Illinois-2023-SB3670-Introduced

103RD GENERAL ASSEMBLY State of Illinois 2023 and 2024 SB3670

Introduced 2/9/2024, by Sen. Laura Ellman

SYNOPSIS AS INTRODUCED:

`New Act`
`205 ILCS 657/Act rep.`

Creates the Uniform Money Transmission Modernization Act. Provides that the provisions supersede the Transmitters of Money Act. Sets forth provisions concerning money transmission licenses; acquisition of control; reporting and records; authorized delegates; timely transmission, refunds, and disclosures; prudential standards; and enforcement. Repeals the Transmitters of Money Act. Makes other changes. Effective January 1, 2026.

LRB103 39026 RTM 69163 b

A BILL FOR

SB3670

LRB103 39026 RTM 69163 b

1 AN ACT concerning regulation.

2 Be it enacted by the People of the State of Illinois,

3 represented in the General Assembly:

4 ARTICLE I. Title & Purpose

5 Section 1-1. Short title. This Act may be cited as the

6 Uniform Money Transmission Modernization Act.

7 Section 1-2. Purpose.

8 (a) This Act is designed to replace existing State money

9 transmission laws currently codified under the Transmitters of

10 Money Act. It is the intent of the General Assembly that the

11 provisions of this Act accomplish the following:

12 (1) ensure states can coordinate in all areas of

13 regulation, licensing, and supervision to eliminate

14 unnecessary regulatory burden and more effectively utilize

15 regulator resources;

16 (2) protect the public from financial crime;

17 (3) standardize the types of activities that are

18 subject to licensing or otherwise exempt from licensing;

19 and

20 (4) modernize safety and soundness requirements to

21 ensure customer funds are protected in an environment that

22 supports innovative and competitive business practices.

SB3670

- 2 -

LRB103 39026 RTM 69163 b

1 (b) The provisions of this Act shall be liberally

2 construed to effectuate its purposes.

3 ARTICLE II. Definitions

4 Section 2-1. Definitions. As used in this Act:

5 "Acting in concert" means persons knowingly acting

6 together with a common goal of jointly acquiring control of a

7 licensee whether or not pursuant to an express agreement.

8 "Authorized delegate" means a person delegated by a

9 licensee to engage in money transmission on behalf of the

10 licensee.

11 "Average daily money transmission liability" means the

12 amount of the licensee's outstanding money transmission

13 obligations in this State at the end of each day in a given

14 period of time, added together, and divided by the total

15 number of days in the given period of time. For purposes of

16 calculating average daily money transmission liability under

17 this Act for any licensee required to do so, the given period

18 of time shall be the quarters ending March 31, June 30,

19 September 30, and December 31.

20 "Bank Secrecy Act" means the Bank Secrecy Act, 31 U.S.C.

21 5311, et seq. and its implementing rules and regulations, as

22 amended and recodified from time to time.

23 "Bill payment service" means the business of transmitting

24 money on behalf of an Illinois person for the purposes of

SB3670

- 3 -

LRB103 39026 RTM 69163 b

1 paying the person's bills.

2 "Closed loop stored value" means stored value that is

3 redeemable by the issuer only for goods or services provided

4 by the issuer or its affiliate or franchisees of the issuer or

5 its affiliate, except to the extent required by applicable law

6 to be redeemable in cash for its cash value.

7 "Control" means, when in reference to a person:

8 (1)(A) the power to vote, directly or indirectly, at

9 least 25% of the outstanding voting shares or voting

10 interests of a licensee or person in control of a

11 licensee;

12 (B) the power to elect or appoint a majority of key

13 individuals or executive officers, managers,

14 directors, trustees, or other persons exercising

15 managerial authority of a person in control of a

16 licensee; or

17 (C) the power to exercise, directly or indirectly,

18 a controlling influence over the management or

19 policies of a licensee or person in control of a

20 licensee.

21 (2) Rebuttable presumption of control.

22 (A) A person is presumed to exercise a controlling

23 influence when the person holds the power to vote,

24 directly or indirectly, at least 10% of the

25 outstanding voting shares or voting interests of a

26 licensee or person in control of a licensee.

SB3670

- 4 -

LRB103 39026 RTM 69163 b

1 (B) A person presumed to exercise a controlling

2 influence as defined by this Section can rebut the

3 presumption of control if the person is a passive

4 investor.

5 (3) For purposes of determining the percentage of a

6 person controlled by any other person, the person's

7 interest shall be aggregated with the interest of any

8 other immediate family member, including the person's

9 spouse, parents, children, siblings, mothers-in-law and

10 fathers-in-law, sons-in-law and daughters-in-law,

11 brothers-in-law and sisters-in-law, and any other person

12 who shares such person's home.

13 "Department" means the Department of Financial and

14 Professional Regulation.

15 "Eligible rating" means a credit rating of any of the 3

16 highest rating categories provided by an eligible rating

17 service, whereby each category may include rating category

18 modifiers such as "plus" or "minus" for S&P, or the equivalent

19 for any other eligible rating service. For purposes of this

20 definition, long-term credit ratings are deemed eligible if

21 the rating is equal to "A-" or higher by S&P, or the equivalent

22 from any other eligible rating service; short-term credit

23 ratings are deemed eligible if the rating is equal to or higher

24 than "A-2" or "SP-2" by S&P, or the equivalent from any other

25 eligible rating service; if ratings differ among eligible

26 rating services, the highest rating shall apply when

SB3670

- 5 -

LRB103 39026 RTM 69163 b

1 determining whether a security bears an eligible rating.

2 "Eligible rating service" means any nationally recognized

3 statistical rating organization as defined by the U.S.

4 Securities and Exchange Commission, and any other organization

5 designated by the Secretary by rule or order.

6 "Federally insured depository financial institution" means

7 a bank, credit union, savings and loan association, trust

8 company, savings association, savings bank, industrial bank,

9 or industrial loan company organized under the laws of the

10 United States or any state of the United States, if the bank,

11 credit union, savings and loan association, trust company,

12 savings association, savings bank, industrial bank, or

13 industrial loan company has federally insured deposits.

14 "In this State" means at a physical location within this

15 State for a transaction requested in person. For a transaction

16 requested electronically or by phone, the provider of money

17 transmission may determine if the person requesting the

18 transaction is in this State by relying on other information

19 provided by the person regarding the location of the

20 individual's residential address or a business entity's

21 principal place of business or other physical address

22 location, and any records associated with the person that the

23 provider of money transmission may have that indicate such

24 location, including, but not limited to, an address associated

25 with an account.

26 "Individual" means a natural person.

SB3670

- 6 -

LRB103 39026 RTM 69163 b

1 "Key individual" means any individual ultimately

2 responsible for establishing or directing policies and

3 procedures of the licensee, such as an executive officer,

4 manager, director, or trustee.

5 "Licensee" means a person licensed under this Act.

6 "Material litigation" means litigation, that according to

7 United States generally accepted accounting principles, is

8 significant to a person's financial health and would be

9 required to be disclosed in the person's annual audited

10 financial statements, report to shareholders, or similar

11 records.

12 "Money" means a medium of exchange that is authorized or

13 adopted by the United States or a foreign government as part of

14 its currency and that is customarily used and accepted as a

15 medium of exchange in the country of issuance. "Money"

16 includes a monetary unit of account established by an

17 intergovernmental organization or by agreement between 2 or

18 more governments.

19 "Monetary value" means a medium of exchange, whether or

20 not redeemable in money.

21 "Money transmission" means any of the following:

22 (1) Selling or issuing payment instruments to a person

23 located in this State.

24 (2) Selling or issuing stored value to a person

25 located in this State.

26 (3) Receiving money for transmission from a person

SB3670

- 7 -

LRB103 39026 RTM 69163 b

1 located in this State or transmitting money in this State.

2 "Money transmission" includes bill payment services and

3 payroll processing services. "Money transmission" does not

4 include the provision solely of online or telecommunications

5 services or network access.

6 "MSB accredited state agency" means a state agency that is

7 accredited by the Conference of State Bank Supervisors and

8 Money Transmitter Regulators Association for money

9 transmission licensing and supervision.

10 "Multistate licensing process" means any agreement entered

11 into by and among state regulators relating to coordinated

12 processing of applications for money transmission licenses,

13 applications for the acquisition of control of a licensee,

14 control determinations, or notice and information requirements

15 for a change of key individuals.

16 "NMLS" means the Nationwide Multistate Licensing System

17 and Registry developed by the Conference of State Bank

18 Supervisors and the American Association of Residential

19 Mortgage Regulators and owned and operated by the State

20 Regulatory Registry, LLC, or any successor or affiliated

21 entity, for the licensing and registration of persons in

22 financial services industries.

23 "Outstanding money transmission obligations" means any of

24 the following:

25 (1) Any payment instrument or stored value issued or

26 sold by the licensee to a person located in the United

SB3670

- 8 -

LRB103 39026 RTM 69163 b

1 States or reported as sold by an authorized delegate of

2 the licensee to a person that is located in the United

3 States that has not yet been paid or refunded by or for the

4 licensee or escheated in accordance with applicable

5 abandoned property laws; or

6 (2) Any money received for transmission by the

7 licensee or an authorized delegate in the United States

8 from a person located in the United States that has not

9 been received by the payee, refunded to the sender, or

10 escheated in accordance with applicable abandoned property

11 laws.

12 For purposes of this definition, "in the United States"

13 includes, to the extent applicable, a person in any state,

14 territory, or possession of the United States; the District of

15 Columbia; the Commonwealth of Puerto Rico; or a U.S. military

16 installation that is located in a foreign country.

17 "Passive investor" means a person that:

18 (1) does not have the power to elect a majority of key

19 individuals or executive officers, managers, directors,

20 trustees, or other persons exercising managerial authority

21 of a person in control of a licensee;

22 (2) is not employed by and does not have any

23 managerial duties of the licensee or person in control of

24 a licensee;

25 (3) does not have the power to exercise, directly or

26 indirectly, a controlling influence over the management or

SB3670

- 9 -

LRB103 39026 RTM 69163 b

1 policies of a licensee or person in control of a licensee;

2 and

3 (4) either:

4 (A) attests to items (1), (2), and (3), in a form

5 and in a medium prescribed by the Secretary; or

6 (B)commits to the passivity characteristics of

7 items (1), (2), and (3), in a written document.

8 "Payment instrument" means a written or electronic check,

9 draft, money order, traveler's check, or other written or

10 electronic instrument for the transmission or payment of money

11 or monetary value, whether or not negotiable. "Payment

12 instrument" does not include stored value or any instrument

13 that (1) is redeemable by the issuer only for goods or services

14 provided by the issuer or its affiliate or franchisees of the

15 issuer or its affiliate, except to the extent required by

16 applicable law to be redeemable in cash for its cash value; or

17 (2) not sold to the public but issued and distributed as part

18 of a loyalty, rewards, or promotional program.

19 "Payroll processing services" means receiving money for

20 transmission pursuant to a contract with a person to deliver

21 wages or salaries, make payment of payroll taxes to State and

22 federal agencies, make payments relating to employee benefit

23 plans, or make distributions of other authorized deductions

24 from wages or salaries. "Payroll processing services" does not

25 include an employer performing payroll processing services on

26 its own behalf or on behalf of its affiliate.

SB3670

- 10 -

LRB103 39026 RTM 69163 b

1 "Person" means any individual, general partnership,

2 limited partnership, limited liability company, corporation,

3 trust, association, joint stock corporation, or other

4 corporate entity identified by the Secretary.

5 "Receiving money for transmission" or "money received for

6 transmission" means receiving money or monetary value in the

7 United States for transmission within or outside the United

8 States by electronic or other means.

9 "Secretary" means the Secretary of Financial and

10 Professional Regulation, the acting Secretary, or a person

11 authorized by the Secretary.

12 "Stored value" means monetary value representing a claim

13 against the issuer evidenced by an electronic or digital

14 record, and that is intended and accepted for use as a means of

15 redemption for money or monetary value, or payment for goods

16 or services. "Stored value" includes, but is not limited to,

17 "prepaid access" as defined by 31 CFR Section 1010.100, as

18 amended or recodified from time to time. Notwithstanding the

19 foregoing, "stored value" does not include a payment

20 instrument or closed loop stored value, or stored value not

21 sold to the public but issued and distributed as part of a

22 loyalty, rewards, or promotional program.

23 "Tangible net worth" means the aggregate assets of a

24 licensee excluding all intangible assets, less liabilities, as

25 determined in accordance with United States generally accepted

26 accounting principles.

SB3670

- 11 -

LRB103 39026 RTM 69163 b

1 ARTICLE III. Exemptions

2 Section 3-1. Exemptions. This Act does not apply to:

3 (1) An operator of a payment system to the extent that it

4 provides processing, clearing, or settlement services, between

5 or among persons exempted by this Section or licensees, in

6 connection with wire transfers, credit card transactions,

7 debit card transactions, stored value transactions, automated

8 clearinghouse transfers, or similar funds transfers.

9 (2) A person appointed as an agent of a payee to collect

10 and process a payment from a payor to the payee for goods or

11 services, other than money transmission itself, provided to

12 the payor by the payee, if:

13 (A) there exists a written agreement between the payee

14 and the agent directing the agent to collect and process

15 payments from payors on the payee's behalf;

16 (B) the payee holds the agent out to the public as

17 accepting payments for goods or services on the payee's

18 behalf; and

19 (C) payment for the goods and services is treated as

20 received by the payee upon receipt by the agent so that the

21 payor's obligation is extinguished and there is no risk of

22 loss to the payor if the agent fails to remit the funds to

23 the payee.

24 (3) A person that acts as an intermediary by processing

SB3670

- 12 -

LRB103 39026 RTM 69163 b

1 payments between an entity that has directly incurred an

2 outstanding money transmission obligation to a sender, and the

3 sender's designated recipient, if the entity:

4 (A) is properly licensed or exempt from licensing

5 requirements under this Act;

6 (B) provides a receipt, electronic record, or other

7 written confirmation to the sender identifying the entity

8 as the provider of money transmission in the transaction;

9 and

10 (C) bears sole responsibility to satisfy the

11 outstanding money transmission obligation to the sender,

12 including the obligation to make the sender whole in

13 connection with any failure to transmit the funds to the

14 sender's designated recipient.

15 (4) The United States or a department, agency, or

16 instrumentality thereof, or its agent.

17 (5) Money transmission by the United States Postal Service

18 or by an agent of the United States Postal Service.

19 (6) A State, county, city, or any other governmental

20 agency or governmental subdivision or instrumentality of a

21 State, or its agent.

22 (7) A federally insured depository financial institution,

23 bank holding company, office of an international banking

24 corporation, foreign bank that establishes a federal branch

25 pursuant to the International Bank Act, 12 U.S.C. 3102, as

26 amended or recodified from time to time, corporation organized

SB3670

- 13 -

LRB103 39026 RTM 69163 b

1 pursuant to the Bank Service Corporation Act, 12 U.S.C.

2 Sections 1861 through 1867, as amended or recodified from time

3 to time, or corporation organized under the Edge Act, 12

4 U.S.C. Sections 611 through 633, as amended or recodified from

5 time to time, under the laws of a state or the United States.

6 (8) Electronic funds transfer of governmental benefits for

7 a federal, State, county, or governmental agency by a

8 contractor on behalf of the United States or a department,

9 agency, or instrumentality thereof, or on behalf of a State or

10 governmental subdivision, agency, or instrumentality thereof.

11 (9) A board of trade designated as a contract market under

12 the federal Commodity Exchange Act, 7 U.S.C. Section 1 et

13 seq., as amended or recodified from time to time, or a person

14 that, in the ordinary course of business, provides clearance

15 and settlement services for a board of trade to the extent of

16 its operation as or for such a board.

17 (10) A registered futures commission merchant under the

18 federal commodities laws to the extent of its operation as

19 such a merchant.

20 (11) A person registered as a securities broker-dealer

21 under federal or State securities laws to the extent of its

22 operation as such a broker-dealer.

23 (12) An individual employed by a licensee, authorized

24 delegate, or any person exempted from the licensing

25 requirements of the Act when acting within the scope of

26 employment and under the supervision of the licensee,

SB3670

- 14 -

LRB103 39026 RTM 69163 b

1 authorized delegate, or exempted person as an employee and not

2 as an independent contractor.

3 (13) A person expressly appointed as a third-party service

4 provider to or agent of an entity exempt under paragraph (7) or

5 (16), solely to the extent that:

6 (A) such service provider or agent is engaging in

7 money transmission on behalf of and pursuant to a written

8 agreement with the exempt entity that sets forth the

9 specific functions that the service provider or agent is

10 to perform; and

11 (B) the exempt entity assumes all risk of loss and all

12 legal responsibility for satisfying the outstanding money

13 transmission obligations owed to purchasers and holders of

14 the outstanding money transmission obligations upon

15 receipt of the purchaser's or holder's money or monetary

16 value by the service provider or agent.

17 (14) Any other person, transaction, or class of persons or

18 transactions exempted by rule or any other person or

19 transaction exempted by the Secretary's order on a finding

20 that the licensing of the person is not necessary to achieve

21 the purposes of this Act.

22 (15) Currency exchanges licensed under the Currency

23 Exchange Act to the extent of its operation as such a currency

24 exchange.

25 (16) A credit union organized under the laws of the United

26 States or any state of the United States with member share

SB3670

- 15 -

LRB103 39026 RTM 69163 b

1 accounts insured by an insurer approved by the credit union's

2 primary financial regulatory agency. An out-of-state-credit

3 union may not conduct any activity in this State that is not

4 authorized for a credit union chartered under the law of this

5 State.

6 Section 3-2. Authority to require demonstration of

7 exemption. The Secretary may require that any person or entity

8 claiming to be exempt from licensing pursuant to Section 3-1

9 provide information and documentation to the Secretary

10 demonstrating that it qualifies for any claimed exemption. The

11 burden of proving the applicability of an exemption is upon

12 the person claiming the exclusion or exception.

13 ARTICLE IV. Implementation, Confidentiality, Supervision &

14 Relationship to Federal Law

15 Section 4-1. Implementation.

16 (a) In order to carry out the purposes of this Act, the

17 Secretary may, subject to the provisions of subsections (a)

18 and (b) of Section 4-2:

19 (1) enter into agreements or relationships with other

20 government officials or federal and State regulatory

21 agencies and regulatory associations in order to improve

22 efficiencies and reduce regulatory burden by standardizing

23 methods or procedures, and sharing resources, records or

SB3670

- 16 -

LRB103 39026 RTM 69163 b

1 related information obtained under this Act;

2 (2) use, hire, contract, or employ analytical systems,

3 methods, or software to examine or investigate any person

4 subject to this Act.

5 (3) accept, from other state or federal government

6 agencies or officials, licensing, examination, or

7 investigation reports made by such other state or federal

8 government agencies or officials; and

9 (4) accept audit reports made by an independent

10 certified public accountant or other qualified third-party

11 auditor for an applicant or licensee and incorporate the

12 audit report in any report of examination or

13 investigation.

14 (b) The Department shall have the broad administrative

15 authority to administer, interpret and enforce this Act, and

16 adopt rules or regulations implementing this Act and to

17 recover the cost of administering and enforcing this Act by

18 imposing and collecting proportionate and equitable fees and

19 costs associated with applications, examinations,

20 investigations, and other actions required to achieve the

21 purpose of this Act. The Department's rulemaking authority

22 shall include, but not be limited to:

23 (1) such rules and regulations in connection with the

24 activities of licensees as may be necessary and

25 appropriate for the protection of consumers in this State;

26 (2) such rules and regulations as may be necessary and

SB3670

- 17 -

LRB103 39026 RTM 69163 b

1 appropriate to define improper or fraudulent business

2 practices in connection with the activities of licensees;

3 (3) such rules and regulations as may define the terms

4 used in this Act and as may be necessary and appropriate to

5 interpret and implement the provisions of this Act;

6 (4) such rules and regulations as may be necessary for

7 the implementation or enforcement of this Act; and

8 (5) such rules and regulations establishing fees the

9 Secretary deems necessary to cover the cost of

10 administration of this Act.

11 Section 4-2. Confidentiality.

12 (a) Except as otherwise provided in this Section, all

13 information or reports obtained by the Secretary from an

14 applicant, licensee, or authorized delegate, and all

15 information contained in or related to an examination,

16 investigation, operating report, or condition report prepared

17 by, on behalf of, or for the use of the Secretary, or financial

18 statements, balance sheets, or authorized delegate

19 information, are confidential and are not subject to

20 disclosure under the Freedom of Information Act.

21 (b) The Secretary may disclose information not otherwise

22 subject to disclosure under subsection (a) to representatives

23 of State or federal agencies who promise in a record that they

24 will maintain the confidentiality of the information or where

25 the Secretary finds that the release is reasonably necessary

SB3670

- 18 -

LRB103 39026 RTM 69163 b

1 for the protection and interest of the public.

2 (c) This Section does not prohibit the Secretary from

3 disclosing to the public a list of all licensees or the

4 aggregated financial or transactional data concerning those

5 licensees.

6 (d) Information contained in the records of the Department

7 that is not confidential and may be made available to the

8 public either on the Department's website, upon receipt by the

9 Department of a written request, or in NMLS shall include:

10 (1) the name, business address, telephone number, and

11 unique identifier of a licensee;

12 (2) the business address of a licensee's registered

13 agent for service;

14 (3) the name, business address, and telephone number

15 of all authorized delegates;

16 (4) the terms of or a copy of any bond filed by a

17 licensee, if confidential information, including, but not

18 limited to, prices and fees, for such bond is redacted;

19 (5) copies of any final orders of the Department

20 relating to any violation of this Act or regulations

21 implementing this Act; and

22 (e) Imposition of an administrative action under this Act

23 is not confidential.

24 (f) The Secretary, in his or her sole discretion, may

25 disclose otherwise confidential information when he or she

26 determines disclosure is in the public interest.

SB3670

- 19 -

LRB103 39026 RTM 69163 b

1 Section 4-3. Supervision.

2 (a) The Secretary may conduct an examination or

3 investigation of a licensee or authorized delegate or

4 otherwise take independent action authorized by this Act or by

5 a rule adopted or order issued under this Act as reasonably

6 necessary or appropriate to administer and enforce this Act,

7 rules and regulations implementing this Act, and other

8 applicable law, including the Bank Secrecy Act and the USA

9 PATRIOT ACT. The Secretary may:

10 (1) conduct an examination either on-site or off-site

11 as the Secretary may reasonably require;

12 (2) conduct an examination in conjunction with an

13 examination conducted by representatives of other state

14 agencies or agencies of another state or of the federal

15 government;

16 (3) accept the examination report of another state

17 agency or an agency of another state or of the federal

18 government, or a report prepared by an independent

19 accounting firm, which on being accepted is considered for

20 all purposes as an official report of the Secretary; and

21 (4) summon and examine under oath a key individual or

22 employee of a licensee or authorized delegate and require

23 the person to produce records regarding any matter related

24 to the condition and business of the licensee or

25 authorized delegate.

SB3670

- 20 -

LRB103 39026 RTM 69163 b

1 (b) A licensee or authorized delegate shall provide, and

2 the Secretary shall have full and complete access to, all

3 records the Secretary may reasonably require to conduct a

4 complete examination. The records must be provided at the

5 location and in the format specified by the Secretary,

6 however, the Secretary may utilize multistate record

7 production standards and examination procedures when such

8 standards will reasonably achieve the requirements of this

9 subsection.

10 (c) Unless otherwise directed by the Secretary, a licensee

11 shall pay all costs reasonably incurred in connection with an

12 examination of the licensee or the licensee's authorized

13 delegates.

14 Section 4-4. Networked supervision.

15 (a) To efficiently and effectively administer and enforce

16 this Act and to minimize regulatory burden, the Secretary is

17 authorized and encouraged to participate in multistate

18 supervisory processes established between states and

19 coordinated through the Conference of State Bank Supervisors,

20 Money Transmitter Regulators Association, and affiliates and

21 successors thereof for all licensees that hold licenses in

22 this State and other states. As a participant in multistate

23 supervision, the Secretary may:

24 (1) cooperate, coordinate, and share information with

25 other state and federal regulators in accordance with

SB3670

- 21 -

LRB103 39026 RTM 69163 b

1 Section 4-2;

2 (2) enter into written cooperation, coordination, or

3 information-sharing contracts or agreements with

4 organizations the membership of which is made up of state

5 or federal governmental agencies; and

6 (3) cooperate, coordinate, and share information with

7 organizations the membership of which is made up of state

8 or federal governmental agencies, if the organizations

9 agree in writing to maintain the confidentiality and

10 security of the shared information in accordance with

11 Section 4-2.

12 (b) The Secretary may not waive, and nothing in this

13 Section constitutes a waiver of, the Secretary's authority to

14 conduct an examination or investigation or otherwise take

15 independent action authorized by this Act or a rule adopted or

16 order issued under this Act to enforce compliance with

17 applicable State or federal law.

18 (c) A joint examination or investigation, or acceptance of

19 an examination or investigation report, does not waive an

20 examination assessment provided for in this Act.

21 Section 4-5. Relationship to federal law.

22 (a) If State money transmission jurisdiction is

23 conditioned on a federal law, any inconsistencies between a

24 provision of this Act and the federal law governing money

25 transmission shall be governed by the applicable federal law

SB3670

- 22 -

LRB103 39026 RTM 69163 b

1 to the extent of the inconsistency.

2 (b) In the event of any inconsistencies between this Act

3 and a federal law that governs pursuant to subsection (a), the

4 Secretary may provide interpretive rule or guidance that:

5 (1) identifies the inconsistency; and

6 (2) identifies the appropriate means of compliance

7 with federal law.

8 ARTICLE V. Money Transmission Licenses

9 Section 5-1. License required.

10 (a) A person may not engage in the business of money

11 transmission or advertise, solicit, or hold oneself out as

12 providing money transmission unless the person is licensed

13 under this Act.

14 (b) Subsection (a) does not apply to:

15 (1) A person who is an authorized delegate of a person

16 licensed under this Act acting within the scope of

17 authority conferred by a written contract with the

18 licensee; or

19 (2) A person who is exempt pursuant to Section 3-1 and

20 does not engage in money transmission outside the scope of

21 such exemption.

22 (c) A license issued under Section 5-5 is not transferable

23 or assignable.

SB3670

- 23 -

LRB103 39026 RTM 69163 b

1 Section 5-2. Consistent State licensing.

2 (a) To establish consistent licensing between this State

3 and other states, the Secretary is authorized and encouraged

4 to:

5 (1) implement all licensing provisions of this Act in

6 a manner that is consistent with other states that have

7 adopted this Act or multistate licensing processes; and

8 (2) participate in nationwide protocols for licensing

9 cooperation and coordination among state regulators

10 provided that such protocols are consistent with this Act.

11 (b) In order to fulfill the purposes of this Act, the

12 Secretary is authorized and encouraged to establish

13 relationships or contracts with NMLS or other entities

14 designated by NMLS to enable the Secretary to:

15 (1) collect and maintain records;

16 (2) coordinate multistate licensing processes and

17 supervision processes;

18 (3) process fees; and

19 (4) facilitate communication between this State and

20 licensees or other persons subject to this Act.

21 (c) The Secretary is authorized and encouraged to utilize

22 NMLS for all aspects of licensing in accordance with this Act,

23 including, but not limited to, license applications,

24 applications for acquisitions of control, surety bonds,

25 reporting, criminal history background checks, credit checks,

26 fee processing, and examinations.

SB3670

- 24 -

LRB103 39026 RTM 69163 b

1 (d) The Secretary is authorized and encouraged to utilize

2 NMLS forms, processes, and functionalities in accordance with

3 this Act. If NMLS does not provide functionality, forms, or

4 processes for a provision of this Act, the Secretary is

5 authorized and encouraged to strive to implement the

6 requirements in a manner that facilitates uniformity with

7 respect to licensing, supervision, reporting, and regulation

8 of licensees which are licensed in multiple jurisdictions.

9 (e) For the purpose of participating in NMLS, the

10 Secretary is authorized to waive or modify, in whole or in

11 part, by rule, regulation or order, any or all of the

12 requirements and to establish new requirements as reasonably

13 necessary to participate in NMLS.

14 Section 5-3. Application for license.

15 (a) Applicants for a license shall apply in a form and in a

16 medium as prescribed by the Secretary. Each such form shall

17 contain content as set forth by rule, regulation, instruction

18 or procedure of the Secretary and may be changed or updated by

19 the Secretary in accordance with applicable law in order to

20 carry out the purposes of this Act and maintain consistency

21 with NMLS licensing standards and practices. The application

22 must state or contain, as applicable:

23 (1) the legal name and residential and business

24 addresses of the applicant and any fictitious or trade

25 name used by the applicant in conducting its business;

SB3670

- 25 -

LRB103 39026 RTM 69163 b

1 (2) a list of any criminal convictions of the

2 applicant and any material litigation in which the

3 applicant has been involved in the 10-year period

4 preceding the submission of the application;

5 (3) a description of any money transmission previously

6 provided by the applicant and the money transmission that

7 the applicant seeks to provide in this State;

8 (4) a list of the applicant's proposed authorized

9 delegates and the locations in this State where the

10 applicant and its authorized delegates propose to engage

11 in money transmission;

12 (5) a list of other states in which the applicant is

13 licensed to engage in money transmission and any license

14 revocations, suspensions, or other disciplinary action

15 taken against the applicant in another state;

16 (6) information concerning any bankruptcy or

17 receivership proceedings affecting the licensee or a

18 person in control of a licensee;

19 (7) a sample form of contract for authorized

20 delegates, if applicable;

21 (8) a sample form of payment instrument or stored

22 value, as applicable;

23 (9) the name and address of any federally insured

24 depository financial institution through which the

25 applicant plans to conduct money transmission; and

26 (10) any other information the Secretary or NMLS

SB3670

- 26 -

LRB103 39026 RTM 69163 b

1 reasonably requires with respect to the applicant.

2 (b) If an applicant is a corporation, limited liability

3 company, partnership, or other legal entity, the applicant

4 shall also provide:

5 (1) the date of the applicant's incorporation or

6 formation and State or country of incorporation or

7 formation;

8 (2) if applicable, a certificate of good standing from

9 the State or country in which the applicant is

10 incorporated or formed;

11 (3) a brief description of the structure or

12 organization of the applicant, including any parents or

13 subsidiaries of the applicant, and whether any parents or

14 subsidiaries are publicly traded;

15 (4) the legal name, any fictitious or trade name, all

16 business and residential addresses, and the employment, as

17 applicable, in the 10-year period preceding the submission

18 of the application of each key individual and person in

19 control of the applicant;

20 (5) a list of any criminal convictions and material

21 litigation in which a person in control of the applicant

22 that is not an individual has been involved in the 10-year

23 period preceding the submission of the application;

24 (6) a copy of audited financial statements of the

25 applicant for the most recent fiscal year and for the

26 2-year period preceding the submission of the application;

SB3670

- 27 -

LRB103 39026 RTM 69163 b

1 (7) a certified copy of unaudited financial statements

2 of the applicant for the most recent fiscal quarter;

3 (8) if the applicant is a publicly traded corporation,

4 a copy of the most recent report filed with the United

5 States Securities and Exchange Commission under Section 13

6 of the federal Securities Exchange Act of 1934, 15 U.S.C.

7 78m, as amended or recodified from time to time;

8 (9) if the applicant is a wholly owned subsidiary of:

9 (A) a corporation publicly traded in the United

10 States, a copy of audited financial statements for the

11 parent corporation for the most recent fiscal year or

12 a copy of the parent corporation's most recent report

13 filed under Section 13 of the federal Securities

14 Exchange Act of 1934, 15 U.S.C. 78m, as amended or

15 recodified from time to time; or

16 (B) a corporation publicly traded outside the

17 United States, a copy of similar documentation filed

18 with the regulator of the parent corporation's

19 domicile outside the United States;

20 (10) the name and address of the applicant's

21 registered agent in this State; and

22 (11) any other information the Secretary reasonably

23 requires with respect to the applicant.

24 A nonrefundable application fee must accompany an

25 application for a license under this Section in accordance

26 with 38 Ill. Adm. Code 205.35, as amended or recodified from

SB3670

- 28 -

LRB103 39026 RTM 69163 b

1 time to time.

2 (c) The Secretary may waive one or more requirements of

3 subsections (a) and (b) or permit an applicant to submit other

4 information instead of the required information.

5 Section 5-4. Information requirements for certain

6 individuals.

7 (a) Any individual in control of a licensee or applicant,

8 any individual that seeks to acquire control of a licensee,

9 and each key individual shall furnish to the Secretary through

10 NMLS the following items:

11 (1) The individual's fingerprints for submission to

12 the Federal Bureau of Investigation and the Secretary for

13 purposes of a national criminal history background check

14 unless the person currently resides outside of the United

15 States and has resided outside of the United States for

16 the last 10 years.

17 (2) Personal history and experience in a form and in a

18 medium prescribed by the Secretary, to obtain the

19 following:

20 (A) an independent credit report from a consumer

21 reporting agency unless the individual does not have a

22 social security number, in which case, this

23 requirement shall be waived;

24 (B) information related to any criminal

25 convictions or pending charges; and

SB3670

- 29 -

LRB103 39026 RTM 69163 b

1 (C) information related to any regulatory or

2 administrative action and any civil litigation

3 involving claims of fraud, misrepresentation,

4 conversion, mismanagement of funds, breach of

5 fiduciary duty, or breach of contract.

6 (b) If the individual has resided outside of the United

7 States at any time in the last 10 years, the individual shall

8 also provide an investigative background report prepared by an

9 independent search firm that meets the following requirements:

10 (1) At a minimum, the search firm shall:

11 (A) demonstrate that it has sufficient knowledge,

12 resources, and employs accepted and reasonable

13 methodologies to conduct the research of the

14 background report; and

15 (B) not be affiliated with or have an interest

16 with the individual it is researching.

17 (2) At a minimum, the investigative background report

18 shall be written in the English language and shall contain

19 the following:

20 (A) if available in the individual's current

21 jurisdiction of residency, a comprehensive credit

22 report, or any equivalent information obtained or

23 generated by the independent search firm to accomplish

24 such report, including a search of the court data in

25 the countries, provinces, states, cities, towns, and

26 contiguous areas where the individual resided and

SB3670

- 30 -

LRB103 39026 RTM 69163 b

1 worked;

2 (B) criminal records information for the past 10

3 years, including, but not limited to, felonies,

4 misdemeanors, or similar convictions for violations of

5 law in the countries, provinces, states, cities,

6 towns, and contiguous areas where the individual

7 resided and worked;

8 (C) employment history;

9 (D) media history, including an electronic search

10 of national and local publications, wire services, and

11 business applications; and

12 (E) financial services-related regulatory history,

13 including, but not limited to, money transmission,

14 securities, banking, insurance, and mortgage related

15 industries.

16 Section 5-5. Issuance of license.

17 (a) When an application for an original license under this

18 Act appears to include all the items and addresses of all of

19 the matters that are required, the application is complete and

20 the Secretary shall promptly notify the applicant in a record

21 of the date on which the application is determined to be

22 complete, and:

23 (1) unless extended by the Secretary pursuant to the

24 Secretary's discretion, the Secretary shall approve or

25 deny the application within 120 days after the completion

SB3670

- 31 -

LRB103 39026 RTM 69163 b

1 date; or

2 (2) if the application is not approved or denied

3 within 120 days after the completion date or any extension

4 thereof:

5 (A) the application is approved; and

6 (B) the license takes effect as of the first

7 business day after expiration of the 120-day period.

8 (b) A determination by the Secretary that an application

9 is complete and is accepted for processing means only that the

10 application, on its face, appears to include all of the items,

11 including the Criminal Background Check response from the

12 Federal Bureau of Investigation, and address all of the

13 matters that are required, and is not an assessment of the

14 substance of the application or of the sufficiency of the

15 information provided.

16 (c) When an application is filed and considered complete

17 under this Section, the Secretary shall investigate the

18 applicant's financial condition and responsibility, financial

19 and business experience, character, and general fitness. The

20 Secretary may conduct an on-site investigation of the

21 applicant, the reasonable cost of which the applicant must

22 pay. The Secretary shall issue a license to an applicant under

23 this Section if the Secretary finds that all of the following

24 conditions have been fulfilled:

25 (1) the applicant has complied with Sections 5-3 and

26 5-4; and

SB3670

- 32 -

LRB103 39026 RTM 69163 b

1 (2) the financial condition and responsibility,

2 financial and business experience, competence, character,

3 and general fitness of the applicant and the competence,

4 experience, character, and general fitness of the key

5 individuals and persons in control of the applicant

6 indicate that it is in the interest of the public to permit

7 the applicant to engage in money transmission.

8 (d) If an applicant avails itself or is otherwise subject

9 to a multistate licensing process:

10 (1) the Secretary is authorized and encouraged to

11 accept the investigation results of a lead investigative

12 state for the purpose of subsection (c) if the lead

13 investigative state has sufficient staffing, expertise,

14 and minimum standards; or

15 (2) if the Department is a lead investigative state,

16 the Secretary is authorized and encouraged to investigate

17 the applicant pursuant to subsection (c) and the

18 timeframes established by agreement through the multistate

19 licensing process, however, in no case shall such

20 timeframe be noncompliant with the application period in

21 paragraph (1) of subsection (a).

22 (e) The Secretary shall issue a formal written notice of

23 the denial of a license application within 30 days after the

24 decision to deny the application. The Secretary shall set

25 forth the specific reasons for the denial of the application

26 in the notice of denial and serve the applicant, either

SB3670

- 33 -

LRB103 39026 RTM 69163 b

1 personally or by certified mail. Service by certified mail

2 shall be deemed completed when the notice is deposited into

3 the U.S. Mail. An applicant whose application is denied by the

4 Secretary under this Section may submit a written request for

5 a hearing that shall include the particular reasons why the

6 applicant believes that the decision to deny the application

7 was incorrect, within 10 days after service of the notice of

8 the denial. If an applicant submits a timely request for a

9 hearing, the Secretary shall schedule a hearing after the

10 request for a hearing unless otherwise agreed to by the

11 parties. The Secretary shall conduct hearings pursuant to this

12 Section and in accordance with 38 Ill. Adm. Code 100, as

13 amended or recodified from time to time.

14 (f) The initial license term shall begin on the day that

15 the application is approved. The license shall expire on

16 December 31 of the year in which the license term began, unless

17 the initial license date is between November 1 and December

18 31, in which instance the initial license term shall run

19 through December 31 of the following year.

20 Section 5-6. Renewal of license.

21 (a) A license under this Act shall be renewed annually.

22 (b) An annual renewal fee in accordance with 38 Ill. Adm.

23 Code 205.35, as amended or recodified from time to time, shall

24 be paid to the Department. The renewal term shall be for a

25 period of one year and shall begin on January 1 of each year

SB3670

- 34 -

LRB103 39026 RTM 69163 b

1 after the initial license term and shall expire on December 31

2 of the year the renewal term begins.

3 (c) A licensee shall submit a renewal report, in a form and

4 in a medium prescribed by the Secretary by December 1 of each

5 year. The form requires any information deemed necessary by

6 the Secretary to review a renewal application. At a minimum,

7 the renewal report must state or contain a description of each

8 material change in information submitted by the licensee in

9 its original license application which has not been reported

10 to the Secretary and a statement of the dollar amount and

11 number of money transmissions and payment instruments sold,

12 issued, exchanged, or transmitted in this State by the

13 licensee and its authorized delegate for the past 4 completed

14 calendar quarters.

15 (d) The Secretary, in his or her discretion, may grant an

16 extension of the renewal date.

17 (e) The Secretary is authorized and encouraged to utilize

18 NMLS to process license renewals if such functionality is

19 consistent with this Section.

20 (f) The Secretary shall issue a formal written notice of

21 the denial of renewal within 30 days after the decision to deny

22 the renewal. The Secretary shall set forth the specific

23 reasons for denying the renewal in the notice of denial and

24 serve the licensee, either personally or by certified mail.

25 Service by certified mail shall be deemed completed when the

26 notice is deposited into the U.S. Mail. A licensee whose

SB3670

- 35 -

LRB103 39026 RTM 69163 b

1 renewal is denied by the Secretary under this Section may

2 submit a written request for a hearing that shall include the

3 particular reasons why the licensee believes that the decision

4 to deny the renewal was incorrect within 10 days after service

5 of the notice of the denial. If a licensee submits a timely

6 request for a hearing, the Secretary shall schedule a hearing

7 unless otherwise agreed to by the parties. The Secretary shall

8 conduct hearings pursuant to this Section and in accordance

9 with 38 Ill. Adm. Code 100, as amended or recodified from time

10 to time. The expiring license shall be deemed to continue in

11 force until 10 days after the service of the notice of denial

12 or, if a timely hearing is requested during that period, until

13 a final order is entered pursuant to a hearing.

14 Section 5-7. Maintenance of license.

15 (a) If a licensee does not continue to meet the

16 qualifications or satisfy the requirements that apply to an

17 applicant for a new money transmission license, the Secretary

18 may suspend or revoke the licensee's license in accordance

19 with the procedures established by this Act or other

20 applicable State law for such suspension or revocation.

21 (b) An applicant for a money transmission license must

22 demonstrate that it meets or will meet, and a money

23 transmission licensee must at all times meet, the requirements

24 in Article X of this Act.

SB3670

- 36 -

LRB103 39026 RTM 69163 b

1 Section 5-8. Fees.

2 The expenses of administering this Act, including

3 investigations and examinations provided for in this Act,

4 shall be borne by and assessed against entities regulated by

5 this Act. The Department may establish fees by rule, including

6 in the following categories:

7 (1) investigation of licensees and license applicant

8 fees;

9 (2) examination fees;

10 (3) contingent fees; and

11 (4) such other categories as may be required to

12 administer this Act.

13 (b) The Secretary shall charge and collect fees, which

14 shall be nonrefundable unless otherwise indicated, in

15 accordance with 38 Ill. Adm. Code 205, as amended or

16 recodified from time to time.

17 (c) All fees currently assessed in accordance with 38 Ill.

18 Adm. Code 205, as amended or recodified from time to time,

19 shall remain in effect until amended by rule in accordance

20 with this Act. Except for money required to be deposited into

21 the TOMA Consumer Protection Fund pursuant to this Act, all

22 moneys received by the Department shall be deposited into the

23 Financial Institution Fund. Failure to pay any required fee by

24 the due date shall subject the licensee to a penalty fee of $25

25 per day and disciplinary action.

SB3670

- 37 -

LRB103 39026 RTM 69163 b

1 Section 5-9. Liability of licensees. A licensee is liable

2 for the payment of all moneys covered by payment instruments

3 that it sells or issues in any form in this State through its

4 authorized delegate and all moneys it receives itself or

5 through its authorized delegate for transmission by any means

6 whether or not any instrument is a negotiable instrument under

7 the laws of this State.

8 ARTICLE VI. Acquisition of Control and Change of Key

9 Individual

10 Section 6-1. Acquisition of control.

11 (a) Any person, or group of persons acting in concert,

12 seeking to acquire control of a licensee shall obtain the

13 written approval of the Secretary before acquiring control. An

14 individual is not deemed to acquire control of a licensee and

15 is not subject to this Section when that individual becomes a

16 key individual in the ordinary course of business.

17 (b) A person, or group of persons acting in concert,

18 seeking to acquire control of a licensee shall, in cooperation

19 with the licensee:

20 (1) submit an application in a form and in a medium

21 prescribed by the Secretary; and

22 (2) submit a nonrefundable fee of $1,000 with the

23 request for approval.

24 (c) Upon request, the Secretary may permit a licensee or

SB3670

- 38 -

LRB103 39026 RTM 69163 b

1 the person, or group of persons acting in concert, to submit

2 some or all information required by the Secretary pursuant to

3 subsection (b) without using NMLS.

4 (d) The application required by subsection (b) shall

5 include information required by Section 5-4 for any new key

6 individuals that have not previously completed the

7 requirements of Section 5-4 for a licensee.

8 (e) When an application for acquisition of control under

9 this Section appears to include all the items and address all

10 of the matters that are required, the application shall be

11 considered complete and:

12 (1) unless extended by the Secretary pursuant to the

13 Secretary's discretion, the Secretary shall approve or

14 deny the application within 60 days after the completion

15 date; or

16 (2) if the application is not approved or denied

17 within 60 days after the completion date or any extension

18 thereof:

19 (A) the application is approved; and

20 (B) the person, or group of persons acting in

21 concert, are not prohibited from acquiring control.

22 (f) A determination by the Secretary that an application

23 is complete and is accepted for processing means only that the

24 application, on its face, appears to include all of the items

25 and address all of the matters that are required, and is not an

26 assessment of the substance of the application or of the

SB3670

- 39 -

LRB103 39026 RTM 69163 b

1 sufficiency of the information provided.

2 (g) When an application is filed and considered complete

3 under subsection (e), the Secretary shall investigate the

4 financial condition and responsibility, financial and business

5 experience, character, and general fitness of the person, or

6 group of persons acting in concert, seeking to acquire

7 control. The Secretary shall approve an acquisition of control

8 pursuant to this Section if the Secretary finds that all of the

9 following conditions have been fulfilled:

10 (1) The requirements of subsections (b) and (d) have

11 been met, as applicable; and

12 (2) the financial condition and responsibility,

13 financial and business experience, competence, character,

14 and general fitness of the person, or group of persons

15 acting in concert, seeking to acquire control; and the

16 competence, experience, character, and general fitness of

17 the key individuals and persons that would be in control

18 of the licensee after the acquisition of control indicate

19 that it is in the interest of the public to permit the

20 person, or group of persons acting in concert, to control

21 the licensee.

22 (h) If an applicant avails itself or is otherwise subject

23 to a multistate licensing process:

24 (1) the Secretary is authorized and encouraged to

25 accept the investigation results of a lead investigative

26 state for the purpose of subsection (g) if the lead

SB3670

- 40 -

LRB103 39026 RTM 69163 b

1 investigative state has sufficient staffing, expertise,

2 and minimum standards; or

3 (2) if the Department is a lead investigative state,

4 the Secretary is authorized and encouraged to investigate

5 the applicant pursuant to subsection (g) and the

6 timeframes established by agreement through the multistate

7 licensing process.

8 (i) The Secretary shall issue a formal written notice of

9 the denial of an application to acquire control within 30 days

10 after the decision to deny the application. The Secretary

11 shall set forth the specific reasons for the denial of the

12 application in the notice of denial and serve the applicant,

13 either personally or by certified mail. Service by certified

14 mail shall be deemed completed when the notice is deposited

15 into the U.S. mail. An applicant whose application is denied

16 by the Secretary under this subsection (i) may submit a

17 written request for hearing which shall include the particular

18 reasons why the applicant believes that the decision to deny

19 the application was incorrect, within 10 days after service of

20 the notice of denial. If an applicant submits a timely request

21 for a hearing, the Secretary shall schedule a hearing unless

22 otherwise agreed to by the parties. The Secretary shall

23 conduct hearings pursuant to this Section and in accordance

24 with 38 Ill. Adm. Code 100, as amended or recodified from time

25 to time.

26 (j) The requirements of subsections (a) and (b) do not

SB3670

- 41 -

LRB103 39026 RTM 69163 b

1 apply to any of the following:

2 (1) a person that acts as a proxy for the sole purpose

3 of voting at a designated meeting of the shareholders or

4 holders of voting shares or voting interests of a licensee

5 or a person in control of a licensee;

6 (2) a person that acquires control of a licensee by

7 devise or descent;

8 (3) a person that acquires control of a licensee as a

9 personal representative, custodian, guardian,

10 conservator, or trustee, or as an officer appointed by a

11 court of competent jurisdiction or by operation of law;

12 (4) a person that is exempt under paragraphs (7) or

13 (16) of Section 3-1;

14 (5) A person that the Secretary determines is not

15 subject to subsection (a) based on the public interest;

16 (6) A public offering of securities of a licensee or a

17 person in control of a licensee; or

18 (7) An internal reorganization of a person in control

19 of the licensee where the ultimate person in control of

20 the licensee remains the same.

21 (k) Persons in paragraphs (2), (3), (4), (6), and (7) of

22 subsection (j) in cooperation with the licensee shall notify

23 the Secretary within 15 days after the acquisition of control.

24 (l) Streamlined acquisition of control.

25 (1) The requirements of subsections (a) and (b) do not

26 apply to a person that has complied with and received

SB3670

- 42 -

LRB103 39026 RTM 69163 b

1 approval to engage in money transmission under this Act or

2 was identified as a person in control in a prior

3 application filed with and approved by the Secretary or by

4 an MSB accredited state agency pursuant to a multistate

5 licensing process, if:

6 (A) the person has not had a license revoked or

7 suspended or controlled a licensee that has had a

8 license revoked or suspended while the person was in

9 control of the licensee in the previous 5 years;

10 (B) if the person is a licensee, the person is well

11 managed and has received at least a satisfactory

12 rating for compliance at its most recent examination

13 by an MSB accredited state agency if such rating was

14 given;

15 (C) the licensee to be acquired is projected to

16 meet the requirements of Article X of this Act after

17 the acquisition of control is completed, and if the

18 person acquiring control is a licensee, that licensee

19 is also projected to meet the requirements of Article

20 X of this Act after the acquisition of control is

21 completed;

22 (D) the licensee to be acquired will not implement

23 any material changes to its business plan as a result

24 of the acquisition of control, and if the person

25 acquiring control is a licensee, that licensee also

26 will not implement any material changes to its

SB3670

- 43 -

LRB103 39026 RTM 69163 b

1 business plan as a result of the acquisition of

2 control; and

3 (E) the person provides notice of the acquisition

4 in cooperation with the licensee and attests to this

5 subsection in a form and in a medium prescribed by the

6 Secretary.

7 (2) If the notice is not denied within 30 days after

8 the date on which the notice was determined to be

9 complete, the notice is deemed approved.

10 (m) Before filing an application for approval to acquire

11 control of a licensee a person may request in writing a

12 determination from the Secretary as to whether the person

13 would be considered a person in control of a licensee upon

14 consummation of a proposed transaction. If the Secretary

15 determines that the person would not be a person in control of

16 a licensee, the proposed person and transaction is not subject

17 to the requirements of subsections (a) and (b).

18 (n) If a multistate licensing process includes a

19 determination pursuant to subsection (m) and an applicant

20 avails itself or is otherwise subject to the multistate

21 licensing process:

22 (1) The Secretary is authorized and encouraged to

23 accept the control determination of a lead investigative

24 state with sufficient staffing, expertise, and minimum

25 standards for the purpose of subsection (m); or

26 (2) If the Department is a lead investigative state,

SB3670

- 44 -

LRB103 39026 RTM 69163 b

1 the Secretary is authorized and encouraged to investigate

2 the applicant pursuant to subsection (m) and the

3 timeframes established by agreement through the multistate

4 licensing process.

5 Section 6-2. Notice and information requirements for a

6 change of key individuals.

7 (a) A licensee adding or replacing any key individual

8 shall:

9 (1) provide notice in a manner prescribed by the

10 Secretary within 15 days after the effective date of the

11 key individual's appointment; and

12 (2) provide information as required by Section 5-4

13 within 45 days after the effective date.

14 (b) The Secretary may issue a formal written notice of

15 denial of key individual within 90 days after the date on which

16 the notice provided pursuant to subsection (a) was determined

17 to be complete if the competence, experience, character, or

18 integrity of the individual would not be in the best interests

19 of the public or the customers of the licensee to permit the

20 individual to be a key individual of such licensee.

21 (c) The Secretary shall set forth the specific reasons for

22 the denial in the notice of denial and serve the licensee and

23 the denied individual, either personally, or by certified

24 mail. Service by certified mail shall be deemed completed when

25 the notice is deposited into the U.S. Mail. A licensee who has

SB3670

- 45 -

LRB103 39026 RTM 69163 b

1 been denied by the Secretary under this subsection (c) may

2 submit a written request for hearing which shall include the

3 particular reasons why the licensee believes that the decision

4 to deny was incorrect, within 10 days after service of the

5 notice of the denial. If a licensee submits a timely request

6 for a hearing, the Secretary shall schedule a hearing after

7 the request for a hearing unless otherwise agreed to by the

8 parties. The Secretary shall conduct hearings pursuant to this

9 Section and in accordance with 38 Ill. Adm. Code 100.

10 (d) If the notice provided pursuant to subsection (a) is

11 not denied within 90 days after the date on which the notice

12 was determined to be complete, or any extension thereof, the

13 key individual is deemed approved.

14 (e) If a multistate licensing process includes a key

15 individual notice review and denial process pursuant to this

16 Section and the licensee avails itself or is otherwise subject

17 to the multistate licensing process:

18 (1) the Secretary is authorized and encouraged to

19 accept the determination of another state;

20 (2) if the investigating state has sufficient

21 staffing, expertise, and minimum standards for the purpose

22 of this Section; or

23 (3) if the Department is a lead investigative state,

24 the Secretary is authorized and encouraged to investigate

25 the applicant pursuant to subsection (b) and the

26 timeframes established by agreement through the multistate

SB3670

- 46 -

LRB103 39026 RTM 69163 b

1 licensing process.

2 ARTICLE VII. Reporting and Records

3 Section 7-1. Report of condition.

4 (a) Each licensee, under penalty of perjury, shall submit

5 a report of condition within 45 days of the end of the calendar

6 quarter, or within any extended time as the Secretary may

7 prescribe.

8 (b) The report of condition shall include:

9 (1) financial information at the licensee level;

10 (2) nationwide and state-specific money transmission

11 transaction information in every jurisdiction in the

12 United States where the licensee is licensed to engage in

13 money transmission;

14 (3) permissible investments report;

15 (4) transaction destination country reporting for

16 money received for transmission, if applicable; and

17 (5) any other information the Secretary reasonably

18 requires with respect to the licensee. The Secretary is

19 authorized and encouraged to utilize NMLS for the

20 submission of the report required by subsection (a) and is

21 authorized to change or update as necessary the

22 requirements of this Section to carry out the purposes of

23 this Act and maintain consistency with NMLS reporting.

24 (c) The information required by paragraph (4) of

SB3670

- 47 -

LRB103 39026 RTM 69163 b

1 subsection (b) shall only be included in a report of condition

2 submitted within 45 days of the end of the fourth calendar

3 quarter.

4 Section 7-2. Audited financial statements.

5 (a) Each licensee shall, within 90 days after the end of

6 each fiscal year, or within any extended time as the Secretary

7 may prescribe, file with the Secretary:

8 (1) an audited financial statement of the licensee for

9 the fiscal year prepared in accordance with United States

10 generally accepted accounting principles; and

11 (2) any other information as the Secretary may

12 reasonably require.

13 (b) The audited financial statements shall be prepared by

14 an independent certified public accountant or independent

15 public accountant who is satisfactory to the Secretary;

16 (c) The audited financial statements shall include or be

17 accompanied by a certificate of opinion of the independent

18 certified public accountant or independent public accountant

19 that is satisfactory in form and content to the Secretary. If

20 the opinion or certificate is qualified, the licensee must

21 make a separate report to the Secretary notifying them of the

22 qualified opinion or certification. If the certificate or

23 opinion is qualified, the Secretary may order the licensee to

24 take any action as the Secretary may find necessary to enable

25 the certified public accountant or independent public

SB3670

- 48 -

LRB103 39026 RTM 69163 b

1 accountant to remove the qualification.

2 Section 7-3. Authorized delegate reporting.

3 (a) Each licensee shall submit a report of authorized

4 delegates within 45 days of the end of the calendar quarter.

5 The Secretary is authorized and encouraged to utilize NMLS for

6 the submission of the report required by this Section provided

7 that such functionality is consistent with the requirements of

8 this Section.

9 (b) The authorized delegate report shall include, at a

10 minimum, each authorized delegate's:

11 (1) company legal name;

12 (2) taxpayer employer identification number;

13 (3) principal provider identifier;

14 (4) physical address;

15 (5) mailing address;

16 (6) any business conducted in other states;

17 (7) any fictitious or trade name;

18 (8) contact person name, phone number, and email;

19 (9) start date as licensee's authorized delegate;

20 (10) end date acting as licensee's authorized

21 delegate, if applicable;

22 (11) court orders pursuant to Section 8-3; and

23 (12) Any other information the Secretary reasonably

24 requires with respect to the authorized delegate.

SB3670

- 49 -

LRB103 39026 RTM 69163 b

1 Section 7-4. Reports of certain events.

2 (a) A licensee shall file a report with the Secretary

3 within one business day after the licensee has reason to know

4 of the occurrence of any of the following events:

5 (1) the filing of a petition by or against the

6 licensee under the United States Bankruptcy Code, 11

7 U.S.C. Sections 101 through 110, as amended or recodified

8 from time to time, for bankruptcy or reorganization;

9 (2) the filing of a petition by or against the

10 licensee for receivership, the commencement of any other

11 judicial or administrative proceeding for its dissolution

12 or reorganization, or the making of a general assignment

13 for the benefit of its creditors; or

14 (3) the commencement of a proceeding to revoke or

15 suspend its license in a state or country in which the

16 licensee engages in business or is licensed.

17 (b) A licensee shall file a report with the Secretary

18 within 3 business days after the licensee has reason to know of

19 the occurrence of any of the following events:

20 (1) a charge or conviction of the licensee or of a key

21 individual or person in control of the licensee for a

22 felony; or

23 (2) a charge or conviction of an authorized delegate

24 for a felony.

25 Section 7-5. Bank Secrecy Act reports. A licensee and an

SB3670

- 50 -

LRB103 39026 RTM 69163 b

1 authorized delegate shall file all reports required by federal

2 currency reporting, recordkeeping, and suspicious activity

3 reporting requirements as set forth in the Bank Secrecy Act

4 and other federal and State laws pertaining to money

5 laundering. The timely filing of a complete and accurate

6 report required under this Section with the appropriate

7 federal agency is deemed compliant with the requirements of

8 this Section.

9 Section 7-6. Records.

10 (a) Licensee shall maintain the following records, for

11 determining its compliance with this Act, for at least 3

12 years:

13 (1) a record of each outstanding money transmission

14 obligation sold;

15 (2) a general ledger posted at least monthly

16 containing all asset, liability, capital, income, and

17 expense accounts;

18 (3) bank statements and bank reconciliation records;

19 (4) records of outstanding money transmission

20 obligations;

21 (5) records of each outstanding money transmission

22 obligation paid within the 3-year period;

23 (6) a list of the last known names and addresses of all

24 of the licensee's authorized delegates; and

25 (7) any other records the Secretary reasonably

SB3670

- 51 -

LRB103 39026 RTM 69163 b

1 requires by rule.

2 (b) The records specified in subsection (a) may be

3 maintained in electronic or other retrievable form of record.

4 (c) The records specified in subsection (a) shall be

5 maintained at the licensee's principal place of business or,

6 with notice to the Secretary, at another location designated

7 by the licensee. If the records are maintained outside this

8 State, the licensee shall make them accessible to the

9 Secretary on 7 business-days' notice.

10 (d) All records maintained by the licensee as required in

11 subsections (a) through (c) are open to inspection by the

12 Secretary pursuant to subsection (a) of Section 4-3.

13 (e) A licensee shall require and its authorized delegates

14 must preserve for at least 3 years all documents relating to

15 money transmission activities, unless the data embodied in

16 those documents has been transmitted for recordation by the

17 licensee.

18 ARTICLE VIII. Authorized Delegates

19 Section 8-1. Relationship between licensee and authorized

20 delegate.

21 (a) As used in this Section, "remit" means to make direct

22 payments of money to a licensee or its representative

23 authorized to receive money or to deposit money in a bank in an

24 account specified by the licensee.

SB3670

- 52 -

LRB103 39026 RTM 69163 b

1 (b) Before a licensee is authorized to conduct business

2 through an authorized delegate or allows a person to act as the

3 licensee's authorized delegate, the licensee must:

4 (1) adopt, and update as necessary, written policies

5 and procedures reasonably designed to ensure that the

6 licensee's authorized delegates comply with applicable

7 State and federal law;

8 (2) enter into a written contract that complies with

9 subsection (d); and

10 (3) conduct a reasonable risk-based background

11 investigation sufficient for the licensee to determine

12 whether the authorized delegate has complied and will

13 likely comply with applicable State and federal law.

14 (c) An authorized delegate must operate in full compliance

15 with this Act.

16 (d) The written contract required by subsection (b) must

17 be signed by the licensee and the authorized delegate and, at a

18 minimum, must:

19 (1) expressly appoint the person signing the contract

20 as the licensee's authorized delegate with the authority

21 to conduct money transmission on behalf of the licensee;

22 (2) set forth the nature and scope of the relationship

23 between the licensee and the authorized delegate and the

24 respective rights and responsibilities of the parties;

25 (3) require the authorized delegate to agree to fully

26 comply with all applicable State and federal laws, rules,

SB3670

- 53 -

LRB103 39026 RTM 69163 b

1 and regulations pertaining to money transmission,

2 including this Act and regulations implementing this Act,

3 relevant provisions of the Bank Secrecy Act, and the USA

4 PATRIOT ACT;

5 (4) require the authorized delegate to remit and

6 handle money and monetary value in accordance with the

7 terms of the contract between the licensee and the

8 authorized delegate;

9 (5) impose a trust on money and monetary value net of

10 fees received for money transmission for the benefit of

11 the licensee;

12 (6) require the authorized delegate to prepare and

13 maintain records as required by this Act or regulations

14 implementing this Act, or as reasonably requested by the

15 Secretary;

16 (7) acknowledge that the authorized delegate consents

17 to examination or investigation by the Secretary;

18 (8) state that the licensee is subject to regulation

19 by the Secretary and that, as part of that regulation, the

20 Secretary may suspend or revoke an authorized delegate

21 designation or require the licensee to terminate an

22 authorized delegate designation; and

23 (9) acknowledge receipt of the written policies and

24 procedures required under paragraph (1) of subsection (b).

25 (e) If the licensee's license is suspended, revoked,

26 surrendered, or expired, the licensee must, within 5 business

SB3670

- 54 -

LRB103 39026 RTM 69163 b

1 days, provide documentation to the Secretary that the licensee

2 has notified all applicable authorized delegates of the

3 licensee whose names are in a record filed with the Secretary

4 of the suspension, revocation, surrender, or expiration of a

5 license. Upon suspension, revocation, surrender, or expiration

6 of a license, applicable authorized delegates shall

7 immediately cease to provide money transmission as an

8 authorized delegate of the licensee.

9 (f) An authorized delegate of a licensee holds in trust

10 for the benefit of the licensee all money net of fees received

11 from money transmission. If any authorized delegate commingles

12 any funds received from money transmission with any other

13 funds or property owned or controlled by the authorized

14 delegate, all commingled funds and other property shall be

15 considered held in trust in favor of the licensee in an amount

16 equal to the amount of money net of fees received from money

17 transmission.

18 (g) An authorized delegate may not use a subdelegate to

19 conduct money transmission on behalf of a licensee.

20 Section 8-2. Unauthorized activities. A person shall not

21 engage in the business of money transmission on behalf of a

22 person not licensed under this Act or not exempt pursuant to

23 Article III of this Act. A person that engages in such activity

24 provides money transmission to the same extent as if the

25 person were a licensee, and shall be jointly and severally

SB3670

- 55 -

LRB103 39026 RTM 69163 b

1 liable with the unlicensed or nonexempt person.

2 Section 8-3. Prohibited authorized delegates.

3 (a) The circuit court in an action brought by a licensee

4 shall have jurisdiction to grant appropriate equitable or

5 legal relief, including, without limitation, prohibiting the

6 authorized delegate from directly or indirectly acting as an

7 authorized delegate for any licensee in this State and the

8 payment of restitution, damages or other monetary relief, if

9 the circuit court finds that an authorized delegate failed to

10 remit money in accordance with the written contract required

11 by subsection (b) of Section 8-1 or as otherwise directed by

12 the licensee or required by law.

13 (b) If the circuit court issues an order prohibiting a

14 person from acting as an authorized delegate for any licensee

15 pursuant to subsection (a), the licensee that brought the

16 action shall report the order to the Secretary within 30 days

17 and shall report the order through NMLS within 90 days.

18 (c) An authorized delegate who holds money in trust for

19 the benefit of a licensee and knowingly fails to remit more

20 than $1,000 of such money is guilty of a Class 3 felony.

21 (d) An authorized delegate who holds money in trust for

22 the benefit of a licensee and knowingly fails to remit no more

23 than $999 of such money is guilty of a Class A misdemeanor.

24 ARTICLE IX. Timely Transmission, Refunds, and Disclosures

SB3670

- 56 -

LRB103 39026 RTM 69163 b

1 Section 9-1. Timely transmission.

2 (a) Every licensee shall forward all money received for

3 transmission in accordance with the terms of the agreement

4 between the licensee and the sender, which shall be no more

5 than 3 business days after the receipt of the money to be

6 transmitted, unless the licensee has a reasonable belief or a

7 reasonable basis to believe that the sender may be a victim of

8 fraud or that a crime or violation of law, rule, or regulation

9 has occurred, is occurring, or may occur.

10 (b) If a licensee fails to forward money received for

11 transmission in accordance with this Section, the licensee

12 must respond to inquiries by the sender with the reason for the

13 failure unless providing a response would violate a State or

14 federal law, rule, or regulation.

15 Section 9-2. Refunds.

16 (a) This Section does not apply to:

17 (1) money received for transmission subject to the

18 federal Remittance Rule, 12 CFR Part 1005, Subpart B, as

19 amended or recodified from time to time; or

20 (2) money received for transmission pursuant to a

21 written agreement between the licensee and payee to

22 process payments for goods or services provided by the

23 payee.

24 (b) Every licensee shall refund to the sender within 10

SB3670

- 57 -

LRB103 39026 RTM 69163 b

1 days after receipt of the sender's written request for a

2 refund of any and all money received for transmission unless

3 any of the following occurs:

4 (1) the money has been forwarded within 10 days after

5 the date on which the money was received for transmission;

6 (2) instructions have been given committing an

7 equivalent amount of money to the person designated by the

8 sender within 10 days of the date on which the money was

9 received for transmission;

10 (3) the agreement between the licensee and the sender

11 instructs the licensee to forward the money at a time that

12 is beyond 10 days after the date on which the money was

13 received for transmission; if funds have not yet been

14 forwarded in accordance with the terms of the agreement

15 between the licensee and the sender, the licensee shall

16 issue a refund in accordance with the other provisions of

17 this Section; or

18 (4) the refund is requested for a transaction that the

19 licensee has not completed based on a reasonable belief or

20 a reasonable basis to believe that a crime or violation of

21 law, rule, or regulation has occurred, is occurring, or

22 may occur.

23 (5) the refund request does not enable the licensee

24 to:

25 (A) identify the sender's name and address or

26 telephone number; or

SB3670

- 58 -

LRB103 39026 RTM 69163 b

1 (B) identify the particular transaction to be

2 refunded if the sender has multiple transactions

3 outstanding.

4 Section 9-3. Receipts.

5 (a) As used in this Section, "receipt" means a paper

6 receipt, electronic record, or other written confirmation. For

7 a transaction conducted in person, the receipt may be provided

8 electronically if the sender requests or agrees to receive an

9 electronic receipt. For a transaction conducted electronically

10 or by phone, a receipt may be provided electronically. All

11 electronic receipts shall be provided in a retainable form.

12 (b) Every licensee or its authorized delegate shall

13 provide the sender a receipt for money received for

14 transmission.

15 (1) The receipt shall contain the following

16 information, as applicable:

17 (A) the name of the sender;

18 (B) the name of the designated recipient;

19 (C) the date of the transaction;

20 (D) the unique transaction or identification

21 number;

22 (E) the name of the licensee, NMLS Unique ID, the

23 licensee's business address, and the licensee's

24 customer service telephone number;

25 (F) the amount of the transaction in United States

SB3670

- 59 -

LRB103 39026 RTM 69163 b

1 dollars;

2 (G) any fee charged by the licensee to the sender

3 for the transaction; and

4 (H) any taxes collected by the licensee from the

5 sender for the transaction.

6 (2) The receipt required by this Section shall be in

7 English and in the language principally used by the

8 licensee or authorized delegate to advertise, solicit, or

9 negotiate, either orally or in writing, for a transaction

10 conducted in person, electronically or by phone, if other

11 than English.

12 (c) This Section does not apply to:

13 (1) money received for transmission subject to the

14 federal Remittance Rule, 12 CFR Part 1005, Subpart B, as

15 amended or recodified from time to time;

16 (2) money received for transmission pursuant to a

17 written agreement between the licensee and payee to

18 process payments for goods or services provided by the

19 payee;

20 (3) payroll processing services; or

21 (4) as authorized in the Secretary's sole discretion.

22 Section 9-4. Notice. Every licensee or authorized delegate

23 shall include on a receipt or disclose on the licensee's

24 website or mobile application the name and phone number of the

25 Department and a statement that the licensee's customers can

SB3670

- 60 -

LRB103 39026 RTM 69163 b

1 contact the Department with questions or complaints about the

2 licensee's money transmission services.

3 Section 9-5. Disclosures for payroll processing services.

4 (a) A licensee that provides payroll processing services

5 shall:

6 (1) issue reports to clients detailing client payroll

7 obligations in advance of the payroll funds being deducted

8 from an account; and

9 (2) make worker paystubs or an equivalent statement

10 available to workers.

11 (b) Subsection (a) does not apply to a licensee providing

12 payroll processing services where the licensee's client

13 designates the intended recipients to the licensee and is

14 responsible for providing the disclosures required by

15 paragraph (2) of subsection (a).

16 ARTICLE X. Prudential Standards

17 Section 10-1. Net worth.

18 (a) A licensee under this Act shall maintain at all times a

19 tangible net worth of the greater of $100,000 or 3% of total

20 assets for the first $100,000,000, 2% of additional assets for

21 $100,000,000 to $1,000,000,000, and 0.5% of additional assets

22 for over $1,000,000,000.

23 (b) Tangible net worth must be demonstrated at initial

SB3670

- 61 -

LRB103 39026 RTM 69163 b

1 application by the applicant's most recent financial

2 statements pursuant to paragraph (6) of subsection (b) of

3 Section 5-3.

4 (c) Notwithstanding the provisions of this Section, the

5 Secretary shall have discretionary authority to exempt, in

6 part or in whole, from the requirements of this Section any

7 applicant or licensee.

8 Section 10-2. Surety bond.

9 (a) An applicant for a money transmission license must

10 provide, and a licensee at all times must maintain, security

11 consisting of a surety bond in a form satisfactory to the

12 Secretary. The bond shall run to the State of Illinois for the

13 benefit of any claimant against the applicant or licensee with

14 respect to the receipt, handling, transmission, and payment of

15 money by the licensee or authorized delegate in connection

16 with the licensed operations. A claimant damaged by a breach

17 of the conditions of a bond shall have a right to action upon

18 the bond for damages suffered thereby and may bring suit

19 directly on the bond, or the Secretary may bring suit on behalf

20 of the claimant.

21 (b) The amount of the required security shall be the

22 greater of $1,000,000 or an amount equal to 100% of the

23 licensee's average daily money transmission liability in this

24 State calculated for the most recently completed quarter, up

25 to a maximum of $2,000,000;

SB3670

- 62 -

LRB103 39026 RTM 69163 b

1 (c) A licensee that maintains a bond in the maximum amount

2 provided for in subsection (b) is not required to calculate

3 its average daily money transmission liability in this State

4 for purposes of this Section.

5 (d) A licensee may exceed the maximum required bond amount

6 pursuant to paragraph (5) of subsection (a) of Section 10-4.

7 (e) After receiving a license, the licensee must maintain

8 the required bond plus net worth until 3 years after it ceases

9 to do business in this State unless all outstanding payment

10 instruments are eliminated or the provisions under the Revised

11 Uniform Unclaimed Property Act have become operative and are

12 adhered to by the licensee. Notwithstanding this provision,

13 however, the amount required to be maintained may be reduced

14 to the extent that the amount of the licensee's payment

15 instruments outstanding in this State are reduced.

16 (f) Instead of a paper surety bond, each licensee and

17 applicant shall file and maintain an electronic surety bond in

18 NMLS or in a manner otherwise authorized by the Secretary.

19 Section 10-3. Maintenance of permissible investments.

20 (a) A licensee shall maintain at all times permissible

21 investments that have a market value computed in accordance

22 with United States generally accepted accounting principles of

23 not less than the aggregate amount of all of its outstanding

24 money transmission obligations.

25 (b) Except for permissible investments enumerated in

SB3670

- 63 -

LRB103 39026 RTM 69163 b

1 subsection (a) of Section 10-4, the Secretary, with respect to

2 any licensee, may by rule or order limit the extent to which a

3 specific investment maintained by a licensee within a class of

4 permissible investments may be considered a permissible

5 investment, if the specific investment represents undue risk

6 to customers, not reflected in the market value of

7 investments.

8 (c) Permissible investments, even if commingled with other

9 assets of the licensee, are held in trust for the benefit of

10 the purchasers and holders of the licensee's outstanding money

11 transmission obligations in the event of insolvency, the

12 filing of a petition by or against the licensee under the

13 United States Bankruptcy Code, 11 U.S.C. Sections 101 through

14 110, as amended or recodified from time to time, for

15 bankruptcy or reorganization, the filing of a petition by or

16 against the licensee for receivership, the commencement of any

17 other judicial or administrative proceeding for its

18 dissolution or reorganization, or in the event of an action by

19 a creditor against the licensee who is not a beneficiary of

20 this statutory trust. No permissible investments impressed

21 with a trust pursuant to this subsection shall be subject to

22 attachment, levy of execution, or sequestration by order of

23 any court, except for a beneficiary of this statutory trust.

24 (d) Upon the establishment of a statutory trust in

25 accordance with subsection (c) or when any funds are drawn on a

26 letter of credit pursuant to paragraph (4) of subsection (a)

SB3670

- 64 -

LRB103 39026 RTM 69163 b

1 of Section 10-4, the Secretary shall notify the applicable

2 regulator of each state in which the licensee is licensed to

3 engage in money transmission, if any, of the establishment of

4 the trust or the funds drawn on the letter of credit, as

5 applicable. Notice shall be deemed satisfied if performed

6 pursuant to a multistate agreement or through NMLS. Funds

7 drawn on a letter of credit, and any other permissible

8 investments held in trust for the benefit of the purchasers

9 and holders of the licensee's outstanding money transmission

10 obligations, are deemed held in trust for the benefit of such

11 purchasers and holders on a pro rata and equitable basis in

12 accordance with statutes pursuant to which permissible

13 investments are required to be held in this State, and other

14 states, as applicable. Any statutory trust established

15 hereunder shall be terminated upon extinguishment of all of

16 the licensee's outstanding money transmission obligations.

17 (e) The Secretary by rule or by order may allow other types

18 of investments that the Secretary determines are of sufficient

19 liquidity and quality to be a permissible investment. The

20 Secretary is authorized to participate in efforts with other

21 state regulators to determine that other types of investments

22 are of sufficient liquidity and quality to be a permissible

23 investment.

24 Section 10-4. Types of permissible investments.

25 (a) The following investments are permissible under

SB3670

- 65 -

LRB103 39026 RTM 69163 b

1 Section 10-3:

2 (1) cash, including demand deposits, savings deposits,

3 and funds in such accounts held for the benefit of the

4 licensee's customers in a federally insured depository

5 financial institution, and cash equivalents including ACH

6 items in transit to the licensee and ACH items or

7 international wires in transit to a payee, cash in transit

8 via armored car, cash in smart safes, cash in

9 licensee-owned locations, debit card or credit card-funded

10 transmission receivables owed by any bank, or money market

11 mutual funds rated "AAA" by S&P, or the equivalent from

12 any eligible rating service;

13 (2) certificates of deposit or senior debt obligations

14 of an insured depository institution, as defined in

15 Section 3 of the Federal Deposit Insurance Act, 12 U.S.C.

16 1813, as amended or recodified from time to time, or as

17 defined under the federal Credit Union Act, 12 U.S.C.

18 1781, as amended or recodified from time to time;

19 (3) an obligation of the United States or a

20 commission, agency, or instrumentality thereof; an

21 obligation that is guaranteed fully as to principal and

22 interest by the United States; or an obligation of a State

23 or a governmental subdivision, agency, or instrumentality

24 thereof;

25 (4) the full drawable amount of an irrevocable standby

26 letter of credit for which the stated beneficiary is the

SB3670

- 66 -

LRB103 39026 RTM 69163 b

1 Secretary that stipulates that the beneficiary need only

2 draw a sight draft under the letter of credit and present

3 it to obtain funds up to the letter of credit amount within

4 7 days of presentation of the items required by

5 subparagraph (C) of this paragraph.

6 (A) The letter of credit must:

7 (i) be issued by a federally insured

8 depository financial institution, a foreign bank

9 that is authorized under federal law to maintain a

10 federal agency or federal branch office in a State

11 or states, or a foreign bank that is authorized

12 under State law to maintain a branch in a State

13 that (I) bears an eligible rating or whose parent

14 company bears an eligible rating; and (II) is

15 regulated, supervised, and examined by United

16 States federal or State authorities having

17 regulatory authority over banks, credit unions,

18 and trust companies;

19 (ii) be irrevocable, unconditional, and

20 indicate that it is not subject to any condition

21 or qualifications outside of the letter of credit;

22 (iii) not contain reference to any other

23 agreements, documents, or entities, or otherwise

24 provide for any security interest in the licensee;

25 and

26 (iv) contain an issue date and expiration date

SB3670

- 67 -

LRB103 39026 RTM 69163 b

1 and expressly provide for automatic extension,

2 without a written amendment, for an additional

3 period of one year from the present or each future

4 expiration date, unless the issuer of the letter

5 of credit notifies the Secretary in writing by

6 certified or registered mail or courier mail or

7 other receipted means, at least 60 days before any

8 expiration date, that the irrevocable letter of

9 credit will not be extended.

10 (B) If any notice of expiration or nonextension of

11 a letter of credit issued under subdivision (iv) of

12 subparagraph (A), then the licensee shall be required

13 to demonstrate to the satisfaction of the Secretary,

14 15 days before expiration, that the licensee maintains

15 and will maintain permissible investments in

16 accordance with subsection (a) of Section 10-3 upon

17 the expiration of the letter of credit. If the

18 licensee is not able to do so, the Secretary may draw

19 on the letter of credit in an amount up to the amount

20 necessary to meet the licensee's requirements to

21 maintain permissible investments in accordance with

22 subsection (a) of Section 10-3. Any such draw shall be

23 offset against the licensee's outstanding money

24 transmission obligations. The drawn funds shall be

25 held in trust by the Secretary or the Secretary's

26 designated agent, to the extent authorized by law, as

SB3670

- 68 -

LRB103 39026 RTM 69163 b

1 agent for the benefit of the purchasers and holders of

2 the licensee's outstanding money transmission

3 obligations.

4 (C) The letter of credit shall provide that the

5 issuer of the letter of credit will honor, at sight, a

6 presentation made by the beneficiary to the issuer of

7 the following documents on or before the expiration

8 date of the letter of credit:

9 (i) the original letter of credit, including

10 any amendments; and

11 (ii) a written statement from the beneficiary

12 stating that any of the following events have

13 occurred:

14 (I) the filing of a petition by or against

15 the licensee under the United States

16 Bankruptcy Code, 11 U.S.C. Sections 101

17 through 110, as amended or recodified from

18 time to time, for bankruptcy or

19 reorganization;

20 (II) the filing of a petition by or

21 against the licensee for receivership, or the

22 commencement of any other judicial or

23 administrative proceeding for its dissolution

24 or reorganization;

25 (III) the seizure of assets of a licensee

26 by the Secretary pursuant to an emergency

SB3670

- 69 -

LRB103 39026 RTM 69163 b

1 order issued in accordance with applicable

2 law, on the basis of an action, violation, or

3 condition that has caused or is likely to

4 cause the insolvency of the licensee; or

5 (IV) the beneficiary has received notice

6 of expiration or nonextension of a letter of

7 credit and the licensee failed to demonstrate

8 to the satisfaction of the beneficiary that

9 the licensee will maintain permissible

10 investments in accordance with subsection (a)

11 of Section 10-3 upon the expiration or

12 nonextension of the letter of credit.

13 (D) The Secretary may designate an agent to serve

14 on the Secretary's behalf as beneficiary to a letter

15 of credit so long as the agent and letter of credit

16 meet requirements established by the Secretary. The

17 Secretary's agent may serve as agent for multiple

18 licensing authorities for a single irrevocable letter

19 of credit if the proceeds of the drawable amount for

20 the purposes of this Section are assigned to the

21 Secretary.

22 (E) The Secretary is authorized and encouraged to

23 participate in multistate processes designed to

24 facilitate the issuance and administration of letters

25 of credit, including, but not limited to, services

26 provided by the NMLS and State Regulatory Registry,

SB3670

- 70 -

LRB103 39026 RTM 69163 b

1 LLC.

2 (5) 100% of the surety bond or deposit provided for

3 under Section 10-2 that exceeds the average daily money

4 transmission liability in this State.

5 (b) Unless permitted by the Secretary by rule or by order

6 to exceed the limit as set forth herein, the following

7 investments are permissible under Section 10-3 to the extent

8 specified:

9 (1) receivables that are payable to a licensee from

10 its authorized delegates in the ordinary course of

11 business that are less than 7 days old, up to 50% of the

12 aggregate value of the licensee's total permissible

13 investments;

14 (2) of the receivables permissible under paragraph (1)

15 of this subsection (b), receivables that are payable to a

16 licensee from a single authorized delegate in the ordinary

17 course of business may not exceed 10% of the aggregate

18 value of the licensee's total permissible investments.

19 (3) the following investments are permissible up to

20 20% per category and combined up to 50% of the aggregate

21 value of the licensee's total permissible investments:

22 (A) a short-term, of up to 6 months, investment

23 bearing an eligible rating;

24 (B) commercial paper bearing an eligible rating;

25 (C) a bill, note, bond, or debenture bearing an

26 eligible rating;

SB3670

- 71 -

LRB103 39026 RTM 69163 b

1 (D) U.S. tri-party repurchase agreements

2 collateralized at 100% or more with U.S. government or

3 agency securities, municipal bonds, or other

4 securities bearing an eligible rating;

5 (E) money market mutual funds rated less than

6 "AAA" and equal to or higher than "A-" by S&P, or the

7 equivalent from any other eligible rating service; and

8 (F) a mutual fund or other investment fund

9 composed solely and exclusively of one or more

10 permissible investments listed in paragraphs (1)

11 through (3) of subsection (a).

12 (4) cash, including demand deposits, savings deposits,

13 and funds in such accounts held for the benefit of the

14 licensee's customers, at foreign depository institutions

15 are permissible up to 10% of the aggregate value of the

16 licensee's total permissible investments if the licensee

17 has received a satisfactory rating in its most recent

18 examination and the foreign depository institution:

19 (A) has an eligible rating;

20 (B) is registered under the Foreign Account Tax

21 Compliance Act;

22 (C) is not located in any country subject to

23 sanctions from the Office of Foreign Asset Control;

24 and

25 (D) is not located in a high-risk or

26 non-cooperative jurisdiction as designated by the

SB3670

- 72 -

LRB103 39026 RTM 69163 b

1 Financial Action Task Force.

2 ARTICLE XI. Enforcement

3 Section 11-1. Prohibited acts and practices for licensees.

4 It is a violation of this Act for a licensee, or other person

5 subject to this Act to:

6 (1) directly or indirectly employ any scheme, device,

7 or artifice to defraud or mislead any person, including,

8 but not limited to, engaging in bait and switch

9 advertising or sales practices;

10 (2) directly or indirectly engage in any unfair or

11 deceptive act or practice toward any person, including,

12 but not limited to, any false or deceptive statement about

13 fees or other terms of a money transmission or currency

14 exchange;

15 (3) directly or indirectly obtain property by fraud or

16 misrepresentation;

17 (4) knowingly make, publish, or disseminate any false,

18 deceptive, or misleading information in the provision of

19 money services;

20 (5) knowingly receive or take possession for personal

21 use of any property of any money services business, other

22 than in payment for services rendered, and with intent to

23 defraud, omit to make, or cause or direct to omit to make,

24 a full and true entry thereof in the books and accounts of

SB3670

- 73 -

LRB103 39026 RTM 69163 b

1 the business;

2 (6) make or concur in making any false entry, or omit

3 or concur in omitting any material entry, in the books or

4 accounts of the business;

5 (7) knowingly make or publish to the Secretary or the

6 Secretary's designee, or concur in making or publishing to

7 the Secretary or the Secretary's designee any written

8 report, exhibit, or statement of its affairs or pecuniary

9 condition containing any material statement which is

10 false, or omit or concur in omitting any statement

11 required by law to be contained therein;

12 (8) fail to make any report or statement lawfully

13 required by the Secretary or other public official;

14 (9) demonstrate by course of conduct, negligence or

15 incompetence in performing any act directly or indirectly

16 relating to licensed activity;

17 (10) engage in unsafe and unsound practices directly

18 or indirectly relating to licensed activity; or

19 (11) fail to comply with the provisions of this Act or

20 with any lawful order or agreement, rule, or regulations

21 made or issued under the provisions of this Act.

22 Section 11-2. Suspension and revocation of licenses.

23 (a) The Secretary may issue an order to suspend or revoke a

24 license of a licensee or order a licensee to revoke the

25 designation of an authorized delegate if:

SB3670

- 74 -

LRB103 39026 RTM 69163 b

1 (1) the licensee has failed to comply with any

2 provision of this Act, or any order, decision, finding,

3 rule, regulation or direction of the Secretary lawfully

4 made pursuant to the authority of this Act;

5 (2) the licensee does not cooperate with an

6 examination or investigation by the Secretary;

7 (3) the licensee engages in fraud, intentional

8 misrepresentation, or gross negligence;

9 (4) an authorized delegate is convicted of a violation

10 of a State or federal anti-money laundering statute, or

11 violates a rule adopted or an order issued under this Act,

12 as a result of the licensee's willful misconduct or

13 grossly negligent inattention to its legal obligations;

14 (5) the competence, experience, character, or general

15 fitness of the licensee, authorized delegate, person in

16 control of a licensee, key individual, or responsible

17 person of the authorized delegate indicates that it is not

18 in the public interest to permit the person to provide

19 money transmission;

20 (6) the licensee engages in an unsafe or unsound

21 practice;

22 (7) the licensee is insolvent, suspends payment of its

23 obligations, or makes a general assignment for the benefit

24 of its creditors;

25 (8) the licensee does not remove an authorized

26 delegate after the Secretary issues and serves upon the

SB3670

- 75 -

LRB103 39026 RTM 69163 b

1 licensee a final order including a finding that the

2 authorized delegate has violated this Act;

3 (9) a fact or condition exists that, if it had existed

4 or had been known at the time the licensee applied for its

5 license, would have been ground for denying the

6 application;

7 (10) the licensee knowingly fails to make a report

8 required by this Act;

9 (11) the licensee fails to pay a judgment entered in

10 favor of a claimant, plaintiff, or credit in an action

11 arising out of the licensee's business regulated under

12 this Act within 30 days after the judgment becomes final

13 or within 30 days after the expiration or termination of a

14 stay of execution;

15 (12) the licensee has been convicted under the laws of

16 this State, another state, or the United States of a

17 felony or of a crime involving breach of trust or

18 dishonesty; or

19 (13) the licensee violates the Illinois Uniform

20 Revised Unclaimed Property Act.

21 (b) In determining whether a licensee is engaging in an

22 unsafe or unsound practice, the Secretary may consider the

23 size and condition of the licensee's money transmission, the

24 magnitude of the loss, the gravity of the violation of this

25 Act, and the previous conduct of the person involved.

26 (c) In every case in which a license is suspended or

SB3670

- 76 -

LRB103 39026 RTM 69163 b

1 revoked, the Secretary shall issue a formal written notice of

2 the suspension or revocation, setting forth the specific

3 reasons for the suspension or revocation of the license and

4 serve the licensee, either personally or by certified mail.

5 Service by certified mail shall be deemed completed when the

6 notice is deposited into U.S. Mail and the order of suspension

7 or revocation of a license shall take effect upon service of

8 the order.

9 (d) A licensee whose license has been suspended or revoked

10 by the Secretary under this Section may request a hearing, in

11 writing, within 10 days after the date of service. If a

12 licensee submits a timely request for a hearing, the order

13 shall be stayed until a final administrative order is entered

14 and the Secretary shall schedule a hearing unless otherwise

15 agreed to by the parties.

16 (e) The Secretary shall conduct hearings pursuant to this

17 Section and in accordance with 38 Ill. Adm. Code 100, as

18 amended or recodified from time to time.

19 Section 11-3. Suspension and revocation of authorized

20 delegates.

21 (a) The Secretary may issue an order to suspend or revoke

22 the designation of an authorized delegate, if the Secretary

23 finds that:

24 (1) the authorized delegate has failed to comply with

25 any provision of this Act or any order, decision, finding,

SB3670

- 77 -

LRB103 39026 RTM 69163 b

1 rule, regulation, or direction of the Secretary lawfully

2 made pursuant to the authority of this Act;

3 (2) the authorized delegate does not cooperate with an

4 examination or investigation by the Secretary;

5 (3) the authorized delegate engages in fraud,

6 intentional misrepresentation, or gross negligence;

7 (4) the authorized delegate is convicted of a

8 violation of a State or federal anti-money laundering

9 statute;

10 (5) the competence, experience, character, or general

11 fitness of the authorized delegate or a person in control

12 of the authorized delegate indicates that it is not in the

13 public interest to permit the authorized delegate to

14 provide money transmission; or

15 (6) the authorized delegate engages in an unsafe or

16 unsound practice.

17 (b) In determining whether an authorized delegate is

18 engaging in an unsafe or unsound practice, the Secretary may

19 consider the size and condition of the authorized delegate's

20 provision of money transmission, the magnitude of the loss,

21 the gravity of the violation of this Act or a rule adopted or

22 order issued under this Act, and the previous conduct of the

23 authorized delegate.

24 (c) In every case in which the designation of an

25 authorized delegate is suspended or revoked, the Secretary

26 shall issue a formal written notice of the suspension or

SB3670

- 78 -

LRB103 39026 RTM 69163 b

1 revocation, setting forth the specific reasons for the

2 suspension or revocation of the designation and serve the

3 authorized delegate, either personally or by certified mail.

4 Service by certified mail shall be deemed completed when the

5 notice is deposited into U.S. Mail and the order of suspension

6 or revocation of a license shall take effect upon service of

7 the order.

8 (d) An authorized delegate whose designation has been

9 suspended or revoked by the Secretary under this Section may

10 request a hearing, in writing, within 10 days after the date of

11 service. If an authorized delegate submits a timely request

12 for a hearing, the order shall be stayed until a final

13 administrative order is entered and the Secretary shall

14 schedule a hearing unless otherwise agreed to by the parties.

15 (e) The Secretary shall conduct hearings pursuant to this

16 Section and in accordance with 38 Ill. Adm. Code 100, as

17 amended or recodified from time to time.

18 Section 11-4. Orders to cease and desist; civil penalties.

19 (a) If the Secretary determines that a licensee, an

20 authorized delegate, or any other person has engaged or is

21 engaged in practices contrary to this Act, the rules adopted

22 under this Act, or an order issued under this Act, the

23 Secretary may issue an order requiring the licensee or

24 authorized delegate to cease and desist from the violation.

25 The order becomes effective upon service of it upon the

SB3670

- 79 -

LRB103 39026 RTM 69163 b

1 licensee or authorized delegate.

2 (b) The Secretary may issue an order against a licensee to

3 cease and desist from providing money transmission through an

4 authorized delegate that is the subject of a separate order by

5 the Secretary.

6 (c) The Secretary may, in addition to or without the

7 issuance of a cease and desist order, assess a penalty of up to

8 $1,000 against a licensee or other person for each violation

9 of this Act, the rules adopted under this Act, or an order

10 issued under this Act as set forth in Section 11-6. The

11 issuance of an order under this Section shall not be a

12 prerequisite to the taking of any action by the Secretary

13 under this Section or any other Section of this Act.

14 (d) The Secretary shall issue a formal written notice of

15 the cease and desist order, setting forth the specific reasons

16 for the order and serve the licensee or the authorized

17 delegate, either personally or by certified mail. Service by

18 certified mail shall be deemed completed when the notice is

19 deposited in United States mail.

20 Section 11-5. Consent orders; settlements.

21 (a) The Secretary may enter into a consent order or

22 settlement agreement at any time with a person to resolve a

23 matter arising under this Act, the rules adopted under this

24 Act, or order issued under this Act. A consent order or

25 settlement agreement must be signed by the person to whom it is

SB3670

- 80 -

LRB103 39026 RTM 69163 b

1 issued or by the person's authorized representative, and must

2 indicate agreement with the terms contained in the order. A

3 consent order or settlement agreement may provide that it does

4 not constitute an admission by a person that this Act or a rule

5 adopted or an order issued under this Act has been violated.

6 (b) Notwithstanding the issuance of a consent order or

7 settlement agreement, the Secretary may seek civil or criminal

8 penalties or compromise civil penalties concerning matter

9 encompassed by the consent order unless the consent order by

10 its terms expressly precludes the Secretary from doing so.

11 (c) The Secretary is authorized to compromise, settle, and

12 collect civil penalties and administrative penalties, as set

13 by rule, with any person for violations of this Act or of any

14 rule or order issued or adopted under this Act.

15 Section 11-6. Criminal penalties. A person who engages in

16 conduct requiring a license under this Act and fails to obtain

17 a license from the Secretary or knowingly makes a false

18 statement, misrepresentation, or false certification in an

19 application, financial statement, account record, report, or

20 other document filed or required to be maintained or filed

21 under this Act or who knowingly makes a false entry or omits a

22 material entry in a document is guilty of a Class 3 felony.

23 Section 11-7. Civil penalties. The Secretary may assess a

24 civil penalty against a person that violates this Act, a rule

SB3670

- 81 -

LRB103 39026 RTM 69163 b

1 adopted or an order issued under this Act in an amount not to

2 exceed $1,000 per day for each day the violation is

3 outstanding, plus this State's costs and expenses for the

4 investigation and prosecution of the matter, including

5 reasonable attorney's fees. Each transaction in violation of

6 this Act or the rules adopted under this Act or issued under

7 this Act, for each day that a violation continues shall be a

8 separate offense.

9 Section 11-8. Unlicensed persons. Any person who, without

10 the required license, engages in conduct requiring a license

11 under this Act shall be liable to the Department in an amount

12 equal to the greater of (1) $5,000 or (2) an amount of money

13 accepted for transmission plus an amount equal to 3 times the

14 amount accepted for transmission. The Department shall cause

15 any funds so recovered to be deposited into the TOMA Consumer

16 Protection Fund.

17 Section 11-9. Judicial review. All final administrative

18 decisions of the Department under this Act are subject to

19 judicial review under the Administrative Review Law and any

20 rules adopted under the Administrative Review Law.

21 ARTICLE XII. Miscellaneous Provisions

22 Section 12-1. Uniformity of application and construction.

SB3670

- 82 -

LRB103 39026 RTM 69163 b

1 In applying and construing this Act, consideration must be

2 given to the need to promote uniformity of the law with respect

3 to its subject matter among states that enact it.

4 Section 12-2. Severability. The provisions of this Act are

5 severable under Section 1.31 of the Statute on Statutes.

6 Section 12-3. Transition period.

7 (a) Licensees pursuant to the Transmitters of Money Act in

8 good standing on the effective date of this Act shall be

9 licensed under this Act upon the filing of and approval by the

10 Department of a renewal application in accordance with Section

11 5-6 and may continue to operate lawfully as a licensee in this

12 State unless and until their next renewal application after

13 the effective date is denied by the Department. An authorized

14 seller of licensee pursuant to the Transmitters of Money Act

15 in good standing as of the effective date shall become an

16 authorized delegate of a licensee upon the filing of and

17 approval by the Department of a renewal application by the

18 licensee in accordance with Section 5-6 and may continue to

19 operate lawfully in this State as an authorized delegate of a

20 licensee unless and until the licensee's next renewal

21 application after the effective date is denied by the

22 Department.

23 (b) A person licensed in this State to engage in the

24 business of money transmission and their authorized sellers

SB3670

- 83 -

LRB103 39026 RTM 69163 b

1 shall not be subject to the provisions of this Act, to the

2 extent that this Act conflicts with the Transmitters of Money

3 Act or this Act establishes new requirements not imposed under

4 the Transmitters of Money Act, until the licensee renews its

5 current license or for 6 months after the effective date of

6 this Act, whichever is later, so long as they comply with the

7 Transmitters of Money Act and its implementing rules.

8 (c) Notwithstanding subsection (a), a licensee shall only

9 be required to amend its authorized delegate contracts for

10 contracts entered into or amended after the effective date of

11 this Act or the completion of any transition period

12 contemplated under subsection (b). Nothing herein shall be

13 construed as limiting an authorized delegate's obligations to

14 operate in full compliance with this Act as required by

15 subsection (c) of Section 8-1 after the time period set forth

16 in subsection (b).

17 (d) A person not required to be licensed pursuant to the

18 Transmitters of Money Act shall not be required to be licensed

19 and comply with this Act until January 1, 2026, unless the

20 Secretary extends the time by rule.

21 (e) Except as otherwise stated, this Act supersedes the

22 Transmitters of Money Act.

23 Section 12-4. TOMA Consumer Protection Fund.

24 (a) The special income-earning fund in the State treasury

25 is known as the TOMA Consumer Protection Fund.

SB3670

- 84 -

LRB103 39026 RTM 69163 b

1 (b) All moneys paid into the fund together with all

2 accumulated undistributed income thereon shall be held as a

3 special fund in the State treasury. The fund shall be used

4 solely for the purpose of providing restitution to consumers

5 who have suffered monetary loss arising out of a transaction

6 regulated by this Act.

7 (c) The fund shall be applied only to restitution when

8 restitution has been ordered by the Secretary. Restitution

9 shall not exceed the amount actually lost by the consumer. The

10 fund shall not be used for the payment of any attorney or other

11 fees.

12 (d) The fund shall be subrogated to the amount of the

13 restitution, and the Secretary shall request the Attorney

14 General to engage in all reasonable collection steps to

15 collect restitution from the party responsible for the loss

16 and reimburse the fund.

17 (e) Notwithstanding any other provisions of this Section,

18 the payment of restitution from the fund shall be a matter of

19 grace and not of right, and no consumer shall have any vested

20 rights in the fund as a beneficiary or otherwise. Before

21 seeking restitution from the fund, the consumer or beneficiary

22 seeking payment of restitution shall apply for restitution on

23 a form provided by the Secretary. The form shall include any

24 information the Secretary may reasonably require in order to

25 determine that restitution is appropriate.

26 (f) Notwithstanding any other provision of this Section,

SB3670

- 85 -

LRB103 39026 RTM 69163 b

1 moneys in the TOMA Consumer Protection Fund may be transferred

2 to the Professions Indirect Cost Fund, as authorized under

3 Section 2105-300 of the Department of Professional Regulation

4 Law of the Civil Administrative Code of Illinois.

5 Article XIII. Token Currency

6 Section 13-1. Definitions. As used in this Article:

7 "Covered person" means a person required to obtain a

8 license pursuant to this Article.

9 "Insured depository institution" means a federally insured

10 depository financial institution as defined in this Act or an

11 insured credit union exempt pursuant to paragraph (16) of

12 Section 3-1 of this Act.

13 "National currency" means United States coins, Federal

14 Reserve notes, or other lawful money under 12 U.S.C. 411;

15 money issued by a central bank; or money issued by an

16 intergovernmental organization pursuant to an agreement by one

17 or more governments.

18 "Token currency" means a digital representation of value:

19 (1) the issuer of which (A) is obligated to convert,

20 redeem, or repurchase for a fixed amount of money or

21 monetary value denominated in national currency or (B)

22 represents will maintain, or creates the reasonable

23 expectation that it will maintain, a stable value relative

24 to the value of a fixed amount of money or monetary value

SB3670

- 86 -

LRB103 39026 RTM 69163 b

1 denominated in national currency; and

2 (2) that is not (A) a national currency or (B) a

3 security issued by an investment company registered under

4 the Investment Company Act of 1940, 15 U.S.C. 80a et seq.

5 "Token currency" includes, without limitation, any

6 interest or instrument commonly known as a "dollar token,"

7 "electronic money token," or "stablecoin".

8 "Token currency business activity" means engaging in the

9 business of token currency issuance or token currency

10 transmission.

11 "Token currency issuance" means issuing token currency in

12 this State or to a person located in this State.

13 "Token currency issuer" means a covered person engaged in

14 token currency issuance.

15 "Token currency transmission" means:

16 (1) selling token currency to a person located in this

17 State; or

18 (2) receiving token currency for transmission from a

19 person located in this State or transmitting token

20 currency in this State.

21 Section 13-2. Scope. Nothing in this Article shall limit

22 the authority of an insured depository institution to engage

23 in activities permissible pursuant to applicable State and

24 federal law, including accepting or receiving deposits and

25 issuing token currency that represent deposits, or to limit

SB3670

- 87 -

LRB103 39026 RTM 69163 b

1 the authority of the Secretary or federal banking agencies to

2 implement and interpret applicable law or establish

3 limitations and conditions on such activities.

4 Section 13-3. Conditions precedent to engaging in token

5 currency issuance or transmission.

6 (a) Except as provided in paragraphs (2) or (3) of

7 subsection (b)of this Section, a covered person engaged in

8 token currency issuance or token currency transmission is

9 engaged in the business of money transmission and is subject

10 to the requirements of this Act.

11 (b) A covered person shall not engage in token currency

12 issuance, or hold himself or herself out as being able to

13 engage in token currency issuance, unless the covered person

14 is:

15 (1) licensed in this State by the Secretary pursuant

16 to Section 5-5 of this Act; or

17 (2) an insured depository institution.

18 (c) A covered person shall not engage in token currency

19 transmission, or hold himself or herself out as being able to

20 engage in token currency transmission, with or on behalf of

21 another person unless the covered person is:

22 (1) licensed in this State by the Secretary pursuant

23 to Section 5-5 of this Act; or

24 (2) exempt from licensing under Section 3-1 of this

25 Act.

SB3670

- 88 -

LRB103 39026 RTM 69163 b

1 Section 13-4. Required disclosures.

2 (a) A covered person that engages in token currency

3 business activity shall provide to a person who uses the

4 covered person's products or services the disclosures required

5 by subsection (b) of this Section and any additional

6 disclosure the Secretary, by rule, determines reasonably

7 necessary for the protection of persons. The Secretary may

8 determine, by rule, the time and form required for disclosure.

9 A disclosure required by this Section must be made separately

10 from any other information provided by the covered person, in

11 a clear manner, and in a record the person may keep.

12 (b) Before establishing a relationship with a person, a

13 covered person shall disclose:

14 (1) a schedule of fees and charges the covered person

15 may assess, the manner by which fees and charges will be

16 calculated if the fees or changes are not set in advance

17 and disclosed, and the timing of the fees and charges;

18 (2) that the product or service provided by the

19 covered person is not guaranteed by the United States

20 Government, covered by deposit insurance by the Federal

21 Deposit Insurance Corporation, or by share insurance of

22 the National Credit Union Administration;

23 (3) the irrevocability of a transfer or exchange and

24 any exception to irrevocability;

25 (4) a description of:

SB3670

- 89 -

LRB103 39026 RTM 69163 b

1 (A) the covered person's liability for an

2 unauthorized, mistaken, or accidental transfer or

3 exchange;

4 (B) the person's responsibility to provide notice

5 to the covered person of an unauthorized, mistaken, or

6 accidental transfer or exchange;

7 (C) the basis for any recovery by the person from

8 the covered person in case of an unauthorized,

9 mistaken, or accidental transfer or exchange;

10 (D) general error-resolution rights applicable to

11 the transfer or exchange; and

12 (E) the method for the person to update the

13 person's contact information with the covered person;

14 (5) that the date or time when the transfer or

15 exchange is made and the person's account is debited may

16 differ from the date or time when the person initiates the

17 instruction to make the transfer or exchange;

18 (6) whether the person has a right to stop a

19 pre-authorized payment or revoke authorization for a

20 transfer and the procedure to initiate a stop-payment

21 order or revoke authorization for a subsequent transfer;

22 (7) the person's right to receive a receipt, trade

23 ticket, or other evidence of the transfer or exchange;

24 (8) the person's right to at least 14 days prior

25 notice of a change in the covered person's fee schedule,

26 other terms and conditions that have a material impact on

SB3670

- 90 -

LRB103 39026 RTM 69163 b

1 token currency business activity with the person, or the

2 policies applicable to the person's account; and

3 (9) that token currency is not currently recognized as

4 legal tender by Illinois or the United States.

5 (c) Except as otherwise provided in subsection (d) of this

6 Section, at the conclusion of a token currency transaction

7 with or on behalf of a person, a covered person shall provide

8 the person a confirmation in a record which contains:

9 (1) the name and contact information of the covered

10 person, including information the person may need to ask a

11 question or file a complaint;

12 (2) the type, value, date, precise time, and amount of

13 the transaction; and

14 (3) the fee charged for the transaction, including any

15 charge for conversion of token currency to other money or

16 monetary value.

17 (d) If a covered person discloses that he or she will

18 provide a daily confirmation in the initial disclosure under

19 subsection (c) of this Section, the covered person may elect

20 to provide a single, daily confirmation for all transactions

21 with or on behalf of a person on that day instead of a per

22 transaction confirmation.

23 Section 13-5. Custody and protection of token currency on

24 behalf of another person.

25 (a) A covered person that has custody or control of token

SB3670

- 91 -

LRB103 39026 RTM 69163 b

1 currency for a person shall:

2 (1) at all times hold an amount of each type of token

3 currency sufficient to satisfy the aggregate entitlements

4 of the person to the type of token currency;

5 (2) segregate such token currency from the other

6 assets of the covered person; and

7 (3) not sell, transfer, assign, lend, hypothecate,

8 pledge, or otherwise use or encumber such token currency,

9 except for the sale, transfer, or assignment of such token

10 currency at the direction of such other person.

11 (b) If a covered person violates subsection (a) of this

12 Section, the property interests of the person in the token

13 currency are pro rata property interests in the type of token

14 currency to which the person is entitled without regard to the

15 time the person became entitled to the token currency or the

16 covered person obtained custody or control of the token

17 currency.

18 (c) Token currency subject to this Section is:

19 (1) held for the persons entitled to the token

20 currency under subsection (a) of this Section;

21 (2) not property of the covered person; and

22 (3) not subject to the claims of creditors of the

23 covered person.

24 (d) Token currency subject to this Section, even if

25 commingled with other assets of the covered person, are held

26 in trust for the benefit of the person entitled to the token

SB3670

- 92 -

LRB103 39026 RTM 69163 b

1 currency under subsection (a) of this Section, in the event of

2 insolvency, the filing of a petition by or against the covered

3 person under 11 U.S.C. Sections et seq., as amended or

4 recodified from time to time, for bankruptcy or

5 reorganization, the filing of a petition by or against the

6 covered person for receivership, the commencement of any other

7 judicial or administrative proceeding for its dissolution or

8 reorganization, or in the event of an action by a creditor

9 against the covered person who is not a beneficiary of this

10 statutory trust. No token currency impressed with a trust

11 pursuant to this subsection shall be subject to attachment,

12 levy of execution, or sequestration by order of any court,

13 except for a beneficiary of this statutory trust.

14 Section 13-6. Books and records.

15 (a) A covered person shall maintain, for all token

16 currency business activity with or on behalf of a person for

17 5years after the date of the activity, a record of all of the

18 following:

19 (1) Any transaction of the covered person with or on

20 behalf of another person or for the covered person's

21 account in this State, including:

22 (A) the identity of the person;

23 (B) the form of the transaction;

24 (C) the amount, date, and payment instructions

25 given by the person; and

SB3670

- 93 -

LRB103 39026 RTM 69163 b

1 (D) the account number, name, and physical address

2 of:

3 (i) the parties to the transaction that are

4 customers or account holders of the covered

5 person; and

6 (ii) to the extent practicable, any other

7 party to the transaction.

8 (2) The aggregate number of transactions and aggregate

9 value of transactions by the covered person with or on

10 behalf of other persons and for the covered person's

11 account in this State, expressed in United States Dollar

12 equivalent of token currency for the previous 12 calendar

13 months.

14 (3) Any transaction in which the covered person

15 exchanged one form of token currency for money or monetary

16 value or another form of token currency with or on behalf

17 of another person.

18 (4) A general ledger maintained at least monthly that

19 lists all assets, liabilities, capital, income, and

20 expenses of the covered person.

21 (5) Any report of condition or other reports to the

22 Department, at such times and in such form, as the

23 Department may request.

24 (6) Bank statements and bank reconciliation records

25 for the covered person and the name, account number, and

26 United States Postal Service address of any bank or credit

SB3670

- 94 -

LRB103 39026 RTM 69163 b

1 union the covered person uses in the conduct of its token

2 currency business activity with or on behalf of another

3 person.

4 (7) A report of any dispute regarding token currency

5 business activity with or on behalf of a person.

6 (b) A covered person shall maintain records required by

7 this Section in a form that enables the Department to

8 determine whether the covered person is in compliance with

9 this Act, any court order, and the laws of this State.

10 (c) If a covered person maintains records outside this

11 State that pertain to token currency business activity with or

12 on behalf of a person, then the covered person shall make the

13 records available to the Department not later than 3 days

14 after request, or, on a determination of good cause by the

15 Department at a later time.

16 (d) All records maintained by a covered person, an

17 affiliate, or a service provider are subject to inspection by

18 the Department.

19 Section 13-7. Compliance; material changes.

20 (a) A covered person must comply with all provisions of

21 this Act to the extent applicable to the covered person's

22 activities and maintain appropriate controls to conduct his or

23 her token currency business activities in a safe and sound

24 manner and in compliance with any applicable State and federal

25 law, rule, regulation, or order, or condition imposed in

SB3670

- 95 -

LRB103 39026 RTM 69163 b

1 writing by the Secretary.

2 (b) Each covered person must notify the Department and

3 submit a written plan at least 60 days before engaging in a

4 materially new token currency business activity or making a

5 material change to an existing token currency business

6 activity. The written plan shall describe the proposed

7 materially new token currency business activity or the

8 proposed material change, demonstrate that the covered person

9 has established appropriate policies and practices to

10 identify, measure, monitor, and control the risks of the

11 proposed activity, and include such other information as

12 requested by the Department. The Secretary may, by rule or

13 order, impose limitations and conditions as the Secretary

14 deems necessary or appropriate on covered persons proposing to

15 engage in a materially new token currency business activity or

16 a material change to an existing token currency business

17 activity.

18 Section 13-8. Additional prudential standards.

19 (a) A token currency issuer shall at all times maintain

20 reserves backing its token currency outstanding on at least a

21 one-to-one basis and comprising only the following assets:

22 (1) National currency;

23 (2) Central bank reserve deposits;

24 (3) Funds held as insured demand deposits or insured

25 share accounts at insured depository institutions;

SB3670

- 96 -

LRB103 39026 RTM 69163 b

1 (4) U.S. Treasury bills with a maturity of 90 days or

2 less;

3 (5) repurchase agreements with a maturity of 7 days or

4 less that are backed by U.S. Treasury bills with a

5 maturity of 90 days or less; and

6 (6) similar high-quality liquid assets, as defined by

7 rule by the Department.

8 (b) With respect to the reserves described in subsection

9 (a) of this Section, a token currency issuer shall:

10 (1) obtain a monthly attestation and examination of

11 management's assertions pertaining to the composition and

12 value of the reserve assets by an independent certified

13 public accountant licensed in the United States and

14 applying the attestation standards of the American

15 Institute of Certified Public Accountants.

16 (2) segregate such reserves from the other assets of

17 the token currency issuer.

18 (3) not pledge, rehypothecate, or reuse the reserves,

19 except for the purpose of creating liquidity to meet

20 reasonable expectations of requests to redeem token

21 currency, subject to rule adopted or order issued by the

22 Secretary.

23 (c) The reserves described in subsection (a) of this

24 Section, even if commingled with other assets of the covered

25 person, are held in trust for the benefit of the purchaser or

26 holder of the covered person's outstanding token currency

SB3670

- 97 -

LRB103 39026 RTM 69163 b

1 obligations in the event of insolvency, the filing of a

2 petition by or against the licensee under the United States

3 Bankruptcy Code, 11 U.S.C. Sections et seq., as amended or

4 recodified from time to time, for bankruptcy or

5 reorganization, the filing of a petition by or against the

6 covered person for receivership, the commencement of any other

7 judicial or administrative proceeding for its dissolution or

8 reorganization, or in the event of an action by a creditor

9 against the covered person who is not a beneficiary of this

10 statutory trust. No reserves impressed with a trust pursuant

11 to this subsection shall be subject to attachment, levy of

12 execution, or sequestration by order of any court, except for

13 a beneficiary of this statutory trust.

14 (d) A token currency issuer shall disclose the monthly

15 attestation report required by paragraph (1) of subsection (b)

16 of this Section on the website of the token currency issuer, in

17 a form satisfactory to the Department, not more than 30 days

18 after the end of the period covered by the attestation.

19 (e) A token currency issuer shall establish a process to

20 allow redemption of token currency within a reasonable

21 timeframe, as determined by rule or order by the Secretary.

22 The timeframe to establish a process to allow redemption of

23 token currency may not be longer than 2 business days after the

24 redemption request. In extraordinary circumstances where the

25 Secretary concludes that redemption would likely jeopardize

26 the reserve-backing requirement of subsection (c) of this

SB3670

- 98 -

LRB103 39026 RTM 69163 b

1 Section or the orderly liquidation of reserves, the Secretary

2 has the authority to vary this requirement as the Secretary

3 deems necessary.

4 (f) In addition to the prudential standards under this

5 Section and Article X of this Act, the Secretary may, by rule

6 or order, establish additional capital, liquidity, and risk

7 management requirements to ensure the financial integrity and

8 ongoing operations of covered persons based on an assessment

9 of the specific risks applicable to a covered person or class

10 of covered persons.

11 Section 13-9. Implementation.

12 (a) In addition to the fees charged and collected under

13 Section 5-8 of this Act and 38 Ill. Adm. Code 205, as amended

14 or recodified from time to time, the Department shall charge

15 and collect fees from a covered person, which shall be

16 nonrefundable unless otherwise indicated, for the expenses of

17 administering this Article, as follows:

18 (1) Each covered person shall pay $150 for each hour

19 or part thereof for each examiner or staff assigned to the

20 supervision of the covered person plus actual travel costs

21 for any examination of token currency business activity

22 pursuant to the Act.

23 (2) Each covered person shall pay an annual assessment

24 fee on token currency business activity, which may be

25 billed, yearly, quarterly, or some other frequency, based

SB3670

- 99 -

LRB103 39026 RTM 69163 b

1 on the total United States Dollar value of token currency

2 issued or transmitted in this State and applying fee rates

3 at least equal to the rates applicable to money

4 transmission volume under 38 Ill. Adm. Code 205.35, as

5 amended or recodified from time to time.

6 (3) Each covered person shall pay to the Department

7 his or her pro rata share of the cost for administration of

8 this Article that exceeds other fees listed in this

9 subsection, as estimated by the Department, for the

10 current year and any deficit actually incurred in the

11 administration of the Article in prior years. Each covered

12 person's share under this paragraph shall initially be

13 divided equally among licensees engaged in token currency

14 business activity.

15 (4) Beginning one year after the effective date of

16 this Act, the Department may, by rule, amend the fees set

17 forth in this subsection in accordance with this Act. The

18 Department is authorized to consider setting fees for

19 token currency business activity based on the value of

20 token currency transacted held in custody by a covered

21 person, and volume of a token currency or volume of token

22 currency transacted by covered persons or held in custody

23 by a covered person.

24 (b) The Secretary is authorized to coordinate and consult

25 with the Board of Governors of the Federal Reserve System,

26 other federal banking agencies, and any law enforcement

SB3670

- 100 -

LRB103 39026 RTM 69163 b

1 officials and regulatory agencies that the Secretary

2 determines to have an appropriate regulatory interest in the

3 implementation of this Article.

4 (c) In addition to such powers and rulemaking authority as

5 prescribed elsewhere in this Act, the Department is hereby

6 authorized and empowered to adopt rules consistent with the

7 purposes of this Article, including, but not limited to:

8 (1) such rules in connection with the activities of a

9 covered person as may be necessary and appropriate for the

10 protection of the residents of this State;

11 (2) such rules as may be necessary and appropriate to

12 define improper or fraudulent business practices in

13 connection with the activity of a covered person;

14 (3) rules as may define the terms used in this Article

15 and as may be necessary and appropriate to interpret and

16 implement the provisions of this Article;

17 (4) rules that may be necessary for the implementation

18 or enforcement of this Article;

19 (5) rules establishing fees the Secretary deems

20 necessary to cover the cost of administration of this

21 Article; and

22 (6) rules in connection with the activity of a covered

23 person as may be necessary and appropriate for the safety

24 and soundness of such covered persons and the stability of

25 the financial system in this State.

SB3670

- 101 -

LRB103 39026 RTM 69163 b

1 Article 900. Amendatory Provisions

2 (205 ILCS 657/Act rep.)

3 Section 900-5. The Transmitters of Money Act is repealed.