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ARIZONA STATE SENATE
Fifty-Fifth Legislature, Second Regular Session
AMENDED
money transmission; money transmitter licensure
Purpose
Repeals and replaces money transmission regulations and allows the Director of the Department of Insurance and Financial Institutions (DIFI) to participate in multistate supervisory processes established between states for all money transmission licensees that hold licenses in Arizona and other states. Prescribes requirements for implementation, licensure, money handling and reporting.
Background
A person must obtain a money transmitter license from DIFI or be an authorized delegate of a licensee to provide money transmitter services. Statute allows a corporation or limited liability company that is in good standing under the laws of the state or country of its incorporation or formation and is authorized to do business in Arizona to apply for or be issued a money transmitter license. A licensed money transmitter may conduct money transmitter services at one or more locations in Arizona through an authorized delegate. Money transmitter services include: 1) selling or issuing payment instruments; 2) engaging in the business of receiving money for transmission or transmitting money; 3) engaging in the business of exchanging payment instruments or money into any form of money or payment instrument; or 4) engaging in the business of receiving money for an obligor to pay that obligor's bills, invoices or accounts (A.R.S. §§ 6-1201 and 6-1202).
There is no anticipated fiscal impact to the state General Fund associated with this legislation.
Provisions
Money Transmission Implementation
1. Transfers management of money transmission licensure and regulations from the Deputy Director of DIFI to the Director of DIFI (Director).
2. Allows the Director to:
a) enter into agreements or relationships with other government officials or federal and state regulatory agencies and regulatory associations in order to improve efficiencies and reduce regulatory burden by standardizing methods or procedures, providing for licensure by reciprocity and sharing resources, records or related information;
b) use, hire, contract or employ analytical systems, methods or software to examine or investigate any money transmission licensee;
c) accept licensing, examination or investigation reports made by other state or federal government agencies or officials; and
d) accept audit reports made by an independent certified public accountant (CPA) or other qualified third-party auditor for an applicant or licensee and incorporate the audit in any report of examination or investigation.
3. Requires the Director to adopt rules to implement money transmission regulations and allows the Director to impose fees for administration and enforcement.
4. Requires the Director to consider the need to promote uniformity of the law for licensees among states that enact substantively similar money transmitter laws.
5. Allows the Director to participate in multistate supervisory processes established between states for all money transmission licensees that hold licenses in Arizona and other states.
6. Requires the Director, as a participant in multistate supervision, to:
a) cooperate, coordinate and share information with other state and federal regulators; and
b) enter into written cooperation, coordination or information-sharing contracts or agreements with organizations that have state or federal governmental agencies as members, if the organizations agree to maintain the confidentiality and security of the shared information.
7. Allows the Director to use, for all aspects of licensure, NMLS which is defined as the Nationwide Multistate Licensing System and Registry developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators and owned and operated by a state regulatory registry for the licensing and registration of persons in financial services industries.
8. Allows the Director, to establish consistent licensure between Arizona and other states, to:
a) implement all licensing provisions in a manner consistent with other states that have adopted laws that are substantively similar to the money transmission regulations or multistate licensing processes; and
b) participate in nationwide protocols for licensing cooperation and coordination among state regulators if the protocols are consistent.
9. Allows the Director to establish relationships or contracts with NMLS or other entities designated by NMLS to enable the Director to:
a) collect and maintain records;
b) coordinate multistate licensing processes and supervisions processes;
c) process fees; and
d) facilitate communication between Arizona and licenses or other persons subject to money transmission regulation.
10. Defines multistate licensing process as a procedure among state regulators relating to the coordinated processing of applications for money transmission licenses, applications for the acquisition of control of a licensee, control determinations or notice and information requirements for a change of key individuals.
11. Allows the Director to use NMLS forms, processes and functionalities and, if NMLS does not provide functionality, forms or processes, allows the Director to strive to implement the requirements in a manner that facilitates uniformity with respect to licensing, supervision, reporting and regulation or licensees that are licensed in multiple jurisdictions.
12. Allows the Director, for participation in the NMLS, to waive or modify, by rule or order, any or all requirements and establish new requirements as reasonably necessary.
Money Transmission Examination and Investigation
13. Allows the Director to conduct an examination or investigation and take authorized actions to administer and enforce money transmission regulations and other applicable law, including the Bank Secrecy Act and the Patriot Act.
14. Prohibits the Director from waiving their authority to conduct an examination or investigation or otherwise take an authorized action to enforce compliance with an applicable state or federal law.
15. Requires regulated persons to provide all records the Director may reasonably require to conduct an examination or investigation and requires the Director to have full and complete access to the records.
16. Specifies that a joint examination or investigation, or acceptance of either, does not waive an examination assessment.
17. Allows the Director, if Arizona is a lead investigative state, to investigate an applicant and specifies that the time frames established by a multistate licensing agreement apply if the time frame complies with the application period.
18. Allows the Director, if an applicant avails itself or is otherwise subject to a multistate licensing process, to accept the applicant investigation results of a lead investigative state, if the lead investigative state has sufficient staffing, expertise and minimum standards.
Money Transmission Licensure
19. Prohibits a person from engaging in the business of money transmission on behalf of an unlicensed or nonexempt person and deems a person that engages in unauthorized activities to be jointly and severally liable with the unlicensed or nonexempt person.
20. Expands eligibility for a money transmission license by removing the restriction that only a corporation or limited liability company is eligible for licensure.
21. Removes the exemption from money transmitter regulations for:
a) consumer lenders;
b) debt management companies;
c) escrow agents;
d) trust companies;
e) mortgage bankers; and
f) collection agencies.
22. Excludes, from the prohibition on an unlicensed person engaging in the business of money transmission:
a) an authorized delegate of a licensee that is acting within the scope of authority conferred by a written contract; and
b) an exempt person that does not engage in money transmission outside the scope of the exemption.
23. Exempts, from money transmission regulations:
a) a state, county, city or town or any other governmental agency or governmental subdivision or instrumentality of a state or its agent;
b) an operator or a payment system that provides processing, clearing or settlement services between or among exempted persons or licensees in connection with wire transfers, credit card transactions, debit card transactions, stored value transactions, automated clearing house transfers or similar transfers of money;
c) an agent of a payee that collects and processes payments from a payor to a payee for goods or services, other than money transmission, provided to the payor by the payee, if certain conditions apply;
d) a person that acts as an intermediary by processing payments between an entity that has directly incurred an outstanding money transmission obligation to a sender and the sender's designated recipient, if the entity meets outlined requirements;
e) money transmission by the U.S. Postal Service or their agent;
f) certain banking entities;
g) electronic funds transfer of governmental benefits for a federal, state, county or governmental agency by a contractor on behalf of the United States, a department, agency or instrumentality of the United States or a state or governmental subdivision, agency or instrumentality of another state;
h) a board of trade designated as a contract market under the Commodity Exchange Act or a person that provides clearance and settlement services for a board of trade to the extent of its operation as or for the board of trade;
i) a registered futures commission merchant to the extent of its operation as a merchant;
j) a person registered as a securities broker or dealer under federal or state securities laws to the extent of the person's operation;
k) an individual employed by a licensee, an authorized delegate or any person exempt from the money transmission licensing requirements when acting within the scope of employment and under the supervision of the licensee, authorized delegate or exempt person as an employee and not as an independent contractor;
l) a person expressly appointed as a third-party service provider to, or an agent of, specified banking entities as outlined; and
m) a person exempt by regulation or order, if the Director finds the exemption to be in the public interest and that regulating the person is not necessary.
24. Allows the Director to require any person claiming to be exempt from money transmission licensure to provide information and documentation demonstrating qualification for the exemption.
25. Clarifies that nonrefundable statutory license applicant fees apply to all applicants.
26. Requires the initial money transmission license term to begin on the day of application approval and requires the license to expire on December 31 of the year in which the term began, except if the initial license date is between November 1 and December 31.
27. Removes requirements for a designated principal place of business and branch office license.
28. Allows the Director to suspend or revoke a license if:
a) a licensee does not continue to meet the qualifications or satisfy the requirements that apply to an applicant for a new money transmission license;
b) the competence, experience, character or general fitness of the licensee, person in control of a licensee or key individual indicates that it is not in the public interest to allow the person to provide money transmission;
c) the licensee engages in an unsafe or unsound practice; or
d) the licensee does not remove an authorized delegate after the Director issues and serves a final order that includes a finding that the authorized delegate has violated money transmission regulations.
29. Eliminates the authority of the Director to suspend or revoke a license if:
a) a fact or condition exists that, if it had been known at the time of application, would have been grounds for denial;
b) the licensee knowingly fails to make a required report; or
c) the licensee fails to pay a judgment entered in favor of a claimant, plaintiff or creditor in an action arising out of the licensee's business within 30 days.
30. Allows the Director, in determining whether a licensee or authorized delegate is engaging in an unsafe or unsound practice, to consider the size and condition of the licensee's money transmission, the magnitude of the loss, the gravity of the violation and the previous conduct of the licensee.
31. Allows a licensee or an authorized delegate to appeal any suspension or revocation.
32. Requires a licensee, within five days after the license is suspended, revoked, surrendered or expired, to provide documentation to the Director that the licensee has provided notice to all applicable authorized delegates whose names are in a record filed with the Director.
33. Allows the Director to suspend or revoke the designation of an authorized delegate if the Director finds that:
a) the authorized delegate violated money transmission regulations;
b) the authorized delegate did not cooperate with an examination or investigation by the Director;
c) the authorized delegate engaged in fraud, intentional misrepresentation or gross negligence;
d) the authorized delegate is convicted of a violation of a state or federal anti-money laundering statutes;
e) the competence, experience, character or general fitness of the authorized delegate or a person in control of the authorized delegate indicates that it is not in the public interest to allow the authorized delegate to provide money transmission; or
f) the authorized delegate is engaging in an unsafe or unsound practice.
34. Requires the Director to issue a formal written notice of application denial within 30 days after a decision is made and requires the notice to include specific reasons for denial along with appeal information.
35. Sets the renewal term as one year, which begins on January 1 of each year after the initial license term.
36. Requires a licensee to submit a renewal report with the annual renewal fee and requires the report to specify information that is materially different from the original license application if the licensee has not previously reported the information to the Director.
37. Allows a licensee to renew an expired license by January 31 and subjects a licensee to a late fee of $500.
38. Requires a licensee to pay applicable renewal fees within 60 days after the license expiration, rather than by November 1.
39. Allows the Director to use NMLS to process license renewals if functionality is consistent with license renewal requirements.
40. Requires an applicant to demonstrate that the applicant meets or will meet licensure requirements.
41. Requires an application for money transmission licensure to include:
a) a list of any criminal convictions of an applicant and any material litigation in which the applicant has been involved in the 10-year period preceding the submission;
b) a description of any money transmission previously provided by the applicant and the money transmission that the applicant seeks to provide in Arizona;
c) a list of other states in which the applicant is licensed to engage in money transmission and any license revocations or suspensions or other disciplinary action taken against the applicant in another state;
d) information concerning any bankruptcy or receivership proceedings affecting the licensee or a person in control of the licensee; and
e) sample forms of a contract for authorized delegates and a payment instrument or stored value, if applicable.
42. Requires an applicant that is a corporation, limited liability company, partnership or other legal entity to additionally include:
a) a certificate of good standing from the state or country in which the applicant is incorporated or formed, if applicable;
b) a brief description of the structure or organization of the applicant and whether any parents or subsidiaries are publicly traded;
c) financial statements from the most recent fiscal year and the two-year period immediately preceding submission or approved unaudited financial statements;
d) a certified copy of unaudited financial statements of the applicant for the most recent fiscal quarter;
e) a copy of the most recent securities report, if the applicant is a publicly traded corporation;
f) a copy of audited financial statements or similar documentation for a parent corporation;
g) the name and address of the applicant's registered agent in Arizona; and
h) and other information the Director reasonably requires.
43. Allows the Director to waive one or more required application items or allows an applicant to submit other information in lieu of the required information.
44. Deems an application for licensure to be complete when the required items and addresses are included and requires the Director to promptly notify the applicant of the date of completion.
45. Removes the consent of the applicant as a requirement for certain application period extensions and allows the Director to extend certain application periods for good cause.
46. Specifies that the determination that an application is complete and is accepted for processing means only that the application appears to include all items and address all required matters and is not an assessment of the substance of the application or of the sufficiency of the information provided.
Licensee Financials
47. Modifies licensee net worth requirements by requiring a licensee to maintain a tangible net worth of:
a) the greater of $100,000 or three percent of total assets for the first $100,000,000;
b) two percent of additional assets for $100,000,000 to $1,000,000,000; or
c) one-half percent of additional assets for over $1,000,000,000.
48. Requires tangible net worth to be demonstrated at initial application by the applicant's most recent audited or unaudited financial statements.
49. Bases the required bond amount for a licensee on the average daily money transmission liability in Arizona, rather than the number of authorized delegates, and requires the bond to equal 100 percent of the average daily money transmission liability up to a maximum of $500,000.
50. Excludes, from the requirement to calculate the average daily money transmission liability, a licensee that maintains the maximum bond amount.
51. Allows a licensee to maintain a surety bond of $25,000 if the licensee's tangible net worth exceeds 10 percent of total assets.
52. Removes alternative bond options and bond cancellation notice requirements.
53. Determines that permissible investments, even if commingled with other assets of the licensee, are held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations in the event of insolvency, bankruptcy, reorganization, receivership or any other judicial or administrative proceeding for its dissolution or reorganization.
54. Specifies that a permissible investment impressed with a trust is not subject to attachment, levy or execution or sequestration by order of any court, except for a beneficiary of the statutory trust.
55. Requires the Director, on the establishment of a statutory trust or when any money are drawn on a letter of credit, to notify the applicable regulator of each state in which the licensee is licensed of the establishment of the trust or the money drawn on the letter of credit.
56. Specifies that notice is satisfied if performed pursuant to a multistate agreement or through NMLS.
57. Deems, as held in trust for the benefit of the purchasers and holders, money drawn on a letter of credit and any other permissible investments held in trust.
58. Terminates a statutory trust on extinguishment of all outstanding money transmission obligations.
59. Allows the Director to:
a) allow other types of investments that the Director determines are of sufficient liquidity and quality to be a permissible investment; and
b) participate in efforts with other state regulators to determine that other types of investments are of sufficient liquidity and quality to be a permissible investment.
60. Defines permissible investments and prescribes requirements for a notice of expiration or nonextension of a letter of credit, including the requirement to provide that the issuer of the letter will honor a presentation made by the beneficiary to the issuer of outlined documents on or before the expiration date of the letter.
61. Allows the Director to:
a) designate an agent to serve on the Director's behalf as beneficiary to a letter of credit if the agent and letter of credit meet requirements established by the Director; and
b) participate in multistate processes designed to facilitate issuing and administering letters of credit, including services provided by NMLS and a state regulatory registry.
62. Allows the Director's agent to serve as agent for multiple licensing authorities for a single irrevocable letter of credit if the proceeds of the drawable amount are assigned to the Director.
63. Removes the option for maintained permissible investments to comply with a net carrying value as outlined.
Authorized Delegates
64. Requires a licensee, before the licensee is authorized to conduct business through an authorized delegate or allows a person to act as the licensee's authorized delegate, to:
a) adopt written policies and procedures reasonably designed to ensure that the licensee's authorized delegates comply with applicable state and federal law;
b) enter into a written contract with the authorized delegate; and
c) conduct a reasonable risk-based background investigation sufficient for the licensee to determine whether the authorized delegate complies with applicable state and federal law.
65. Requires the written contract between a licensee and an authorized delegate to be signed by both parties and:
a) appoint the person signing the contract as the licensee's authorized delegate with the authority to conduct money transmission on behalf of the licensee;
b) describe the nature and scope of the relationship between the licensee and the authorized delegate and the respective rights and responsibilities;
c) require the authorized delegate to agree to fully comply with all applicable state and federal laws;
d) require the authorized delegate to remit and handle money and monetary value in accordance with the terms of the contract;
e) impose a trust on money and monetary value net of fees received for money transmission for the benefit of the licensee;
f) require the authorized delegate to prepare money and maintain records;
g) acknowledge that the authorized delegate consents to examination or investigation by the Director;
h) state that the licensee is subject to regulation by the Director and that the Director may suspend or revoke an authorized delegate designation; and
i) acknowledge receipt of the required written policies and procedures.
66. Prohibits an authorized delegate from using a subdelegate to conduct money transmission on behalf of a licensee.
67. Requires applicable authorized delegates, on suspension, revocation, surrender or expiration of a licensee's license, to immediately cease to provide money transmission as an authorized delegate of the license.
68. Specifies that an authorized delegate of a licensee holds in trust for the benefit of the licensee all money net of fees received from money transmission.
69. Requires, if an authorized delegate commingles money transmission monies and other money or property, all commingled money and other property to be considered held in trust in favor of the licensee in an amount equal to the amount of money net of fees received from money transmission.
Individual in Control of a Licensee
70. Requires an individual in control of a licensee or applicant, any individual who seeks to acquire control of a licensee and each key individual to submit:
a) a full set of fingerprints; and
b) the individual's personal history and experience so the Director may obtain a credit report and information related to criminal convictions and actions and civil litigation.
71. Allows a person presumed to exercise a controlling influence to rebut the presumption of control if the person is a passive investor.
72. Requires an individual, if they have resided outside the United States within the previous 10 years, to provide an investigative background report prepared by an independent search firm that meets outlined requirements.
73. Specifies that an individual is not deemed to acquire control of a licensee and is not subject to acquisition of control requirements when the individual becomes a key individual in the ordinary course of business.
74. Allows the Director, on request, to allow a licensee or the person or group of persons acting in concert seeking to acquire control of a licensee to submit some or all required information without using NMLS.
75. Requires the application submitted when seeking to acquire control of a licensee to include information required for any new key individuals that have not previously completed the requirements for a licensee.
76. Deems an application for approval to acquire control of a licensee complete when the application appears to include the required items and to address the required matters and requires the Director to promptly notify the applicant of the date of completion.
77. Requires the Director to issue a formal written notice of application denial within 30 days after a decision is made and requires the notice to include specific reasons for denial along with appeal information.
78. Requires the Director to approve an acquisition of control if the Director finds that the following conditions have been fulfilled:
a) the application included required information; and
b) the financial condition and responsibility, financial and business experience, competence, character and general fitness of the person or group of persons acting in concert, seeking to acquire control and persons that would be in control after acquisition indicate that it is in the interest of the public to allow the person or group of persons acting in concert to control the licensee.
79. Reduces the required approval or denial time period, from 120 days to 60 days, for an application for approval to acquire control of a licensee.
80. Specifies that the determination that an application for approval to acquire control of a licensee is complete and is accepted for processing means only that the application appears to include all items and address all required matters and is not an assessment of the substance of the application or of the sufficiency of the information provided.
81. Exempts, from application for approval to acquire control of a licensee requirements:
a) an internal reorganization of a person in control of the licensee in which the ultimate person in control of the licensee remains the same; and
b) a person that receives approval to engage in money transmission or is identified as a person in control in a prior application filed with and approved by the Director or by a money services business accredited state pursuant to a multistate licensing process, if the person and the licensee to be acquired meets specified criteria.
82. Requires outlined individuals to notify the Director within 15 days after an acquisition of control.
Key Individuals
83. Requires a licensee adding or replacing any key individual to provide:
a) notice within 15 days after the effective date of the key individual's addition or replacement; and
b) required information within 45 days after the effective date of the key individual's addition or replacement.
84. Allows the Director, within 90 days of the key individual's notice of addition or replacement, to issue a notice of disapproval of a key individual if the competence, experience, character or integrity of the individual is not in the best interest of the public or the customers of the licensee.
85. Requires a notice of disapproval to contain a statement of the basis for disapproval and to be sent to the licensee and the disapproved individual.
86. Allows a licensee to appeal a notice of disapproval.
87. Deems a key individual's application to be approved if the provided notice is not disapproved within 90 days of completion.
Money Handling
88. Requires each licensee to forward all money received for transmission in accordance with the terms of the agreement between the licensee and the sender unless the licensee has a reasonable belief or a reasonable basis to believe that the sender may be a victim of fraud or that a crime or violation of law has occurred, is occurring or may occur.
89. Requires a licensee who has failed to forward money received for transmission to respond to inquiries by the sender with the reason for the failure unless providing a response would violate a state or federal law.
90. Requires a licensee to refund a sender within 10 days of receipt of a sender's written request for a refund of money received for transmission unless:
a) the money is forwarded with 10 days after the date on which the money is received for transmission;
b) instructions have been given committing an equivalent amount of money to the person designated by the sender within 10 days after the date on which the money is received for transmission;
c) the agreement between the licensee and the sender instructs the licensee to forward the money at a time that is more than 10 days after the date on which the money is received for transmission;
d) the refund is requested for a transaction that the licensee has not completed based on a reasonable belief that a crime or violation of law has occurred, is occurring or may occur; or
e) the refund request does not enable the licensee to identify the sender's contact information or the particular transaction.
91. Excludes, from the refund requirements, money received for transmission that is:
a) subject to the federal remittance rules; or
b) pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee.
92. Requires each licensee and authorized delegate to provide a sender with a receipt for money received for transmission.
93. Allows, for an in-person transaction, the receipt to be provided electronically in a retainable form, if the sender requests or agrees to receive an electronic receipt.
94. Allows, for a transaction conducted electronically or by telephone, the receipt to be provided electronically in a retainable form.
95. Requires the receipt to be in English and in the language principally used by the licensee or authorized delegate to advertise, solicit or negotiate for a transaction conducted in person, electronically or by telephone.
96. Requires the receipt to contain:
a) the name of the sender;
b) the name of the designated recipient;
c) the date of the transaction;
d) the unique transaction or identification number;
e) the name of the licensee, the NMLS unique identifier, the licensee's business address and the licensee's customer service telephone number;
f) the amount of the transaction in dollars;
g) any transaction fee charged by the licensee; and
h) any transaction taxes collected by the licensee from the sender.
97. Requires each licensee or authorized delegate to include, on a receipt or disclose on the licensee's website or mobile application, the name and telephone number of DIFI and a statement that the licensee's customers can contact DIFI with questions or complaints.
98. Excludes, from the receipt requirements, money received for transmission that is:
a) subject to the federal remittance rules;
b) not primarily for personal, family or household purposes; and
c) pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee.
Reporting and Recordkeeping
99. Requires each licensee to file the following with the Director within 90 days after the end of each fiscal year:
a) an audited financial statement for the fiscal year prepared using the United States generally accepted accounting principles by an independent CPA; and
b) any other information reasonably required by the Director.
100. Requires the audited financial statements to include or be accompanied by a certificate of opinion of the independent CPA that satisfies the Director.
101. Allows the Director, if the certificate of opinion is qualified, to order the licensee to take any action found necessary to enable the independent CPA to remove the qualification.
102. Requires each licensee to submit a report of condition within 45 days after the end of the calendar or within any extended time as the Director prescribes.
103. Requires the report of condition to include:
a) a consolidated financial statement, including a balance sheet and income and expense statements at the licensee level;
b) nationwide and state-specific money transmission transaction information in every jurisdiction in the United States where the licensee is licensed;
c) a permissible investments report;
d) for the fourth quarter report, transaction destination country reporting for money received for transmission; and
e) any other information the Director reasonably requires.
104. Allows the Director to use NMLS for the submission of the report of condition and authorizes the Director to change or update the reporting requirements to maintain consistency with NMLS reporting.
105. Requires each licensee to submit a report of authorized delegates with 45 days after the end of a calendar quarter and allows the Director to use NMLS for the submission.
106. Requires the report of authorized delegates to include:
a) the company legal name;
b) the taxpayer employer identification number;
c) the principal provider identifier;
d) the mailing address and physical address, if any;
e) any business conducted in other states;
f) any fictitious or trade name;
g) the contact person name, telephone number and email address;
h) the start and end date as the licensee's authorized delegate; and
i) any other information required by the Director.
107. Requires a licensee to file a report with the Director within one business day if:
a) the filing of a bankruptcy or reorganization petition by or against the licensee;
b) the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization or the making of a general assignment for the benefit of its creditors; or
c) the commencement of a proceeding to revoke or suspend the licensee's license in a state or country in which the licensee engages in business or is licensed.
108. Requires a licensee to file a report with the Director within three business days if:
a) a felony charge or conviction of the licensee or of a key individual or person in control of the licensee; or
b) a felony charge or conviction of an authorized delegate.
109. Requires a licensee and an authorized delegate to file all reports required by federal currency reporting, recordkeeping and suspicious activity reporting requirements as set forth in the Bank Secrecy Act and other federal and state laws relating to money laundering.
110. Deems to be, in compliance, a timely filing of a complete and accurate report with the appropriate federal agency.
111. Requires a licensee to maintain the following records, in any form of record, for at least five years to help the Director determine the licensee's compliance with money transmission regulations:
a) a record of each outstanding money transmission obligation sold;
b) a general ledger posted at least monthly that contains all asset, liability, capital, income and expense accounts;
c) bank statements and bank reconciliation records;
d) records of outstanding money transmission obligations;
e) records of each outstanding money transmission obligation paid during the five-year period;
f) a list of the last known names and addresses of all authorized delegates; and
g) any other records required by the Director by rule.
112. Specifies that the federal reporting exception for domestic financial institutions does not apply to persons who are engaged in the money accumulation business.
113. Removes specified records storage requirements.
114. Removes the authority of the Director to require requested records to be accompanied by an individual who is available to answer questions regarding the records.
115. Extends, from five days to seven days, the time at which records maintained outside of Arizona must be made available to the Director upon request.
116. Removes permissible on-site records examinations.
117. Removes current authorized delegate record retention of customer identification information.
Definitions
118. Defines money transmission as the following, excluding providing solely online telecommunications services or network access:
a) selling or issuing payment instruments to a person located in Arizona;
b) selling or issuing stored value to a person located in Arizona; and
c) receiving money for transmission from a person located in Arizona.
119. Narrows the definition of money transmitter by removing a person who:
a) sells or issues payment instruments;
b) engages in the business of receiving money for the transmission of or transmitting money; and
c) engages in the business of exchanging payment instruments or money into any form of money or payment instrument.
120. Includes, in the definition of money, a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.
121. Redefines control.
122. Defines terms.
123. Removes the definitions of check cashing, controlling person, engage in the business, foreign money exchange, location, money accumulation business, outstanding payment instruments, responsible individual and traveler's check.
Miscellaneous
124. Grants the Deputy Director of DIFI the authority to require the following individuals to submit a full set of fingerprints and the associated fees to DIFI before receiving a license:
a) any individual in control of a licensee or applicant;
b) any individual who seeks to acquire control of a licensee; or
c) a key individual.
125. Determines that applicable federal law governs if a state money transmission jurisdiction is conditioned on a federal law in the case of inconsistencies between state and federal law.
126. Allows the Director, if an inconsistency exists, to provide interpretative guidance that identifies the inconsistency and the appropriate means of complying with federal law.
127. Removes the requirement for the names and addresses of all registered advance fee loan brokers to be recorded in a register within the office of the Deputy Director.
128. Removes the Deputy Director as the agent for service or process.
129. Removes the requirement for a payment instrument sold by a licensee to bear the name of the licensee along with a unique consecutive number.
130. Exempts a licensed money transmitter from new money transmission statutes if there are conflicts between existing money transmitter statutes until the person renews their license or until six months after the effective date, whichever is later.
131. Requires a licensed money transmitter to only amend authorized delegate contracts for contracts entered into or amended after the effective date or after completion of license renewal.
132. Makes technical changes.
133. Becomes effective on the general effective date.
Amendments Adopted by Committee
1. Clarifies that statutory license applicant fees apply to all applicants.
2. Allows a licensee to maintain a surety bond of $25,000, if the licensee's tangible net worth exceeds 10 percent of total assets.
Amendments Adopted by Committee of the Whole
1. Grants the Deputy Director of DIFI the authority to require the following individuals to submit a full set of fingerprints and the associated fees to DIFI before receiving a license:
a) any individual in control of a licensee or applicant;
b) any individual who seeks to acquire control of a licensee; or
c) a key individual.
2. Makes conforming changes.
Senate Action
FIN 2/9/22 DPA 8-0-2
Prepared by Senate Research
February 24, 2022
MG/slp