CHAPTER 151. REGULATION OF MONEY SERVICES BUSINESSES
FINANCE CODE
TITLE 3. FINANCIAL INSTITUTIONS AND BUSINESSES
SUBTITLE E. OTHER FINANCIAL BUSINESSES
CHAPTER 151. REGULATION OF MONEY SERVICES BUSINESSES
SUBCHAPTER A. GENERAL PROVISIONS
Sec. 151.001. SHORT TITLE. This chapter may be cited as the
Money Services Act.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.002. DEFINITIONS. (a) This section defines general
terms that apply to an applicant for or holder of a money
services license issued under this chapter, regardless of whether
the license is a money transmission license or a currency
exchange license. Additional terms that apply specifically to
money transmission are defined in Section 151.301. Additional
terms that apply specifically to currency exchange are defined in
Section 151.501.
(b) In this chapter:
(1) "Applicant" means a person that files an application for a
license under this chapter.
(2) "Authorized delegate" means a person a license holder
appoints under Section 151.402 to conduct money transmission on
behalf of the license holder.
(3) "Bank Secrecy Act" means the Bank Secrecy Act (31 U.S.C.
Section 5311 et seq.), and its implementing regulations set forth
at 31 C.F.R. Part 103.
(4) "Commission" means the Finance Commission of Texas.
(5) "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.
(6) "Control" means ownership of, or the power to directly or
indirectly vote, 25 percent or more of the outstanding voting
interests of a license holder or applicant, and includes an
individual whose ownership is through one or more legal entities.
(7) "Currency exchange" has the meaning assigned by Section
151.501.
(8) "Currency exchange license" means a license issued under
Subchapter F.
(9) "Department" means the Texas Department of Banking.
(10) "Executive officer" means a president, a presiding officer
of the executive committee, a treasurer or chief financial
officer, or any other individual who performs similar functions.
(11) "License holder" means a person that holds a money
transmission license or a currency exchange license.
(12) "Location" means a place at which activity regulated by
this chapter occurs.
(13) "Material litigation" means any litigation that, according
to generally accepted accounting principles, is considered
significant to an applicant's or license holder's financial
health and would be required to be referenced in that entity's
audited financial statements, report to shareholders, or similar
documents.
(14) "Money services" means money transmission or currency
exchange.
(15) "Money transmission" has the meaning assigned by Section
151.301.
(16) "Money transmission license" means a license issued under
Subchapter D.
(17) "Person" means an individual or legal entity.
(18) "Principal" means:
(A) with respect to a sole proprietorship, an owner; or
(B) with respect to a legal entity other than a sole
proprietorship, an executive officer, director, general partner,
trustee, or manager, as applicable.
(19) "Record" means information that is:
(A) inscribed on a tangible medium; or
(B) stored in an electronic or other medium and retrievable in
perceivable form.
(20) "Responsible individual" means an individual who has direct
control over or significant management policy and decision-making
authority with respect to a license holder's ongoing, daily money
services operations in this state.
(21) "USA PATRIOT ACT" means the Uniting and Strengthening
America by Providing Appropriate Tools Required to Intercept and
Obstruct Terrorism (USA PATRIOT ACT) Act of 2001 (Pub. L. No.
107-56, 115 Stat. 272).
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.003. EXCLUSIONS. The following persons are not
required to be licensed under this chapter:
(1) the United States or an instrumentality of the United
States, including the United States Post Office or a contractor
acting on behalf of the United States Post Office;
(2) a state or an agency, political subdivision, or other
instrumentality of a state;
(3) a federally insured financial institution, as that term is
defined by Section 201.101, that is organized under the laws of
this state, another state, or the United States;
(4) a foreign bank branch or agency in the United States
established under the federal International Banking Act of 1978
(12 U.S.C. Section 3101 et seq.);
(5) a person acting as an agent for an entity excluded under
Subdivision (3) or (4), to the extent of the person's actions in
that capacity, provided that:
(A) the entity is liable for satisfying the money services
obligation owed to the purchaser on the person's receipt of the
purchaser's money; and
(B) the entity and person enter into a written contract that
appoints the person as the entity's agent and the person acts
only within the scope of authority conferred by the contract;
(6) a person that, on behalf of the United States or a
department, agency, or instrumentality of the United States, or a
state or county, city, or any other governmental agency or
political subdivision of a state, provides electronic funds
transfer services of governmental benefits for a federal, state,
county, or local governmental agency;
(7) a person that acts as an intermediary on behalf of and at
the direction of a license holder in the process by which the
license holder, after receiving money or monetary value from a
purchaser, either directly or through an authorized delegate,
transmits the money or monetary value to the purchaser's
designated recipient, provided that the license holder is liable
for satisfying the obligation owed to the purchaser;
(8) an attorney or title company that in connection with a real
property transaction receives and disburses domestic currency or
issues an escrow or trust fund check only on behalf of a party to
the transaction;
(9) a person engaged in the business of currency transportation
who is both a registered motor carrier under Chapter 643,
Transportation Code, and a licensed armored car company or
courier company under Chapter 1702, Occupations Code, provided
that the person does not engage in the money transmission or
currency exchange business without a license issued under this
chapter; and
(10) any other person, transaction, or class of persons or
transactions exempted by commission rule or any other person or
transaction exempted by the commissioner's order on a finding
that the licensing of the person is not necessary to achieve the
purposes of this chapter.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
SUBCHAPTER B. ADMINISTRATIVE PROVISIONS
Sec. 151.101. ADMINISTRATION. The department shall administer
this chapter.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.102. RULES. (a) The commission may adopt rules to
administer and enforce this chapter, including rules necessary or
appropriate to:
(1) implement and clarify this chapter;
(2) preserve and protect the safety and soundness of money
services businesses;
(3) protect the interests of purchasers of money services and
the public;
(4) protect against drug trafficking, terrorist funding, and
money laundering, structuring, or a related financial crime; and
(5) 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 chapter.
(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.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.103. 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.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.104. INVESTIGATIONS. (a) The commissioner may conduct
investigations in or outside this state and the United States as
the commissioner considers necessary or appropriate to administer
and enforce this chapter, including investigations to:
(1) determine whether to approve an application for or renewal
of a license or a request for approval or exemption filed under
this chapter or a rule adopted or order issued under this
chapter;
(2) determine whether a person has violated or is likely to
violate this chapter or a rule adopted or order issued under this
chapter;
(3) determine whether a license or authorized delegate
designation should be revoked or suspended;
(4) otherwise aid in the enforcement of this chapter or a rule
adopted or order issued under this chapter; and
(5) aid in the adoption of rules or issuance of orders under
this chapter.
(b) For purposes of an investigation, examination, or other
proceeding under this chapter, the commissioner may administer or
cause to be administered oaths, subpoena witnesses, compel the
attendance of witnesses, take evidence, and require the
production of any document that the commissioner determines to be
relevant to the inquiry.
(c) If a person refuses to obey a subpoena, a district court of
Travis County, on application by the commissioner, may issue an
order requiring the person to appear before the commissioner and
produce documents or give evidence regarding the matter under
investigation.
(d) The commissioner may employ a person or request the attorney
general, the Department of Public Safety, or any other state,
federal, or local law enforcement agency to assist in enforcing
this chapter.
(e) The commissioner may recover the reasonable costs incurred
in connection with an investigation conducted under this chapter
from the person that is the subject of the investigation.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.105. REGULATORY COOPERATION. (a) To efficiently and
effectively administer and enforce this chapter and to minimize
regulatory burden, the commissioner may cooperate, coordinate,
and share information with another state, federal, or foreign
governmental agency that:
(1) regulates or supervises persons engaged in money services
businesses or activities subject to this chapter; or
(2) is authorized to investigate or prosecute violations of a
state, federal, or foreign law related to persons engaged in
money services businesses or activities subject to this chapter,
including a state attorney general's office.
(b) The commissioner, with respect to an agency described by and
for the purposes set forth in Subsection (a), may:
(1) enter into a written cooperation, coordination, or
information-sharing contract or agreement with the agency;
(2) share information with the agency, subject to the
confidentiality provisions of Section 151.606(b)(3);
(3) conduct a joint or concurrent on-site examination or other
investigation or enforcement action with the agency;
(4) accept a report of examination or investigation by, or a
report submitted to, the agency, in which event the accepted
report is an official report of the commissioner for all
purposes;
(5) engage the services of the agency to assist the commissioner
in performing or discharging a duty or responsibility imposed by
this chapter or other law and pay a reasonable fee for the
services;
(6) share with the agency any supervisory or examination fees
assessed against a license holder or authorized delegate under
this chapter and receive a portion of supervisory or examination
fees assessed by the agency against a license holder or
authorized delegate; and
(7) take other action as the commissioner considers reasonably
necessary or appropriate to carry out and achieve the purposes of
this chapter.
(c) The commissioner may not waive, and nothing in this section
constitutes a waiver of, the commissioner's authority to conduct
an examination or investigation or otherwise take independent
action authorized by this chapter or a rule adopted or order
issued under this chapter to enforce compliance with applicable
state or federal law.
(d) A joint examination or investigation, or acceptance of an
examination or investigation report, does not waive an
examination assessment provided for in this chapter.
(e) Chapter 2254, Government Code, does not apply to a contract
or agreement entered into under this section.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.106. CONSENT TO SERVICE OF PROCESS. A license holder,
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.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
SUBCHAPTER C. GENERAL QUALIFICATIONS AND PROVISIONS
APPLICABLE TO MONEY SERVICES LICENSES
Sec. 151.201. SCOPE. This subchapter sets out the general
qualifications and provisions that apply to a money services
license, regardless of whether the license is a money
transmission license or a currency exchange license. Subchapters
D and E set forth the additional qualifications and provisions
that apply specifically to a money transmission license.
Subchapter F sets forth the additional qualifications and
provisions that apply specifically to a currency exchange
license.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.202. QUALIFICATIONS FOR LICENSE. (a) Subject to
Subsections (b) and (c), to qualify for a license under this
chapter, an applicant must demonstrate to the satisfaction of the
commissioner that:
(1) the financial responsibility and condition, financial and
business experience, competence, character, and general fitness
of the applicant justify the confidence of the public and warrant
the belief that the applicant will conduct business in compliance
with this chapter and the rules adopted under this chapter and
other applicable state and federal law;
(2) the issuance of the license is in the public interest;
(3) the applicant, a principal of the applicant, or a person in
control of the applicant does not owe the department a delinquent
fee, assessment, administrative penalty, or other amount imposed
under this chapter or a rule adopted or order issued under this
chapter;
(4) the applicant, if a partnership, and any partner that would
generally be liable for the obligations of the partnership, does
not owe a delinquent federal tax;
(5) the applicant, if a corporation:
(A) is in good standing and statutory compliance in the state or
country of incorporation;
(B) is authorized to engage in business in this state; and
(C) does not owe any delinquent franchise or other taxes to this
state;
(6) the applicant, if not a corporation, is properly registered
under the laws of this state or another state or country and, if
required, is authorized to engage in business in this state; and
(7) the applicant, a principal of the applicant, or a principal
of a person in control of the applicant is not listed on the
specifically designated nationals and blocked persons list
prepared by the United States Department of the Treasury, or
designated successor agency, as a potential threat to commit or
fund terrorist acts.
(b) In determining whether an applicant has demonstrated
satisfaction of the qualifications identified in Subsection
(a)(1), the commissioner shall consider the financial
responsibility and condition, financial and business experience,
competence, character, and general fitness of each principal of,
person in control of, principal of a person in control of, and
proposed responsible individual of the applicant and may deny
approval of the application on the basis that the applicant has
failed to demonstrate satisfaction of the requisite
qualifications with respect to one or more of those persons.
(c) The commissioner may not issue a license to an applicant if
the applicant or one of the following persons has been convicted
within the preceding 10 years of a criminal offense specified in
Subsection (e):
(1) if the applicant is an individual, the spouse or proposed
responsible individual or individuals of the applicant;
(2) if the applicant is an entity that is wholly owned, directly
or indirectly, by a single individual, the spouse of the
individual; or
(3) if the applicant is a person other than an individual, a
principal of, person in control of, principal of a person in
control of, or proposed responsible individual or individuals of
the applicant.
(d) The commissioner, on a finding that the conviction does not
reflect adversely on the present likelihood that the applicant
will conduct business in compliance with this chapter, rules
adopted under this chapter, and other applicable state and
federal law, may waive a disqualification under Subsection (c)
based on the conviction of a spouse or a corporate applicant or
corporate person in control of an applicant.
(e) For purposes of Subsection (c), a disqualifying conviction
is a conviction for a felony criminal offense:
(1) under state or federal law that involves or relates to:
(A) deception, dishonesty, or defalcation;
(B) money transmission or other money services, including a
reporting, recordkeeping or registration requirement of the Bank
Secrecy Act, the USA PATRIOT ACT, or Chapter 271;
(C) money laundering, structuring, or a related financial crime;
(D) drug trafficking; or
(E) terrorist funding; and
(2) under a similar law of a foreign country unless the
applicant demonstrates to the satisfaction of the commissioner
that the conviction was based on extenuating circumstances
unrelated to the person's reputation for honesty and obedience to
law.
(f) For purposes of Subsection (c), a person is considered to
have been convicted of an offense if the person has been found
guilty or pleaded guilty or nolo contendere to the charge or has
been placed on probation or deferred adjudication without regard
to whether a judgment of conviction has been entered by the
court.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.203. APPLICATION FOR LICENSE. (a) An application for
a license under this chapter must be made under oath and in the
form and medium required by the commissioner. The application
must contain:
(1) the legal name and residential and business address of the
applicant and each principal of the applicant;
(2) the taxpayer identification number, social security number,
driver's license number, or other identifying information the
commissioner requires of the applicant and each principal of the
applicant; and
(3) any other information or documentation the commissioner
reasonably requires to determine whether the applicant qualifies
for and should be issued the license for which application is
made.
(b) The commissioner, at the time the application is submitted
or in connection with an investigation of the application under
Section 151.204, may require the applicant, the spouse of the
applicant, a principal of, individual who is a person in control
of, or proposed responsible individual of the applicant, or any
other individual associated with the applicant and the proposed
licensed activities, to provide the department a complete set of
fingerprints for purposes of a criminal background investigation.
(c) An applicant must certify in writing on the application that
the applicant and each principal of, person in control of, and
proposed responsible individual of the applicant:
(1) is familiar with and agrees to fully comply with all
applicable state and federal laws and regulations pertaining to
the applicant's proposed money services business, including this
chapter, relevant provisions of the Bank Secrecy Act, the USA
PATRIOT ACT, and Chapter 271;
(2) has not within the preceding three years knowingly failed to
file or evaded the obligation to file a report, including a
currency transaction or suspicious activity report required by
the Bank Secrecy Act, the USA PATRIOT ACT, or Chapter 271; and
(3) has not knowingly accepted money for transmission or
exchange in which a portion of the money was derived from an
illegal transaction or activity.
(d) The commissioner may waive an application requirement or
permit the submission of substituted information in lieu of the
information generally required in an application, either with
respect to a specific applicant or a category of applicants, if
the commissioner determines that the waiver or substitution of
information is consistent with achievement of the purposes of
this chapter.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.204. PROCESSING AND INVESTIGATION OF APPLICATION. (a)
An application for a license under this chapter shall be
processed and acted on according to the time periods established
by commission rule.
(b) On receipt of an application that meets the requirements of
Section 151.203 and Section 151.304 or 151.504, as applicable,
the commissioner shall investigate the applicant to determine
whether the prescribed qualifications have been met. The
commissioner may:
(1) conduct an on-site investigation of the applicant;
(2) employ a screening service to assist with the investigation;
(3) to the extent the commissioner considers reasonably
necessary to evaluate the application and the applicant's
qualifications, investigate the financial responsibility and
condition, financial and business experience, character and
general fitness of each principal of, person in control of,
principal of a person in control of, or proposed responsible
individual of the applicant or any other person that is or will
be associated with the applicant's licensed activities in this
state; or
(4) require additional information and take other action the
commissioner considers reasonably necessary.
(c) The commissioner may collect from the applicant the
reasonable expenses of an on-site examination or third-party
investigation. Additionally, depending on the nature and extent
of the investigation required in connection with a particular
application, the commissioner may require an applicant to pay a
nonrefundable investigation fee in an amount established by
commission rule.
(d) The commissioner may suspend consideration of an application
for a license if the applicant or a principal of, person in
control of, or proposed responsible individual of the applicant
is the subject of a pending state or federal criminal
prosecution, state or federal government enforcement action, or
state or federal asset forfeiture proceeding until the conclusion
of the prosecution, action, or proceeding.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.205. ISSUANCE OF LICENSE. (a) The commissioner shall
issue a license if the commissioner, with respect to the license
for which application has been made, finds that:
(1) the applicant meets the prescribed qualifications and it is
reasonable to believe that the applicant's business will be
conducted fairly and lawfully, according to applicable state and
federal law, and in a manner commanding the public's trust and
confidence;
(2) the issuance of the license is in the public interest;
(3) the documentation and forms required to be submitted by the
applicant are acceptable; and
(4) the applicant has satisfied all requirements for licensure.
(b) 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.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.206. TRANSFER OR ASSIGNMENT OF LICENSE. A license
issued under this chapter may not be transferred or assigned.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.207. RENEWAL OF LICENSE. (a) Regardless of the date
on which a license under this chapter is issued, the license
expires on August 15 of each year unless the license is renewed
in accordance with this section or is previously surrendered by
the license holder or suspended or revoked by the commissioner.
(b) As a condition of renewal, a license holder must continue to
possess the qualifications and satisfy the requirements that
apply to an applicant for a new money transmission license or
currency exchange license, as applicable. Additionally, not
later than July 1 of each year, a license holder must:
(1) pay an annual renewal fee in an amount established by
commission rule; and
(2) submit a renewal 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.
(c) If the department does not receive a license holder's
renewal fee and complete renewal report on or before July 1, the
commissioner shall notify the license holder in writing that:
(1) the license holder has until August 15 to submit the renewal
report and pay the renewal fee; 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 July 1 that the commissioner does not
receive the completed renewal report and renewal fee.
(d) If the license holder fails to submit the completed renewal
report and pay the renewal fee and any late fee due, the license
expires effective 5 p.m. central daylight time on August 15, and
the license holder must cease and desist from engaging in the
business of money transmission or currency exchange, as
applicable, as of that time. The expiration of a license is not
subject to appeal.
(e) On timely receipt of a license holder's complete renewal
report, renewal 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) renew the license;
(2) impose conditions on the renewal of the license the
commissioner may consider reasonably necessary or appropriate; or
(3) suspend or revoke the license on the basis of a ground
specified in Section 151.703.
(f) On written application and for good cause shown, the
commissioner may extend the time for filing the fee and report
required under this section.
(g) 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.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.208. SURRENDER OF LICENSE. (a) A license holder may
surrender the license holder's license by delivering the original
license to the commissioner along with a written notice of
surrender that includes the location at which the license
holder'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 license holder shall surrender the license holder's
license if the license holder becomes ineligible for a license
under Section 151.202(c).
(c) The surrender of a license does not reduce or eliminate a
license holder'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 deny
the renewal of a license, 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 license holder under Section 151.308
or 151.506.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.209. REFUNDS. A fee or cost paid under this chapter in
connection with an application or renewal is not refundable.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
SUBCHAPTER D. MONEY TRANSMISSION LICENSE
Sec. 151.301. DEFINITIONS. (a) This section defines terms that
apply to an applicant for or holder of a money transmission
license issued under this subchapter.
(b) In this subchapter:
(1) "Currency" means the coin and paper money of 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.
(2) "Electronic instrument" means a card or other tangible
object for the transmission, transfer, or payment of money or
monetary value, that contains an electronic chip or strip for the
storage of information or that provides access to information.
(3) "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.
(4) "Money transmission" means the receipt of money or monetary
value by any means in exchange for a promise to make the money or
monetary value available at a later time or different location.
The term:
(A) includes:
(i) selling or issuing stored value or payment instruments,
including checks, money orders, and traveler's checks;
(ii) receiving money or monetary value for transmission,
including by payment instrument, wire, facsimile, electronic
transfer, or ACH debit;
(iii) providing third-party bill paying services; or
(iv) receiving currency or an instrument payable in currency to
physically transport the currency or its equivalent from one
location to another by motor vehicle or other means of
transportation or through the use of the mail or a shipping,
courier, or other delivery service; and
(B) does not include the provision solely of online or
telecommunication services or connection services to the
Internet.
(5) "Outstanding" means:
(A) with respect to a payment instrument or stored value, a
payment instrument or stored value that has been issued and sold
in the United States directly by the license holder, or sold by
an authorized delegate of the license holder in the United States
and reported to the license holder, that has not yet been paid by
or for the license holder; or
(B) with respect to transmission, a money transmission for which
the license holder, directly or through an authorized delegate of
the license holder, has received money or monetary value from the
customer for transmission, but has not yet completed the money
transmission by delivering the money or monetary value to the
person designated by the customer or refunded the money or
monetary value to the customer.
(6) "Payment instrument" means a written or electronic
equivalent of a check, draft, money order, traveler's check, or
other written or electronic instrument, service, or device for
the transmission or payment of money or monetary value, sold or
issued to one or more persons, regardless of whether negotiable.
The term does not include an instrument, service, or device that:
(A) transfers money directly from a purchaser to a creditor of
the purchaser or to an agent of the creditor;
(B) is redeemed by the issuer in goods or services or a cash or
credit refund under circumstances not designed to evade the
obligations and responsibilities imposed by this chapter; or
(C) is a credit card voucher or letter of credit.
(7) "Receive" means to obtain possession of money or monetary
value in a manner that cannot be reversed through the exercise of
routine contractual or statutory rights.
(8) "Stored value" means monetary value evidenced by an
electronic record that is prefunded and for which value is
reduced on each use. The term does not include an electronic
record that is:
(A) loaded with points, miles, or other nonmonetary value; or
(B) not sold to the public but distributed as a reward or
charitable donation.
(9) "Unsafe or unsound act or practice" means a practice of or
conduct by a license holder or an authorized delegate of the
license holder that creates the likelihood of material loss,
insolvency, or dissipation of the license holder's assets, or
that otherwise materially prejudices the interests of the license
holder or the license holder's customers.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.302. LICENSE REQUIRED. (a) A person may not engage in
the business of money transmission or advertise, solicit, or hold
itself out as a person that engages in the business of money
transmission unless the person:
(1) is licensed under this subchapter;
(2) is an authorized delegate of a person licensed under this
subchapter, appointed by the license holder in accordance with
Section 151.402;
(3) is excluded from licensure under Section 151.003; or
(4) has been granted an exemption under Subsection (c).
(b) For purposes of this chapter:
(1) a person engages in the business of money transmission if
the person conducts money transmission for persons located in
this state and receives compensation or expects to receive
compensation, directly or indirectly, for conducting the
transmissions; and
(2) a person solicits, advertises, or holds itself out as a
person that engages in the business of money transmission if the
person represents that the person will conduct money transmission
for persons located in this state.
(c) 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) either transmits money exclusively in connection with
commercial contracts in interstate commerce or does not charge a
fee to transmit money or transmits money without a fee as an
inducement for customer participation in the person's primary
business.
(d) A license holder may engage in the money transmission
business at one or more locations in this state owned, directly
or indirectly by the license holder, or through one or more
authorized delegates, or both, under a single license granted to
the license holder.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.303. ADDITIONAL QUALIFICATIONS. In addition to the
general qualifications for licensure set forth in Section
151.202, an applicant for a money transmission license must
demonstrate to the satisfaction of the commissioner that:
(1) the applicant has and will maintain the minimum net worth
required under Section 151.307;
(2) the applicant's financial condition will enable the
applicant to safely and soundly engage in the business of money
transmission; and
(3) the applicant does not engage in any activity or practice
that adversely affects the applicant's safety and soundness.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.304. APPLICATION AND ACCOMPANYING FEE, STATEMENTS, AND
SECURITY. (a) An applicant for a money transmission license
must submit an application in accordance with Section 151.203.
(b) At the time an application for a money transmission license
is submitted, an applicant must file with the department:
(1) an application fee in the amount established by commission
rule;
(2) audited financial statements that are satisfactory to the
commissioner for purposes of determining whether the applicant
has the minimum net worth required under Section 151.307 and is
likely to maintain the required minimum net worth if a license is
issued; and
(3) security in the amount of $300,000, that meets the
requirements of Section 151.308, and an undertaking or agreement
that the applicant will increase or supplement the security to
equal the aggregate security required by the commissioner under
that section before the issuance of the license and the start of
operations.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.305. INVESTIGATION AND ACTION ON APPLICATION. The
commissioner shall investigate the applicant and act on the
application in accordance with Sections 151.204 and 151.205.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.306. TEMPORARY LICENSE. (a) The commissioner may
issue a temporary license to a person that is engaging in money
transmission, but has not obtained a license under this
subchapter, if the person:
(1) certifies in writing that the person qualifies for the
license and will submit a completed license application not later
than the 60th day after the date the temporary license is issued;
(2) submits a recent financial statement acceptable to the
commissioner that reflects the minimum net worth required under
Section 151.307;
(3) provides security that meets the requirements of Section
151.308 in an amount specified by the commissioner, but not less
than $300,000;
(4) agrees in writing that, until a permanent license is issued,
the person will engage only in activities being conducted at
existing locations; and
(5) pays the application fee and a nonrefundable temporary
license fee in the amount established by commission rule.
(b) The effective period for a temporary license may not exceed
90 days from the date the license is issued, provided that the
commissioner may extend the period for not more than an
additional 30 days if necessary to complete the processing of a
timely filed application for which approval is likely.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.307. NET WORTH. (a) An applicant for a money
transmission license must possess, and a money transmission
license holder must maintain at all times, a minimum net worth
computed in accordance with generally accepted accounting
principles of:
(1) $100,000, if business is proposed to be or is conducted,
directly or through an authorized delegate, at four or fewer
locations; or
(2) $500,000, if business is proposed to be or is conducted,
directly or through an authorized delegate, at five or more
locations.
(b) The commissioner may increase the amount of net worth
required of an applicant or license holder, up to a maximum of $1
million, if the commissioner determines, with respect to the
applicant or license holder, that a higher net worth is necessary
to achieve the purposes of this chapter based on:
(1) the nature and volume of the projected or established
business;
(2) the number of locations at or through which money
transmission is or will be conducted;
(3) the amount, nature, quality, and liquidity of its assets;
(4) the amount and nature of its liabilities;
(5) the history of its operations and prospects for earning and
retaining income;
(6) the quality of its operations;
(7) the quality of its management;
(8) the nature and quality of its principals and persons in
control;
(9) the history of its compliance with applicable state and
federal law; and
(10) any other factor the commissioner considers relevant.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.308. SECURITY. (a) An applicant for a money
transmission license must provide, and a money transmission
license holder must maintain at all times, security consisting of
a surety bond, an irrevocable letter of credit, or a deposit
instead of a bond in accordance with this section.
(b) The amount of the required security is the greater of
$300,000 or an amount equal to one percent of the license
holder's total yearly dollar volume of money transmission
business in this state or the applicant's projected total volume
of business in this state for the first year of licensure, up to
a maximum of $2 million. When the amount of the required
security exceeds $1 million, the applicant or license holder may,
in the alternative, provide security in the amount of $1 million,
plus a dollar for dollar increase in the net worth of the
applicant or license holder over the amount required under
Section 151.307, up to a total amount of $2 million.
(c) 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;
(3) be conditioned on the faithful compliance of the license
holder or the principals, responsible individuals, employees and
authorized delegates of the license holder with this chapter or
any rule adopted or order issued under this chapter; and
(4) 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.
(d) 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.
(e) 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
151.801 or Chapter 2001, Government Code.
(f) 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.
(g) 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.
(h) 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.
(i) 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.
(j) 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.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.309. PERMISSIBLE INVESTMENTS. (a) A money
transmission license holder must maintain at all times
permissible investments that have an aggregate market value
computed in accordance with generally accepted accounting
principles in an amount not less than:
(1) if the license holder has a net worth of less than $5
million, the aggregate face amount of the license holder's
average outstanding money transmission obligations in the United
States, computed in the manner prescribed by commission rule; or
(2) if the license holder has a net worth of $5 million or more,
50 percent of the amount required by Subdivision (1).
(b) Except to the extent limited by Subsection (d), the
following constitute a permissible investment for purposes of
this section:
(1) 40 percent of the receivables due a license holder from
authorized delegates resulting from money transmission under this
chapter that is not past due or doubtful of collection;
(2) cash in demand or interest-bearing accounts with a federally
insured depository institution, including certificates of
deposit;
(3) certificates of deposit or senior debt obligations of a
domestic federally insured depository institution that are
readily marketable and insured by an agency of the federal
government;
(4) investment grade bonds and other legally created general
obligations of a state, an agency or political subdivision of a
state, the United States, or an instrumentality of the United
States;
(5) obligations that a state, an agency or political subdivision
of a state, the United States, or an instrumentality of the
United States has unconditionally agreed to purchase, insure, or
guarantee and that bear a rating of one of the three highest
grades as defined by a nationally recognized organization that
rates securities;
(6) shares in a money market mutual fund if the mutual fund,
under the terms of the mutual fund's governing documents, is
authorized to invest only in securities of the type described by
Subdivisions (4) and (5) or permitted by commission rule; and
(7) other assets and investments permitted by rule of the
commission or approved by the commissioner in writing, based on a
determination that the assets or investments have a safety
substantially equivalent to other permissible investments.
(c) In addition to investments listed in Subsection (b), a
permissible investment for purposes of Subsection (a) includes:
(1) the security provided under Section 151.308;
(2) a surety bond or letter of credit in addition to the
security provided under Section 151.308, if the additional surety
bond or letter of credit satisfies the requirements of Section
151.308; and
(3) that portion of a surety bond maintained for the benefit of
the purchasers of the license holder's outstanding money
transmission obligations in another state that is not in excess
of the amount of the outstanding obligations in that state,
provided:
(A) the license holder maintains a surety bond or letter of
credit or has on hand other permissible investments, or a
combination of investments, in an amount sufficient to satisfy
the requirements of Subsection (a) with respect to the
outstanding money transmission obligations in this state; and
(B) the surety bond is issued by a surety rated within the top
two rating categories of a nationally recognized United States
rating service.
(d) The commissioner, with respect to a license holder, may
limit or disallow for purposes of determining compliance with
Subsection (a) an investment, surety bond, or letter of credit
otherwise permitted by this section if the commissioner
determines it to be unsatisfactory for investment purposes or to
pose a significant supervisory concern.
(e) A permissible investment subject to this section, even if
commingled with other assets of the license holder, is considered
by operation of law to be held in trust for the benefit of 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 any of the license
holder's obligations under this chapter.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
SUBCHAPTER E. CONDUCT OF MONEY TRANSMISSION BUSINESS
Sec. 151.401. LIABILITY OF LICENSE HOLDER. A money transmission
license holder is liable for the payment of all money or monetary
value received for transmission either directly or through an
authorized delegate appointed in accordance with Section 151.402.
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.402. CONDUCT OF BUSINESS THROUGH AUTHORIZED DELEGATE.
(a) A money transmission license holder may conduct business
regulated under this chapter through an authorized delegate
appointed by the license holder in accordance with this section.
A license holder is responsible for the acts of the authorized
delegate, of which the license holder has or reasonably should
have knowledge, that are conducted pursuant to the authority
granted by the license holder and that relate to the license
holder's money transmission business.
(b) Before a license holder is authorized to conduct business
through an authorized delegate or allows a person to act as the
license holder's authorized delegate, the license holder must:
(1) adopt, and update as necessary, written policies and
procedures designed to ensure that the license holder's
authorized delegate complies with applicable state and federal
law;
(2) enter into a written contract that complies with Subsection
(c); and
(3) conduct a reasonable risk-based background investigation
sufficient for the license holder to determine whether the
authorized delegate has complied with applicable state and
federal law.
(c) The written contract required by Subsection (b)(2) must be
signed by the license holder and the authorized delegate and, at
a minimum, must:
(1) appoint the person signing the contract as the license
holder's authorized delegate with the authority to conduct money
transmission on behalf of the license holder;
(2) set forth the nature and scope of the relationship between
the license holder and the authorized delegate and the respective
rights and responsibilities of the parties;
(3) require the authorized delegate to certify that the delegate
is familiar with and agrees to fully comply with all applicable
state and federal laws, rules, and regulations pertaining to
money transmission, including this chapter and rules adopted
under this chapter, relevant provisions of the Bank Secrecy Act
and the USA PATRIOT ACT, and Chapter 271;
(4) require the authorized delegate to remit and handle money
and monetary value in accordance with Sections 151.403(b) and
(c);
(5) impose a trust on money and monetary value received in
accordance with Section 151.404;
(6) require the authorized delegate to prepare and maintain
records as required by this chapter or a rule adopted under this
chapter or as reasonably requested by the commissioner;
(7) acknowledge that the authorized delegate consents to
examination or investigation by the commissioner;
(8) state that the license holder 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 license holder to terminate an
authorized delegate designation;
(9) acknowledge receipt of the written policies and procedures
required under Subsection (b)(1); and
(10) acknowledge that the authorized delegate has been provided
regulatory website addresses through which the authorized
delegate can access this chapter and rules adopted under this
chapter and the Bank Secrecy Act, the USA PATRIOT ACT, and
Chapter 271.
(d) A license holder must report to the commissioner the theft
or loss of payment instruments or stored value from the license
holder or an authorized delegate in this state if the total value
of the instruments or stored value exceeds $10,000. The license
holder must make the report as soon as the license holder has
knowledge of the theft or loss.
(e) A license holder must notify the license holder's authorized
delegates and require the delegates to take any action required
by the commissioner if the license holder:
(1) fails to renew the license holder's license; or
(2) is subject to an emergency or final order that affects the
conduct of the license holder's business through an authorized
delegate.
(f) A license holder must maintain a current list of authorized
delegates located in this state that includes the name and
business address of each delegate and must provide the list to
the commissioner on request. A license holder that engages in
business through 11 or more authorized delegates located in this
state must include on the license holder's website a list of the
names and addresses of the authorized delegates of the license
holder located in this state and the delegates' business
addresses. The license holder must update the list quarterly.
(g) The commission by rule may exempt from one or more of the
requirements of this chapter an authorized delegate that is a
federally insured financial institution excluded under Section
151.003(3) or a foreign bank branch or agency excluded under
Section 151.003(4).
Added by Acts 2005, 79th Leg., Ch.
1099, Sec. 1, eff. September 1, 2005.
Sec. 151.403. AUTHORIZED DELEGATE CONDUCT. (a) An authorized
delegate of a license holder:
(1) is under a duty to and must act only as authorized under the
contract with the license holder and in strict compliance with
the license holder's written policies and procedures;
(2) must not commit fraud or misrepresentation or make any
fraudulent or false statement or misrepresentation to a license
holder or the commissioner;
(3) must cooperate with an investigation or examination
conducted by the commissioner and is considered to have consented
to the commissioner's examination of the delegate's books and
records;
(4) must not commit an unsafe or unsound act or practice or
conduct business in an unsafe and unsound manner;
(5) must, on discovery, immediately report to the license holder
the theft or loss of payment instruments or stored value;
(6) must prominently display on the form prescribed by the
commissioner a notice that indicates that the person is an
authorized delegate of the license holder under this subchapter;
and
(7) must cease to provide money services as an authorized
delegate of a license holder or take other required action
immediately on receipt of notice from the commissioner or the
license holder as provided by Section 151.402(e).
(b) An authorized delegate shall remit all money owed to the
license holder:
(1) not later than the 10th business day after the date the
authorized delegate receives the money;
(2) in accordance with the contract between the license holder
and the authorized delegate; or
(3) as directed by the commissioner.
(c) Notwithstanding Subsection (b)(1), an authorized delegate
may remit the money at a later date if the authorized delegate
maintains on deposit with an office of a federally insured
financial institution located in the United States an amount
that:
(1) is in an account solely in the name of the license holder;
and
(2) for each day by which the period before the remittance
exceeds 10 business days, is not less than the outstanding
obligations of the license holder routinely incurred by the
authorized delegate on a daily basis.
(d) Any business for which a license is required under this
sub