CHAPTER 151. REGULATION OF MONEY SERVICES BUSINESSES

State Codes and Statutes

Statutes > Texas > Finance-code > Title-3-financial-institutions-and-businesses > 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.

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.

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.

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

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.

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;

(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.

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.

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

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.

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).

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

(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.

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.

(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.

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.

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.

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

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

State Codes and Statutes

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