85R6063 TSR-F     By: Burrows H.B. No. 3233       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 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 ORDER 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 action 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 151.705(b), Finance Code, is amended to   read as follows:          (b)  A cease and desist order may require a license holder or   authorized delegate to cease and desist from the action or   violation and [or] to take affirmative action to correct any   condition resulting from or contributing to the action or   violation, including the payment of restitution to each resident of   this state damaged by the violation, and the requirements of the   order may apply to a principal or responsible person of the license   holder or authorized delegate.          SECTION 12.  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 13.  (a)  Sections 151.302, 151.304, 151.307, and   151.308, Finance Code, as amended by this Act, apply only to an   application for a money transmission license 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)  Not later than September 1, 2022, a person holding a   money transmission license on September 1, 2017, shall comply with   the net worth requirements of Section 151.307, Finance Code, as   amended by this Act.  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, 151.705, 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 14.  This Act takes effect September 1, 2017.