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CSBS reinforces continuing education requirements for loan officers
On November 13, the CSBS reported that 14 mortgage loan originators (MLOs) associated with one company failed to provide the required information for completing their continuing education courses online, resulting in the loss of credit for 175 courses. The SAFE Mortgage Licensing Act of 2008 mandates that state-licensed MLOs complete eight hours of continuing education annually. With over 171,000 MLOs expected to complete continuing education online this year, the CSBS emphasized the importance of identity verification when taking online courses and noted that failing to identify when taking courses was a serious violation. The CSBS stated that it will continue to monitor continuing education activity and enforce compliance with NMLS rules of conduct.
California DFPI revokes cryptocurrency lender’s license after suspension
On October 28, the California DFPI revoked a cryptocurrency lender’s California Licensing Law (CFL) license based on alleged violations, including improper practices related to digital asset collateral loans, including failing to consider the ability to repay, charging interest on undisbursed funds, failing to offer credit counseling, and failing to accurately disclose APR. DFPI’s allegations were described in the settlement agreement, in which the cryptocurrency lender agreed to the license revocation. As previously covered by InfoBytes, the DFPI suspended the cryptocurrency lender’s license in 2022 pending a DFPI investigation.
The settlement agreement included several key terms: the company agreed to a desist and refrain order and an order to discontinue unsafe or injurious practices, and DFPI imposed a fine of $175,000 for the alleged violations of the CFL. However, due to the company’s ongoing bankruptcy proceedings and cessation of operations, the commissioner waived the fine.
Connecticut Banking Commissioner suspends bitcoin-ATM operator’s money transmitter license
On October 25, the Connecticut Banking Commissioner has suspended a money transmitter’s license, citing several issues: inadequate KYC policies, multiple consumer complaints about fraudulent activity, and insufficient capital levels. A 2023 multistate examination revealed that the money transmitter failed to file federally-required transaction reports and did not collect necessary identifying numbers, such as social security numbers, for high-value transactions. The Commissioner has stated that, pending the money transmitter’s right to request a hearing, he plans to revoke the money transmitter’s license and impose a civil money penalty of an indeterminate amount.
California enacts bill on assessing license fees in deferred deposit transactions
On September 14, the Governor of California approved AB 3148 (the “Act”), amending the California Deferred Deposit Transaction Law (CDDTL) to change the formula for determining annual fee licenses as required to pay to the Commissioner of the DFPI to cover all costs and expenses reasonably incurred in the administration of the CDDTL and any deficit incurred in the program’s administration. Previously, the amount of this pro rata fee was based on the number of locations a licensee operated. Going forward, this fee will be determined by the proportion of a licensee’s total dollar amount of deferred deposit transactions relative to the aggregate total amount made by all licensees as shown by specified annual reports to the commissioner. The bill also sets a minimum assessment fee, ensuring licensees do not pay less than $500 per licensed location per year. The commissioner must notify each licensee of the assessed amount by May 20 each year, with payments due within 30 days. Failure to pay on time may result in penalties or the suspension or revocation of the licensee’s certificate. The Act will apply to the calculation of next year’s annual fee.
Wisconsin to add money transmitter license to NMLS
On August 27, the Wisconsin Department of Financial Institutions (DFI) announced it will start accepting applications for a new money transmitter license through NMLS on October 1. The new license will replace the current Seller of Checks license, and existing licensees will need to comply with the new requirements by January 1, 2025. The change followed the enactment of SB 668, also known as the 2023 Wisconsin Act 267, which repealed Chapter 217 of the Wisconsin Statutes and replaced it with the Money Transmission Modernization Act. Additionally, the new law authorized the Wisconsin DFI to require non-depository financial service providers to use NMLS for licensing and regulatory filings and revised regulations for collection agencies and certain licensed consumer lenders.
New Hampshire enacts a new money transmission law
On August 23, New Hampshire Governor Chris Sununu signed HB 1241 (the “Act”) into law, creating new money transmitter licensing requirements, and adjusting renewal procedures for certain consumer credit entities. The Act adopts the Money Transmission Modernization Act (MTMA) to incorporate aspects of the CSBS’s model law which aims to create a single set of nationwide money transmitter standards and requirements, according to this press release. Among other things, the Act outlines the license application process, which includes background checks and audited financial statements, describes grounds for license suspension, outlines procedures for handling consumer complaints, and mandates the timely transmission and refund of money received for transmission. Sections 1 through 5 will become effective October 22, Section 9 will be effective December 30, 2030, and all other sections are effective August 23.
MSB Call Report updates effective for Q3 reporting
Recently, NMLS announced updates to the Money Services Business (MSB) Call Report effective in the third quarter for filings due November 14. These updates aim to align the report with the Model Money Transmission Modernization Act (MTMA) and refine financial reporting requirements, particularly in the Permissible Investment (PI) section and State Transaction (ST) details. Changes include definition adjustments to current fields and new breakouts in the following fields, like revising and expanding PI20 (i.e., Deposits in All Foreign Banks), expanding PI60 (i.e., Due from agents (net of allowance for doubtful accounts)), revising and expanding PI70 (i.e., Investments rated A or its equivalent and above), and updating PI105 (i.e., Subtotal for a Permissible Investment Calculation).
The report also features new line items for surety bonds and state-specific average daily outstanding transmission liability (ADTL) in a new section titled “Transmission Lability” with three new STs: a new field called ST360 (i.e., Surety Bond) to report the amount of the surety bond held in the state; another new field named ST361 (i.e., the total ADTL in the state) created to report the average daily transmission liability in the state for the quarter; and a newly calculated field named ST362 (i.e., the Surety Bond Amount for Permissible Investment), which is the difference of ST360 from ST361.
These additions support compliance standards outlined in the MTMA and enhance the accuracy of state transaction reporting. These changes go into effect for the Q3 2024 MSB Call Report filings, due on November 14, covering the period from July 1 to September 31.
Illinois enacts the Uniform Money Transmission Modernization Act
On August 9, the Governor of Illinois signed SB 3412 (the “Act”) into law, creating a new regulatory framework for money transmission. This Act, named the Uniform Money Transmission Modernization Act, replaces the previous Transmitters of Money Act. The Act aims to standardize and modernize the regulation, licensing, and supervision of money transmission activities across states. The Act protects the public from financial crimes, reduces regulatory burdens, and ensures the safety of customer funds. The Act introduces specific licensing requirements, such as applicants providing detailed financial and operational information. It mandates that licensees maintain a tangible net worth and permissible investments to safeguard customer funds. Additionally, it outlines the roles and responsibilities of authorized delegates, ensuring compliance with state and federal laws.
Licensees must submit regular reports, including audited financial statements and records of money transmission activities. The Act grants the Secretary of Financial and Professional Regulation the authority to conduct compliance examinations. It includes provisions for a transition period, allowing current licensees to continue operating under the new regulations upon license renewal. The Act also establishes the Transmitters of Money Act (TOMA) Consumer Protection Fund to provide restitution to consumers who suffer monetary losses due to violations. The new regulations take effect immediately, with certain provisions becoming effective on January 1, 2026.
Utah consumer credit notification transfers to NMLS
On August 2, the Utah Department of Financial services sent a letter to all consumer credit notification filers notifying them that the state will transition all consumer credit notification to the NMLS. The letter cited a newly enacted law, SB 25, which stated that a company that would be required to file a Utah Consumer Credit Notification must be managed on the NMLS (covered by InfoBytes here). The letter outlined two steps licensees should take by August 26 to prepare for the transition: (i) companies must create a company record in the NMLS; and (ii) companies must complete the company (MU1) and Individual (MU2) forms.
Missouri updates its money transmission statute in new act
On July 11, the Governor of Missouri signed into law SB 1359 (the “Act”) to modify provisions relating to financial institutions. The Act included the Money Transmission Modernization Act of 2024, which was intended to help other states coordinate regulatory frameworks, protect the public from financial crime, standardize licensing activities, and modernize safety and soundness requirements. Similarly, the Act will prohibit any person from engaging in money transmission without receiving a license. Missouri also enacted prudential standards for licensees, which ensure that all licensees maintain a net worth greater than $100,000 and a surety bond. The Act also included the Commercial Financing Disclosure Law, which will apply to any person who makes more than five commercial financing transactions in a calendar year. Such persons, described as “providers,” must make certain transaction disclosures. The Act will go into effect on August 28.