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Financial Services Law Insights and Observations

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  • New Mexico Director of Financial Institutions Division calls on MSBs to cease standalone operations

    State Issues

    On April 9, New Mexico Director of Financial Institutions Division Christopher Moya issued an order calling on all standalone money services businesses (MSB) to temporarily close and suspend operations. MSBs are not designated as essential businesses in New Mexico, and as such, were instructed to cease all standalone storefront operations to further combat the spread of Covid-19. Branches located physically within a business deemed essential were permitted to stay in operation, as well as MSBs with telephonic or online services.

    State Issues Covid-19 New Mexico Money Service / Money Transmitters

  • Delaware directs check sales and money transmitter licensees to use NMLS

    The Delaware Office of the State Bank Commissioner issued a directive that, beginning on April 15, all Chapter 23, Sale of Checks and Transmission of Money Licensees are advised to use the Nationwide Mortgage Licensing System for applications, renewals, surrenders and amendments.

    Licensing NMLS Covid-19 State Issues Money Service / Money Transmitters

  • Delaware directs check sales and money transmitter licensees to use NMLS

    State Issues

    The Delaware Office of the State Bank Commissioner issued a directive that, beginning on April 15, all Chapter 23, Sale of Checks and Transmission of Money Licensees are advised to use the Nationwide Mortgage Licensing System for applications, renewals, surrenders and amendments.

    State Issues Covid-19 Delaware Money Service / Money Transmitters Licensing NMLS Mortgages

  • Hawaii regulator permits licensees to reduce office hours, temporarily close

    State Issues

    The Hawaii Division of Financial Institutions issued guidance indicating that it will temporarily permit licensees with locations in Hawaii to reduce hours or close offices during Hawaii’s Covid-19 Emergency Period. The guidance clarifies that financial institutions and escrow depositories are required to provide notice of closures or reductions in hours to the Division and to customers as soon as practicable.  While mortgage loan originators, mortgage servicers, and money transmitters are not required to provide notice, the Division requests a courtesy notification of any closure or reduction in hours, and mortgage loan originator branch managers must post signage at the branch office.

    State Issues Covid-19 Hawaii Licensing Mortgage Origination Mortgage Servicing Money Service / Money Transmitters

  • Arkansas Securities Department provides relief from regulatory deadlines and guidance on notarization

    State Issues

    On April 1, the Arkansas Securities Department issued guidance providing relief from certain regulatory deadlines to licensed money services businesses and mortgage companies. The department is providing a 60-day extension to file financial statements and a 30-day extension to submit Call Reports and the MCR Standard Financial Condition Reports. Further, the guidance provides that licensed entities are authorized to use real-time audio and visual means to witness the signing of a legal document so long as the identity and physical presence of any and all witnesses and signers in Arkansas are validated at the time of execution of the document by real-time audio or visual means.

    State Issues Covid-19 Arkansas Securities Notary Money Service / Money Transmitters Mortgages Licensing

  • Illinois Department of Financial and Professional Regulation issues notice to currency exchange and money transmitter licensees

    State Issues

    On March 30, the Illinois Department of Financial and Professional Regulation (Department) issued a notice encouraging currency exchange and money transmitter licensees to provide the Department with advance notice of any changes to their usual business practices. The Department expects all licensees to act responsibly and proactively to address any consumer harm that may arise.

    State Issues Illinois State Regulators Money Service / Money Transmitters Licensing Covid-19

  • Idaho Department of Finance issues memorandum to money transmitter licensees and applicants

    State Issues

    On March 26, the Idaho Department of Finance issued a memorandum to Idaho money transmitter licensees and applicants regarding agency operations and communications due to Covid-19. The memorandum includes information on the Department’s teleworking arrangements and notes that routine examinations of registered entities and agents have been suspended. Registration staff continues to process licensing/registration applications through the CRD/IARD/NMLS systems and U.S. mail. In line with the NMLS Policy committee’s decisions and recommendations, the Department has also extended deadlines by 60 days for the filing of certain reports and statements.

    State Issues Covid-19 Idaho Money Service / Money Transmitters Licensing Mortgages

  • NMLS extends deadline for reports and SAFE MLO test enrollment

    On March 25, in response to the Covid-19 pandemic, the NMLS Policy Committee extended the deadline for certain reporting obligations satisfied through NMLS, and the enrollment window for taking the SAFE MLO test.

    Companies required to submit financial statements, the Mortgage Call Report, and the Money Services Businesses Call Report will have an additional 60 days from pre-established deadlines to submit such reports. Individuals will have the testing window on their test appointments extended 180 days.

    The NMLS Resource Center has been updated with additional resources to provide updates on state agency operating status. In addition, the NMLS Policy Committee is encouraging states to accept documentation electronically that otherwise may have been required in hard copy.

    The full announcement can be found on the NMLS Resource Center.

    Licensing Mortgage Licensing NMLS Mortgage Origination Mortgages MLO Money Service / Money Transmitters Call Report Covid-19

  • Kansas Office of the State Bank Commissioner issues work from home guidance

    State Issues

    On March 16, the Kansas Office of the State Bank Commissioner (OSBC) issued temporary guidance allowing licensed mortgage companies, mortgage loan originators, supervised loan licensees, credit services organizations, money transmitters, credit notification registrants and their employees to work remotely due to the Covid-19 crisis. Licensed or registered individuals and entities will be allowed to work from their residences or a company designated location--even if the residence or location is not a licensed or registered branch location--providing they have temporary policies, procedures, and a plan for supervision in place. OSBC also set forth best practices for remote work to ensure that security of information is maintained.

    State Issues Licensing Covid-19 Kansas State Regulation Mortgages Money Service / Money Transmitters

  • CSBS seeks additional comments on money services businesses model law

    State Issues

    On February 25, the Conference of State Bank Supervisors (CSBS) issued a second request for comments on its draft model law language for money services businesses (MSB Model Law)—a primary part of CSBS’s Vision 2020 initiatives, which are intended to modernize state regulation of non-banks and fintech firms. (Vision 2020 InfoBytes coverage is available here.) According to CSBS, the draft MSB Model Law is comprised of “an integrated, 50-state licensing and supervisory system that recognizes standards across state lines.” As previously covered by InfoBytes, last October CSBS requested comments on the draft MSB Model Law language focusing on issue areas identified by the Fintech Industry Advisory Panel—Control, Activity and Exemption Definitions, Safety & Soundness, and Supervision. To finalize the areas of control and supervision, CSBS is seeking a second round of comments by March 11 to address the following issues identified from comments received during the first round.

    • The industry expressed implementation concerns, with several parties noting, “that CSBS has no authority to implement the MSB Model Law in individual states and utilizing NMLS to drive consistency could compound differences between states.”
    • The proposed control language failed to address uncertainty over the identification of control persons. Moreover, “attempts to exclude passive investors [did] not achieve the intended results.”
    • The industry strongly suggested that parity language contained in the draft MSB Model Law—designed to facilitate state adoption—“was overly broad and would create uncertainty if used.”
    • Definitions and exemptions fell short on several critical issues.
    • The existence of proponents and detractors of both the safety and soundness proposals signaled a divergence within the industry as to the appropriate safeguards for customer funds.

    CSBS notes that the MSB Model Law language will help harmonize operations between states. After the comment period ends, CSBS will prioritize the MSB Model Law for release, with control and coordination language expected to be released in the second quarter of 2020, followed by activities and exemption definitions in May. CSBS also plans to work with states and the industry on safety and soundness language, which may be released as early as August.

    State Issues CSBS Licensing Money Service / Money Transmitters NMLS Vision 2020

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