (a) and (b) and adding Subsection (a-1) to
read as follows:
(a) The following investments are permissible under Section
152.355:
(1) cash, including:
(A) demand deposits held in a federally insured
depository financial institution;
(B) savings deposits held in a federally insured
depository financial institution;
(C) funds in accounts under Paragraphs (A) and
(B) held for the benefit of the [a] money transmission licensee's
customers in a federally insured depository financial institution;
(D) cash equivalents, including automated
clearing house items:
(i) in transit to the money transmission
licensee; and
(ii) in transit to a payee;
(E) international wires in transit to a payee;
(F) cash in transit via armored car;
(G) cash in smart safes;
(H) cash in money transmission licensee-owned
locations;
(I) debit card or credit card-funded
transmission receivables owed by a bank; or
(J) money market mutual funds rated "AAA" by S&P
Global or an equivalent rating from an eligible rating service;
(2) certificates of deposit or senior debt obligations
of an insured depository institution, as defined by Section 3,
Federal Deposit Insurance Act (12 U.S.C. Section 1813) or the
Federal Credit Union Act (12 U.S.C. Section 1781);
(3) an obligation:
(A) of the United States or a commission, agency,
or instrumentality of the United States;
(B) that is guaranteed fully as to principal and
interest by the United States; or
(C) of a state or a governmental subdivision,
agency, or instrumentality of the United States;
(4) the full drawable amount of an irrevocable standby
letter of credit for which the stated beneficiary is the
commissioner that stipulates that the commissioner need only draw a
sight draft under the letter of credit and present it to obtain
funds up to the letter of credit amount on presentation of the items
required by Subsection (f);
(5) 100 percent of the surety bond or deposit provided
for under Section 152.352 that exceeds the average daily money
transmission liability in this state; or
(6) stablecoin, to the extent of outstanding
transmission obligations received by the licensee in the same kind
of stablecoin.
(a-1) For purposes of Subsection (a)(6), stablecoin must be
held, stored, or kept in custody of the licensee directly or by a
third-party custodian that meets the qualifications prescribed by
the commissioner.
(b) Unless permitted by the commissioner to exceed the limit
provided, the following investments are permissible under Section
152.355 to the extent specified:
(1) receivables that are payable to a money
transmission licensee from its authorized delegates in the ordinary
course of business that are less than seven days old are permissible
up to the amount of 50 percent of the aggregate value of the
licensee's total permissible investments;
(2) receivables under Subdivision (1) that are payable
to a money transmission licensee from a single authorized delegate
in the ordinary course of business are permissible up to the amount
of 10 percent of the aggregate value of the licensee's total
permissible investments;
(3) the following investments are permissible up to
the amount of 20 percent of the aggregate value of a money
transmission licensee's total permissible investments for the
amount under each paragraph and the amount of 50 percent of the
aggregate value of the licensee's total permissible investments for
the total amount under this subdivision:
(A) a short-term investment of not more than 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) a United States tri-party repurchase
agreement collateralized at 100 percent or more with United States
or agency security, municipal bonds, or other security bearing an
eligible rating;
(E) a money market mutual fund rated less than
"AAA" and not less than "A-" by S&P Global, or the equivalent from
an eligible rating service; and
(F) a mutual fund or other investment fund
composed solely and exclusively of one or more permissible
investments listed in Subsections (a)(1)-(3); and
(4) cash, including demand deposits, savings
deposits, and funds in an account held for the benefit of the [a]
money transmission licensee's customers at a foreign depository
institution is permissible up to the amount of 10 percent of the
aggregate value of the licensee's total permissible investments if:
(A) the licensee has received a satisfactory
rating in its most recent examination; and
(B) the foreign depository institution:
(i) has an eligible rating;
(ii) is registered under the Foreign
Account Tax Compliance Act (Pub. L. No. 111-147);
(iii) is not located in a country subject to
sanctions from the Office of Foreign Assets Control; and
(iv) is not located in a jurisdiction
designated high-risk or uncooperative by the Financial Action Task
Force.
SECTION 10. Section 152.403(b), Finance Code, is amended to
read as follows:
(b) The commissioner may suspend or revoke a money services
license or order a money transmission licensee to revoke the
designation of an authorized delegate if the commissioner has
reason to believe that:
(1) the money services licensee has violated this
chapter, a rule adopted or order issued under this chapter, a
written agreement entered into with the department or commissioner,
or any other state or federal law applicable to the licensee's money
services business;
(2) the money services licensee has refused to permit
or has not cooperated with an examination or investigation
authorized by this chapter;
(3) the money services licensee has engaged in fraud,
knowing misrepresentation, deceit, or gross negligence in
connection with the operation of the licensee's money services
business or any transaction subject to this chapter;
(4) an authorized delegate of the money transmission
licensee has knowingly violated this chapter, a rule adopted or
order issued under this chapter, or a state or federal
anti-money-laundering or terrorist funding law, and the licensee
knows or should have known of the violation and has failed to make a
reasonable effort to prevent or correct the violation;
(5) the competence, experience, character, or general
fitness of the money services licensee or the authorized delegate
of a money transmission licensee, or a key individual [principal]
of or[,] person in control [of, or responsible person] of a money
services licensee or authorized delegate of a money transmission
licensee, indicates that it is not in the public interest to permit
the licensee or authorized delegate to provide money services;
(6) the money services licensee has engaged in an
unsafe or unsound act or practice or has conducted business in an
unsafe or unsound manner;
(7) the money services licensee has suspended payment
of the licensee's obligations, made a general assignment for the
benefit of the licensee's creditors, or admitted in writing the
licensee's inability to pay debts of the licensee as they become
due;
(8) the money transmission licensee has failed to
terminate the authority of an authorized delegate after the
commissioner has issued and served on the licensee a final order
finding that the authorized delegate has violated this chapter;
(9) a fact or condition exists that, if it had been
known at the time the money services licensee applied for the
license, would have been grounds for denying the application;
(10) the money services licensee has engaged in false,
misleading, or deceptive advertising;
(11) the money services licensee has failed to pay a
judgment entered in favor of a claimant or creditor in an action
arising out of the licensee's activities under this chapter not
later than the 30th day after the date the judgment becomes final or
not later than the 30th day after the date the stay of execution
expires or is terminated, as applicable;
(12) the money services licensee has knowingly made a
material misstatement or has suppressed or withheld material
information on an application, request for approval, report, or
other document required to be filed with the department under this
chapter; or
(13) the money services licensee has committed a
breach of trust or of a fiduciary duty.
SECTION 11. Section 152.404(a), Finance Code, is amended to
read as follows:
(a) The commissioner may suspend or revoke the designation
of an authorized delegate by a money transmission licensee if the
commissioner has reason to believe that:
(1) the authorized delegate has violated this chapter,
a rule adopted or order issued under this chapter, a written
agreement entered into with the commissioner or the department, or
any other state or federal law applicable to a money transmission
business;
(2) the authorized delegate has refused to permit or
has not cooperated with an examination or investigation under this
chapter;
(3) the authorized delegate has engaged in fraud,
knowing misrepresentation, deceit, gross negligence, or an unfair
or deceptive act or practice in connection with the operation of the
delegate's business on behalf of the money transmission licensee or
any transaction subject to this chapter;
(4) the competence, experience, character, or general
fitness of the authorized delegate, or a key individual [principal]
of or[,] person in control [of, or responsible person] of the
authorized delegate, indicates that it is not in the public
interest to permit the authorized delegate to provide money
transmission;
(5) the authorized delegate has engaged in an unsafe
or unsound act or practice or conducted business in an unsafe and
unsound manner;
(6) the authorized delegate, or a key individual
[principal or responsible person] of the authorized delegate, is
listed on the Specially Designated Nationals and Blocked Persons
List prepared by the United States Department of the Treasury as a
potential threat to commit terrorist acts or to fund terrorist
acts; or
(7) the authorized delegate, or a key individual
[principal or responsible person] of the authorized delegate, has
been convicted of a state or federal anti-money-laundering or
terrorist funding law.
SECTION 12. Section 152.405(b), Finance Code, is amended to
read as follows:
(b) A cease and desist order may require a money services
licensee or authorized delegate to cease and desist from the action
or violation or to take affirmative action to correct any condition
resulting from or contributing to the action or violation, and the
requirements of the order may apply to a key individual [principal
or responsible person] of the licensee or authorized delegate.
SECTION 13. Section 152.410(f), Finance Code, is amended to
read as follows:
(f) A money services licensee or authorized delegate
against whom an emergency order is directed must submit a written
certification to the commissioner, signed by the licensee or
authorized delegate, and their key [principals and responsible]
individuals, as applicable, and each person named in the order,
stating that each person has received a copy of and has read and
understands the order.
SECTION 14. This Act takes effect September 1, 2025.