Minnesota
On May 24, 2023, the governor of Minnesota signed SF 2744, bringing amendments to various state statutes related to financial institutions. The amendments address the regulation and licensing of money transmitters. New definitions and exemptions are provided, granting the state commissioner the authority to enter into agreements with other government officials or regulatory agencies to standardize methods and share resources. The commissioner is authorized to accept reports from other state or federal agencies, participate in multistate supervisory processes, and conduct joint examinations or investigations with other states. The amendments also outline licensing requirements, including prohibiting engaging in money transmission without a license, establishing net worth and surety bond requirements, and permitting the commissioner to establish relationships with the Nationwide Multi-State Licensing System and Registry.
In addition to the changes in money transmitter regulations, the amendments cover consumer lending, including small-dollar, short-term consumer lending, payday lending, and specific money transmitter requirements. Notable changes include expanding the definition of "annual percentage rate" (APR) to include all interest, finance charges, and fees, and redefining "consumer short-term loan" to encompass loans with a principal amount or advance on a credit limit of $1,300 instead of the previous $1,000. The amendments also establish prohibited actions, cap the APR on loans at a maximum of 50%, and prohibit lenders from adding additional charges or payments. These changes will affect loans originated on or after January 1, 2024. Furthermore, the amendments introduce modifications to regulations governing payday loans with APRs exceeding 36%, which now require conducting an ability-to-repay analysis. These provisions will go into effect on January 1, 2024.
Nevada
Nevada’s governor signed AB 21 on May 24, 2023, revising provisions related to the licensing and regulation of money transmitters in the state. For example, NRS 671.020 was amended to narrowly exempt, e.g., federally insured depository financial institutions and privately insured depository financial institutions; whereas previously, the law broadly exempted any, e.g., “bank,” its parent or trust company, savings bank, savings and loan association, credit union, and industrial bank, without regard to whether such institution was insured. The amendments align with the Model Money Transmission Modernization Act approved by the Conference of State Bank Supervisors (CSBS). Similar to Minnesota, the commissioner is authorized to engage in multistate supervisory processes and exchange information with regulators at both the state and federal levels. The Act will become effective from July 1, 2023.
Georgia
Earlier in May 2023, the governor of Georgia signed HB 55, amending provisions regarding the licensing of money transmitters and merging provisions related to licensing sellers of payment instruments. The Act introduces requirements for licensees, outlines exemptions, and establishes that applications pending for a seller of payment instruments license as of July 1 will be considered applications for a money transmitter license. The amendment specifically provides that the department may accept examination reports performed and produced by other state or federal agencies in satisfaction of this requirement unless the department determines that the examinations are not available or do not provide information necessary to fulfill the responsibilities of the department under this article. Additionally, the Act requires licensees to notify all applicable authorized agents within five business days if their license is suspended, revoked, surrendered, or expired. This Act will also take effect from July 1, 2023.
Texas
On May 29, 2023, the Texas governor signed SB 895, enacting the Money Services Modernization Act. This Act seeks to establish a consistent and coordinated set of standards for regulating money service businesses. The implementation of these standards is intended to streamline the regulatory process and reduce administrative burdens. To that end, one key aspect of the Act is the inclusion of networked supervision criteria, allowing the commissioner to participate in multistate supervisory processes coordinated through organizations such as the Conference of State Bank Supervisors and the Money Transmitter Regulators Association. By collaborating with other state and federal regulators, the commissioner can coordinate information sharing, enter into contracts or agreements, and conduct joint examinations or investigations. Additionally, the commissioner has the authority to accept examination or investigation reports from other states, further enhancing regulatory efficiency.
Furthermore, the Texas Money Services Modernization Act grants the commissioner enforcement, examination, and supervision authority over money services licensees and authorized delegates. The commissioner also has the power to adopt implementing regulations and recover costs and fees associated with various actions such as applications, examinations, and investigations. The Act includes additional provisions aimed at consumer protection, such as incorporating stablecoins into the definition of "money" or "monetary value" under specific conditions. Additionally, the Act provides exemptions for certain activities, such as when an agent of the payee collects and processes payments for goods or services, excluding money transmission services. Finally, the Act establishes comprehensive licensing application and renewal procedures, covering aspects like net worth, surety bond, and permissible investment requirements. These procedures ensure that money service businesses comply with necessary financial standards. The Act will come into effect on September 1, 2023.
