The Money Transmission Modernization Act (the act) repeals the existing Money Transmitters Act and introduces significant reforms to modernize the regulation of money transmitters in Colorado. The bill aims to streamline processes, reduce regulatory burdens, and update outdated requirements. Key provisions of the act include:
Key Provisions of the Act:
Clarification of Control Over Licensees:
The act clarifies the definition of control over a money transmitter (licensee) and establishes a rebuttable presumption of control, making it clearer who holds control over a licensee.
Participation in Multistate Licensing:
The act allows Colorado to participate in multistate licensing initiatives, which may streamline the licensing process for money transmitters operating across multiple states and reduce the regulatory burden for businesses.
Agent-to-Payee Exemption:
The act codifies the agent-to-payee exemption to licensure, exempting certain agents (such as individuals or entities acting on behalf of another) from needing a license if they meet the criteria established by the law.
Prudential Standards:
The act revises prudential standards that money transmitters must meet to obtain and maintain a license. These standards include:
Tangible net worth calculations.
Permissible investment calculations, which outline what assets a money transmitter can invest in.
These revisions are aimed at ensuring money transmitters are financially stable and able to meet their obligations.
Irrevocable, Standby Letter of Credit:
The act allows an irrevocable, standby letter of credit to be used as a permissible investment for money transmitters, providing more flexibility in the assets they can hold to satisfy licensing and regulatory requirements.
Expansion of Enforcement Actions:
The act expands the enforcement actions available to regulators in cases where a money transmitter fails to perform in accordance with regulatory standards. This gives authorities more tools to ensure compliance.
Benefits of the Act:
Modernization and Efficiency: By updating outdated rules and introducing new standards, the act brings the money transmission industry in Colorado in line with current industry practices, potentially making the regulatory process more efficient.
Multistate Coordination: Participation in multistate licensing initiatives helps businesses that operate across state lines by streamlining the licensing process and reducing duplicative regulatory requirements.
Flexibility for Businesses: The codification of the agent-to-payee exemption and the inclusion of a standby letter of credit as a permissible investment provides more flexibility for businesses, making it easier for them to comply with the law while operating.
Enhanced Consumer Protection: The updated enforcement mechanisms ensure that regulators have the tools necessary to take action against noncompliant entities, helping protect consumers from potential harm.
Overall, the act modernizes and simplifies the regulatory framework for money transmitters, ensuring that it is more adaptable, clear, and efficient, while maintaining strong protections for consumers.
Summary
The bill repeals the current Money Transmitters Act and replaces
it with the Money Transmission Modernization Act (act). The new act enacts, in part, a model law developed in conjunction with the money transmitter industry.
The act reduces regulatory burden by modernizing outdated and
inconsistent regulatory requirements, including: •
Clarifying the definition of control of a licensee and introducing a rebuttable presumption of control;
•
Enabling Colorado's participation in multistate licensing initiatives;
•
Codifying the agent-to-payee exemption to licensure;
•
Revising prudential standards required for licensing and ongoing monitoring, such as tangible net worth and permissible investment calculations;
•
Establishing an irrevocable, standby letter of credit as a permissible investment; and
•
Expanding the enforcement actions available in case of nonperformance by a money transmitter.
