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Financial Services Law Insights and Observations


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  • Wisconsin enacts update to Department of Financial Institutions’ licensing and regulation of mortgage and non-mortgage financial services providers

    On April 4, Wisconsin enacted SB 668 (the “Act”) which will amend many provisions to the Wisconsin Department of Financial Institution’s (DFI) regulation of non-banks. According to an analysis by the state’s Legislative Reference Bureau, the Act will change how multiple financial practices are regulated and rely on the Nationwide Multistate Licensing System and Registry (NMLSR). The Act will allow Wisconsin to use the NMLSR to administer licensing needs concerning consumer lenders, payday lenders, collection agencies, sales finance companies, money transmitters, mortgage bankers and brokers, adjustment service companies, community currency exchanges, and insurance premium finance companies. The amendments were modeled after the Model Money Transmission Modernization Act approved by the CSBS.

    The Act will require licensees to provide information directly to the NMLSR. For collection agencies, the act will eliminate the requirement that a collector hold a separate license from the one held by his employer, update the definition of collection agency to add the exception for mortgage bankers, and require separate collection agency licenses for each place of business, among others – including repeals. As to consumer lenders, the Act will better define consumer loans, specify provisions governing licensed lenders, and specify which activities require licensure. With respect to sellers of checks and money transmitters, the Reference Bureau noted three provisions governing licensing and regulation of money transmitters will be replaced by the Model Money Transmission Modernization Act. This will include making a license through the NMLSR; granting the power to suspend, revoke, or refuse renewal of a license to the Wisconsin DFI; and allowing a licensed money transmitter to conduct business through an authorized delegate; among others. The Act also updated NMLSR requirements and DFI powers concerning payday lenders, sales finance companies, adjustment service companies, community currency exchanges, and insurance premium finance companies. 

    Licensing State Issues State Legislation NMLS Money Service / Money Transmitters Nonbank

  • Arizona enacts new money transmission requirements for licensees

    On April 8, the Governor of Arizona signed into law SB 1034 which will amend money transmission requirements for licensees. The new law will require a licensee, before transmitting any money (either in person or electronically), to provide consumer fraud warnings on the associated risks and dangers, instructions on how to stop a money transmission (if that option is available), and a statement that the money not be returned after the transmission is completed. The law will not apply to (i) an electronic funds transfer to another person that is not available for immediate use, (ii) electronic funds transfers made with a gift certificate, and (iii) a licensee that can provide proof of presenting its employees an annual fraud prevention training that covers “the indicia of fraud associated” with electronic money transfers. The law will go into effect on July 7 (90 days after enactment).

    Licensing State Issues State Legislation

  • West Virginia updates licensing of mortgage brokers and lenders

    On March 26, the Governor of West Virginia signed into law SB 613, a bill that amended certain statutes regarding mortgage broker, lender, and loan originator licensing requirements. The bill updated definitions relating to the licensure and regulation of mortgage brokers, lenders, and loan originators, permitted the Commissioner of Financial Institutions to participate in the multistate licensing and examination process, and updated net worth requirements to use generally accepted accounting principles. The bill also established new information requirements for applicants and individuals involved in a change of control, requiring fingerprints, credit reports, and judicial findings to be provided to the NMLS and Registry.

    This bill also amended the West Virginia Mortgage Licensing Act to permit employees of a mortgage broker, lender, or servicer to perform remote work, subject to appropriate data security requirements, monitoring, and others. SB 613 will go into effect on June 3.

    Licensing State Legislation State Issues Broker

  • South Dakota enacts new money transmission law, aligning the law to the Money Transmission Modernization Act

    Recently, the Governor of South Dakota, Kristi Noem, signed into law SB 58, which amended and repealed many parts of the state’s money transmission law enacted in 2023 to bring the law more into alignment with a model Money Transmitter Model Law. South Dakota was one of several states that have enacted the model law since 2022 (covered by InfoBytes here, here, here, and here), to harmonize the licensing and regulation of money transmitters between states.

    Among many other new provisions, the Act defined “money” to mean a “medium of exchange that is authorized or adopted by the United States or a foreign government” but excluded any central bank digital currency. Additionally, the Act provided for several exemptions, such as the “agent of a payee” exemption, which exempted an agent who collects and processes payment from a payor to a payee for goods and services other than money transmission itself from the Act’s coverage, under certain specified circumstances. 

    The Act also imposed a licensing regime on persons engaged in the business of money transmission and authorizes and encourages the South Dakota Director of the Division of Banking (Director) to coordinate the licensing provisions with other states and utilize the Nationwide Multistate Licensing System for the license applications, maintenance, and renewals. SB 58 amended the required surety bond amount from $100,000 to $500,000, to the greater of $100,000 or an amount equal to the licensee’s average daily money transmission liability in South Dakota for the most recent three-month period, up to a maximum of $500,000, or if the licensee’s tangible net worth exceeds 10% of total assets, $100,000.

    Once a license application is completed, the Director will have 120 days to approve or deny the application. In addition to the license application process, the Act also outlined the criteria for renewing, maintaining, and changing control of the license, as well as the licensee’s responsibility to keep records and maintain permissible investments. Notably, if a licensee is transmitting virtual currencies, then the licensee must “hold like-kind virtual currencies of the same volume as that held by the licensee but that is obligated to consumers” instead of the permissible investments otherwise listed under the Act. The Act will go into effect on July 1.

    Licensing State Issues Money Service / Money Transmitters CBDC South Dakota Digital Assets

  • New York State floats BNPL legislation in FY 2025 budget

    State Issues

    On January 14, New York proposed its FY 2025 budget: Transportation, Economic Development and Environmental Conservation Article VII Bill, which includes an article, cited as the “Buy Now Pay Later Act” (the “Act”). The Act includes new licensing provisions, requiring buy now pay later (BNPL) financing providers (referred to as “lenders” within the Act) to pay a fee and file a written application to receive a license in order to provide BNPL loans. BNPL lenders would also be required to submit an affidavit of financial solvency, disclose their license on their website, app, or other consumer interface, and list the license in the terms and conditions of any BNPL loan offered and entered by the licensee. Licensees would also be subject to supervisory investigations. The Act would further require BNPL lenders to (i) maintain policies for ensuring the accuracy of data that may be reported to credit agencies; (ii) disclose certain loan terms; (iii) engage in limited ability-to-repay analyses; (iv) refrain from charging unfair, abusive, or excessive fees; and (v) abide by certain restrictions and disclosure requirements relating to the use of consumer data, among other things.

    State Issues BNPL New York Consumer Finance Licensing

  • Oregon amends money transmission law with respect to a required security device

    On January 9, the State of Oregon enacted a new bill on money transmission licensing, specifically stating that “each license application shall be accompanied by a security device in the amount of $25,000.” A security device is defined by Oregon law as a surety bond or an irrevocable letter of credit. If an applicant engages in business at more than one location, the security device will increase by $5,000 per location, with a maximum of $150,000. The bill further states that in place of security devices, an applicant could deposit securities such as interest-bearing stocks, bonds, notes, etc., and be held under the same obligations as the security device. The bill concludes that the security device will remain in effect until its cancellation and remain in place no longer than five years following a licensee ceasing its money transmission operations in Oregon. In the event of the bankruptcy of the licensee, the security device will be held in trust for the benefit of purchasers and holders of the licensee’s outstanding payment instruments.

    Licensing Oregon Bond Securities

  • Idaho Department of Finance publishes proposed rule changes on its Mortgage Practices Act

    On January 3, the Idaho Department of Finance published a bulletin on proposed rule changes to Vol. 23-10 of the Idaho Administrative Bulletin, specifically to section 12.01.10 – Rules Pursuant to The Idaho Residential Mortgage Practices Act; a redline of the bill’s section changes is here. According to the bill, the rule changes aim to “reduce regulatory burden by removing outdated requirements,” and the rulemaking changes were made pursuant to Executive Order 2020-01.

    There were several changes to the bill. First, the section on “Deceptive Advertising” was struck from the bill. Second, and under “Written Disclosures,” the portion on “Receipt of an Application” was struck from the bill. Third, and under “Prohibited Practices” and further under “Engage in Deceptive Advertising,” the proposed changes include the addition of two subsections: one on engaging in bait and switch advertising; and another on misleading someone to believe a solicitation is from a person’s current mortgage holder, or government agency, among others. Fourth, the section on “Borrowers Unable to Obtain Loans” was struck entirely.

    Licensing Consumer Finance Mortgages

  • Illinois adopts regulatory changes as part of its Collection Agency Act

    State Issues

    On December 1, the State of Illinois’s Department of Financial and Professional Regulation promulgated final regulations implementing provisions of the Illinois Collection Agency Act. As previously covered by InfoBytes, Illinois transferred oversight of collection agencies from the Division of Professional Regulation to the Division of Financial Institutions under Public Act 102-975 in November.

    Illinois proposed the new rules to “help the Division of Financial Institutions fulfill its newly-granted statutory responsibility and align these rules with regulatory requirements” set forth by the Illinois Collection Agency Act. Adoption of the new rules will not result in any substantive changes for Illinois Collection Agency licensees but will mirror the previous rules governing collection agencies at 68 Ill. Admin. Code 1210; additionally, the new rules have been adjusted to bring collection agencies in alignment with other industries regulated by the Division of Financial Institutions. Specifically, the new rules adjust the previous collection agency rules “regarding definitions, officers, applications for or changes to licensure, communications, pseudonyms, changes in ownership, recordkeeping, fees, payments, and the granting of variances to better reflect the standards of the Division of Financial Institutions.”

    Lastly, the rules add three new sections: (i) Administration and Enforcement of the Act, which grants the director administrative and enforcement power over collection agencies; (ii) Reports, which requires licensees to file written reports (upon at least 45-day notice by the Division); and, (iii) Investigations and Examinations, which generally states that licensees may be “examined from time to time” to ensure compliance. The rules went into effect on November 20, 2023.

    State Issues Licensing Illinois Debt Collection

  • DFPI opens comment period for the Digital Financial Assets Law

    On November 20, DFPI announced it is seeking public comment before it begins its formal rulemaking process on its Digital Financial Assets Law (DFAL), which was enacted on October 13. As previously covered by InfoBytes, DFAL created a licensing requirement for businesses engaging in digital financial asset business activity and is effective on July 1, 2025.

    For comments that recommend rules, DFPI encourages comments that “propose specific rule language and provide an estimate, with justification, of the potential economic impact on business and individuals that would be affected by the language.” Additionally, DFPI requests metrics, applicable information about economic impacts, or quantitative analysis to support comments. Among other topics, DFPI especially asks for comments related to (i) application fees and potential fee adjustments based on application complexity; (ii) surety bond or trust account factors; (iii) if capital minimums should vary by the type of activity requiring licensure; and (iv) its stablecoin approval process. 

    Comments must be received by January 12, 2024. On January 8, 2024, DFPI will host a Virtual Informal Listening Session with stakeholders to discuss feedback on this informal invitation for comments.

    Licensing State Issues Agency Rule-Making & Guidance DFPI California State Legislation Digital Assets Cryptocurrency

  • SBA issues new SBLC licenses for the first time in 40 years

    Federal Issues

    On November 1, the SBA announced that three new Small Business Lending Company (SBLC) licenses have been issued to lenders focused on underserved markets, which is notably the first expansion of the SBLC program in more than 40 years. An SBLC license permits lending institutions to leverage government guarantees during the process of approving small business loans, decreasing risk for the lender, and lowering costs for the borrower. Consequently, SBA noted, SBLCs can extend a greater number of loans to small businesses than would be feasible without government support. The announcement stated that SBA's current SBLCs surpass banks and credit unions in their ability to provide loans to minority-owned businesses.

    In June, the SBA opened a window for new applications for lenders. In announcing the new licensees, SBA Administrator Isabel Guzman stated that “[w]ith the addition of three new Small Business License Companies, the SBA will be able to serve even more small business owners who need capital to start, operate, and grow their businesses.” The SBA highlighted that “[e]ach of the three new SBLC license holders will focus on historically underserved markets, including small businesses in Native, rural, and low-income communities.”

    Federal Issues SBA Nonbank Consumer Finance Peer-to-Peer Loans Small Business Lending Biden Licensing


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