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The California Department of Business Oversight (“DBO”) has issued an Invitation for Comments relating to the scope of the “agent of a payee” exemption under the Money Transmission Act, Cal. Fin. Code § 2000 et seq. Comments are due on April 9. According to the DBO, it is seeking comments because it intends to develop regulations to “clarify the applicability” of the exemption. Read our client alert.…
The payments and money transmission regulatory landscape continues to evolve.  A key new development is that Michigan has affirmed by legislation that “agent of a payee” transactions meeting certain criteria are not subject to regulation under the state’s money transmission licensing law. However, the California Department of Business Oversight (the “DBO”), which regulates money transmission in California, continues to scrutinize the scope of what constitutes payee-agency activity exempt from money transmission licensing.  In light of…
On December 13, 2018, the Bureau of Consumer Financial Protection published in the Federal Register a proposed policy, which would modify its 2016 Policy on No-Action Letters and create a new “Product Sandbox” policy in an effort to encourage banks and financial services providers to test new financial products. The alert discusses the Proposed Policy’s intention to fix several shortcomings of the 2016 Policy and encourage companies to test new financial products and services. Read…
One of the most important questions facing non-bank providers of payments services is whether they are subject to regulation under U.S. state money transmission laws. Though almost all U.S. states regulate money transmitters, there are a number of states that provide exemptions for entities that act as an agent of the payee. While a small handful of states have had long-standing agent of the payee exemptions, California more recently addressed the applicability of a money…
The Banking Department of the Vermont Department of Financial Regulation recently entered into a consent order with a money transmission licensing applicant. The consent order makes it clear that “Vermont does not exempt a payment processor or an agent of a payee from [money transmission] licensure.” Vermont’s position is at odds with the recent trend of state banking departments affirming that payee agency or payment processing transactions involving the sale of goods or services are…
Yesterday, the Office of the South Carolina Attorney General issued a press release announcing that it has created a Money Services Division within the AG’s office and that, effective May 14, the Division is accepting applications for licensure under South Carolina’s money transmission law. This law, officially known as the South Carolina Anti-Money Laundering Act, will formally take effect on May 25, the date the regulations promulgated to implement the Act are scheduled to be…
One of the defining aspects of the payments revolution of the past few years—at least from a regulatory perspective—has been the question of whether a particular payments service is subject to regulation as money transmission. A number of states have determined that under certain conditions, state money transmission licensing laws do not apply to services provided as an agent of the payee. The most recent states to affirm this are Hawaii and Connecticut. Read our client
On September 25, 2017, Acting Comptroller of the Currency Keith Noreika discussed online lending and innovation in his keynote remarks prepared for delivery to the Online Lending Policy Summit in Washington, D.C. Consistent with his previous remarks, the Acting Comptroller expressed his support for a regulatory environment that fosters responsible innovation and touted the growth of online and marketplace lending as “the natural evolution of banking itself.” Read our client alert.…
On July 7, 2017, the Office of the Comptroller of the Currency released its Semiannual Risk Perspective report identifying the risks faced by national banks and federal savings associations in the 12-month period ending December 31, 2016. The Report, which is intended to highlight key risk issues facing the federal banking system, noted that strategic, credit, operational and compliance risks of banks remained a “top concern” for the agency during this period. The Report comes at a…
On May 11, 2017, the FDIC announced that it had reached settlements with Bank of Lake Mills and two of its “institution-affiliated parties””—Freedom Stores, Inc. and Military Credit Services, LLC—for allegedly engaging in unfair and deceptive practices in violation of Section 5 of the FTC Act. Read our client alert.…