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Financial Services Law Insights and Observations

OCC: National banks do not need state money transmitter licenses to exercise fiduciary powers

Federal Issues OCC Money Service / Money Transmitters Licensing State Issues

Federal Issues

In June, the OCC posted an interpretive letter to establish that a national bank, subject to certain limits established by 12 U.S.C. § 92a and 12 C.F.R. part 9, may exercise fiduciary powers in any state without obtaining a state money transmitter license. Interpretive Letter #1167 responds to a request for clarification as to whether a bank, whose fiduciary powers are derived from and governed by the National Bank Act and OCC regulations, is required to obtain a state money transmitter license or exemption in order to exercise its fiduciary capacity. The OCC determined that under 12 U.S.C. § 92a, national banks are authorized to act in specific fiduciary capacities “and any other fiduciary capacity permitted for state institutions when acting in the capacity is not in contravention of state law.” The OCC noted that while a national bank’s fiduciary capacities are determined by reference to state law, 12 U.S.C. § 92a (i) “imposes no geographic limits on where a national bank with fiduciary powers may act in a fiduciary capacity”; and (ii) “does not limit where a national bank may market its fiduciary activities, where its fiduciary customers may be located, or where the property being administered may be located.” As such, a national bank may conduct federally authorized fiduciary activities in any state, even if aspects of the bank’s activities fall within a state’s definition of money transmission and the bank is not licensed as a money transmitter in that state. According to the OCC, state laws that are intended to impose licensing requirements on a national bank’s exercise of fiduciary powers are preempted and satisfaction of an exemption from those requirements is not required. However, the OCC cautioned that “[d]ifferent facts and circumstances or consideration of different laws and regulations could result in a different conclusion.”

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