By: Campbell S.B. No. 1403
 
  (Burrows)
 
   
 
 
A BILL TO BE ENTITLED
 
AN ACT
  relating to the regulation of money services businesses.
         BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
         SECTION 1.  Section 151.002(b), Finance Code, is amended by
  adding Subdivision (20-a) to read as follows:
               (20-a)  "Tangible net worth" means the total value of
  all assets, minus any liabilities and intangible assets.
         SECTION 2.  Section 151.003, Finance Code, as amended by
  Chapters 1000 (H.B. 483) and 75 (S.B. 899), Acts of the 84th
  Legislature, Regular Session, 2015, is reenacted and amended to
  read as follows:
         Sec. 151.003.  EXCLUSIONS.  Subject to Subchapter J, 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:
                     (A)  only transports currency [from a person to]:
                           (i)  from a person to the same person at
  another location; [or]
                           (ii)  from a person to a financial
  institution to be deposited in an account belonging to the same
  person; or
                           (iii)  to a person from a financial
  institution after being withdrawn from an account belonging to the
  same person; and
                     (B)  does not otherwise engage in the money
  transmission or currency exchange business or depository agent
  services business without a license issued under this chapter;
               (9-a)  a trust company, as defined by Section
  187.001(a), that is organized under the laws of this state; 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.
         SECTION 3.  The heading to Section 151.2031, Finance Code,
  is amended to read as follows:
         Sec. 151.2031.  USE OF NATIONWIDE MULTISTATE [MORTGAGE]
  LICENSING SYSTEM AND REGISTRY.
         SECTION 4.  Sections 151.2031(a) and (b), Finance Code, are
  amended to read as follows:
         (a)  In this section, "Nationwide Multistate [Mortgage]
  Licensing System and Registry" or "nationwide registry" means a
  licensing system developed and maintained by the Conference of
  State Bank Supervisors or an affiliated organization to manage
  mortgage licenses and other financial services licenses, or a
  successor registry.
         (b)  The commissioner may require that a person submit
  through the Nationwide Multistate [Mortgage] Licensing System and
  Registry 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.
         SECTION 5.  Section 151.302(c), Finance Code, is amended to
  read as follows:
         (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.
         SECTION 6.  Section 151.304(b), Finance Code, is amended to
  read as follows:
         (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.
         SECTION 7.  Section 151.307, Finance Code, is amended by
  amending Subsection (a) and adding Subsection (c) to read as
  follows:
         (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 or over the Internet.
         (c)  At least 50 percent of the applicant's or license
  holder's total net worth under this section must be tangible net
  worth.
         SECTION 8.  Section 151.308, Finance Code, is amended by
  amending Subsection (b) and adding Subsections (b-1) and (b-2) to
  read as follows:
         (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.
         (b-1)  The commissioner may increase the amount of security
  required of an applicant who intends to provide, or a license holder
  who is providing, third-party bill payments in conjunction with
  loan acceleration services, up to a total amount of $2 million, by
  multiplying the amount of security required under this section by a
  factor of up to two, if the commissioner determines, with respect to
  the applicant or license holder, that a higher amount of the
  required security is necessary to achieve the purposes of this
  chapter based on the factors listed under Section 151.307(b).
         (b-2)  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.
         SECTION 9.  Section 151.702, Finance Code, is amended to
  read as follows:
         Sec. 151.702.  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 10.  The heading to Section 151.705, Finance Code,
  is amended to read as follows:
         Sec. 151.705.  CEASE AND DESIST ORDERS FOR LICENSE HOLDERS
  OR AUTHORIZED DELEGATES.
         SECTION 11.  Section 151.707(d), Finance Code, is amended to
  read as follows:
         (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 [shall] recommend that the
  commissioner impose the maximum administrative penalty permitted
  under Subsection (c).
         SECTION 12.  (a)  Sections 151.304, 151.307, and 151.308,
  Finance Code, as amended by this Act, apply to a new application for
  a money transmission license only if the application was submitted
  on or after the effective date of this Act.  An application for a
  license submitted before the effective date of this Act is governed
  by the law in effect on the date the application was submitted, and
  the former law is continued in effect for that purpose.
         (b)  A person holding a money transmission license on
  September 1, 2017, who is not in compliance with the net worth
  requirements of Section 151.307, Finance Code, as amended by this
  Act, shall comply with the net worth requirements of that section
  not later than September 1, 2022.  On written application and for
  good cause shown, the banking commissioner of Texas may extend the
  period for compliance under this section for the money transmission
  license holder.
         (c)  Not later than July 1, 2018, a person holding a money
  transmission license on September 1, 2017, shall comply with the
  security requirements of Section 151.308, Finance Code, as amended
  by this Act.
         (d)  Sections 151.702 and 151.707, Finance Code, as amended
  by this Act, apply only to a violation that occurs on or after the
  effective date of this Act. A violation that occurs before that
  date is governed by the law in effect immediately before the
  effective date of this Act, and that law is continued in effect for
  that purpose.
         SECTION 13.  This Act takes effect September 1, 2017.