This month a new law governing virtual currency and online transactions went into effect in Alabama. The Alabama Monetary Transmission Act was passed by the legislature in May and replaces the “Sale of Checks Act” which had been in effect since 1961. The legislation regulates transactions involving virtual currency, such as BitCoin, as well as traditional money transfers.
Under the Act, unless exempted by the statute, persons engaged in the business of monetary transmissions must obtain a license from the Commission. Among the persons and entities excluded from the Act and its licensing requirements are banks, bank holding companies, futures merchants, governmental entities, broker-dealers and securities clearing firms.
In addition to imposing licensing requirements, the Act establishes a record-keeping process enabling the Alabama Securities Commission to audit transactions by licensees and their authorized delegates. Licensees under the Act must maintain records of each payment instrument or stored-value sold or acquired, as well as maintain general ledgers, bank statements and reconciliation records for a minimum of five years. All records required to be maintained by the Act are subject to examination by the Commission and must be made available within five business days of request.
The Act also provides the Commission with the ability to enforce civil and criminal penalties for violation of the Act. Civil penalties of $1,000 per day, plus the Commission’s cost of examination may be imposed for violation. Additionally, the Act makes engaging in money transmitting activities without a license a Class C felony, while making false statements or certifications in records maintained under the Act are a Class D felony. The Act does grant persons aggrieved by orders by the Commission under the Act the right to a hearing.