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

NOTE: There are more recent revisions of this legislation. Read Latest Draft

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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-Introduced.html

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88R11286 TYPED
By: Johnson S.B. No. 895

A BILL TO BE ENTITLED
AN ACT
relating to modernizing the regulation of money services
businesses.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
SECTION 1. Subtitle E, Title 3, Finance Code, is amended by
adding Chapter 151 to read as follows:
CHAPTER 151. REGULATION OF MONEY SERVICES BUSINESSES
SUBCHAPTER A. GENERAL PROVISIONS
Section 151.2000 Short Title. This Act may be cited as the
Texas Money Services Modernization Act.
Section 151.002 Definitions. For purposes of this Act, the
following definitions shall apply:
(a) "Acting in concert" means persons knowingly acting
together with a common goal of jointly acquiring control of a
licensee whether or not pursuant to an express agreement.
(b) "Authorized delegate" means a person a licensee
designates to engage in money transmission on behalf of the
licensee.
(c) "Average daily money transmission liability" means the
amount of the 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 Act for any licensee
required to do so, the given period of time shall be the quarters
ending March 31, June 30, September 30, and December 31 and at any
other date that may be requested during an examination.
(d) "Bank Secrecy Act" means the Bank Secrecy Act, 31 U.S.C.
Section 5311, et seq. and its implementing regulations, as amended
and recodified from time to time.
(e) "Closed loop stored value" means stored value that is
redeemable by the issuer only for goods or services provided by the
issuer or its affiliate or franchisees of the issuer or its
affiliate, except to the extent required by applicable law to be
redeemable in cash for its cash value;
(f) "Commission" means the Finance Commission of Texas.
(g) "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.
(h) "Control" means
(1) (A) the power to vote, directly or indirectly, at least
25 percent of the outstanding voting shares or voting interests of a
licensee or person in control of a licensee;
(B) the power to 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 licensee; or
(C) the power to exercise, directly or
indirectly, a controlling influence over the management or policies
of a licensee or person in control of a licensee.
(2) Rebuttable Presumption of Control.
(A) A person is presumed to exercise a
controlling influence when the person holds the power to vote,
directly or indirectly, at least 10 percent of the outstanding
voting shares or voting interests of a licensee or person in control
of a licensee.
(B) A person presumed to exercise a controlling
influence as defined by this section can rebut the presumption of
control if the person is a passive investor.
(3) For purposes of determining the percentage of a
person controlled by any other person, the person's interest shall
be aggregated with the interest of any other immediate family
member, including the person's spouse, parents, children,
siblings, mothers- and fathers-in law, sons- and daughters-in-law,
brothers- and sisters-in-law, and any other person who shares such
person's home.
(i) "Currency" means the coin and paper money issued by the
United States or another country that is designated as legal tender
and circulates and is customarily used and accepted as a medium of
exchange in the country of issuance.
(j) "Currency exchange" means:
(1) receiving the currency of one government and
exchanging it for the currency of another government; or
(2) receiving a negotiable instrument and exchanging
it for the currency of another government.
(k) "Department" means the Texas Department of Banking.
(l) "Eligible rating" shall mean a credit rating of any of
the three highest rating categories provided by an eligible rating
service, whereby each category may include rating category
modifiers such as "plus" or "minus" for S&P, or the equivalent for
any other eligible rating service. Long-term credit ratings are
deemed eligible if the rating is equal to A- or higher by S&P, or the
equivalent from any other eligible rating service. Short-term
credit ratings are deemed eligible if the rating is equal to or
higher than A-2 or SP-2 by S&P, or the equivalent from any other
eligible rating service. In the event that ratings differ among
eligible rating services, the highest rating shall apply when
determining whether a security bears an eligible rating.
(m) "Eligible rating service" shall mean any Nationally
Recognized Statistical Rating Organization (NRSRO) as defined by
the U.S. Securities and Exchange Commission, and any other
organization designated by the Commissioner by rule or order.
(n) "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, when such bank, credit
union, savings and loan association, trust company, savings
association, savings bank, industrial bank, or industrial loan
company has federally insured deposits.
(o) "In this state" means at a physical location within this
state for a transaction requested in person. For a transaction
requested electronically or by phone, the provider of money
transmission may determine if the person requesting the transaction
is "in this state" by relying on other information provided by the
person regarding the location of the individual's residential
address or a business entity's principal place of business or other
physical address location, and any records associated with the
person that the provider of money transmission may have that
indicate such location, including but not limited to an address
associated with an account.
(p) "Individual" means a natural person.
(q) "Key individual" means any individual ultimately
responsible for establishing or directing policies and procedures
of the licensee, such as an executive officer, manager, director,
or trustee.
(r) "Licensee" means a person licensed under this Act.
(s) "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.
(t) "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 "monetary value" includes:
(1) Stablecoin that is fully backed by sovereign
currency and grants the holder the right to redeem the coin for
sovereign currency from the issuer.
(u) "Money transmission" means any of the following:
(1) Selling or issuing payment instruments to a person
located in this state.
(2) Selling or issuing stored value to a person
located in this state.
(3) Receiving money for transmission from a person
located in this state.
The term includes payroll processing services. The term does not
include the provision solely of online or telecommunications
services or network access.
(v) "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.
(w) "Multistate licensing process" means any 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 licensee, control
determinations, or notice and information requirements for a change
of key individuals.
(x) "Negotiable instrument" has the meaning assigned by
Section 3.104, Business & Commerce Code.
(y) "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, or any
successor or affiliated entity, for the licensing and registration
of persons in financial services industries.
(z) "Outstanding money transmission obligations" shall be
established and extinguished in accordance with applicable state
law and shall mean:
(1) Any payment instrument or stored value issued or
sold by the licensee to a person located in the United States or
reported as sold by an authorized delegate of the licensee to a
person that is located in the United States that has not yet been
paid or refunded by or for the licensee, or escheated in accordance
with applicable abandoned property laws; or
(2) Any money received for transmission by the
licensee or an authorized delegate in the United States from a
person located in the United States that has not been received by
the payee or refunded to the sender, or escheated in accordance with
applicable abandoned property laws.
(3) For purposes of this section, "in the United
States" shall include, to the extent applicable, a person in any
state, territory, or possession of the United States; the District
of Columbia; the Commonwealth of Puerto Rico; or a U.S. military
installation that is located in a foreign country.
(aa) "Passive investor" means a person that:
(1) 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 licensee;
(2) Is not employed by and does not have any managerial
duties of the licensee or person in control of a licensee;
(3) Does not have the power to exercise, directly or
indirectly, a controlling influence over the management or policies
of a licensee or person in control of a licensee; and
(4) Either:
(A) Attests to (1), (2), and (3), in a form and in
a medium prescribed by the Commissioner; or
(B) Commits to the passivity characteristics of
(1), (2), and (3), in a written document.
(bb) "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 negotiable. The term does not
include stored value or any instrument that (1) is redeemable by the
issuer only for goods or services provided by the issuer or its
affiliate or franchisees of the issuer or its affiliate, except to
the extent required by applicable law to be redeemable in cash for
its cash value; or (2) not sold to the public but issued and
distributed as part of a loyalty, rewards, or promotional program.
(cc) "Payroll processing services" means receiving money
for transmission pursuant to a contract with a person to deliver
wages or salaries, make payment of payroll taxes to state and
federal agencies, make payments relating to employee benefit plan],
or make distributions of other authorized deductions from wages or
salaries. The term payroll processing services does not include an
employer performing payroll processing services on its own behalf
or on behalf of its affiliate, or a professional employment
organization subject to regulation under other applicable state
law.
(dd) "Person" means any individual, general partnership,
limited partnership, limited liability company, corporation,
trust, association, joint stock corporation, or other corporate
entity identified by the Commissioner.
(ee) "Receiving money for transmission" or "money received
for transmission" means receiving money or monetary value in the
United States for transmission within or outside the United States
by electronic or other means.
(ff) "Stored value" means monetary value representing a
claim against the issuer evidenced by an electronic or digital
record, and 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, but is not limited to, "prepaid
access" as defined by 31 C.F.R. Section 1010.100, as amended or
recodified from time to time. Notwithstanding the foregoing, the
term "stored value" does not include a payment instrument or 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.
(gg) "Tangible net worth" shall mean the aggregate assets of
a licensee excluding all intangible assets, less liabilities, as
determined in accordance with United States generally accepted
accounting principles.
(hh) "Unsafe or unsound act or practice" means a practice of
or conduct by a licensee or an authorized delegate of the licensee
that creates the likelihood of material loss, insolvency, or
dissipation of the licensee's assets, or that otherwise materially
prejudices the interests of the licensee or the licensee's
customers.
Section 151.003 Exemptions. This Act does not apply to:
(a) An operator of a payment system to the extent that it
provides processing, clearing, or settlement services, between or
among persons exempted by this section or licensees, in connection
with wire transfers, credit card transactions, debit card
transactions, stored-value transactions, automated clearing house
transfers, or similar funds transfers.
(b) 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 itself, provided to the payor by the
payee, provided that:
(1) 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;
(2) the payee holds the agent out to the public as
accepting payments for goods or services on the payee's behalf; and
(3) payment for the goods and services is treated as
received by the payee upon receipt by the agent so that 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.
(c) A person that acts as an intermediary by processing
payments between an entity that has directly incurred an
outstanding money transmission obligation to a sender, and the
sender's designated recipient, provided that the entity:
(1) is properly licensed or exempt from licensing
requirements under this Act;
(2) 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
(3) bears sole responsibility to satisfy the
outstanding money transmission obligation to the sender, including
the obligation to make the sender whole in connection with any
failure to transmit the funds to the sender's designated recipient.
(d) The United States or a department, agency, or
instrumentality thereof, or its agent.
(e) Money transmission by the United States Postal Service
or by an agent of the United States Postal Service.
(f) A state, county, city, or any other governmental agency
or governmental subdivision or instrumentality of a state, or its
agent.
(g) A federally insured depository financial institution,
bank holding company, office of an international banking
corporation, foreign bank that establishes a federal branch
pursuant to the International Bank Act, 12 U.S.C. Section 3102, as
amended or recodified from time to time, corporation organized
pursuant to the Bank Service Corporation Act, 12 U.S.C. Sections
1861-1867, as amended or recodified from time to time, or
corporation organized under the Edge Act, 12 U.S.C. Sections
611-633, as amended or recodified from time to time, under the laws
of a state or the United States.
(h) A trust company, as defined by Section 187.001(a), that
is organized under the laws of this state.
(i) 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 thereof, or on behalf of a state or governmental
subdivision, agency, or instrumentality thereof.
(j) A board of trade designated as a contract market under
the federal Commodity Exchange Act, 7 U.S.C. Sections 1-25, as
amended or recodified from time to time, or a person that, 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 such a board.
(k) A registered futures commission merchant under the
federal commodities laws to the extent of its operation as such a
merchant.
(l) A person registered as a securities broker-dealer under
federal or state securities laws to the extent of its operation as
such a broker-dealer.
(m) An individual employed by a licensee, authorized
delegate, or any person exempted from the licensing requirements of
the Act 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.
(n) A person expressly appointed as a third party service
provider to or agent of an entity exempt under Section 151.003(g),
solely to the extent that:
(1) such service provider or agent is engaging in
money transmission on behalf of and pursuant to a written agreement
with the exempt entity that sets forth the specific functions that
the service provider or agent is to perform; and
(2) 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 upon receipt of the
purchaser's or holder's money or monetary value by the service
provider or agent.
(o) A person exempt by regulation or order if the
Commissioner finds such exemption to be in the public interest and
that the regulation of such person is not necessary for the purposes
of this Act.
Section 151.004 Authority to Require Demonstration of
Exemption. The Commissioner may require that any person claiming to
be exempt from licensing pursuant to Section 151.003 provide
information and documentation to the Commissioner demonstrating
that it qualifies for any claimed exemption.
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Section 151.101 Administration.
(a) The department shall administer this chapter. The
commission may adopt rules to administer and enforce this chapter,
including rules necessary or appropriate to:
(1) implement and clarify this chapter; and
(2) recover the cost of maintaining and operating the
department and the cost of administering and enforcing this chapter
and other applicable law by imposing and collecting proportionate
and equitable fees and costs for notices, applications,
examinations, investigations, and other actions required to
achieve the purposes of this chap
(b) 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.
Section 151.102 Purpose. The purpose of this Act is to
protect the interests of purchasers of money services and the
public, preserve and protect the safety and soundness of money
services businesses, and protect against drug trafficking,
terrorist funding, and money laundering, structuring, or related
financial crime.
Section 151.103 Implementation.
(a) In order to carry out the purposes of this Act, the
Commissioner may, subject to the provisions of Section 151.105(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 Act;
(2) Use, hire, contract, or employ analytical systems,
methods, or software to examine or investigate any person subject
to this Act.
(3) Accept, from other state or federal government
agencies or officials, licensing, examination, or investigation
reports made by such 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 licensee and incorporate the audit report in any
report of examination or investigation.
Section 151.104 Commissioner's General Authority.
(a) Each power granted to the commissioner under this
chapter is in addition to, and not in limitation of, each other
power granted under this chapter. The fact that the commissioner
possesses, or has exercised, a power under a provision of this
chapter does not preclude the commissioner from exercising a power
under any other provision of this chapter.
(b) Each power granted to the commissioner under this
chapter is in addition to, and not in limitation of, powers granted
to the commissioner under other law. The fact that the commissioner
possesses, or has exercised, a power under any other provision of
law does not preclude the commissioner from exercising any power
under this chapter. The fact that the commissioner possesses, or
has exercised, a power under a provision of this chapter does not
preclude the commissioner from exercising a power under any other
law.
(c) The commissioner may impose on any 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.
Section 151.105 Confidentiality.
(a) Except as otherwise provided in Subsection (b), all
information or reports obtained by the Commissioner from an
applicant, licensee, or authorized delegate, and 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, or financial statements, balance sheets,
or authorized delegate information, are confidential and are not
subject to disclosure under the Public Information Act.
(b) The Commissioner may disclose information not otherwise
subject to disclosure under Subsection (a) to representatives of
state or federal agencies who promise in a record that they will
maintain the confidentiality of the information or where the
Commissioner finds that the release is reasonably necessary for the
protection and interest of the public in accordance with the Public
Information Act.
(c) This Section 151.105 does not prohibit the Commissioner
from disclosing to the public a list of all licensees or the
aggregated financial or transactional data concerning those
licensees.
(d) Information contained in the records of the Department
that is not confidential and may be made available to the public
either on the Department's website, upon receipt by the Department
of a written request, or in NMLS shall include:
(1) The name, business address, telephone number, and
unique identifier of a licensee;
(2) The business address of a licensee's registered
agent for service;
(3) The name, business address, and telephone number
of all authorized delegates;
(4) The terms of or a copy of any bond filed by a
licensee, provided that confidential information, including, but
not limited to, prices and fees for such bond is redacted;
(5) Copies of any non-confidential final orders of the
Department relating to any violation of this Act or regulations
implementing this Act; and
(6) Imposition of an administrative fine or penalty
under this Act.
Section 151.106 Supervision.
(a) The Commissioner may conduct an examination or
investigation of a licensee or authorized delegate or otherwise
take independent action authorized by this Act or by a rule adopted
or order issued under this Act as reasonably necessary or
appropriate to administer and enforce this Act, regulations
implementing this Act, and other applicable law, including the Bank
Secrecy Act and the USA PATRIOT ACT. The Commissioner may:
(1) conduct an examination either 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, which on
being accepted is considered for all purposes as an official report
of the Commissioner; and
(4) summon and examine under oath a key individual or
employee of a licensee or authorized delegate and require the
person to produce records regarding any matter related to the
condition and business of the licensee or authorized delegate.
(b) A 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. The records must be provided at the location and in the
format specified by the Commissioner, provided, the Commissioner
may utilize multistate record production standards and examination
procedures when such standards will reasonably achieve the
requirements of this section.
(c) Unless otherwise directed by the Commissioner, a
licensee shall pay all costs reasonably incurred in connection with
an examination of the licensee or the licensee's authorized
delegates.
Section 151.107 Networked Supervision.
(a) To efficiently and effectively administer and enforce
this Act 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 thereof for all licensees that hold
licenses in this state and other states. As a participant in
multistate supervision, the Commissioner will:
(1) cooperate, coordinate, and share information with
other state and federal regulators in accordance with Section
151.105 of this Act;
(2) enter into written cooperation, coordination, or
information-sharing contracts or agreements with organizations the
membership of which is made up of state or federal governmental
agencies; and
(3) cooperate, coordinate, and share information with
organizations the membership of which is made up of state or federal
governmental agencies, provided that the organizations agree in
writing to maintain the confidentiality and security of the shared
information in accordance with Section 151.105 of this Act.
(b) 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 Act or a rule adopted or order
issued under this Act to enforce compliance with applicable state
or federal law.
(c) A joint examination or investigation, or acceptance of
an examination or investigation report, does not waive an
examination assessment provided for in this Act.
Section 151.108 Relationship to Federal Law.
(a) In the event state money transmission jurisdiction is
conditioned on a federal law, any inconsistencies between a
provision of this Act 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 inconsistencies between this Act and
a federal law that governs pursuant to Subsection (a), the
Commissioner may provide interpretive guidance that:
(1) identifies the inconsistency; and
(2) identifies the appropriate means of compliance
with federal law.
Section 151.109 Consent To Service Of Process. A 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.
SUBCHAPTER C. MONEY SERVICES LICENSES
Section 151.201 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 Act.
(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:
(1) A person that is an authorized delegate of a person
licensed under this Act acting within the scope of authority
conferred by a written contract with the licensee; or
(2) A person that is exempt pursuant to Section
151.003 and does not engage in money transmission outside the scope
of such exemption.
(3) A person that has been granted an exemption under
Subsection (e).
(d) A license issued under Section 151.206 is not
transferable or assignable.
(e) On application and a finding that the exemption is in
the public interest, the commissioner may exempt a person that:
(1) incidentally engages in the money transmission
business only to the extent reasonable and necessary to accomplish
a primary business objective unrelated to the money transmission
business;
(2) does not advertise or offer money transmission
services 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.
Section 151.202 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:
(1) is licensed under this subchapter;
(2) is an authorized delegate of a person licensed for
money transmission under this subchapter;
(3) is excluded under Section 151.003; or
(4) has been granted an exemption under Subsection
(e).
(b) For purposes of this chapter, a person engages in the
business of currency exchange if the person exchanges currency and
receives compensation or expects to receive compensation, directly
or indirectly, for the currency exchange.
(c) A licensee may engage in the currency exchange business
at one or more locations in this state owned, directly or indirectly
by the licensee, under a single license.
(d) A license issued under Section 151.206 is not
transferable or assignable.
(e) On application and a 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, provided that a person is not
eligible for the exemption if:
(1) the value of the goods or services purchased in a
single transaction exceeds $10,000;
(2) the change given or made as a result of the
transaction exceeds $100;
(3) an attempt is made to structure a transaction in a
manner that evades the licensing requirements of this subchapter or
avoids using a business licensed 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).
Section 151.203 Consistent State Licensing.
(a) The commissioner may require that a person submit
through 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 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 151.204(a)(10) or Section 151.204(b)(11).
Section 151.204 Application for a Money Services License.
(a) Applicants for a license shall apply in a form and in a
medium as prescribed by the Commissioner. Each such form shall
contain content as set forth by rule, regulation, 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 Act and maintain consistency with NMLS
licensing standards and practices. The application must state or
contain, as applicable:
(1) the legal name and residential and business
addresses of the applicant and any fictitious or trade name used by
the applicant in conducting its 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 next preceding the submission
of the application;
(3) a description of any money transmission or
currency exchange previously provided by the applicant and the
money transmission or currency exchange that the applicant seeks to
provide in this state;
(4) if applicable, a list of the applicant's proposed
authorized delegates and the locations in this state where the
applicant and its authorized delegates propose to engage in money
transmission;
(5) a list of other states in which the applicant is
licensed to engage in money transmission, currency exchange, or
both 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 licensee or a person in
control of a licensee;
(7) a sample form of contract for authorized
delegates, if applicable;
(8) a sample form of payment instrument or stored
value, as 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) 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) if applicable, a certificate of good standing from
the state or country in which the applicant is incorporated or
formed;
(3) a brief description of the structure or
organization of the applicant, including any parents or
subsidiaries of the applicant, and whether any parents or
subsidiaries are publicly traded;
(4) the legal name, any fictitious or trade name, all
business and residential addresses, and the employment, as
applicable, in the 10-year period next preceding the submission of
the application of each key individual and person in control of the
applicant;
(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 applying 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 next preceding the
submission of the application or, if applying for a currency
exchange license or if otherwise determined to be acceptable to the
Commissioner, certified unaudited financial statements for the
most recent fiscal year or other period acceptable to the
Commissioner;
(7) a certified copy of unaudited financial statements
of the applicant for the most recent fiscal quarter;
(8) 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 of the federal
Securities Exchange Act of 1934, 15 U.S.C. Section 78m, as amended
or recodified from time to time;
(9) if the applicant is a wholly owned subsidiary of:
(A) 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 of the U.S.
Securities Exchange Act of 1934, 15 U.S.C. Section 78m, as amended
or recodified from time to time; or
(B) a corporation publicly traded outside the
United States, a copy of similar documentation filed with the
regulator of the parent corporation's domicile outside the United
States;
(10) the name and address of the applicant's
registered agent in this state; and
(11) any other information the Commissioner
reasonably requires with respect to the applicant.
(c) A nonrefundable application fee in the amount
established by commission rule.
(d) The Commissioner may waive one or more requirements of
Sections 151.204(a) and (b) or permit an applicant to submit other
information in lieu of the required information.
Section 151.205 Information Requirements for Certain
Individuals.
(a) Any individual in control of a licensee or applicant,
any individual that seeks to acquire control of a licensee, and each
key individual shall furnish to the Commissioner the following
items:
(1) The individual's 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 last ten years.
(2) Personal history and experience in a form and in a
medium prescribed by the Commissioner, to obtain the following:
(A) An independent credit report from a consumer
reporting agency unless the individual does not have a Social
Security number, in which case, this requirement shall be waived;
(B) Information related to any criminal
convictions or pending charges; and
(C) Information related to any regulatory or
administrative action and any civil litigation involving claims of
fraud, misrepresentation, conversion, mismanagement of funds,
breach of fiduciary duty, or breach of contract.
(b) If the individual has resided outside of the United
States at any time in the last ten years, the individual shall also
provide an investigative background report prepared by an
independent search firm that meets the following requirements:
(1) At a minimum, the search firm shall:
(A) Demonstrate that it has sufficient
knowledge, resources, and employs accepted and reasonable
methodologies to conduct the research of the background report; and
(B) Not be affiliated with or have an interest
with the individual it is researching.
(2) At a minimum, the investigative background report
shall be written in the English language and shall contain the
following:
(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 such 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 ten
years, including, but not limited to, 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 but not limited to, money transmission,
securities, banking, insurance, and mortgage-related industries.
Section 151.206 Issuance of License.
(a) When an application for an original license under this
Act appears to include all the items and addresses all of the
matters that are required, the application is complete and the
Commissioner shall promptly notify the applicant in a record of the
date on which the application is determined to be complete, and:
(1) The Commissioner shall approve or deny the
application within 120 days after the completion date; or
(2) if the application is not approved or denied
within 120 days after the completion date:
(A) the application is approved; and
(B) the license takes effect as of the first
business day after expiration of the 120-day period.
(C) The Commissioner may for good cause extend
the application period.
(b) A determination by the Commissioner that an application
is complete and is accepted for processing means only that the
application, on its face, appears to include all of the items,
including the Criminal Background Check response from the FBI, and
address all of the matters that are required, and is not an
assessment of the substance of the application or of the
sufficiency of the information provided.
(c) 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. The
Commissioner shall issue a license to an applicant under this
section if the Commissioner finds that all of the following
conditions have been fulfilled:
(1) The applicant has complied with Sections 151.204
and 151.205; and
(2) the financial condition and responsibility,
financial and business experience, competence, character, and
general fitness of the applicant; and the competence, experience,
character, and general fitness of the key individuals and persons
in control of the applicant indicate that it is in the interest of
the public to permit the applicant to engage in money transmission,
currency exchange, or both.
(d) If an applicant avails itself or is otherwise subject to
a multistate licensing process:
(1) the Commissioner may accept the investigation
results of a lead investigative state for the purpose of Section
151.206(c) if the lead investigative state has sufficient staffing,
expertise, and minimum standards; or
(2) if Texas is a lead investigative state, the
Commissioner may investigate the applicant pursuant to Section
151.206(c) and the timeframes established by agreement through the
multistate licensing process, provided however, that in no case
shall such timeframe be noncompliant with the application period in
Section 151.206(a)(1).
(e) If the commissioner finds that the applicant for any
reason fails to possess 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 151.801.
(f) The initial license term shall begin on the day the
application is approved.
Section 151.207 Maintenance of License.
(a) If a licensee does not continue to meet the
qualifications or satisfy the requirements that apply to an
applicant for a new money transmission license, the Commissioner
may suspend or revoke the licensee's license in accordance with the
procedures established by this Act or other applicable state law
for such suspension or revocation.
(b) An applicant for a money transmission license must
demonstrate that it meets or will meet, and a money transmission
licensee must at all times meet, the requirements in Sections
151.701, 151.702, 151.704, and 151.705 of this Act.
(c) In addition to complying with Subsection (a), a license
holder must annually:
(1) pay a license fee in an amount established by
commission rule; and
(2) submit a report that is under oath, is in the form
and medium required by the commissioner, and contains:
(A) if the license is a money transmission
license, an audited unconsolidated financial statement dated as of
the last day of the license holder's fiscal year that ended in the
immediately preceding calendar year;
(B) if the license is a currency exchange
license, a financial statement, audited or unaudited, dated as of
the last day of the license holder'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 the security, net worth, permissible investments, and
other requirements the license holder must satisfy and whether the
license holder continues to meet the qualifications and
requirements for licensure.
(d) If the department does not receive a license holder's
annual license fee and complete annual report on or before the due
date prescribed by the commissioner under this section, the
commissioner shall notify the license holder in writing that:
(1) the license holder shall submit the report and pay
the license fee not later than the 45th day after the due date
prescribed by the commissioner; and
(2) the license holder must pay a late fee, in an
amount that is established by commission rule and not subject to
appeal, for each business day after the report due date specified by
the commissioner that the commissioner does not receive the
completed report and license fee.
(e) If the license holder fails to submit the completed
annual report and pay the annual license fee and any late fee due
within the time prescribed by Subsection (d)(1), the license
expires, and the license holder must cease and desist from engaging
in the business of money transmission or currency exchange, as
applicable, as of that date. The expiration of a license is not
subject to appeal.
(f) On timely receipt of a license holder'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 license holder. 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 151.803.
(g) 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.
(h) The holder or principal of or the person in control of
the holder of an expired license, or the holder or principal of or
person in control of the holder of a license surrendered under
Section 151.208, that wishes to conduct activities for which a
license is required under this chapter must file a new license
application and satisfy all requirements for licensure that apply
at the time the new application is filed.
Section 151.208 Surrender of License.
(a) A 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 licensee shall surrender the licensee's license if the
licensee becomes ineligible for a license issued under this
chapter.
(c) The surrender of a license does not reduce or eliminate
a 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, to assess an administrative penalty, to order
the payment of restitution, or to exercise any other authority
under this chapter. Further, the surrender of a license does not
release the security required of the licensee under Section 151.702
or 151.703.
Section 151.209 Refunds.
(a) A fee or cost paid under this chapter is not refundable.
SUBCHAPTER E. ACQUISITION OF CONTROL AND CHANGE OF KEY INDIVIDUAL
Section 151.301 Acquisition of Control.
(a) Any person, or group of persons acting in concert,
seeking to acquire control of a licensee shall obtain the written
approval of the Commissioner prior to acquiring control. An
individual is not deemed to acquire control of a licensee and is not
subject to these acquisition of control provisions when 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 licensee shall, in cooperation with the
licensee:
(1) Submit an application in a form and in a medium
prescribed by the Commissioner; and
(2) Submit a nonrefundable fee in the amount
established by commission rule.
(c) Upon request, the Commissioner may permit a licensee or
the person, or group of persons acting in concert, to submit some or
all information required by the Commissioner pursuant to Subsection
(b)(1) without using NMLS.
(d) The application required by Subsection (b)(1) shall
include information required by Section 151.205 for any new key
individuals that have not previously completed the requirements of
Section 151.205 for a 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 shall be considered
complete and the Commissioner shall promptly notify the applicant
in a record of the date on which the application was determined to
be complete and:
(1) The Commissioner shall approve or deny the
application within 60 days after the completion date; or
(2) if the application is not approved or denied
within 60 days after the completion date:
(A) the application is approved; and
(B) the person, or group of persons acting in
concert, are not prohibited from acquiring control.
(3) The Commissioner may for good cause extend the
application period.
(f) A determination by the Commissioner that an application
is complete and is accepted for processing means only that the
application, on its face, appears to include all of the items and
address all of the matters that are required, and is not an
assessment of the substance of the application or of the
sufficiency of the information provided.
(g) 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. The
Commissioner shall approve an acquisition of control pursuant to
this section if the Commissioner finds that all of the following
conditions have been fulfilled:
(1) The requirements of Subsections (b) and (d) have
been met, as applicable; and
(2) 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 the competence,
experience, character, and general fitness of the key individuals
and persons that would be in control of the licensee after the
acquisition of control indicate that it is in the interest of the
public to permit the person, or group of persons acting in concert,
to control the licensee.
(h) If an applicant avails itself or is otherwise subject to
a multistate licensing process:
(1) the Commissioner may accept the investigation
results of a lead investigative state for the purpose of Subsection
(g) if the lead investigative state has sufficient staffing,
expertise, and minimum standards; or
(2) if Texas is a lead investigative state, the
Commissioner may investigate the applicant pursuant to Subsection
(g) and the timeframes established by agreement through the
multistate licensing process.
(i) If the commissioner determines that the proposed person
in control fails to meet the qualifications, standards, and
requirements of this chapter, the commissioner shall inform the
license holder and the proposed person in control in writing that
the application is denied and state the reasons for the denial. The
license holder 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 151.801.
(j) The requirements of Subsections (a) and (b) do not apply
to any of the following:
(1) A person that 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 licensee or a person in
control of a licensee;
(2) A person that acquires control of a licensee by
devise or descent;
(3) A person that acquires control of a 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 that is exempt under Section 151.003(g);
(5) A person that the Commissioner determines is not
subject to Subsection (a) based on the public interest;
(6) A public offering of securities of a licensee or a
person in control of a licensee; or
(7) An internal reorganization of a person in control
of the licensee where the ultimate person in control of the licensee
remains the same.
(k) Persons in Subsections (j)(2), (3), (4), (6), (7) in
cooperation with the licensee shall notify the Commissioner within
15 days after the acquisition of control.
(l) Streamlined Acquisition of Control
(1) The requirements of Subsections (a) and (b) do not
apply to a person that has complied with and received approval to
engage in money transmission under this Act or was identified as a
person in control in a prior application filed with and approved by
the Commissioner or by an MSB accredited state pursuant to a
multistate licensing process, provided that:
(A) the person has not had a license revoked or
suspended or controlled a licensee that has had a license revoked or
suspended while the person was in control of the licensee in the
previous 5-years;
(B) if the person is a licensee, the person is
well managed and has received at least a satisfactory rating for
compliance at its most recent examination by an MSB accredited
state if such rating was given;
(C) the licensee to be acquired is projected to
meet the requirements of Sections 151.701, 151.702, and 151.705 of
this Act after the acquisition of control is completed, and if the
person acquiring control is a licensee, that licensee is also
projected to meet the requirements of Sections 151.701, 151.702,
and 151.705 of this Act after the acquisition of control is
completed;
(D) the licensee to be acquired will not
implement any material changes to its business plan as a result of
the acquisition of control, and if the person acquiring control is a
licensee, that licensee also will not implement any material
changes to its business plan as a result of the acquisition of
control; and
(E) the person provides notice of the acquisition
in cooperation with the licensee and attests to Subsections
(k)(1)(A), (B), (C), and (D) in a form and in a medium prescribed by
the Commissioner.
(2) If the notice is not disapproved within 30 days
after the date on which the notice was determined to be complete,
the notice is deemed approved.
(m) Before filing an application for approval to acquire
control of a 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 licensee upon consummation of
a proposed transaction. If the Commissioner determines that the
person would not be a person in control of a licensee, the proposed
Person and transaction is not subject to the requirements of
Subsections (a) and (b).
(n) If a multistate licensing process includes a
determination pursuant to Subsection (m) and an applicant avails
itself or is otherwise 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 (m); or
(2) If state is a lead investigative state, the
Commissioner may investigate the applicant pursuant to Subsection
(m) and the timeframes established by agreement through the
multistate licensing process,
Section 151.302 Notice and Information Requirements for a
Change of Key Individuals.
(a) A licensee adding or replacing any key individual shall:
(1) Provide notice in a manner prescribed by the
Commissioner within 15 days after the effective date of the key
individual's appointment; and
(2) Provide information as required by Section 151.205
within 45 days of the effective date.
(b) Within 90 days of the date on which the notice provided
pursuant to Subsection (a) was determined to be complete, the
Commissioner may issue a notice of disapproval of a key individual
if the competence, experience, character, or integrity of the
individual would not be in the best interests of the public or the
customers of the licensee to permit the individual to be a key
individual of such licensee.
(c) A notice of disapproval shall contain a statement of the
basis for disapproval and shall be sent to the licensee and the
disapproved individual. A 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 151.901.
(d) If the notice provided pursuant to Subsection (a) is not
disapproved within 90 days after the date on which the notice was
determined to be complete, the key individual is deemed approved.
(e) If a multistate licensing process includes a key
individual notice review and disapproval process pursuant to this
section and the licensee avails itself or is otherwise 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 purpose of this section;
or
(2) if Texas is a lead investigative state, the
Commissioner may investigate the applicant pursuant to Subsection
(b) and the timeframes established by agreement through the
multistate licensing process.
SUBCHAPTER F. REPORTING AND RECORDS
Section 151.401 Report of Condition.
(a) Each money transmission licensee shall submit a report
of condition within 45 days of the end of the calendar quarter, or
within any extended time as the Commissioner may prescribe.
(b) The report of condition shall include:
(1) Financial information at the licensee level;
(2) Nationwide and state-specific money transmission
transaction information in every jurisdiction in the United States
where the licensee is licensed to engage in money transmission;
(3) Permissible investments report;
(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. The Commissioner may utilize
NMLS for the submission of the report required by this section and
is authorized to change or update as necessary the requirements of
this section to carry out the purposes of this Act and maintain
consistency with NMLS reporting.
(c) The information required by Subsection (b)(4) shall
only be included in a report of condition submitted within 45 days
of the end of the fourth calendar quarter.
Section 151.402 Currency Exchange Report
(a) Each currency exchange licensee shall submit a
quarterly interim financial statement and transaction report that
reflects the licensee's financial condition and currency exchange
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 last day of the calendar quarter; and
(b) any other report required by rule of the
commission or reasonably requested by the commissioner to determine
compliance with this chapter.
(c) A 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.
(d) 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.
Section 151.403 Financial Statements.
(a) Each licensee shall, within 90 days after the end
of each fiscal year, or within any extended time as the Commissioner
may prescribe, file with the Commissioner:
(1) If the licensee holds a money transmission
license, an audited unconsolidated financial statement of the
licensee for the fiscal year prepared in accordance with United
States generally accepted accounting principles;
(2) If the licensee holds a currency exchange
license, 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) The audited unconsolidated financial statements
shall be prepared by an independent certified public accountant or
independent public accountant who is satisfactory to the
Commissioner;
(c) The audited financial statements shall 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 or opinion is qualified, the Commissioner may order the
licensee to take any action as the Commissioner may find necessary
to enable the independent or certified public accountant or
independent public accountant to remove the qualification.
Section 151.404 Authorized Delegate Reporting.
(a) Each licensee shall submit a report of authorized
delegates within 45 days of the end of the calendar quarter. The
Commissioner may utilize NMLS for the submission of the report
required by this section provided that such functionality is
consistent with the requirements of this section.
(b) The authorized delegate report shall include, at a
minimum, each authorized delegate's:
(1) Company legal name;
(2) Taxpayer employer identification number;
(3) Principal provider identifier;
(4) Physical address;
(5) Mailing address;
(6) Any business conducted in other states;
(7) Any fictitious or trade name;
(8) Contact person name, phone number, and email
(9) Start date as licensee's authorized
delegate;
(10) End date acting as licensee's authorized
delegate, if applicable; and
(11) Any other information the Commissioner
reasonably requires with respect to the authorized delegate.
Section 151.405 Reports of Certain Events.
(a) A licensee shall file a report with the
Commissioner within one business day after the licensee has reason
to know of the occurrence of any of the following events:
(1) the filing of a petition by or against the
licensee under the United States Bankruptcy Code, 11 U.S.C. Section
101-110, as amended or recodified from time to time, 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 its dissolution or
reorganization, or the making of a general assignment for the
benefit of its creditors; or
(3) the commencement of a proceeding to revoke or
suspend its license in a state or country in which the licensee
engages in business or is licensed.
(b) A licensee shall file a report with the
Commissioner within three business day after the licensee has
reason to know of the occurrence of any of the following events:
(1) a charge or conviction of the licensee or of a
key individual or person in control of the licensee for a felony; or
(2) a charge or conviction of an authorized
delegate for a felony.
Section 151.406 Bank Secrecy Act Reports.
A licensee and an authorized delegate shall file all reports
required by federal currency reporting, record keeping, and
suspicious activity reporting requirements as set forth in the Bank
Secrecy Act and other federal and state laws pertaining to money
laundering. The timely filing of a complete and accurate report
required under this section with the appropriate federal agency is
deemed compliant with the requirements of this section.
Section 151.407 Records.
(a) Licensee shall maintain the following records, for
determining its compliance with this Act for at least five years:
(1) a record of each outstanding money
transmission obligation sold;
(2) a record of each currency exchange
transaction;
(3) a general ledger posted at least monthly
containing all asset, liability, capital, income, and expense
accounts;
(4) bank statements and bank reconciliation
records;
(5) records of outstanding money services
obligations;
(6) records of each outstanding money services
obligation paid within the five-year period;
(7) a list of the last known names and addresses
of all of the licensee's authorized delegates; and
(8) any other records the Commissioner
reasonably requires by rule.
(b) The items specified in Subsection (a)(1) may be
maintained in any form of record.
(c) Records specified in Subsection (a) may be
maintained outside this state if they are made accessible to the
Commissioner on seven business-days' notice that is sent in a
record.
(d) All records maintained by the licensee as required
in Subsections (a)-(c) are open to inspection by the Commissioner
pursuant to Section 151.106(a).
SUBCHAPTER G. AUTHORIZED DELEGATES
Section 151.501 Liability of 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 in accordance with
Section 151.502.
Section 151.502 Relationship Between Licensee and
Authorized Delegate.
(a) In this section, "remit" means to make direct
payments of money to a licensee or its representative authorized to
receive money or to deposit money in a bank in an account specified
by the licensee.
(b) Before a licensee is authorized to conduct
business through an authorized delegate or allows 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 delegates comply with applicable state and
federal law;
(2) enter into a written contract 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 and will likely comply with
applicable state and federal law.
(c) An authorized delegate must operate in full
compliance with this Act.
(d) The written contract required by Subsection (b)
must be signed by the licensee and the authorized delegate and, at a
minimum, must:
(1) appoint the person signing the contract as
the licensee's authorized delegate with the authority to conduct
money transmission on behalf of the licensee;
(2) set forth 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, including this Act
and regulations implementing this Act, relevant provisions of the
Bank Secrecy Act and the USA 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 Act or regulations
implementing this Act, 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 the licensee's license is suspended, revoked,
surrendered, or expired, the licensee must, within five (5)
business days, 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.
Upon suspension, revocation, surrender, or expiration of a license,
applicable authorized delegates shall immediately cease to provide
money transmission as an authorized delegate of the licensee.
(f) An authorized delegate of a licensee holds in
trust for the benefit of the licensee all money net of fees received
from money transmission. If any 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 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 licensee.
Section 151.503 Disclosure Requirements
(a) A 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 licensee receiving currency or an instrument
payable in currency for transmission must comply with Chapter 278.
Section 151.504 Unauthorized Activities
A person shall not engage in the business of money
transmission on behalf of a person not licensed under this Act or
not exempt pursuant to Section 151.003 of this Act. A person that
engages in such activity provides money transmission to the same
extent as if the person were a 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 H. TIMELY TRANSMISSION, REFUNDS, AND DISCLOSURES
Section 151.601 Timely Transmission.
(a) Every licensee shall forward all money received
for transmission in accordance with the terms of the agreement
between the licensee and the sender unless the licensee has a
reasonable belief or a reasonable basis to believe that the sender
may be a victim of fraud or that a crime or violation of law, rule,
or regulation has occurred, is occurring, or may occur.
(b) If a licensee fails to forward money received for
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.
Section 151.602 Refunds.
(a) This section does not apply to:
(1) money received for transmission subject to
the federal Remittance Rule (12 C.F.R. Part 1005, Subpart B), as
amended or recodified from time to time; or
(2) money received for transmission pursuant to a
written agreement between the licensee and payee to process
payments for goods or services provided by the payee.
(b) Every licensee shall refund to the sender within
10 days of receipt of the sender's written request for a refund of
any and all money received for transmission unless any of the
following occurs:
(1) The money has been forwarded within 10 days
of 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
within 10 days of the date on which the money was received for
transmission;
(3) The agreement between the licensee and the
sender instructs the licensee to forward the money at a time that is
beyond 10 days of the date on which the money was received for
transmission. If funds have not yet been forwarded in accordance
with the terms of the agreement between the licensee and the sender,
the licensee shall issue a refund in accordance with the other
provisions of this section; or
(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.
(5) The refund request does not enable the
licensee to:
(A) Identify the sender's name and address
or telephone number; or,
(B) Identify the particular transaction to
be refunded in the event the sender has multiple transactions
outstanding.
Section 151.603 Receipts.
(a) This section does not apply to:
(1) Money received for transmission subject to
the federal Remittance Rule (12 C.F.R. Part 1005, Subpart B), as
amended or recodified from time to time;
(2) money received for transmission that is not
primarily for personal, family or household purposes;
(3) money received for transmission pursuant to a
written agreement between the licensee and payee to process
payments for goods or services provided by the payee; or
(4) payroll processing services.
(b) For purposes of this section "receipt" means a
paper receipt, electronic record or other written confirmation. For
a transaction conducted in person, the 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.
(c) Every licensee or its authorized delegate shall
provide the sender a receipt for money received for transmission.
(1) The receipt shall contain the following
information, as applicable:
(A) The name of the sender;
(B) The name of the designated recipient;
(C) The date of the transaction;
(D) The unique transaction or
identification number;
(E) The name of the licensee, NMLS Unique
ID, the licensee's business address, and the licensee's customer
service telephone number;
(F) The amount of the transaction in United
States dollars;
(G) Any fee charged by the licensee to the
sender for the transaction; and
(H) Any taxes collected by the licensee
from the sender for the transaction.
(2) The receipt required by this section shall be
in English and in the language principally used by the licensee or
authorized delegate to advertise, solicit, or negotiate, either
orally or in writing, for a transaction conducted in person,
electronically or by phone, if other than English.
Section 151.604 Disclosures for Payroll Processing
Services.
(a) A 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 paystubs or an
equivalent statement to workers.
(b) Subsection (a) does not apply to a 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 I. PRUDENTIAL STANDARDS.
Section 151.701 Net Worth.
(a) A money transmission licensee under this Act shall
maintain at all times a tangible net worth of the greater of
$100,000 or 3 percent of total assets for the first $100 million, 2
percent of additional assets for $100 million to $1 billion, and 0.5
percent of additional assets for over $1 billion.
(b) Tangible net worth must be demonstrated at initial
application by the applicant's most recent audited or unaudited
financial statements pursuant to Section 151.204(b)(6).
(c) Notwithstanding the foregoing provisions of this
section, the Commissioner shall have the authority, for good cause
shown, to exempt, in-part or in whole, from the requirements of this
section any applicant or licensee.
Section 151.702 Security for Money Transmission.
(a) An applicant for a money transmission license must
provide, and a licensee at all times must maintain, security
consisting of a surety bond in a form satisfactory to the
Commissioner or, with the Commissioner's approval, a deposit
instead of a bond in accordance with this section.
(b) The amount of the required security shall be:
(1) the greater of $100,000 or an amount equal to
one hundred percent of the licensee's average daily money
transmission liability in this state calculated for the most
recently completed three-month period, up to a maximum of $500,000;
or
(2) in the event that the licensee's tangible net
worth exceeds 10% of total assets, the licensee shall maintain a
surety bond of $100,000.
(c) A licensee that maintains a bond in the maximum
amount provided for in Subsections (b)(1) or (2), as applicable
shall not be required to calculate its average daily money
transmission liability in this state for purposes of this section.
(d) A licensee may exceed the maximum required bond
amount pursuant to Section 151.705(a)(5).
Section 151.703 Security for Currency Exchange.
(a) An applicant for a currency exchange license must
provide and a currency exchange licensee must maintain at all times
security in the amount applicable to the applicant or licensee
under this section.
(b) An applicant must provide and a licensee must
maintain security in the amount of $2,500 if the applicant will
conduct or 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 (d), if
Subsection (b) does not apply to:
(1) the applicant, the applicant must provide
security in the amount that is the greater of:
(A) $2,500; or
(B) an amount equal to one percent of the
applicant's projected total dollar volume of currency exchange
business in this state for the first year of licensure; or
(2) the licensee, the licensee must maintain
security in the amount that is the greater of:
(A) $2,500; or
(B) 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) The maximum amount of security that may be
required under Subsection (c) is $1 million.
Section 151.704 Additional Requirements for Security.
(a) Subsections (b)-(i) of this section define
additional requirements applicable to the security provided
pursuant to Sections 151.702 and 151.703.
(b) The security 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 the license holder'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.
(c) 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.
(d) 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 license holder.
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 license holder, provided that a
surety may not be considered an interested, aggrieved, or affected
person for purposes of an administrative proceeding under Section
151.901 or Chapter 2001, Government Code.
(e) The 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.
(f) The security shall cover claims for at least five
years after the license holder surrenders its 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 license holder's obligations to the
department and to purchasers in this state is reduced. The
commissioner may permit a license holder to substitute another form
of security when the license holder ceases to provide money
transmission in this state.
(g) 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 license holder to file or make new
or additional security to comply with this section.
(h) Instead of providing all or part of the amount of
the security required by this section, an applicant or license
holder 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. The deposit:
(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 license holder in the
event of bankruptcy, receivership, or a claim against the license
holder unrelated to the license holder's obligations under this
chapter.
Section 151.705 Maintenance of Permissible Investments.
(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 enumerated in
Section 151.706(a), the Commissioner, with respect to any 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 licensee's outstanding
money transmission obligations in the event of insolvency, the
filing of a petition by or against the licensee under the United
States Bankruptcy Code, 11 U.S.C. Section 101-110, as amended or
recodified from time to time, for bankruptcy or reorganization, the
filing of a petition by or against the licensee for receivership,
the commencement of any other judicial or administrative proceeding
for its dissolution or reorganization, or in the event of an action
by a creditor against the licensee who is not a beneficiary of this
statutory trust. No permissible investments impressed with a trust
pursuant to this section shall be subject to attachment, levy of
execution, or sequestration by order of any court, except for a
beneficiary of this statutory trust.
(d) Upon the establishment of a statutory trust in
accordance with Subsection (c) or when any funds are drawn on a
letter of credit pursuant to Section 151.705(a)(4), the
Commissioner shall notify the applicable regulator of each state in
which the licensee is licensed to engage in money transmission, if
any, of the establishment of the trust or the funds drawn on the
letter of credit, as applicable. Notice shall be deemed satisfied
if performed pursuant to a multistate agreement or through NMLS.
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 licensee's outstanding money transmission
obligations, are deemed held in trust for the benefit of such
purchasers and holders on a pro rata and equitable basis in
accordance with statutes pursuant to which permissible investments
are required to be held in this state, and other states, as
applicable. Any statutory trust established hereunder shall be
terminated upon extinguishment of all of the licensee's outstanding
money transmission obligations.
(e) 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 is authorized to 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.
Section 151.706 Types of Permissible Investments.
(a) The following investments are permissible under Section
151.705:
(1) cash (including demand deposits, savings
deposits, and funds in such accounts held for the benefit of the
licensee's customers in a federally insured depository financial
institution) and cash equivalents including ACH items in transit to
the licensee and ACH items or international wires in transit to a
payee, cash in transit via armored car, cash in smart safes, cash in
licensee-owned locations, debit card or credit card-funded
transmission receivables owed by any bank, or money market mutual
funds rated "AAA" by S&P, or the equivalent from any eligible rating
service;
(2) certificates of deposit or senior debt obligations
of an insured depository institution, as defined in Section 3 of the
Federal Deposit Insurance Act, 12 U.S.C. Section 1813, as amended
or recodified from time to time, or as defined under the federal
Credit Union Act, 12 U.S.C. Section 1781, as amended or recodified
from time to time;
(3) an obligation of the United States or a
commission, agency, or instrumentality thereof; an obligation that
is guaranteed fully as to principal and interest by the United
States; or an obligation of a state or a governmental subdivision,
agency, or instrumentality thereof;
(4) the full drawable amount of an irrevocable standby
letter of credit for which the stated beneficiary is the
Commissioner that stipulates that the beneficiary need only draw a
sight draft under the letter of credit and present it to obtain
funds up to the letter of credit amount upon presentation of the
items required by Subsection (a)(4)(C).
(A) The letter of credit must:
(i) Be issued by a federally insured
depository financial institution, a foreign bank that is authorized
under federal law to maintain a federal agency or federal branch
office in a state or states, or a foreign bank that is authorized
under state law to maintain a branch in a state that (1) bears an
eligible rating or whose parent company bears an eligible rating;
(2) is regulated, supervised, and examined by United States federal
or state authorities having regulatory authority over banks, credit
unions, and trust companies; and (3) is approved by the
Commissioner.
(ii) Be irrevocable, unconditional and
indicate that it is not subject to any condition or qualifications
outside of the letter of credit;
(iii) Not contain reference to any other
agreements, documents or entities, or otherwise provide for any
security interest in the licensee; and
(iv) Contain an issue date and expiration
date, and expressly provide for automatic extension, without a
written amendment, for an additional period of one year from the
present or each future expiration date, unless the issuer of the
letter of credit notifies the Commissioner in writing by certified
or registered mail or courier mail or other receipted means, at
least sixty (60) days prior to any expiration date, that the
irrevocable letter of credit will not be extended.
(B) In the event of any notice of expiration or
non-extension of a letter of credit issued under Subsection
(a)(4)(A)(iv), the licensee shall be required to demonstrate to the
satisfaction of the Commissioner, 15 days prior to expiration, that
the licensee maintains and will maintain permissible investments in
accordance with Section 151.705(a) upon the expiration of the
letter of credit. If the licensee is not able to do so, 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 151.705(a). Any
such draw shall be offset against the licensee's outstanding money
transmission obligations. The drawn funds shall be held in trust by
the Commissioner or the Commissioner's designated agent, to the
extent authorized by law, as agent for the benefit of the purchasers
and holders of the licensee's outstanding money transmission
obligations.
(C) The letter of credit shall provide that the
issuer of the letter of credit will honor, at sight, a presentation
made by the beneficiary to the issuer of the following documents on
or prior to the expiration date of the letter of credit:
(i) The original letter of credit
(including any amendments); and
(ii) A written statement from the
beneficiary stating that any of the following events have occurred:
1. the filing of a petition by or
against the licensee under the United States Bankruptcy Code, 11
U.S.C. Section 101-110, as amended or recodified from time to time,
for bankruptcy or reorganization;
2. the filing of a petition by or
against the licensee for receivership, or the commencement of any
other judicial or administrative proceeding for its dissolution or
reorganization;
3. the seizure of assets of a licensee
by a Commissioner pursuant to 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
4. The beneficiary has received
notice of expiration or non-extension of a letter of credit and the
licensee failed to demonstrate to the satisfaction of the
beneficiary that the licensee will maintain permissible
investments in accordance with Section 151.705(a) upon the
expiration or non-extension of the letter of credit.
(D) The Commissioner may designate an agent to
serve on the Commissioner's behalf as beneficiary to a letter of
credit so long as 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.
(E) 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.
(5) One hundred percent of the surety bond or deposit
provided for under Section 151.702 that exceeds the average daily
money transmission liability in this state.
(6) Stablecoin but only to the extent of outstanding
transmission obligations received by the licensee in like kind
stablecoin.
(b) Unless permitted by the Commissioner to exceed the limit
as set forth herein, the following investments are permissible
under Section 151.705 to the extent specified:
(1) receivables that are payable to a licensee from
its authorized delegates in the ordinary course of business that
are less than seven days old, up to 50% of the aggregate value of the
licensee's total permissible investments;
(2) of the receivables permissible under Subsection
(b)(1), receivables that are payable to a licensee from a single
authorized delegate in the ordinary course of business may not
exceed 10% of the aggregate value of the licensee's total
permissible investments.
(3) the following investments are permissible up to
20% per category and combined up to 50% of the aggregate value of
the licensee's total permissible investments:
(A) A short-term (up to six months) investment
bearing an eligible rating;
(B) Commercial paper bearing an eligible rating;
(C) A bill, note, bond, or debenture bearing an
eligible rating;
(D) U.S. tri-party repurchase agreements
collateralized at 100% or more with U.S. government or agency
securities, municipal bonds, or other securities bearing an
eligible rating;
(E) Money market mutual funds rated less than
"AAA" and equal to or higher than "A-" by S&P, or the equivalent
from any other 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).
(4) cash (including demand deposits, savings
deposits, and funds in such accounts held for the benefit of the
licensee's customers) at foreign depository institutions are
permissible up to 10% of the aggregate value of the licensee's total
permissible investments if the licensee has received a satisfactory
rating in its most recent examination and the foreign depository
institution:
(A) has an eligible rating;
(B) is registered under the Foreign Account Tax
Compliance Act;
(C) is not located in any country subject to
sanctions from the Office of Foreign Asset Control; and
(D) is not located in a high-risk or
non-cooperative jurisdiction as designated by the Financial Action
Task Force.
SUBCHAPTER J. Enforcement
Section 151.801 Injunctive Relief.
(a) Whenever it appears that a person has violated, or that
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.
Section 151.802 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 151.709, unless the
order is issued as an emergency order. The commissioner may issue
an emergency cease and desist order in accordance with Section
151.710 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.
Section 151.803 Suspension and Revocation of License.
(a) The commissioner must revoke a license if the
commissioner finds that:
(1) the net worth of the licensee is less than the
amount required under this chapter; or
(2) the licensee does not provide the security
required under this chapter.
(b) The commissioner may suspend or revoke a license or
order a licensee to revoke the designation of an authorized
delegate if the commissioner has reason to believe that:
(1) the 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 licensee has refused to permit or has not
cooperated with an examination or investigation authorized by this
chapter;
(3) the 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 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 licensee or an authorized delegate of the licensee,
or a principal of, person in control of, or responsible person of a
licensee or authorized delegate, indicates that it is not in the
public interest to permit the licensee or authorized delegate to
provide money services;
(6) the licensee has engaged in an unsafe or unsound
act or practice or has conducted business in an unsafe or unsound
manner;
(7) the 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 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 licensee applied for the license, would have
been grounds for denying the application;
(10) the licensee has engaged in false, misleading, or
deceptive advertising;
(11) the 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 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 licensee has committed a breach of trust or of
a fiduciary duty.
(c) In determining whether a 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
license or directing a licensee to revoke the designation of an
authorized delegate is subject to Section 151.709, unless the order
is issued as an emergency order. The commissioner may issue an
emergency order suspending a license or directing a licensee to
revoke the designation of an authorized delegate in accordance with
Section 151.810 if the commissioner finds that the factors
identified in Section 151.810(b) exist.
Section 151.804 Suspension and Revocation of Authorized
Delegate Designation.
(a) The commissioner may suspend or revoke the designation
of an authorized delegate 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 services
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 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 services;
(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
specifically 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 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 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
151.709, 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
151.710 if the commissioner finds that the factors identified in
Section 151.710(b) exist.
Section 151.805 Cease and Desist Orders for Licensees or
Authorized Delegates.
(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 151.803 or 151.804 exists with respect to a licensee or
authorized delegate; and
(2) a cease and desist order is necessary to protect
the interests of the licensee, the purchasers of the licensee's
money services, or the public.
(b) A cease and desist order may require a 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
151.809, unless the order is issued as an emergency order. The
commissioner may issue an emergency cease and desist order in
accordance with Section 151.810 if the commissioner finds that the
factors identified in Section 151.810(b) exist.
Section 151.806 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 this chapter or a rule
adopted or order issued under this chapter has been violated.
(c) A consent order is a final order and may not be appealed.
Section 151.807 Administrative Penalty.
(a) After notice and hearing, the commissioner may assess an
administrative penalty against a person that:
(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 licensee, has engaged in conduct
specified in Section 151.803;
(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
151.801.
(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 licensee or a
licensee's authorized delegate, from the proceeds of the licensee's
security in accordance with Section 151.308(e).
Section 151.808 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
license is required under Subchapter D or F 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.
Section 151.809 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
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 nonappealable 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
151.901(b).
Section 151.810 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 licensee;
(B) has caused or is likely to cause the
substantial dissipation of the licensee's assets or earnings;
(C) has seriously weakened or is likely to
seriously weaken the condition of the licensee; or
(D) has seriously prejudiced or is likely to
seriously prejudice the interests of the licensee, a purchaser of
the licensee's money services, or the public; and
(2) immediate action is necessary to protect the
interests of the 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
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 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 nonappealable 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 151.901(b).
SUBCHAPTER K. MISCELLANEOUS PROVISIONS
Section 151.901 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.
Section 151.902 Uniformity of Application and
Construction.
In applying and construing this Act, consideration must be
given to the need to promote uniformity of the law with respect to
its subject matter among states that enact it.
Section 151.903 Severability Clause.
If any provision of this Act or its application to any person
or circumstance is held invalid, the invalidity does not affect
other provisions or applications of this Act which can be given
effect without the invalid provision or application, and to this
end the provisions of this Act are severable.
SECTION 2. (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 151, Finance Code. By September 1, 2024, a
licensee must satisfy the minimum requirements to maintain a
license established in Chapter 151, Finance Code, as added by this
Act.
(b) A contract between a licensee and an authorized delegate
that is in effect on September 1, 2023, remains in effect until the
earlier of the date the contract is renewed or December 31, 2024. A
new or renewal contract entered into between a licensee and an
authorized delegate after the effective date of this Act must
satisfy the contract requirements established in Chapter 151,
Finance Code, as added by this Act.
(e) The Finance Commission of Texas may adopt rules to
further provide for the orderly transition to licensing and
regulation under this Act.
SECTION 3. Chapter 151, Finance Code, is repealed.
SECTION 4. Section 278.001(1), Finance Code, is amended to
read as follows:
(1) "Currency" means the coin and paper money issued
by the United States or another country that is designated as legal
tender and circulates and is customarily used and accepted as a
medium of exchange in the country of issuance.
SECTION 5. This Act takes effect September 1, 2023