Bill Text: TX SB895 | 2023-2024 | 88th Legislature | Enrolled

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Bill Title: Relating to the regulation of money services businesses; creating a criminal offense; creating administrative penalties; authorizing the imposition of a fee.

Spectrum: Slight Partisan Bill (Republican 2-1)

Status: (Passed) 2023-05-29 - Effective on 9/1/23 [SB895 Detail]

Download: Texas-2023-SB895-Enrolled.html

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S.B. No. 895

AN ACT
relating to the regulation of money services businesses; creating a
criminal offense; creating administrative penalties; authorizing
the imposition of a fee.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
ARTICLE 1. MONEY SERVICES MODERNIZATION ACT
SECTION 1.01. Subtitle E, Title 3, Finance Code, is amended
by adding Chapter 152 to read as follows:
CHAPTER 152. REGULATION OF MONEY SERVICES BUSINESSES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 152.001. SHORT TITLE. This chapter may be cited as the
Money Services Modernization Act.
Sec. 152.002. PURPOSE; CONSTRUCTION OF CHAPTER. (a) The
purposes of this chapter are to:
(1) protect the interests of purchasers of money
services and the public;
(2) preserve and protect the safety and soundness of
money services businesses; and
(3) protect against drug trafficking, terrorist
funding, money laundering, structuring, or related financial
crimes.
(b) In applying and construing this chapter, consideration
shall be given to the need to promote uniformity of the law with
respect to its subject matter among states that enact laws
substantially similar to this chapter.
Sec. 152.003. DEFINITIONS. In this chapter:
(1) "Acting in concert" means knowingly acting
together with a common goal of jointly acquiring control of a money
services licensee whether or not under an express agreement.
(2) "Authorized delegate" means a person designated by
a money transmission licensee to engage in money transmission
services on behalf of the licensee.
(3) "Average daily money transmission liability"
means the amount of a money services licensee's outstanding money
transmission obligations in this state at the end of each day in a
given period of time, added together, and divided by the total
number of days in the given period of time. For purposes of
calculating average daily money transmission liability under this
chapter as required by a money services licensee, the given period
of time shall be:
(A) the calendar quarters;
(B) a period described by this chapter; or
(C) any other period of time designated by the
commissioner during an examination.
(4) "Bank Secrecy Act" means the Bank Secrecy Act (31
U.S.C. Section 5311), and its implementing regulations.
(5) "Closed-loop stored value" means stored value that
is redeemable by the issuer only for goods or services provided by
the issuer, the issuer's affiliate, or a franchisee of the issuer or
the issuer's affiliate, except to the extent required by applicable
law to be redeemable in cash for its cash value.
(6) "Commission" means the Finance Commission of
Texas.
(7) "Commissioner" means the banking commissioner of
Texas or a person designated by the banking commissioner and acting
under the banking commissioner's direction and authority.
(8) "Control" means the power to:
(A) directly or indirectly vote at least 25
percent or more of the outstanding voting shares or voting
interests of a money services licensee or person in control of a
money services licensee;
(B) elect or appoint a majority of key
individuals or executive officers, managers, directors, trustees,
or other persons exercising managerial authority of a person in
control of a money services licensee; or
(C) directly or indirectly exercise a
controlling influence over the management or policies of a money
services licensee or person in control of a money services
licensee.
(9) "Currency" means the coin and paper money issued
by the United States or another country that is designated as legal
tender, circulates, and is customarily used and accepted as a
medium of exchange in the country of issuance.
(10) "Currency exchange" means receiving:
(A) the currency of one government and exchanging
it for the currency of another government; or
(B) a negotiable instrument, as defined by
Section 3.104, Business & Commerce Code, and exchanging it for the
currency of another government.
(11) "Currency exchange licensee" means a holder of a
currency exchange license under this chapter.
(12) "Department" means the Texas Department of
Banking.
(13) "Eligible rating" means a sufficiently high
credit rating given by an eligible rating service. If a security
has differing credit ratings given by multiple eligible rating
services, the highest rating shall apply when determining whether
the security has an eligible rating. For purposes of this
definition, a sufficiently high credit rating is a credit rating of
any of the three highest rating categories provided by an eligible
rating service, including:
(A) a long-term credit rating of A- or higher by
S&P Global;
(B) a short-term credit rating of A-2, SP-2, or
higher by S&P Global; or
(C) the relative equivalent rating from an
eligible rating service that does not have a rating described by
Paragraphs (A) and (B).
(14) "Eligible rating service" means:
(A) a Nationally Recognized Statistical Rating
Organization as defined by the United States Securities and
Exchange Commission; and
(B) any other organization designated by the
commissioner by rule or order.
(15) "Federally insured depository financial
institution" means a bank, credit union, savings and loan
association, trust company, savings association, savings bank,
industrial bank, or industrial loan company organized under the
laws of the United States or any state of the United States that has
federally insured deposits.
(16) "In this state" means:
(A) for a transaction requested in person, a
physical location within this state; or
(B) for a transaction requested electronically
or by phone, a determination that the person requesting the
transaction is in this state based on:
(i) information provided by the person
regarding:
(a) if the person is an individual,
the location of the individual's residential address; or
(b) if the person is a business
entity, the entity's principal place of business or other physical
address location; and
(ii) any records associated with the person
that the provider of money transmission has that indicate the
person's location, including an address associated with a person's
account.
(17) "Key individual" means an individual who is
ultimately responsible for establishing or directing policies and
procedures of a money services licensee, including an executive
officer, manager, director, or trustee.
(18) "Material litigation" means litigation that,
according to United States generally accepted accounting
principles, is significant to a person's financial health and would
be required to be disclosed in the person's annual audited
financial statements, report to shareholders, or similar records.
(19) "Money" or "monetary value" means currency or a
claim that can be converted into currency through a financial
institution, electronic payments network, or other formal or
informal payment system. The term includes stablecoin that:
(A) is pegged to a sovereign currency;
(B) is fully backed by assets held in reserve;
and
(C) grants a holder of the stablecoin the right
to redeem the stablecoin for sovereign currency from the issuer.
(20) "Money services" means money transmission
services or currency exchange services.
(21) "Money services licensee" means a holder of a
money transmission license or currency exchange license under this
chapter.
(22) "Money transmission":
(A) means:
(i) selling or issuing payment instruments
to a person located in this state;
(ii) selling or issuing stored value to a
person located in this state; or
(iii) receiving money for money
transmission services from a person located in this state;
(B) includes payroll processing services; and
(C) does not include the provision solely of
online or telecommunications services or network access.
(23) "Money transmission licensee" means a holder of a
money transmission license under this chapter.
(24) "MSB-accredited state" means a state agency that
is accredited by the Conference of State Bank Supervisors and Money
Transmitter Regulators Association for money transmission
licensing and supervision.
(25) "Multistate licensing process" means an
agreement entered into by and among state regulators relating to
coordinated processing of applications for money transmission
licenses, applications for the acquisition of control of a money
transmission licensee, control determinations, or notice and
information requirements for a change of key individuals.
(26) "NMLS" means the Nationwide Multistate Licensing
System and Registry developed by the Conference of State Bank
Supervisors and the American Association of Residential Mortgage
Regulators and owned and operated by the State Regulatory Registry,
LLC, for the licensing and registration of persons in financial
services industries, or a successor or affiliated entity.
(27) "Outstanding money transmission obligation," as
established and extinguished in accordance with applicable state
law, means:
(A) a payment instrument or stored value:
(i) that has been:
(a) issued or sold by a money
transmission licensee to a person located in any state, territory,
or possession of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, or a United States military
installation that is located in a foreign country; or
(b) reported as sold by an authorized
delegate to a person who is located in any state, territory, or
possession of the United States, the District of Columbia, the
Commonwealth of Puerto Rico, or a United States military
installation that is located in a foreign country; and
(ii) that has not been:
(a) paid or refunded by or for the
licensee; or
(b) escheated in accordance with
applicable abandoned property laws; or
(B) money received for money transmission
services by a money transmission licensee or an authorized delegate
from a person located in any state, territory, or possession of the
United States, the District of Columbia, the Commonwealth of Puerto
Rico, or a United States military installation that is located in a
foreign country that has not been:
(i) received by the payee or refunded to the
person; or
(ii) escheated in accordance with
applicable abandoned property laws.
(28) "Passive investor" means a person who:
(A) does not have the power to elect a majority of
key individuals or executive officers, managers, directors,
trustees, or other persons exercising managerial authority of a
person in control of a money services licensee;
(B) is not employed by and does not have any
managerial duties of a money services licensee or person in control
of a money services licensee;
(C) does not have the power to directly or
indirectly exercise a controlling influence over the management or
policies of a money services licensee or person in control of a
money services licensee; and
(D) either:
(i) attests to Paragraphs (A), (B), and (C)
in a form and medium prescribed by the commissioner; or
(ii) commits to the passivity
characteristics of Paragraphs (A), (B), and (C) in a written
document.
(29) "Patriot Act" means the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (Pub. L.
No. 107-56).
(30) "Payment instrument" means a written or
electronic check, draft, money order, traveler's check, or other
written or electronic instrument for the transmission or payment of
money or monetary value, whether or not the instrument is
negotiable. The term does not include stored value or an instrument
that is:
(A) redeemable by the issuer only for goods or
services provided by the issuer, the issuer's affiliate, or a
franchisee of the issuer or the issuer's affiliate, except to the
extent required by applicable law to be redeemable in cash for its
cash value; or
(B) not sold to the public but issued and
distributed as part of a loyalty, rewards, or promotional program.
(31) "Payroll processing services" means receiving
money for money transmission services under a contract with a
person to deliver wages or salaries, make payment of payroll taxes
to state and federal agencies, make payments relating to an
employee benefit plan, or make distributions of other authorized
deductions from wages or salaries. The term does not include:
(A) an employer performing payroll processing
services on its own behalf or on behalf of its affiliate; or
(B) a professional employer organization subject
to regulation under other applicable state law.
(32) "Person" means an individual, general
partnership, limited partnership, limited liability company,
corporation, trust, association, joint stock corporation, or other
corporate entity identified by the commissioner.
(33) "Receiving money for money transmission" means
receiving money or monetary value in the United States for money
transmission services by electronic or other means that occurs
within or outside the United States.
(34) "Stored value" means monetary value representing
a claim against the issuer evidenced by an electronic or digital
record that is intended and accepted for use as a means of
redemption for money or monetary value or payment for goods or
services. The term includes prepaid access as defined by 31 C.F.R.
Section 1010.100(ww). The term does not include a payment
instrument, closed-loop stored value, or stored value not sold to
the public but issued and distributed as part of a loyalty, rewards,
or promotional program.
(35) "Tangible net worth" means the aggregate assets
of a money services licensee excluding all intangible assets, less
liabilities, as determined in accordance with United States
generally accepted accounting principles.
(36) "Unsafe or unsound act or practice" means a
practice of or conduct by a money services licensee or an authorized
delegate that:
(A) creates the likelihood of material loss,
insolvency, or dissipation of the licensee's assets; or
(B) otherwise materially prejudices the
interests of the licensee or the licensee's customers.
Sec. 152.004. EXEMPTIONS. This chapter does not apply to:
(1) an operator of a payment system to the extent that
the operator provides processing, clearing, or settlement
services, between or among persons exempted by this section or
money services licensees, in connection with wire transfers, credit
card transactions, debit card transactions, stored-value
transactions, automated clearing house transfers, or similar funds
transfers;
(2) a person appointed as an agent of a payee to
collect and process a payment from a payor to the payee for goods or
services, other than money transmission services, provided to the
payor by the payee, provided that:
(A) there exists a written agreement between the
payee and the agent directing the agent to collect and process
payments from payors on the payee's behalf;
(B) the payee holds the agent out to the public as
accepting payments for goods or services on the payee's behalf; and
(C) payment for the goods and services is treated
as received by the payee on receipt by the agent, the payor's
obligation is extinguished, and there is no risk of loss to the
payor if the agent fails to remit the funds to the payee;
(3) a person who acts as an intermediary by processing
payments between an entity that has directly incurred an
outstanding money transmission obligation to a sender, and the
sender's designated recipient, provided that the entity that has
incurred the outstanding money transmission obligation:
(A) is licensed or exempt from the licensing
requirements of this chapter;
(B) provides a receipt, electronic record, or
other written confirmation to the sender identifying the entity as
the provider of money transmission in the transaction; and
(C) bears sole responsibility to satisfy the
outstanding money transmission obligation to the sender, including
the obligation to make the sender whole in connection with a failure
to transmit the funds to the sender's designated recipient;
(4) the United States or a department, agency, or
instrumentality of the United States, or an agent of a department,
agency, or instrumentality of the United States;
(5) money transmission services by the United States
Postal Service or by an agent of the United States Postal Service;
(6) a state, county, city, or any other governmental
agency or governmental subdivision or instrumentality of a state,
or its agent;
(7) a federally insured depository financial
institution, bank holding company, office of an international
banking corporation, foreign bank that establishes a federal branch
under the International Banking Act of 1978 (12 U.S.C. Section
3102), corporation organized under the Bank Service Company Act (12
U.S.C. Sections 1861-1867), or corporation organized under the Edge
Act (12 U.S.C. Sections 611-633);
(8) a trust company, as defined by Section 187.001,
that is organized under the laws of this state;
(9) an attorney or title company that in connection
with a real property transaction receives and disburses domestic
currency or issues an escrow or trust fund check only on behalf of a
party to the transaction;
(10) an electronic funds transfer of governmental
benefits for a federal, state, county, or governmental agency by a
contractor on behalf of the United States or a department, agency,
or instrumentality of the United States, or on behalf of a state or
governmental subdivision, agency, or instrumentality of a state;
(11) a board of trade designated as a contract market
under the federal Commodity Exchange Act (7 U.S.C. Sections 1-25),
or a person who, in the ordinary course of business, provides
clearance and settlement services for a board of trade to the extent
of its operation as or for a board of trade;
(12) a registered futures commission merchant under
the federal commodities laws to the extent of its operation as such
a merchant;
(13) a person registered as a securities broker-dealer
under federal or state securities laws to the extent of the person's
operation as a broker-dealer;
(14) an individual employed by a money services
licensee, authorized delegate, or person exempted from the
licensing requirements of this chapter when acting within the scope
of employment and under the supervision of the licensee, authorized
delegate, or exempted person as an employee and not as an
independent contractor;
(15) a person expressly appointed as a third-party
service provider to or agent of an entity exempt under Subdivision
(7), solely to the extent that:
(A) the service provider or agent engages in
money transmission services on behalf of and under a written
agreement with the exempt entity that provides the specific
functions that the service provider or agent is to perform; and
(B) the exempt entity assumes all risk of loss
and all legal responsibility for satisfying the outstanding money
transmission obligations owed to purchasers and holders of the
outstanding money transmission obligations on receipt of the
purchaser's or holder's money or monetary value by the service
provider or agent; and
(16) a person exempt by a regulation or order of the
commissioner finding that:
(A) the exemption is in the public interest; and
(B) the regulation of the person is not necessary
for the purposes of this chapter.
Sec. 152.005. AUTHORITY TO REQUIRE DEMONSTRATION OF
EXEMPTION. The commissioner may require a person claiming to be
exempt from licensing under Section 152.004 to provide information
and documentation to the commissioner demonstrating that the person
qualifies for the exemption claimed.
Sec. 152.006. CENTRALIZED DIGITAL CURRENCY PROHIBITED.
This chapter does not authorize the creation of any centralized
bank digital currency or any other action that prohibits or limits
the use of paper currency.
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Sec. 152.051. ADMINISTRATION. The department shall
administer this chapter.
Sec. 152.052. RULES; FEES. (a) The commission may adopt
rules to administer and enforce this chapter, including rules
necessary or appropriate to implement and clarify this chapter.
(b) The commission may by rule impose and collect
proportionate and equitable fees and costs for notices,
applications, examinations, investigations, and other actions
required to:
(1) recover the cost of:
(A) maintaining and operating the department;
and
(B) administering and enforcing this chapter and
other applicable law; and
(2) achieve the purposes of this chapter.
(c) The presence or absence of a specific reference in this
chapter to a rule regarding a particular subject is not intended to
and does not limit the general rulemaking authority granted to the
commission by this section.
Sec. 152.053. IMPLEMENTATION. The commissioner may,
subject to Sections 152.055(a) and (b):
(1) enter into agreements or relationships with other
government officials or federal and state regulatory agencies and
regulatory associations in order to improve efficiencies and reduce
regulatory burden by standardizing methods or procedures and
sharing resources, records, or related information obtained under
this chapter;
(2) use, hire, contract for, or employ analytical
systems, methods, or software to examine or investigate a person
subject to this chapter;
(3) accept from other state or federal government
agencies or officials licensing, examination, or investigation
reports made by the other state or federal government agencies or
officials; and
(4) accept audit reports made by an independent
certified public accountant or other qualified third-party auditor
for an applicant or money services licensee and incorporate the
audit report in a report of examination or investigation.
Sec. 152.054. COMMISSIONER'S GENERAL AUTHORITY. (a) A
power granted to the commissioner under this chapter is in addition
to and does not limit another power granted under this chapter or
other law. The commissioner's exercise of authority under another
law does not preclude the commissioner from exercising a power
under this chapter.
(b) The commissioner may impose on an authority, approval,
exemption, license, or order issued or granted under this chapter
any condition the commissioner considers reasonably necessary or
appropriate to carry out and achieve the purposes of this chapter.
Sec. 152.055. CONFIDENTIALITY. (a) Except as provided by
Subsection (b), the following are confidential and not subject to
disclosure under Chapter 552, Government Code:
(1) all information or reports obtained by the
commissioner from an applicant, money services licensee, or
authorized delegate;
(2) all information contained in or related to an
examination, investigation, operating report, or condition report
prepared by, on behalf of, or for the use of the commissioner; and
(3) financial statements, balance sheets, or
authorized delegate information.
(b) The commissioner may disclose information not otherwise
subject to disclosure under Subsection (a):
(1) to representatives of state or federal agencies
who affirm in a record that the representatives will maintain the
confidentiality of the information; or
(2) when the commissioner finds that the disclosure is
reasonably necessary for the protection and interest of the public
in accordance with Chapter 552, Government Code.
(c) This section does not prohibit the commissioner from
disclosing to the public a list of all money services licensees or
the aggregated financial or transactional data concerning those
licensees.
(d) The following information for each money services
licensee contained in the records of the department is not
confidential and may be made available to the public in its entirety
on the department's Internet website or in the NMLS, or as
responsive on receipt by the department of a written request:
(1) the name, business address, telephone number, and
unique identifier of the licensee;
(2) the business address of the licensee's registered
agent for service;
(3) the name, business address, and telephone number
of each authorized delegate for the licensee, if applicable;
(4) the terms of or a copy of any bond filed by the
licensee, provided that confidential information under Subsection
(a), including prices and fees for the bond, is redacted;
(5) copies of any nonconfidential final orders of the
department relating to a violation of this chapter or a regulation
implementing this chapter; and
(6) notice of the imposition of an administrative fine
or penalty under this chapter.
Sec. 152.056. INVESTIGATIONS. (a) The commissioner may
conduct investigations in or outside this state and the United
States as the commissioner considers necessary or appropriate to
administer and enforce this chapter.
(b) For purposes of an investigation, examination, or other
proceeding under this chapter, the commissioner may:
(1) administer oaths or cause oaths to be
administered;
(2) subpoena witnesses;
(3) compel the attendance of witnesses;
(4) take evidence; and
(5) require the production of any document that the
commissioner determines to be relevant to the inquiry.
(c) If a person refuses to obey a subpoena, a district court
of Travis County, on application by the commissioner, may issue an
order requiring the person to appear before the commissioner and
produce documents or give evidence regarding the matter under
investigation.
(d) The commissioner may employ a person or request the
attorney general, the Department of Public Safety, or any other
state, federal, or local law enforcement agency to assist in
enforcing this chapter.
(e) The commissioner may recover the reasonable costs
incurred in connection with an investigation conducted under this
chapter from the person that is the subject of the investigation.
Sec. 152.057. SUPERVISION. (a) The commissioner may
conduct an examination or investigation of a money services
licensee or authorized delegate or otherwise take independent
action authorized by this chapter or by a rule adopted or order
issued under this chapter as reasonably necessary or appropriate to
administer and enforce this chapter, regulations implementing this
chapter, and other applicable law, including the Bank Secrecy Act
and the Patriot Act.
(b) The commissioner may:
(1) conduct an examination on-site or off-site as the
commissioner may reasonably require;
(2) conduct an examination in conjunction with an
examination conducted by representatives of other state agencies or
agencies of another state or of the federal government;
(3) accept the examination report of another state
agency or an agency of another state or of the federal government,
or a report prepared by an independent accounting firm; and
(4) summon and examine under oath a key individual or
employee of a money services licensee or authorized delegate and
require the person to produce records regarding a matter related to
the condition and business of the licensee or authorized delegate.
(c) If the commissioner accepts a report under Subsection
(b)(3), the report is considered for all purposes an official
report of the commissioner.
(d) A money services licensee or authorized delegate shall
provide, and the commissioner shall have full and complete access
to, all records the commissioner may reasonably require to conduct
a complete examination. Records must be provided at the location
and in the format specified by the commissioner, provided the
commissioner may use multistate record production standards and
examination procedures when those standards will reasonably
achieve the requirements of this section.
(e) Unless otherwise directed by the commissioner, a money
services licensee shall pay all costs reasonably incurred in
connection with an examination of the licensee or an authorized
delegate of the licensee.
Sec. 152.058. NETWORKED SUPERVISION. (a) To efficiently
and effectively administer and enforce this chapter and to minimize
regulatory burden, the commissioner may participate in multistate
supervisory processes established between states and coordinated
through the Conference of State Bank Supervisors, Money Transmitter
Regulators Association, and affiliates and successors of those
entities for all money services licensees that hold licenses in
this state and other states.
(b) If the commissioner participates in multistate
supervision, the commissioner shall:
(1) cooperate, coordinate, and share information with
other state and federal regulators in accordance with Section
152.055(b);
(2) enter into written cooperation, coordination, or
information-sharing contracts or agreements with organizations
made up of state or federal governmental agencies; and
(3) cooperate, coordinate, and share information with
organizations made up of state or federal governmental agencies, if
the organizations agree in writing to maintain the confidentiality
and security of the shared information in accordance with Section
152.055.
(c) The commissioner may not waive, and nothing in this
section constitutes a waiver of, the commissioner's authority to
conduct an examination or investigation or otherwise take
independent action authorized by this chapter or a rule adopted or
order issued under this chapter to enforce compliance with
applicable state or federal law.
(d) A joint examination or investigation, or acceptance of
an examination or investigation report, does not waive an
examination assessment provided for in this chapter.
Sec. 152.059. RELATIONSHIP TO FEDERAL LAW. (a) If state
money transmission jurisdiction is conditioned in federal law, any
inconsistency between a provision of this chapter and the federal
law governing money transmission shall be governed by the
applicable federal law to the extent of the inconsistency.
(b) In the event of any inconsistency between this chapter
and federal law that governs under Subsection (a), the commissioner
may provide interpretive guidance that:
(1) identifies the inconsistency; and
(2) prescribes the appropriate means of compliance
with federal law.
Sec. 152.060. CONSENT TO SERVICE OF PROCESS. A money
services licensee, an authorized delegate, or a person who
knowingly engages in activities that are regulated and require a
license under this chapter, with or without filing an application
for a license or holding a license under this chapter, is considered
to have consented to the jurisdiction of the courts of this state
for all actions arising under this chapter.
Sec. 152.061. PRESUMPTION OF CONTROL. (a) A person is
presumed to exercise a controlling influence over a money services
licensee if the person holds the power to directly or indirectly
vote not less than 10 percent of the outstanding voting shares or
voting interests of a money services licensee or person in control
of a money services licensee.
(b) The presumption under Subsection (a) may be rebutted by
evidence that the person who is presumed to exercise a controlling
influence under Subsection (a) is a passive investor.
(c) For purposes of determining the percentage of a money
services licensee controlled by a person, the person's interest
shall be aggregated with the interest of any person:
(1) related within the second degree of consanguinity
or affinity, other than a person's grandparent or grandchild; or
(2) who shares the person's home.
SUBCHAPTER C. MONEY SERVICES LICENSES
Sec. 152.101. MONEY TRANSMISSION LICENSE REQUIRED. (a) A
person may not engage in the business of money transmission or
advertise, solicit, or hold itself out as engaging in the business
of money transmission unless the person is licensed under this
chapter.
(b) For the purposes of this chapter, a person engages in
the business of money transmission if the person receives
compensation or expects to receive compensation, directly or
indirectly, for conducting money transmission.
(c) Subsection (a) does not apply to a person who:
(1) is an authorized delegate of a money transmission
licensee acting within the scope of authority conferred by a
written contract with the licensee;
(2) is exempt under Section 152.004 and does not
engage in money transmission outside the scope of the applicable
exemption; or
(3) has been granted an exemption under Subsection
(e).
(d) A license issued under Section 152.106 is not
transferable or assignable.
(e) On receiving an application and finding that the
exemption is in the public interest, the commissioner may exempt a
person who:
(1) incidentally engages in the business of money
transmission only to the extent reasonable and necessary to
accomplish a primary business objective unrelated to the business
of money transmission;
(2) does not advertise or offer money transmission to
the public except to the extent reasonable and necessary to fairly
advertise or offer the person's primary business services; and
(3) transmits money without a fee as an inducement for
customer participation in the person's primary business.
(f) In accordance with the investigation provisions of this
chapter, the commissioner may examine a person to verify the
person's exempt status under Subsection (e).
Sec. 152.102. CURRENCY EXCHANGE LICENSE REQUIRED. (a) A
person may not engage in the business of currency exchange or
advertise, solicit, or hold itself out as providing currency
exchange unless the person is licensed under this chapter.
(b) For the purposes of this chapter, a person engages in
the business of currency exchange services if the person receives
compensation or expects to receive compensation, directly or
indirectly, for conducting currency exchange services.
(c) Subsection (a) does not apply to a person who:
(1) is a money transmission licensee;
(2) is an authorized delegate of a money transmission
licensee acting within the scope of authority conferred by a
written contract with the licensee;
(3) is exempt under Section 152.004 and does not
engage in currency exchange services outside the scope of the
applicable exemption; or
(4) has been granted an exemption under Subsection
(e).
(d) A license issued under Section 152.106 is not
transferable or assignable.
(e) On receiving an application and finding that the
exemption is in the public interest, the commissioner may exempt a
retailer, wholesaler, or service provider that in the ordinary
course of business accepts currency of a foreign country or
government as payment for goods or services, unless:
(1) the value of the goods or services purchased in a
single transaction with the retailer, wholesaler, or service
provider exceeds $10,000;
(2) the change given or made as a result of the
transaction with the retailer, wholesaler, or service provider
exceeds $100;
(3) the person attempts to structure the transaction
in a manner that evades the licensing requirements of this chapter
or avoids using a money services licensee under this chapter;
(4) the person is engaged in the business of cashing
checks, drafts, or other payment instruments for consideration and
is not otherwise exempt from licensing under this chapter; or
(5) the person would not be eligible for a license
under this chapter.
(f) In accordance with the investigation provisions of this
chapter, the commissioner may examine a person to verify the
person's exempt status under Subsection (e).
(g) A currency exchange licensee may engage in the business
of currency exchange services at one or more locations in this state
directly or indirectly owned by the licensee under a single
license.
Sec. 152.103. CONSISTENT STATE LICENSING. (a) The
commissioner may require that a person submit through the NMLS in
the form and manner prescribed by the commissioner and acceptable
to the registry any information or document or payment of a fee
required to be submitted under this chapter or rules adopted under
this chapter.
(b) The commissioner may use the NMLS as a channeling agent
for obtaining information required for licensing purposes under
this chapter or rules adopted under this chapter, including:
(1) criminal history record information from the
Federal Bureau of Investigation, the United States Department of
Justice, or any other agency or entity at the commissioner's
discretion;
(2) information related to any administrative, civil,
or criminal findings by a governmental jurisdiction; and
(3) information requested by the commissioner under
Section 152.104(a)(10) or (c)(13).
Sec. 152.104. APPLICATION FOR MONEY SERVICES LICENSE. (a)
An applicant for a money services license shall apply in a form and
medium prescribed by the commissioner. The application must
contain:
(1) the legal name and residential and business
addresses of the applicant and any fictitious or trade name used by
the applicant in conducting the applicant's business;
(2) a list of any criminal convictions of the
applicant and any material litigation in which the applicant has
been involved in the 10-year period preceding the submission of the
application;
(3) a description of any money services previously
provided by the applicant and the money services that the applicant
seeks to provide in this state;
(4) a list of the applicant's proposed authorized
delegates and the locations in this state where the applicant and
the applicant's authorized delegates propose to engage in money
transmission, if applicable;
(5) a list of other states in which the applicant is
licensed to engage in money services, and any license revocations,
suspensions, or other disciplinary action taken against the
applicant in another state;
(6) information concerning any bankruptcy or
receivership proceedings affecting the applicant or a person in
control of the applicant;
(7) a sample form of contract for authorized
delegates, if applicable;
(8) a sample form of payment instrument or stored
value, if applicable;
(9) the name and address of any federally insured
depository financial institution through which the applicant plans
to conduct licensable activity; and
(10) any other information the commissioner
reasonably requires with respect to the applicant.
(b) A form adopted by the commissioner under Subsection (a)
must contain content as provided by commission rule or instruction
or procedure of the commissioner and may be changed or updated by
the commissioner in accordance with applicable law in order to
carry out the purposes of this chapter and maintain consistency
with NMLS licensing standards and practices.
(c) If an applicant is a corporation, limited liability
company, partnership, or other legal entity, the applicant shall
also provide:
(1) the date of the applicant's incorporation or
formation and state or country of incorporation or formation;
(2) a certificate of good standing from the state or
country in which the applicant is incorporated or formed, if
applicable;
(3) a brief description of the structure or
organization of the applicant, including any parent entity or
subsidiary of the applicant, and whether any parent entity or
subsidiary is publicly traded;
(4) the legal name, any fictitious or trade name, all
business and residential addresses, and the employment, as
applicable, of each key individual and person in control of the
applicant in the 10-year period preceding the submission of the
application;
(5) a list of any criminal convictions and material
litigation in which a person in control of the applicant that is not
an individual has been involved in the 10-year period preceding the
submission of the application;
(6) if the application is for a money transmission
license, a copy of audited financial statements of the applicant
for the most recent fiscal year and for the two-year period
preceding the submission of the application;
(7) if the application is for a currency exchange
license, or if the application is for a money transmission license
and the commissioner otherwise determines it to be acceptable,
certified unaudited financial statements for the most recent fiscal
year or other period acceptable to the commissioner;
(8) a certified copy of unaudited financial statements
of the applicant for the most recent fiscal quarter;
(9) if the applicant is a publicly traded corporation,
a copy of the most recent report filed with the United States
Securities and Exchange Commission under Section 13, Securities
Exchange Act of 1934 (15 U.S.C. Section 78m);
(10) if the applicant is a wholly owned subsidiary of a
corporation publicly traded in the United States, a copy of audited
financial statements for the parent corporation for the most recent
fiscal year or a copy of the parent corporation's most recent report
filed under Section 13, Securities Exchange Act of 1934 (15 U.S.C.
Section 78m);
(11) if the applicant is a corporation publicly traded
outside the United States, a copy of documentation similar to the
documentation required under Subdivision (10) filed with the
regulator of the parent corporation's domicile outside the United
States;
(12) the name and address of the applicant's
registered agent in this state; and
(13) any other information the commissioner
reasonably requires with respect to the applicant.
(d) At the time an application for a license under this
section is submitted, an applicant must file with the department a
nonrefundable application fee in the amount established by
commission rule.
(e) The commissioner may waive one or more requirements of
Subsections (a) and (c) or permit an applicant to submit other
information in lieu of the information required by this section.
Sec. 152.105. INFORMATION REQUIREMENTS FOR CERTAIN
INDIVIDUALS. (a) In addition to the requirements of Section
152.104, an applicant shall provide additional information to the
commissioner if the applicant is an individual who:
(1) is in control of a money services licensee or
applicant;
(2) seeks to acquire control of a money services
licensee; or
(3) is a key individual.
(b) Additional information provided to the commissioner by
an individual under this section must include the individual's:
(1) fingerprints for submission to the Federal Bureau
of Investigation and the commissioner for purposes of a national
criminal history background check unless the person currently
resides outside of the United States and has resided outside of the
United States for the 10-year period preceding the submission of
the application; and
(2) personal history and experience, in a form and
medium prescribed by the commissioner, that contains the following
information:
(A) if the individual has a social security
number, an independent credit report for the individual from a
consumer reporting agency;
(B) information related to any criminal
convictions or pending charges against the individual; and
(C) information related to any regulatory or
administrative action and any civil litigation against the
individual involving claims of fraud, misrepresentation,
conversion, mismanagement of funds, breach of fiduciary duty, or
breach of contract.
(c) If an individual to whom this section applies has
resided outside of the United States at any time in the preceding 10
years, the individual shall also provide an investigative
background report prepared by an independent search firm that at a
minimum:
(1) demonstrates that the search firm:
(A) has sufficient knowledge and resources and
employs accepted and reasonable methodologies to conduct the
research of the background report; and
(B) is not affiliated with and does not have an
interest with the individual being researched; and
(2) is written in the English language and contains
the following information:
(A) if available in the individual's current
jurisdiction of residency, a comprehensive credit report, or any
equivalent information obtained or generated by the independent
search firm to accomplish a report, including a search of the court
data in the countries, provinces, states, cities, towns, and
contiguous areas where the individual resided and worked;
(B) criminal records information for the past 10
years, including felonies, misdemeanors, or similar convictions
for violations of law in the countries, provinces, states, cities,
towns, and contiguous areas where the individual resided and
worked;
(C) employment history;
(D) media history, including an electronic
search of national and local publications, wire services, and
business applications; and
(E) financial services-related regulatory
history, including money transmission services, securities,
banking, insurance, and mortgage-related industries.
Sec. 152.106. ISSUANCE OF LICENSE. (a) An application for
a license under this chapter that appears to include all the items
and address all of the matters that are required under Sections
152.104 and 152.105 is considered complete and the commissioner
shall promptly notify the applicant in writing of the date on which
the application is determined to be complete.
(b) The commissioner shall approve or deny the application
not later than the 120th day after the date the application is
determined to be complete under Subsection (a). If the application
is not approved or denied within 120 days after the completion date,
the application is approved and the license takes effect on the
first business day after expiration of the 120-day period. The
commissioner may extend the application approval period for good
cause.
(c) A determination by the commissioner under Subsection
(a) that an application is complete and is accepted for processing
is not an assessment of the substance of the application or of the
sufficiency of the information provided, and means only that the
application, on its face, appears to include all of the items,
including the national criminal history background check response
from the Federal Bureau of Investigation under Section 152.105(b),
and address all of the matters that are required under Sections
152.104 and 152.105.
(d) When an application is filed and considered complete
under this section, the commissioner shall investigate the
applicant's financial condition and responsibility, financial and
business experience, character, and general fitness. The
commissioner may conduct an on-site investigation of the applicant,
the reasonable cost of which the applicant must pay.
(e) The commissioner shall issue a license to an applicant
under this section if the commissioner finds that:
(1) the applicant has complied with Sections 152.104
and 152.105; and
(2) it is in the interest of the public to permit the
applicant to engage in money transmission services, currency
exchange services, or both, considering:
(A) the financial condition and responsibility,
financial and business experience, competence, character, and
general fitness of the applicant; and
(B) the experience, competence, character, and
general fitness of the key individuals and persons in control of the
applicant.
(f) If an applicant participates in or is subject to a
multistate licensing process:
(1) the commissioner may accept the investigation
results of a lead investigative state for the purpose of Subsection
(d) if the lead investigative state has sufficient staffing,
expertise, and minimum standards; or
(2) if this state is a lead investigative state, the
commissioner may investigate the applicant under Subsection (d) and
the time frames established by agreement through the multistate
licensing process, provided that the time frame complies with the
period in Subsection (b).
(g) If the commissioner finds that the applicant fails to
meet the qualifications or satisfy the requirements for the license
for which application is made, the commissioner shall inform the
applicant in writing that the application is denied and state the
reasons for the denial. The applicant may appeal the denial by
filing a written request for a hearing with the commissioner not
later than the 30th day after the date the notice is mailed. A
hearing on the denial must be held not later than the 45th day after
the date the commissioner receives the written request unless the
administrative law judge extends the period for good cause or the
parties agree to a later hearing date. The hearing is considered a
contested case hearing and is subject to Section 152.451.
(h) Except as provided by Subsection (b), the license takes
effect on the day the application is approved.
Sec. 152.107. MAINTENANCE OF LICENSE. (a) If a money
services licensee does not continue to meet the qualifications or
satisfy the requirements that apply to an applicant for a money
services license, the commissioner may suspend or revoke the
licensee's license in accordance with the procedures established by
this chapter or other applicable state law governing suspension or
revocation.
(b) An applicant for a money transmission license must
demonstrate that it meets or will meet the requirements in Sections
152.351, 152.352, 152.354, and 152.355. A money transmission
licensee must at all times continue to meet the requirements of
those sections.
(c) An applicant for a currency exchange license must
demonstrate that it meets or will meet the requirements in Sections
152.353, 152.354, and 152.355. A currency exchange licensee must
at all times continue to meet the requirements of those sections.
(d) In addition to complying with the requirements of
Subsection (a) and, as applicable, Subsection (b) or (c), a money
services licensee must annually:
(1) pay a license fee in an amount established by
commission rule; and
(2) submit a report under oath in the form and medium
prescribed by the commissioner that contains the following
information:
(A) if the licensee is a money transmission
licensee, an audited, unconsolidated financial statement dated as
of the last day of the money transmission licensee's fiscal year
that ended in the immediately preceding calendar year;
(B) if the licensee is a currency exchange
licensee, a financial statement, audited or unaudited, dated as of
the last day of the currency exchange licensee's fiscal year that
ended in the immediately preceding calendar year; and
(C) documentation and certification, or any
other information the commissioner reasonably requires to
determine:
(i) the security, net worth, permissible
investments, and other requirements the money services licensee
must satisfy; and
(ii) whether the money services licensee
continues to meet the qualifications and requirements for
licensure.
(e) If the department does not receive a money services
licensee's annual license fee and complete annual report under
Subsection (d) on or before the due date prescribed by the
commissioner under this section, the commissioner shall notify the
money services licensee in writing that the money services licensee
must:
(1) submit the report and pay the license fee not later
than the 45th day after the due date prescribed by the commissioner;
and
(2) pay a late fee, in an amount established by
commission rule and not subject to appeal, for each business day
after the due date specified by the commissioner that the
commissioner does not receive the completed report and license fee.
(f) If the money services licensee fails to submit the
completed annual report and pay the annual license fee and any late
fee due within the time prescribed by Subsection (e), the license
expires, and the money services licensee must cease and desist from
engaging in the business of money services as of that date. The
expiration of a license under this section is not subject to appeal.
(g) On timely receipt of a money services licensee's
complete annual report, annual license fee, and any late fee due,
the department shall review the report and, if necessary,
investigate the business and records of the money services
licensee. On completion of the review and investigation, if any,
the commissioner may:
(1) impose conditions on the license the commissioner
considers reasonably necessary or appropriate; or
(2) suspend or revoke the license on the basis of a
ground specified in Section 152.403.
(h) On written application and for good cause shown, the
commissioner may extend the due date for filing the annual license
fee and annual report required under this section.
(i) The holder, principal, or person in control of the
holder of a license issued under this chapter that has expired or
that the holder has surrendered under Section 152.108 that wishes
to conduct activities for which a license is required under this
chapter must file a new license application under Section 152.104
and satisfy all requirements for licensure that apply at the time
the new application is filed.
Sec. 152.108. SURRENDER OF LICENSE. (a) A money services
licensee may surrender the licensee's license by delivering the
original license to the commissioner along with a written notice of
surrender that includes the location at which the licensee's
records will be stored and the name, address, telephone number, and
other contact information for an individual who is authorized to
provide access to the records.
(b) A money services licensee shall surrender the
licensee's license under this section if the licensee becomes
ineligible for a license issued under this chapter.
(c) The surrender of a license does not reduce or eliminate
a money services licensee's civil or criminal liability arising
from any acts or omissions before the surrender of the license,
including any administrative action undertaken by the commissioner
to revoke or suspend a license, assess an administrative penalty,
order the payment of restitution, or exercise any other authority
under this chapter. Further, the surrender of a license does not
release the security required of a licensee under Section 152.352
or 152.353.
Sec. 152.109. REFUND OF FEE OR COST PAID BY MONEY SERVICES
LICENSEE. A fee or cost paid by a money services licensee under
this chapter is not refundable.
SUBCHAPTER D. ACQUISITION OF CONTROL AND CHANGE OF KEY INDIVIDUAL
Sec. 152.151. ACQUISITION OF CONTROL. (a) A person or
group of persons acting in concert seeking to acquire control of a
money services licensee must obtain written approval from the
commissioner before acquiring control. An individual is not
considered to acquire control of a money services licensee and is
not subject to the acquisition of control provisions of this
subchapter if that individual becomes a key individual in the
ordinary course of business.
(b) A person or group of persons acting in concert seeking
to acquire control of a money services licensee shall, in
cooperation with the licensee, submit:
(1) an application in a form and medium prescribed by
the commissioner; and
(2) a nonrefundable fee in the amount established by
commission rule.
(c) On request, the commissioner may permit a money services
licensee or the person or group of persons acting in concert to
submit some or all information required by the commissioner under
Subsection (b)(1) without using the NMLS.
(d) The application required by Subsection (b)(1) must
include information required by Section 152.105 for any new key
individual that has not previously completed the requirements of
Section 152.105 for the money services licensee.
(e) When an application for acquisition of control under
this section appears to include all the items and address all of the
matters that are required, the application is considered complete
and the commissioner shall promptly notify the applicant in writing
of the date on which the application was determined to be complete.
(f) The commissioner shall approve or deny the application
not later than the 60th day after the completion date. If the
application is not approved or denied before the 61st day after the
completion date, the application is approved and the person or
group of persons acting in concert are not prohibited from
acquiring control. The commissioner may extend the application
period for good cause.
(g) A determination by the commissioner under Subsection
(e) that an application is complete and is accepted for processing
is not an assessment of the substance of the application or of the
sufficiency of the information provided. That determination means
only that the application, on its face, appears to include all of
the items and address all of the matters that are required under
Subsection (b).
(h) When an application is filed and considered complete
under Subsection (e), the commissioner shall investigate the
financial condition and responsibility, financial and business
experience, character, and general fitness of the person or group
of persons acting in concert seeking to acquire control.
(i) The commissioner shall approve an acquisition of
control under this section if the commissioner finds that:
(1) the requirements of Subsections (b) and (d) have
been met, as applicable; and
(2) it is in the interest of the public to permit the
person or group of persons acting in concert to control the money
services licensee, considering:
(A) the financial condition and responsibility,
financial and business experience, competence, character, and
general fitness of the person or group of persons acting in concert
seeking to acquire control; and
(B) the experience, competence, character, and
general fitness of the key individuals and persons that would be in
control of the money services licensee after the acquisition of
control.
(j) If an applicant participates in or is subject to a
multistate licensing process:
(1) the commissioner may accept the investigation
results of a lead investigative state for the purpose of Subsection
(h) if the lead investigative state has sufficient staffing,
expertise, and minimum standards; or
(2) if this state is a lead investigative state, the
commissioner may investigate the applicant under Subsection (h) and
the time frames established by agreement through the multistate
licensing process, provided that the time frame complies with the
period in Subsection (f).
(k) If the commissioner determines that a proposed person in
control fails to meet the qualifications or satisfy the
requirements of this chapter, the commissioner shall inform the
money services licensee and the proposed person in control in
writing that the application is denied and state the reasons for the
denial. The money services licensee or the proposed person in
control may appeal the denial by filing a written request for a
hearing with the commissioner not later than the 30th day after the
date the notice is mailed. A hearing on the denial must be held not
later than the 45th day after the date the commissioner receives the
written request unless the administrative law judge extends the
period for good cause or the parties agree to a later hearing date.
The hearing is considered a contested case hearing and is subject to
Section 152.451.
(l) The requirements of Subsections (a) and (b) do not apply
to:
(1) a person who acts as a proxy for the sole purpose
of voting at a designated meeting of the shareholders or holders of
voting shares or voting interests of a money services licensee or a
person in control of a money services licensee;
(2) a person who acquires control of a money services
licensee by devise or descent;
(3) a person who acquires control of a money services
licensee as a personal representative, custodian, guardian,
conservator, or trustee, or as an officer appointed by a court of
competent jurisdiction or by operation of law;
(4) a person who is exempt under Section 152.004(7);
(5) a person who the commissioner determines is not
subject to Subsection (a) based on the public interest;
(6) a public offering of securities of a money
services licensee or a person in control of a money services
licensee; or
(7) an internal reorganization of a person in control
of the money services licensee resulting in the same person
remaining in control of the licensee.
(m) A person to whom Subsections (a) and (b) do not apply
under Subsection (l)(2), (3), (4), (6), or (7) shall, in
cooperation with the money services licensee, notify the
commissioner not later than the 15th day after the date of the
acquisition of control of the person's grounds for not complying
with Subsection (a) or (b).
Sec. 152.152. STREAMLINED ACQUISITION OF CONTROL. (a) The
requirements of Section 152.151 do not apply to a person who has
complied with and received approval to engage in money services
under this chapter or was identified as a person in control in a
previous application filed with and approved by the commissioner or
by an MSB-accredited state under a multistate licensing process,
provided that:
(1) the person has not:
(A) had a money services license revoked or
suspended; or
(B) controlled a money services licensee that has
had a money services license revoked or suspended while the person
was in control of the licensee in the previous five years;
(2) if the person is a money services licensee, the
person:
(A) is well managed; and
(B) if a rating for compliance has been given to
the person by an MSB-accredited state, received a satisfactory
rating in its most recent examination;
(3) in the case of a money transmission licensee, the
person to be acquired and the person acquiring control are both
money transmission licensees projected to meet the requirements of
Sections 152.351, 152.352, 152.354, and 152.355 after the
acquisition of control is completed;
(4) in the case of a currency exchange licensee, the
person to be acquired and the person acquiring control are both
currency exchange licensees projected to meet the requirements of
Sections 152.353 and 152.354 after the acquisition of control is
completed;
(5) the money services licensee to be acquired will
not implement any material changes to the licensee's business plan
as a result of the acquisition of control, and if the person
acquiring control is a money services licensee, the acquiring
licensee also will not implement any material changes to its
business plan as a result of the acquisition of control; and
(6) the person provides notice of the acquisition in
cooperation with the money services licensee and attests to
Subdivisions (1) through (5), as applicable, in a form and medium
prescribed by the commissioner.
(b) If the notice under Subsection (a)(6) is not disapproved
before the 31st day after the date on which the notice was
determined to be complete, the notice is considered approved.
(c) Before filing an application for approval to acquire
control of a money services licensee, a person may request in
writing a determination from the commissioner as to whether the
person would be considered a person in control of a money services
licensee on consummation of a proposed transaction. If the
commissioner determines that the person would not be a person in
control of a money services licensee, the proposed transaction is
not subject to the requirements of Section 152.151.
(d) If a multistate licensing process includes a
determination under Subsection (c) and an applicant participates in
or is subject to the multistate licensing process:
(1) the commissioner may accept the control
determination of a lead investigative state with sufficient
staffing, expertise, and minimum standards for the purpose of
Subsection (c); or
(2) if this state is a lead investigative state, the
commissioner may investigate the applicant under Subsection (c) and
the time frames established by agreement through the multistate
licensing process.
Sec. 152.153. NOTICE AND INFORMATION REQUIREMENTS FOR
CHANGE OF KEY INDIVIDUALS. (a) A money services licensee adding or
replacing a key individual shall provide:
(1) notice in a manner prescribed by the commissioner
not later than the 15th day after the effective date of the key
individual's appointment; and
(2) information as required by Section 152.105 not
later than the 45th day after that effective date.
(b) Not later than the 90th day after the date on which
notice provided under Subsection (a) is determined to be complete,
the commissioner may issue a notice of disapproval of a key
individual if it would not be in the best interests of the public or
the customers of the money services licensee to permit the
individual to be a key individual of the licensee, considering the
competence, experience, character, or integrity of the individual.
(c) A notice of disapproval shall be sent to the money
services licensee and the disapproved individual and must contain a
statement of the basis for disapproval. A money services licensee
may appeal a notice of disapproval by filing a written request for a
hearing with the commissioner not later than the 30th day after the
date the notice is mailed. A hearing on the denial must be held not
later than the 45th day after the date the commissioner receives the
written request unless the administrative law judge extends the
period for good cause or the parties agree to a later hearing date.
The hearing is considered a contested case hearing and is subject to
Section 152.451.
(d) If the notice provided under Subsection (a) is not
disapproved before the 91st day after the date on which the notice
is determined to be complete, the key individual is considered
approved.
(e) If a multistate licensing process includes a key
individual notice review and disapproval process under this section
and the money services licensee participates in or is subject to the
multistate licensing process:
(1) the commissioner may accept the determination of
another state if the investigating state has sufficient staffing,
expertise, and minimum standards for the purposes of this section;
or
(2) if this state is a lead investigative state, the
commissioner may investigate the applicant in the same manner as
for a determination under Subsection (b) and in accordance with the
time frames established by agreement through the multistate
licensing process.
SUBCHAPTER E. REPORTING AND RECORDS
Sec. 152.201. MONEY TRANSMISSION REPORT. (a) Each money
transmission licensee shall submit a report of condition not later
than the 45th day after the end of the calendar quarter, or within
an extended time as the commissioner may prescribe.
(b) The report of condition must include:
(1) the licensee's financial information;
(2) nationwide and state-specific money transmission
services transaction information in every jurisdiction in the
United States where the licensee is licensed to engage in money
transmission;
(3) a report on the licensee's permissible
investments;
(4) transaction destination country reporting for
money received for transmission, if applicable; and
(5) any other information the commissioner reasonably
requires with respect to the licensee.
(c) The commissioner may:
(1) use the NMLS for the submission of the report
required by this section; and
(2) change or update the requirements of this section
as necessary to carry out the purposes of this chapter and maintain
consistency with NMLS reporting.
(d) The information required by Subsection (b)(4) may only
be included in a report of condition submitted not later than the
45th day after the end of the fourth calendar quarter.
Sec. 152.202. CURRENCY EXCHANGE REPORT. (a) A currency
exchange licensee shall submit:
(1) the annual report required by Section
152.107(d)(2), including a financial statement that may be audited
or unaudited and that is dated as of the last day of the currency
exchange licensee's fiscal year that ended in the immediately
preceding calendar year;
(2) a quarterly interim financial statement and
transaction report that reflects the licensee's financial
condition and currency exchange services business as of the last
day of the calendar quarter to which the statement and report relate
and that are prepared not later than the 45th day after the end of
the calendar quarter; and
(3) any other report required by rule of the
commission or reasonably requested by the commissioner to determine
compliance with this chapter.
(b) A currency exchange licensee shall file the statements
and reports required under this section with the commissioner as
required by this chapter, by commission rule, or as requested by the
commissioner.
(c) On written application and for good cause shown, the
commissioner may extend the time for preparing or filing a
statement or report required under this section.
Sec. 152.203. FINANCIAL STATEMENTS. (a) A money services
licensee shall, not later than the 90th day after the end of each
fiscal year, or within an extended time prescribed by the
commissioner, file with the commissioner:
(1) for a money transmission licensee, an audited
unconsolidated financial statement of the licensee for the fiscal
year prepared in accordance with United States generally accepted
accounting principles;
(2) for a currency exchange licensee, a financial
statement, audited or unaudited, dated as of the last day of the
licensee's fiscal year that ended in the immediately preceding
calendar year; and
(3) any other information as the commissioner may
reasonably require.
(b) A financial statement required by Subsection (a)(1)
must be prepared by an independent certified public accountant or
independent public accountant who is satisfactory to the
commissioner.
(c) An audited financial statement required by Subsection
(a) must include or be accompanied by a certificate of opinion of
the independent certified public accountant or independent public
accountant that is satisfactory in form and content to the
commissioner. If the certificate of opinion is qualified, the
commissioner may order the money services licensee to take any
action the commissioner finds necessary to enable the independent
certified public accountant or independent public accountant to
remove the qualification.
Sec. 152.204. AUTHORIZED DELEGATE REPORTING. (a) A money
transmission licensee shall submit a report of authorized delegates
not later than the 45th day after the end of each calendar quarter.
The commissioner may use the NMLS for the submission of the report
required by this section if NMLS functionality is consistent with
the requirements of this section.
(b) The authorized delegate report must include for each
authorized delegate:
(1) the authorized delegate's legal name;
(2) the authorized delegate's taxpayer employer
identification number;
(3) the authorized delegate's principal provider
identifier;
(4) the authorized delegate's physical address;
(5) the authorized delegate's mailing address;
(6) any business the authorized delegate conducts in
other states;
(7) any fictitious or trade name the authorized
delegate uses;
(8) a contact person name, phone number, and e-mail;
(9) a start date as the money transmission licensee's
authorized delegate;
(10) an end date as the money transmission licensee's
authorized delegate, if applicable; and
(11) any other information the commissioner
reasonably requires with respect to the authorized delegate.
Sec. 152.205. REPORTS OF CERTAIN EVENTS. (a) A money
services licensee shall file a report with the commissioner not
later than the first business day after the licensee has reason to
know of:
(1) the filing of a petition by or against the licensee
under the United States Bankruptcy Code (11 U.S.C. Sections
101-1532) for bankruptcy or reorganization;
(2) the filing of a petition by or against the licensee
for receivership, the commencement of any other judicial or
administrative proceeding for the licensee's dissolution or
reorganization, or the making of a general assignment for the
benefit of the licensee's creditors; or
(3) the commencement of a proceeding to revoke or
suspend the licensee's license in a state or country in which the
licensee engages in or is licensed to engage in money services
business.
(b) A money services licensee shall file a report with the
commissioner not later than the third business day after the
licensee has reason to know of the occurrence of a felony charge or
conviction of:
(1) the licensee or a key individual;
(2) a person in control of the licensee; or
(3) an authorized delegate.
Sec. 152.206. BANK SECRECY ACT REPORTS. A money services
licensee and an authorized delegate shall file all reports required
by federal currency reporting, record keeping, and suspicious
activity reporting requirements as provided by the Bank Secrecy Act
and other federal and state laws relating to money laundering. The
timely filing of a complete and accurate report required under this
section with the appropriate federal agency is considered compliant
with the requirements of this section.
Sec. 152.207. RECORDS. (a) A money services licensee shall
maintain the following records for determining its compliance with
this chapter for at least five years:
(1) a general ledger posted at least monthly
containing all asset, liability, capital, income, and expense
accounts;
(2) bank statements and bank reconciliation records;
(3) for a money transmission licensee:
(A) records of outstanding money transmission
obligations;
(B) records of each outstanding money
transmission obligation paid within the five-year period;
(C) records of each outstanding money
transmission obligation sold; and
(D) a list of the last known names and addresses
of all of the licensee's authorized delegates;
(4) for a currency exchange licensee, a record of each
currency exchange transaction; and
(5) any other records the commissioner reasonably
requires by rule.
(b) The records required to be maintained by Subsection
(a)(3)(C) may be maintained in any form of record.
(c) Records required to be maintained by Subsection (a) may
be maintained outside this state if they are made accessible to the
commissioner not later than the seventh business day after the
commissioner sends notice in writing.
(d) All records maintained by a money services licensee as
required by this section are open to examination by the
commissioner under Section 152.057(a).
SUBCHAPTER F. AUTHORIZED DELEGATES
Sec. 152.251. LIABILITY OF MONEY TRANSMISSION LICENSEE. A
money transmission licensee is liable for the payment of all money
or monetary value received for transmission directly or by an
authorized delegate appointed under this subchapter.
Sec. 152.252. RELATIONSHIP BETWEEN MONEY TRANSMISSION
LICENSEE AND AUTHORIZED DELEGATE. (a) In this section, "remit"
means to make a direct payment of money to a money transmission
licensee or the licensee's representative authorized to receive
money or to deposit money in a bank in an account specified by the
licensee.
(b) Before a money transmission licensee may conduct
business through an authorized delegate or may allow a person to act
as the licensee's authorized delegate, the licensee must:
(1) adopt, and update as necessary, written policies
and procedures reasonably designed to ensure that the licensee's
authorized delegate complies with applicable state and federal law;
(2) enter into a written contract appointing an
authorized delegate that complies with Subsection (d); and
(3) conduct a reasonable risk-based background
investigation sufficient for the licensee to determine whether the
authorized delegate has complied with and will likely comply with
applicable state and federal law.
(c) An authorized delegate shall operate in full compliance
with this chapter.
(d) The written contract required by Subsection (b)(2) must
be signed by the money transmission licensee and the authorized
delegate and must, at a minimum:
(1) appoint the person signing the contract as the
licensee's authorized delegate with the authority to conduct money
transmission services on behalf of the licensee;
(2) provide the nature and scope of the relationship
between the licensee and the authorized delegate and the respective
rights and responsibilities of the parties;
(3) require the authorized delegate to agree to fully
comply with all applicable state and federal laws, rules, and
regulations pertaining to money transmission services, including
this chapter and regulations implementing this chapter, relevant
provisions of the Bank Secrecy Act, and the Patriot Act;
(4) require the authorized delegate to remit and
handle money and monetary value in accordance with the terms of the
contract between the licensee and the authorized delegate;
(5) impose a trust on money and monetary value net of
fees received for money transmission for the benefit of the
licensee;
(6) require the authorized delegate to prepare and
maintain records as required by this chapter or regulations
implementing this chapter, or as reasonably requested by the
commissioner;
(7) acknowledge that the authorized delegate consents
to examination or investigation by the commissioner;
(8) state that the licensee is subject to regulation
by the commissioner and that, as part of that regulation, the
commissioner may suspend or revoke an authorized delegate
designation or require the licensee to terminate an authorized
delegate designation; and
(9) acknowledge receipt of the written policies and
procedures required under Subsection (b)(1).
(e) If a money transmission licensee's license is
suspended, revoked, surrendered, or expired, the licensee must, not
later than the fifth business day after the date the licensee's
license is suspended, revoked, surrendered, or expired, provide
documentation to the commissioner that the licensee has notified
all applicable authorized delegates of the licensee whose names are
in a record filed with the commissioner of the suspension,
revocation, surrender, or expiration of a license. On suspension,
revocation, surrender, or expiration of a license, applicable
authorized delegates shall immediately cease to provide money
transmission services as an authorized delegate of the money
transmission licensee.
(f) An authorized delegate of a money transmission licensee
holds in trust for the benefit of the licensee all money net of fees
received from money transmission. If an authorized delegate
commingles any funds received from money transmission with any
other funds or property owned or controlled by the authorized
delegate, all commingled funds and other property shall be
considered held in trust in favor of the money transmission
licensee in an amount equal to the amount of money net of fees
received from money transmission.
(g) An authorized delegate may not use a subdelegate to
conduct money transmission on behalf of a money transmission
licensee.
Sec. 152.253. DISCLOSURE REQUIREMENTS. (a) A money
transmission licensee's name and mailing address or telephone
number must be provided to the purchaser in connection with each
money transmission transaction conducted by the licensee directly
or through an authorized delegate.
(b) A money transmission licensee receiving currency or an
instrument payable in currency for transmission shall comply with
Chapter 278.
Sec. 152.254. UNAUTHORIZED ACTIVITIES. A person may not
engage in the business of money transmission on behalf of a person
not licensed under this chapter or not exempt under Section
152.004. A person who engages in unauthorized activity provides
money transmission to the same extent as if the person were a money
transmission licensee, and shall be jointly and severally liable
with the unlicensed or nonexempt person. Any business for which a
license is required under this chapter that is conducted by an
authorized delegate outside the scope of authority conferred in the
contract between the authorized delegate and the licensee is
unlicensed activity.
SUBCHAPTER G. TIMELY TRANSMISSION, REFUNDS, AND DISCLOSURES BY
MONEY TRANSMISSION LICENSEE
Sec. 152.301. TIMELY TRANSMISSION. (a) A money
transmission licensee shall forward all money received for money
transmission in accordance with the terms of the agreement between
the licensee and the sender unless the licensee has a reasonable
belief or a reasonable basis to believe that the sender may be a
victim of fraud or that a crime or violation of law, rule, or
regulation has occurred, is occurring, or may occur.
(b) If a money transmission licensee fails to forward money
received for money transmission in accordance with this section,
the licensee must respond to inquiries by the sender with the reason
for the failure unless providing a response would violate a state or
federal law, rule, or regulation.
Sec. 152.302. REFUNDS. (a) This section does not apply to
money received for money transmission that is:
(1) subject to the federal requirements for remittance
transfers under 12 C.F.R. Part 1005, Subpart B; or
(2) under a written agreement between a money
transmission licensee and a payee to process payments for goods or
services provided by the payee.
(b) A money transmission licensee shall refund any and all
money received for money transmission services to the sender not
later than the 10th day after the date of receipt of the sender's
written request for a refund unless:
(1) the money has been forwarded not later than the
10th day after the date on which the money was received for
transmission;
(2) instructions have been given committing an
equivalent amount of money to the person designated by the sender
not later than the 10th day after the date on which the money was
received for transmission;
(3) an agreement between the licensee and the sender
instructs the licensee to forward the money at a time that is later
than the 10th day after the date on which the money was received for
transmission;
(4) the refund is requested for a transaction that the
licensee has not completed based on a reasonable belief or a
reasonable basis to believe that a crime or violation of law, rule,
or regulation has occurred, is occurring, or may occur; or
(5) the refund request does not enable a money
transmission licensee to identify:
(A) the sender's name and address or telephone
number; or
(B) the particular transaction to be refunded in
the event the sender has multiple transactions outstanding.
(c) If funds have not yet been forwarded in accordance with
the terms of an agreement between a money transmission licensee and
a sender under Subsection (b)(3), the licensee shall issue a refund
in accordance with the other provisions of this section.
Sec. 152.303. RECEIPTS. (a) This section does not apply
to:
(1) money received for money transmission subject to
the federal requirements for remittance transfers under 12 C.F.R.
Part 1005, Subpart B;
(2) money received for money transmission that is not
primarily for personal, family, or household purposes;
(3) money received for money transmission under a
written agreement between a money transmission licensee and a payee
to process payments for goods or services provided by the payee; or
(4) payroll processing services.
(b) In this section, "receipt" means a paper receipt,
electronic record, or other written confirmation.
(c) For a transaction conducted in person, a receipt may be
provided electronically if the sender requests or agrees to receive
an electronic receipt. For a transaction conducted electronically
or by phone, a receipt may be provided electronically. All
electronic receipts shall be provided in a retainable form.
(d) A money transmission licensee or the licensee's
authorized delegate shall provide the sender a receipt for money
received for money transmission services.
(e) A receipt must contain, as applicable:
(1) the name of the sender;
(2) the name of the designated recipient;
(3) the date of the transaction;
(4) the unique transaction or identification number;
(5) the name of the money transmission licensee, the
licensee's NMLS Unique ID, the licensee's business address, and the
licensee's customer service telephone number;
(6) the amount of the transaction in United States
dollars;
(7) any fee charged by the money transmission licensee
to the sender for the transaction; and
(8) any taxes collected by the money transmission
licensee from the sender for the transaction.
(f) The receipt required by this section must be in English
and in a language other than English if the money transmission
licensee or authorized delegate principally uses that language to
advertise, solicit, or negotiate, either orally or in writing, for
a transaction conducted in person, electronically, or by phone.
Sec. 152.304. DISCLOSURES FOR PAYROLL PROCESSING SERVICES.
(a) A money transmission licensee that provides payroll processing
services shall:
(1) issue reports to clients detailing client payroll
obligations in advance of the payroll funds being deducted from an
account; and
(2) make available worker pay stubs or an equivalent
statement to workers.
(b) Subsection (a) does not apply to a money transmission
licensee providing payroll processing services where the
licensee's client designates the intended recipients to the
licensee and is responsible for providing the disclosures required
by Subsection (a)(2).
SUBCHAPTER H. PRUDENTIAL STANDARDS
Sec. 152.351. NET WORTH OF MONEY TRANSMISSION LICENSEE.
(a) A money transmission licensee under this chapter shall
maintain at all times a tangible net worth in an amount not less
than:
(1) for a licensee with total assets in an amount not
greater than $100 million, the greater of:
(A) $100,000; or
(B) 3 percent of the value of the licensee's
total assets;
(2) for a licensee with total assets in an amount
greater than $100 million and not greater than $1 billion, the sum
of $3 million and 2 percent of the additional assets in excess of
$100 million; and
(3) for a licensee with total assets in an amount
greater than $1 billion, the sum of $21 million and 0.5 percent of
the additional assets in excess of $1 billion.
(b) Tangible net worth under this section must be
demonstrated at the initial application by the applicant's most
recent audited or unaudited financial statements under Section
152.104(c)(6).
(c) Notwithstanding other provisions of this section, the
commissioner may, for good cause shown, exempt a money transmission
licensee wholly or partly from the requirements of this section.
Sec. 152.352. SECURITY FOR MONEY TRANSMISSION LICENSEE.
(a) A money transmission licensee shall at all times maintain
security consisting of a surety bond in a form satisfactory to the
commissioner. With the commissioner's approval, a money
transmission licensee may maintain a deposit in lieu of a bond under
this section.
(b) The amount of the required security for a money
transmission licensee under this section is:
(1) for a licensee with a tangible net worth in an
amount not greater than 10 percent of the licensee's total assets,
the greater of:
(A) $100,000; or
(B) 100 percent of the licensee's average daily
money transmission liability in this state for the most recently
completed three-month period, up to a maximum amount of $500,000;
or
(2) for a licensee with a tangible net worth in an
amount greater than 10 percent of the licensee's total assets,
$100,000.
(c) A money transmission licensee that maintains a bond in
the maximum amount provided for under Subsection (b) may not be
required to calculate the licensee's average daily money
transmission liability in this state for purposes of this section.
(d) A money transmission licensee may exceed the maximum
required bond amount under Section 152.356(a)(5).
Sec. 152.353. SECURITY FOR CURRENCY EXCHANGE LICENSEE. (a)
A currency exchange licensee shall at all times maintain security
in the amount applicable to the licensee under this section. The
security must satisfy the requirements of and is subject to Section
152.354.
(b) A currency exchange licensee shall maintain security in
the amount of $2,500 if the licensee conducts business with persons
located in this state exclusively at one or more physical locations
through in-person, contemporaneous transactions.
(c) Except as provided by Subsection (e), if Subsection (b)
does not apply to a currency exchange licensee, the licensee shall
maintain security in an amount not less than the greater of:
(1) $2,500; or
(2) an amount equal to one percent of the licensee's
total dollar volume of currency exchange business in this state for
the preceding year.
(d) For purposes of demonstrating prospective compliance
with this section under Section 152.107(c), an applicant for a
currency exchange license may use the applicant's projected total
dollar volume of currency exchange business in this state for the
first year of licensure to determine the amount under Subsection
(c)(2).
(e) The maximum amount of security that may be required
under this section is $1 million.
Sec. 152.354. ADDITIONAL SECURITY REQUIREMENTS. (a) In
addition to the requirements of Section 152.352 or 152.353, a
security under this subchapter must:
(1) be in a form satisfactory to the commissioner;
(2) be payable to any claimant or to the commissioner,
on behalf of a claimant or this state, for any liability arising out
of a money transmission licensee's money transmission business in
this state, incurred under, subject to, or by virtue of this
chapter; and
(3) if the security is a bond, be issued by a qualified
surety company authorized to engage in business in this state and
acceptable to the commissioner or, if the security is an
irrevocable letter of credit, be issued by a financial institution
acceptable to the commissioner.
(b) A claimant may bring suit directly on the security, or
the commissioner may bring suit on behalf of the claimant or the
state, either in one action or in successive actions.
(c) The commissioner may collect from the security or
proceeds of the security any delinquent fee, assessment, cost,
penalty, or other amount imposed on and owed by a money services
licensee. If the security is a surety bond, the commissioner shall
give the surety reasonable prior notice of a hearing to impose an
administrative penalty against the money services licensee,
provided that a surety may not be considered an interested,
aggrieved, or affected person for purposes of an administrative
proceeding under Section 152.451 of this code or Chapter 2001,
Government Code.
(d) A security remains in effect until canceled, which may
occur only after providing 30 days' written notice to the
commissioner. Cancellation does not affect any liability incurred
or accrued during the period covered by the security.
(e) A security must cover claims for at least five years
after the money services licensee surrenders the licensee's license
or otherwise ceases to engage in activities for which a license is
required under this subchapter. However, the commissioner may
permit the amount of the security to be reduced or eliminated before
that time to the extent that the amount of the money services
licensee's obligations to the department and to purchasers in this
state is reduced. The commissioner may permit a money services
licensee to substitute another form of security when the licensee
ceases to provide money transmission in this state.
(f) If the commissioner at any time reasonably determines
that the required security is insecure, deficient in amount, or
exhausted in whole or in part, the commissioner by written order
shall require the money services licensee to file or make new or
additional security to comply with this section.
(g) Instead of providing all or part of the amount of the
security required by this section, an applicant for a money
services license or a money services licensee may deposit, with a
financial institution possessing trust powers that is authorized to
conduct a trust business in this state and is acceptable to the
commissioner, an aggregate amount of United States currency,
certificates of deposit, or other cash equivalents that equals the
total amount of the required security or the remaining part of the
security.
(h) A deposit under Subsection (g):
(1) must be held in trust in the name of and be pledged
to the commissioner;
(2) must secure the same obligations as the security;
and
(3) is subject to other conditions and terms the
commissioner may reasonably require.
(i) The security is considered by operation of law to be
held in trust for the benefit of this state and any individual to
whom an obligation arising under this chapter is owed, and may not
be considered an asset or property of the money services licensee in
the event of bankruptcy, receivership, or a claim against the
licensee unrelated to the licensee's obligations under this
chapter.
Sec. 152.355. MAINTENANCE OF PERMISSIBLE INVESTMENTS BY
MONEY TRANSMISSION LICENSEE. (a) A money transmission licensee
shall maintain at all times permissible investments that have a
market value computed in accordance with United States generally
accepted accounting principles of not less than the aggregate
amount of all of its outstanding money transmission obligations.
(b) Except for permissible investments allowed under
Section 152.356(a), the commissioner, with respect to a money
transmission licensee, may limit the extent to which a specific
investment maintained by a licensee within a class of permissible
investments may be considered a permissible investment, if the
specific investment represents undue risk to customers not
reflected in the market value of investments.
(c) Permissible investments are held in trust for the
benefit of the purchasers and holders of the money transmission
licensee's outstanding money transmission obligations in the event
of:
(1) insolvency;
(2) the filing of a petition by or against the licensee
under the United States Bankruptcy Code (11 U.S.C. Sections
101-1532) for bankruptcy or reorganization;
(3) the filing of a petition by or against the licensee
for receivership;
(4) the commencement of any other judicial or
administrative proceeding for the licensee's dissolution or
reorganization; or
(5) an action by a creditor who is not a beneficiary of
the trust under this section against the licensee.
(d) A permissible investment impressed with a trust under
Subsection (c) is not subject to attachment, levy of execution, or
sequestration by order of any court, except for a beneficiary of the
trust.
(e) On the establishment of a trust under Subsection (c) or
when any funds are drawn on a letter of credit under Section
152.356(a)(4), the commissioner shall notify the applicable
regulator of each state in which the money transmission licensee is
licensed to engage in money transmission services of the
establishment of the trust or the funds drawn on the letter of
credit, as applicable. Notice under this subsection is considered
to be given if performed under a multistate agreement or through the
NMLS.
(f) Funds drawn on a letter of credit, and any other
permissible investments held in trust for the benefit of the
purchasers and holders of the money transmission licensee's
outstanding money transmission obligations, are considered held in
trust for the benefit of those purchasers and holders on a pro rata
and equitable basis in accordance with statutes under which
permissible investments are required to be held in this state, and
other states, as applicable.
(g) A trust established under Subsection (c) shall be
terminated on extinguishment of all of the money transmission
licensee's outstanding money transmission obligations.
(h) The commissioner may allow other types of investments
that the commissioner determines are of sufficient liquidity and
quality to be a permissible investment. The commissioner may
participate in efforts with other state regulators to determine
that other types of investments are of sufficient liquidity and
quality to be a permissible investment.
Sec. 152.356. TYPES OF PERMISSIBLE INVESTMENTS. (a) The
following investments are permissible under Section 152.355:
(1) cash, including:
(A) demand deposits;
(B) savings deposits;
(C) funds in accounts under Paragraphs (A) and
(B) held for the benefit of a money transmission licensee's
customers in a federally insured depository financial institution;
(D) cash equivalents, including automated
clearing house items:
(i) in transit to the money transmission
licensee; and
(ii) in transit to a payee;
(E) international wires in transit to a payee;
(F) cash in transit via armored car;
(G) cash in smart safes;
(H) cash in money transmission licensee-owned
locations;
(I) debit card or credit card-funded
transmission receivables owed by a bank; or
(J) money market mutual funds rated "AAA" by S&P
Global or an equivalent rating from an eligible rating service;
(2) certificates of deposit or senior debt obligations
of an insured depository institution, as defined by Section 3,
Federal Deposit Insurance Act (12 U.S.C. Section 1813) or the
Federal Credit Union Act (12 U.S.C. Section 1781);
(3) an obligation:
(A) of the United States or a commission, agency,
or instrumentality of the United States;
(B) that is guaranteed fully as to principal and
interest by the United States; or
(C) of a state or a governmental subdivision,
agency, or instrumentality of the United States;
(4) the full drawable amount of an irrevocable standby
letter of credit for which the stated beneficiary is the
commissioner that stipulates that the commissioner need only draw a
sight draft under the letter of credit and present it to obtain
funds up to the letter of credit amount on presentation of the items
required by Subsection (f);
(5) 100 percent of the surety bond or deposit provided
for under Section 152.352 that exceeds the average daily money
transmission liability in this state; or
(6) stablecoin, to the extent of outstanding
transmission obligations received by the licensee in the same kind
of stablecoin.
(b) Unless permitted by the commissioner to exceed the limit
provided, the following investments are permissible under Section
152.355 to the extent specified:
(1) receivables that are payable to a money
transmission licensee from its authorized delegates in the ordinary
course of business that are less than seven days old are permissible
up to the amount of 50 percent of the aggregate value of the
licensee's total permissible investments;
(2) receivables under Subdivision (1) that are payable
to a money transmission licensee from a single authorized delegate
in the ordinary course of business are permissible up to the amount
of 10 percent of the aggregate value of the licensee's total
permissible investments;
(3) the following investments are permissible up to
the amount of 20 percent of the aggregate value of a money
transmission licensee's total permissible investments for the
amount under each paragraph and the amount of 50 percent of the
aggregate value of the licensee's total permissible investments for
the total amount under this subdivision:
(A) a short-term investment of not more than six
months bearing an eligible rating;
(B) commercial paper bearing an eligible rating;
(C) a bill, note, bond, or debenture bearing an
eligible rating;
(D) a United States tri-party repurchase
agreement collateralized at 100 percent or more with United States
or agency security, municipal bonds, or other security bearing an
eligible rating;
(E) a money market mutual fund rated less than
"AAA" and not less than "A-" by S&P Global, or the equivalent from
an eligible rating service; and
(F) a mutual fund or other investment fund
composed solely and exclusively of one or more permissible
investments listed in Subsections (a)(1)-(3); and
(4) cash, including demand deposits, savings
deposits, and funds in an account held for the benefit of a money
transmission licensee's customers at a foreign depository
institution is permissible up to the amount of 10 percent of the
aggregate value of the licensee's total permissible investments if:
(A) the licensee has received a satisfactory
rating in its most recent examination; and
(B) the foreign depository institution:
(i) has an eligible rating;
(ii) is registered under the Foreign
Account Tax Compliance Act (Pub. L. No. 111-147);
(iii) is not located in a country subject to
sanctions from the Office of Foreign Assets Control; and
(iv) is not located in a jurisdiction
designated high-risk or uncooperative by the Financial Action Task
Force.
(c) A letter of credit under Subsection (a)(4) must:
(1) be issued by:
(A) a federally insured depository financial
institution;
(B) a foreign bank authorized under federal law
to maintain a federal agency or federal branch office in a state or
states; or
(C) a foreign bank that is authorized under state
law to maintain a branch in a state that:
(i) bears an eligible rating or whose
parent company bears an eligible rating;
(ii) is regulated, supervised, and examined
by United States federal or state authorities having regulatory
authority over banks, credit unions, and trust companies; and
(iii) is approved by the commissioner;
(2) be irrevocable and unconditional and indicate that
it is not subject to any condition or qualifications outside of the
letter of credit;
(3) not contain reference to any other agreement,
document or entity, or otherwise provide for a security interest in
the money transmission licensee;
(4) contain an issue date and expiration date; and
(5) expressly provide for automatic extension without
a written amendment for an additional period of one year from a
current or future expiration date, unless the issuer of the letter
of credit notifies the commissioner in writing by certified or
registered mail, courier mail, or other receipted means, not more
than the 60th day before any expiration date, that the irrevocable
letter of credit will not be extended.
(d) On receipt of a notice of expiration or non-extension of
a letter of credit issued under Subsection (c)(5), the commissioner
shall require a money transmission licensee to demonstrate to the
satisfaction of the commissioner, not later than the 15th day
before expiration, that the licensee maintains and will maintain
permissible investments in accordance with Section 152.355 after
the letter of credit expires.
(e) If the money transmission licensee is not able to
satisfactorily demonstrate to the commissioner that the licensee
will maintain permissible investments under Subsection (d), the
commissioner may draw on the letter of credit in an amount up to the
amount necessary to meet the licensee's requirements to maintain
permissible investments in accordance with Section 152.355. The
commissioner shall offset the draw against the money transmission
licensee's outstanding money transmission obligations. The
commissioner or the commissioner's designated agent shall hold
drawn funds in trust to the extent authorized by law as agent for
the benefit of the purchasers and holders of the money transmission
licensee's outstanding money transmission obligations.
(f) A letter of credit under Subsection (a)(4) must provide
that the issuer of the letter of credit will honor, at sight, a
presentation made by the commissioner to the issuer on or before the
expiration date of the letter of credit of:
(1) the original letter of credit, including any
amendments; and
(2) a written statement from the commissioner stating
that:
(A) a petition has been filed by or against the
money transmission licensee under the United States Bankruptcy Code
(11 U.S.C. Sections 101-1532) for bankruptcy or reorganization;
(B) a petition has been filed by or against the
money transmission licensee for receivership, or the commencement
of any other judicial or administrative proceeding for the
licensee's dissolution or reorganization;
(C) a money transmission licensee's assets have
been seized by the commissioner under an emergency order issued in
accordance with applicable law on the basis of an action,
violation, or condition that has caused or is likely to cause the
insolvency of the licensee; or
(D) the commissioner has received notice of
expiration or non-extension of a letter of credit under Subsection
(c)(5), and the money transmission licensee failed to demonstrate
to the satisfaction of the commissioner under Subsection (d) that
the licensee will maintain permissible investments in accordance
with Section 152.355 on the expiration or non-extension of the
letter of credit.
(g) The commissioner may designate an agent to serve on the
commissioner's behalf as beneficiary to a letter of credit if the
agent and letter of credit meet requirements established by the
commissioner. The commissioner's agent may serve as agent for
multiple licensing authorities for a single irrevocable letter of
credit if the proceeds of the drawable amount for the purposes of
Subsection (a)(4) are assigned to the commissioner.
(h) The commissioner may participate in multistate
processes designed to facilitate the issuance and administration of
letters of credit, including but not limited to services provided
by the NMLS and State Regulatory Registry, LLC.
SUBCHAPTER I. ENFORCEMENT
Sec. 152.401. INJUNCTIVE RELIEF. (a) If a person appears
to have violated, or if reasonable cause exists to believe that a
person is likely to violate, this chapter or a rule adopted under
this chapter, the following persons may bring an action for
injunctive relief to enjoin the violation or enforce compliance
with the provision:
(1) the commissioner, through the attorney general;
(2) the attorney general;
(3) the district attorney of Travis County; or
(4) the prosecuting attorney of the county in which
the violation is alleged to have occurred.
(b) In addition to the authority granted to the commissioner
under Subsection (a), the commissioner, through the attorney
general, may bring an action for injunctive relief if the
commissioner has reason to believe that a person has violated or is
likely to violate an order of the commissioner issued under this
chapter.
(c) An action for injunctive relief brought by the
commissioner, the attorney general, or the district attorney of
Travis County under Subsection (a), or brought by the commissioner
under Subsection (b), must be brought in a district court in Travis
County. An action brought by a prosecuting attorney under
Subsection (a)(4) must be brought in a district court in the county
in which all or part of the violation is alleged to have occurred.
(d) On a proper showing, the court may issue a restraining
order, an order freezing assets, a preliminary or permanent
injunction, or a writ of mandate, or may appoint a receiver for the
defendant or the defendant's assets.
(e) A receiver appointed by the court under Subsection (d)
may, with approval of the court, exercise all of the powers of the
defendant's directors, officers, partners, trustees, or persons
who exercise similar powers and perform similar duties.
(f) An action brought under this section may include a claim
for ancillary relief, including a claim by the commissioner for
costs or civil penalties authorized under this chapter, or for
restitution or damages on behalf of the persons injured by the act
constituting the subject matter of the action, and the court has
jurisdiction to award that relief.
Sec. 152.402. CEASE AND DESIST ORDERS FOR UNLICENSED
PERSONS. (a) If the commissioner has reason to believe that an
unlicensed person has engaged or is likely to engage in an activity
for which a license is required under this chapter, the
commissioner may order the person to cease and desist from the
violation until the person is issued a license under this chapter.
The commissioner's order is subject to Section 152.409, unless the
order is issued as an emergency order. The commissioner may issue
an emergency cease and desist order under Section 152.410 if the
commissioner finds that the person's violation or likely violation
threatens immediate and irreparable harm to the public.
(b) A cease and desist order under this section may require
the unlicensed person to take affirmative action to correct any
condition resulting from or contributing to the activity or
violation, including the payment of restitution to each resident of
this state damaged by the violation.
Sec. 152.403. SUSPENSION AND REVOCATION OF MONEY SERVICES
LICENSE. (a) The commissioner shall revoke a money services
license if the commissioner finds that:
(1) the money services licensee does not provide the
security required under this chapter; or
(2) for a money transmission licensee, the net worth
of the licensee is less than the amount required under this chapter.
(b) The commissioner may suspend or revoke a money services
license or order a money transmission licensee to revoke the
designation of an authorized delegate if the commissioner has
reason to believe that:
(1) the money services licensee has violated this
chapter, a rule adopted or order issued under this chapter, a
written agreement entered into with the department or commissioner,
or any other state or federal law applicable to the licensee's money
services business;
(2) the money services licensee has refused to permit
or has not cooperated with an examination or investigation
authorized by this chapter;
(3) the money services licensee has engaged in fraud,
knowing misrepresentation, deceit, or gross negligence in
connection with the operation of the licensee's money services
business or any transaction subject to this chapter;
(4) an authorized delegate of the money transmission
licensee has knowingly violated this chapter, a rule adopted or
order issued under this chapter, or a state or federal
anti-money-laundering or terrorist funding law, and the licensee
knows or should have known of the violation and has failed to make a
reasonable effort to prevent or correct the violation;
(5) the competence, experience, character, or general
fitness of the money services licensee or the authorized delegate
of a money transmission licensee, or a principal of, person in
control of, or responsible person of a money services licensee or
authorized delegate of a money transmission licensee, indicates
that it is not in the public interest to permit the licensee or
authorized delegate to provide money services;
(6) the money services licensee has engaged in an
unsafe or unsound act or practice or has conducted business in an
unsafe or unsound manner;
(7) the money services licensee has suspended payment
of the licensee's obligations, made a general assignment for the
benefit of the licensee's creditors, or admitted in writing the
licensee's inability to pay debts of the licensee as they become
due;
(8) the money transmission licensee has failed to
terminate the authority of an authorized delegate after the
commissioner has issued and served on the licensee a final order
finding that the authorized delegate has violated this chapter;
(9) a fact or condition exists that, if it had been
known at the time the money services licensee applied for the
license, would have been grounds for denying the application;
(10) the money services licensee has engaged in false,
misleading, or deceptive advertising;
(11) the money services licensee has failed to pay a
judgment entered in favor of a claimant or creditor in an action
arising out of the licensee's activities under this chapter not
later than the 30th day after the date the judgment becomes final or
not later than the 30th day after the date the stay of execution
expires or is terminated, as applicable;
(12) the money services licensee has knowingly made a
material misstatement or has suppressed or withheld material
information on an application, request for approval, report, or
other document required to be filed with the department under this
chapter; or
(13) the money services licensee has committed a
breach of trust or of a fiduciary duty.
(c) In determining whether a money services licensee has
engaged in an unsafe or unsound act or practice or has conducted
business in an unsafe or unsound manner, the commissioner may
consider factors that include:
(1) the size and condition of the licensee's provision
of money services;
(2) the magnitude of the loss or potential loss;
(3) the gravity of the violation of this chapter or
rule adopted or order issued under this chapter;
(4) any action taken against the licensee by this
state, another state, or the federal government; and
(5) the previous conduct of the licensee.
(d) The commissioner's order suspending or revoking a money
services license or directing a money transmission licensee to
revoke the designation of an authorized delegate is subject to
Section 152.409, unless the order is issued as an emergency order.
The commissioner may issue an emergency order suspending a money
services license or directing a money transmission licensee to
revoke the designation of an authorized delegate in accordance with
Section 152.410 if the commissioner finds that the factors
identified in Section 152.410(b) exist.
Sec. 152.404. SUSPENSION AND REVOCATION OF AUTHORIZED
DELEGATE DESIGNATION. (a) The commissioner may suspend or revoke
the designation of an authorized delegate by a money transmission
licensee if the commissioner has reason to believe that:
(1) the authorized delegate has violated this chapter,
a rule adopted or order issued under this chapter, a written
agreement entered into with the commissioner or the department, or
any other state or federal law applicable to a money transmission
business;
(2) the authorized delegate has refused to permit or
has not cooperated with an examination or investigation under this
chapter;
(3) the authorized delegate has engaged in fraud,
knowing misrepresentation, deceit, gross negligence, or an unfair
or deceptive act or practice in connection with the operation of the
delegate's business on behalf of the money transmission licensee or
any transaction subject to this chapter;
(4) the competence, experience, character, or general
fitness of the authorized delegate, or a principal of, person in
control of, or responsible person of the authorized delegate,
indicates that it is not in the public interest to permit the
authorized delegate to provide money transmission;
(5) the authorized delegate has engaged in an unsafe
or unsound act or practice or conducted business in an unsafe and
unsound manner;
(6) the authorized delegate, or a principal or
responsible person of the authorized delegate, is listed on the
Specially Designated Nationals and Blocked Persons List prepared by
the United States Department of the Treasury as a potential threat
to commit terrorist acts or to fund terrorist acts; or
(7) the authorized delegate, or a principal or
responsible person of the authorized delegate, has been convicted
of a state or federal anti-money-laundering or terrorist funding
law.
(b) In determining whether an authorized delegate has
engaged in an unsafe or unsound act or practice or conducted
business in an unsafe or unsound manner, the commissioner may
consider factors that include:
(1) the size and condition of the authorized
delegate's provision of money transmission;
(2) the magnitude of the loss or potential loss;
(3) the gravity of the violation of this chapter or
rule adopted or order issued under this chapter;
(4) any action taken against the authorized delegate
by this state, another state, or the federal government; and
(5) the previous conduct of the authorized delegate.
(c) The commissioner's order suspending or revoking the
designation of an authorized delegate is subject to Section
152.409, unless the order is issued as an emergency order. The
commissioner may issue an emergency order suspending the
designation of an authorized delegate in accordance with Section
152.410 if the commissioner finds that the factors identified in
Section 152.410(b) exist.
Sec. 152.405. CEASE AND DESIST ORDERS FOR MONEY SERVICES
LICENSEE OR AUTHORIZED DELEGATE. (a) The commissioner may issue an
order to cease and desist if the commissioner finds that:
(1) an action, violation, or condition listed in
Section 152.403 or 152.404 exists with respect to a money services
licensee or authorized delegate; and
(2) a cease and desist order is necessary to protect
the interests of the money services licensee, the purchasers of the
licensee's money services, or the public.
(b) A cease and desist order may require a money services
licensee or authorized delegate to cease and desist from the action
or violation or to take affirmative action to correct any condition
resulting from or contributing to the action or violation, and the
requirements of the order may apply to a principal or responsible
person of the licensee or authorized delegate.
(c) The cease and desist order is subject to Section
152.409, unless the order is issued as an emergency order. The
commissioner may issue an emergency cease and desist order in
accordance with Section 152.410 if the commissioner finds that the
factors identified in Section 152.410(b) exist.
Sec. 152.406. CONSENT ORDERS. (a) The commissioner may
enter into a consent order at any time with a person to resolve a
matter arising under this chapter or a rule adopted or order issued
under this chapter.
(b) A consent order must be signed by the person to whom the
order is issued or by the person's authorized representative and
must indicate agreement with the terms contained in the order.
However, a consent order may provide that the order does not
constitute an admission by a person that the person has violated
this chapter or a rule adopted or order issued under this chapter.
(c) A consent order is a final order and may not be appealed.
Sec. 152.407. ADMINISTRATIVE PENALTY. (a) After notice
and hearing, the commissioner may assess an administrative penalty
against a person who:
(1) has violated this chapter or a rule adopted or
order issued under this chapter and has failed to correct the
violation not later than the 30th day after the date the department
sends written notice of the violation to the person;
(2) if the person is a money services licensee, has
engaged in conduct described by Section 152.403;
(3) has engaged in a pattern of violations; or
(4) has demonstrated wilful disregard for the
requirements of this chapter, the rules adopted under this chapter,
or an order issued under this chapter.
(b) A violation corrected after a person receives written
notice from the department of the violation may be considered for
purposes of determining whether a person has engaged in a pattern of
violations under Subsection (a)(3) or demonstrated wilful
disregard under Subsection (a)(4).
(c) The amount of the penalty may not exceed $5,000 for each
violation or, in the case of a continuing violation, $5,000 for each
day that the violation continues. Each transaction in violation of
this chapter and each day that a violation continues is a separate
violation.
(d) In determining the amount of the penalty, the
commissioner shall consider factors that include the seriousness of
the violation, the person's compliance history, and the person's
good faith in attempting to comply with this chapter, provided that
if the person is found to have demonstrated wilful disregard under
Subsection (a)(4), the trier of fact may recommend that the
commissioner impose the maximum administrative penalty permitted
under Subsection (c).
(e) A hearing to assess an administrative penalty is
considered a contested case hearing and is subject to Section
152.451.
(f) An order imposing an administrative penalty after
notice and hearing becomes effective and is final for purposes of
collection and appeal immediately on issuance.
(g) The commissioner may collect an administrative penalty
assessed under this section:
(1) in the same manner that a money judgment is
enforced in court; or
(2) if the penalty is imposed against a money services
licensee or an authorized delegate, from the proceeds of the
licensee's security in accordance with Section 152.354(c).
Sec. 152.408. CRIMINAL PENALTY. (a) A person commits an
offense if the person:
(1) intentionally makes a false statement,
misrepresentation, or certification in a record or application
filed with the department or required to be maintained under this
chapter or a rule adopted or order issued under this chapter, or
intentionally makes a false entry or omits a material entry in the
record or application; or
(2) knowingly engages in an activity for which a money
services license is required under this chapter without being
licensed under this chapter.
(b) An offense under this section is a felony of the third
degree.
(c) An offense under this section may be prosecuted in
Travis County or in the county in which the offense is alleged to
have been committed.
(d) Nothing in this section limits the power of the state to
punish a person for an act that constitutes an offense under this or
any other law.
Sec. 152.409. NOTICE, HEARING, AND OTHER PROCEDURES FOR
NONEMERGENCY ORDERS. (a) This section applies to an order issued
by the commissioner under this subchapter that is not an emergency
order.
(b) An order to which this section applies becomes effective
only after notice and an opportunity for hearing. The order must:
(1) state the grounds on which the order is based;
(2) to the extent applicable, state the action or
violation from which the person subject to the order must cease and
desist or the affirmative action the person must take to correct a
condition resulting from the violation or that is otherwise
appropriate;
(3) be delivered by personal delivery or sent by
certified mail, return receipt requested, to the person against
whom the order is directed at the person's last known address;
(4) state the effective date of the order, which may
not be before the 21st day after the date the order is delivered or
mailed; and
(5) include a notice that a person may file a written
request for a hearing on the order with the commissioner not later
than the 20th day after the date the order is delivered or mailed.
(c) Unless the commissioner receives a written request for a
hearing from the person against whom the order is directed not later
than the 20th day after the date the order is delivered or mailed,
the order takes effect as stated in the order and is final against
and non-appealable by that person from that date.
(d) A hearing on the order must be held not later than the
45th day after the date the commissioner receives the written
request for the hearing unless the administrative law judge extends
the period for good cause or the parties agree to a later hearing
date.
(e) An order that has been affirmed or modified after a
hearing becomes effective and is final for purposes of enforcement
and appeal immediately on issuance. The order may be appealed to
the district court of Travis County as provided by Section
152.451(b).
Sec. 152.410. REQUIREMENTS AND NOTICE AND HEARING
PROCEDURES FOR EMERGENCY ORDERS. (a) This section applies to an
emergency order issued by the commissioner under this subchapter.
(b) The commissioner may issue an emergency order, without
prior notice and an opportunity for hearing, if the commissioner
finds that:
(1) the action, violation, or condition that is the
basis for the order:
(A) has caused or is likely to cause the
insolvency of the money services licensee;
(B) has caused or is likely to cause the
substantial dissipation of the money services licensee's assets or
earnings;
(C) has seriously weakened or is likely to
seriously weaken the condition of the money services licensee; or
(D) has seriously prejudiced or is likely to
seriously prejudice the interests of the money services licensee, a
purchaser of the licensee's money services, or the public; and
(2) immediate action is necessary to protect the
interests of the money services licensee, a purchaser of the
licensee's money services, or the public.
(c) In connection with and as directed by an emergency
order, the commissioner may seize the records and assets of a money
services licensee or authorized delegate that relate to the
licensee's money services business.
(d) An emergency order must:
(1) state the grounds on which the order is based;
(2) advise the person against whom the order is
directed that the order takes effect immediately, and, to the
extent applicable, require the person to immediately cease and
desist from the conduct or violation that is the subject of the
order or to take the affirmative action stated in the order as
necessary to correct a condition resulting from the conduct or
violation or as otherwise appropriate;
(3) be delivered by personal delivery or sent by
certified mail, return receipt requested, to the person against
whom the order is directed at the person's last known address; and
(4) include a notice that a person may request a
hearing on the order by filing a written request for hearing with
the commissioner not later than the 15th day after the date the
order is delivered or mailed.
(e) An emergency order takes effect as soon as the person
against whom the order is directed has actual or constructive
knowledge of the issuance of the order.
(f) A money services licensee or authorized delegate
against whom an emergency order is directed must submit a written
certification to the commissioner, signed by the licensee or
authorized delegate, and their principals and responsible
individuals, as applicable, and each person named in the order,
stating that each person has received a copy of and has read and
understands the order.
(g) Unless the commissioner receives a written request for a
hearing from a person against whom an emergency order is directed
not later than the 15th day after the date the order is delivered or
mailed, the order is final and non-appealable as to that person on
the 16th day after the date the order is delivered or mailed.
(h) A request for a hearing does not stay an emergency
order.
(i) A hearing on an emergency order takes precedence over
any other matter pending before the commissioner, and must be held
not later than the 10th day after the date the commissioner receives
the written request for hearing unless the administrative law judge
extends the period for good cause or the parties agree to a later
hearing date.
(j) An emergency order that has been affirmed or modified
after a hearing is final for purposes of enforcement and appeal.
The order may be appealed to the district court of Travis County as
provided in Section 152.451(b).
SUBCHAPTER J. MISCELLANEOUS PROVISIONS
Sec. 152.451. ADMINISTRATIVE PROCEDURES. (a) All
administrative proceedings under this chapter must be conducted in
accordance with Chapter 2001, Government Code, and Title 7, Chapter
9, Texas Administrative Code.
(b) A person affected by a final order of the commissioner
issued under this chapter after a hearing may appeal the order by
filing a petition for judicial review in a district court of Travis
County. A petition for judicial review filed in the district court
under this subsection does not stay or vacate the appealed order
unless the court, after notice and hearing, specifically stays or
vacates the order.
ARTICLE 2. CONFORMING AMENDMENTS
SECTION 2.01. Section 140A.104(e), Civil Practice and
Remedies Code, is amended to read as follows:
(e) A bank or savings and loan association insured by the
Federal Deposit Insurance Corporation, a credit union insured by
the National Credit Union Administration, or the holder of a money
transmission license as defined by Chapter 152 [151], Finance Code,
may not be held liable in damages or for other relief under this
chapter, unless the finder of fact finds by a preponderance of the
evidence that the person or agent acquiring or maintaining an
interest in or transporting, transacting, transferring, or
receiving the funds on behalf of another did so knowing that the
funds were the proceeds of an offense and that a director or high
managerial agent performed, authorized, requested, commanded,
participated in, ratified, or recklessly tolerated the unlawful
conduct of the person or agent.
SECTION 2.02. Article 59.01(2), Code of Criminal Procedure,
is amended to read as follows:
(2) "Contraband" means property of any nature,
including real, personal, tangible, or intangible, that is:
(A) used in the commission of:
(i) any first or second degree felony under
the Penal Code;
(ii) any felony under Section 15.031(b),
21.11, or 38.04 or Chapter 29, 30, 31, 32, 33, 33A, or 35, Penal
Code;
(iii) any felony under Chapter 43, Penal
Code, except as provided by Paragraph (B);
(iv) any felony under The Securities Act
(Title 12, Government Code); or
(v) any offense under Chapter 49, Penal
Code, that is punishable as a felony of the third degree or state
jail felony, if the defendant has been previously convicted three
times of an offense under that chapter;
(B) used or intended to be used in the commission
of:
(i) any felony under Chapter 481, Health
and Safety Code (Texas Controlled Substances Act);
(ii) any felony under Chapter 483, Health
and Safety Code;
(iii) a felony under Chapter 152 [151],
Finance Code;
(iv) any felony under Chapter 20A or 34,
Penal Code;
(v) a Class A misdemeanor under Subchapter
B, Chapter 365, Health and Safety Code, if the defendant has been
previously convicted twice of an offense under that subchapter;
(vi) any felony under Chapter 32, Human
Resources Code, or Chapter 31, 32, 35A, or 37, Penal Code, that
involves a health care program, as defined by Section 35A.01, Penal
Code;
(vii) a Class B misdemeanor under Chapter
522, Business & Commerce Code;
(viii) a Class A misdemeanor under Section
306.051, Business & Commerce Code;
(ix) any offense under Section 42.10, Penal
Code;
(x) any offense under Section 46.06(a)(1)
or 46.14, Penal Code;
(xi) any offense under Chapter 71, Penal
Code;
(xii) any offense under Section 20.05,
20.06, 20.07, 43.04, or 43.05, Penal Code;
(xiii) an offense under Section 326.002,
Business & Commerce Code; or
(xiv) a Class A misdemeanor or any felony
under Section 545.420, Transportation Code, other than a Class A
misdemeanor that is classified as a Class A misdemeanor based
solely on conduct constituting a violation of Subsection (e)(2)(B)
of that section;
(C) the proceeds gained from the commission of a
felony listed in Paragraph (A) or (B) of this subdivision, a
misdemeanor listed in Paragraph (B)(vii), (ix), (x), (xi), or (xii)
of this subdivision, or a crime of violence;
(D) acquired with proceeds gained from the
commission of a felony listed in Paragraph (A) or (B) of this
subdivision, a misdemeanor listed in Paragraph (B)(vii), (ix), (x),
(xi), or (xii) of this subdivision, or a crime of violence;
(E) used to facilitate or intended to be used to
facilitate the commission of a felony under Section 15.031 or
Chapter 43, Penal Code; or
(F) used to facilitate or intended to be used to
facilitate the commission of an offense under Section 20.05, 20.06,
or 20.07 or Chapter 20A, Penal Code.
SECTION 2.03. Section 182.021, Finance Code, is amended to
read as follows:
Sec. 182.021. ACTIVITIES NOT REQUIRING CHARTER. Subject to
Subchapter C, Chapter 187, a company does not engage in the trust
business in a manner requiring a state charter by:
(1) acting in a manner authorized by law and in the
scope of authority as an agent of a trust institution;
(2) rendering a service customarily performed as an
attorney in a manner approved and authorized by the Supreme Court of
Texas or State Bar of Texas;
(3) acting as trustee under a deed of trust made only
as security for the payment of money or for the performance of
another act;
(4) conducting business as a trust institution if the
exercise of fiduciary powers in this state by the trust institution
is not otherwise prohibited by law;
(5) engaging in a business regulated by the Office of
Consumer Credit Commissioner, except as limited by rules adopted by
the finance commission;
(6) receiving and distributing rents and proceeds of
sale as a licensed real estate broker on behalf of a principal in a
manner authorized by the Texas Real Estate Commission;
(7) engaging in a securities transaction or providing
an investment advisory service as a licensed and registered dealer,
salesman, or advisor to the extent that the activity is regulated by
the State Securities Board or the Securities and Exchange
Commission;
(8) engaging in the sale and administration of an
insurance product by an insurance company or agent authorized or
licensed by the Texas Department of Insurance to the extent that the
activity is regulated by the Texas Department of Insurance;
(9) engaging in the lawful sale of prepaid funeral
benefits under a permit issued by the banking commissioner under
Chapter 154;
(10) engaging in the lawful business of a perpetual
care cemetery corporation under Chapter 712, Health and Safety
Code;
(11) engaging as a principal in the money services
business under a license issued by the banking commissioner under
Chapter 152 [151];
(12) acting as trustee under a voting trust as
provided by Section 6.251, Business Organizations Code;
(13) acting as trustee by a public, private, or
independent institution of higher education or a university system,
as defined by Section 61.003, Education Code, including an
affiliated foundation or corporation of such an institution or
system acting as trustee as provided by the Education Code;
(14) engaging in another activity expressly excluded
from the application of this subtitle by rule of the finance
commission;
(15) rendering services customarily performed by a
certified accountant in a manner authorized by the Texas State
Board of Public Accountancy;
(16) serving as trustee of a charitable trust as
provided by Section 2.106, Business Organizations Code;
(17) performing escrow or settlement services if
licensed or authorized under Title 11, Insurance Code;
(18) acting as a qualified intermediary in a tax
deferred exchange under Section 1031, Internal Revenue Code of
1986, and applicable regulations;
(19) providing permitted services at a trust
representative office established in this state pursuant to
Subchapter C, Chapter 187; or
(20) acting as a trustee or custodian approved by the
Internal Revenue Service under 26 C.F.R. Section 1.408-2(e) of an
individual retirement account described by Section 408(a),
Internal Revenue Code of 1986.
SECTION 2.04. Section 278.001(1), Finance Code, is amended
to read as follows:
(1) "Currency" has the meaning assigned by Section
152.003 [151.501].
SECTION 2.05. Section 213.012(a), Labor Code, is amended to
read as follows:
(a) In this section, "payment instrument" has the meaning
assigned by Section 152.003 [151.301], Finance Code.
SECTION 2.06. Section 151.0035(b), Tax Code, is amended to
read as follows:
(b) "Data processing service" does not include:
(1) the transcription of medical dictation by a
medical transcriptionist;
(2) services exclusively to encrypt electronic
payment information for acceptance onto a payment card network
described by Subdivision (3)(E) to comply with standards set by the
Payment Card Industry Security Standards Council; or
(3) settling of an electronic payment transaction by:
(A) a downstream payment processor or point of
sale payment processor that routes electronic payment information
to an entity described by Paragraph (C) or (E);
(B) a person who is engaged in the business of
money transmission and required to obtain a license under Section
152.101 [151.302(a)], Finance Code;
(C) a federally insured financial institution,
as defined by Section 201.101, Finance Code, that is organized
under the laws of this state, another state, or the United States,
or an affiliate of the institution;
(D) a person who has entered into a sponsorship
agreement with an entity described by Paragraph (C) for the purpose
of settling that entity's electronic payment transactions through a
payment card network; or
(E) a payment card network that allows a person
to accept a specific brand of debit or credit card by routing
information and data to settle an electronic payment transaction.
ARTICLE 3. REPEALER
SECTION 3.01. Chapter 151, Finance Code, is repealed.
ARTICLE 4. TRANSITIONAL PROVISIONS
SECTION 4.01. (a) A license issued under Chapter 151,
Finance Code, that is in effect on September 1, 2023, remains in
force as a license under Chapter 152, Finance Code. Not later than
September 1, 2024, a licensee must satisfy the minimum requirements
to maintain a license established by Chapter 152, Finance Code, as
added by this Act.
(b) A contract between a licensee and an authorized delegate
entered into or renewed on or after the effective date of this Act
must satisfy the contract requirements established by Chapter 152,
Finance Code, as added by this Act.
(c) The Finance Commission of Texas may adopt rules to
further provide for the orderly transition to licensing and
regulation under this Act.
ARTICLE 5. EFFECTIVE DATE
SECTION 5.01. This Act takes effect September 1, 2023.
______________________________ ______________________________
President of the Senate Speaker of the House
I hereby certify that S.B. No. 895 passed the Senate on
March 30, 2023, by the following vote: Yeas 30, Nays 1.
______________________________
Secretary of the Senate
I hereby certify that S.B. No. 895 passed the House on
May 16, 2023, by the following vote: Yeas 116, Nays 22,
one present not voting.
______________________________
Chief Clerk of the House
Approved:
______________________________
Date
______________________________
Governor