The Vermont Statutes Online

Title 8: Banking and Insurance

Chapter 079: Money Services

• Subchapter 001: GENERAL PROVISIONS

• § 2500. Purpose

  It is the intent of the General Assembly that the provisions of this chapter accomplish the following:

  (1) ensure the State can coordinate with other states in all areas of regulation, licensing, and supervision to eliminate unnecessary regulatory burden and more effectively use regulator resources;

  (2) protect the public from financial crime;

  (3) standardize the types of activities that are subject to licensing or otherwise exempt from licensing; and

  (4) modernize safety and soundness requirements to ensure customer funds are protected in an environment that supports innovative and competitive business practices. (Added 2023, No. 110 (Adj. Sess.), § 39, eff. July 1, 2024.)

• § 2501. Transition period

  (a) A person licensed under subchapter three of this chapter prior to July 1, 2024, and their authorized delegates, shall not be subject to the provisions of this chapter that establish new or different requirements from those that existed prior to July 1, 2024 until July 1, 2025.

  (b) Notwithstanding subsection (a) of this section, on or before July 1, 2025 a licensee shall amend its authorized delegate written contracts to comply with the requirements in section 2525 of this chapter, provided the licensee and authorized delegate otherwise operate in full compliance with this chapter pursuant to the timeline established in subsection (a) of this section. (Added 2023, No. 110 (Adj. Sess.), § 39, eff. July 1, 2024.)

• § 2502. Relationship to federal law

  (a) In the event state money transmission jurisdiction is conditioned on a federal law, any inconsistencies between a provision of this chapter and the federal law governing money transmission shall be governed by the applicable federal law to the extent of the inconsistency.

  (b) In the event of any inconsistencies between this chapter and a federal law that governs pursuant to subsection (a) of this section, the Commissioner may provide interpretive guidance that:

  (1) identifies the inconsistency; and

  (2) identifies the appropriate means of compliance with federal law. (Added 2023, No. 110 (Adj. Sess.), § 39, eff. July 1, 2024.)

• § 2503. Definitions

  As used in this chapter:

  (1) “Authorized delegate” means a person a licensee designates to engage in money transmission on behalf of the licensee.

  (2) “Average daily money transmission liability” means the amount of the licensee’s outstanding money transmission obligations in this State at the end of each day in a given period of time, added together, and divided by the total number of days in the given period of time. For purposes of calculating average daily money transmission liability under this chapter for any licensee required to do so, the given periods of time shall be the quarters ending March 31, June 30, September 30, and December 31.

  (3) “Bank Secrecy Act” means the Bank Secrecy Act, 31 U.S.C. § 5311, et seq. and its implementing regulations, as may be amended.

  (4) “Check cashing” means receiving at least $500.00 compensation within a 30-day period for taking payment instruments or stored value, other than traveler’s checks, in exchange for money, payment instruments, or stored value delivered to the person delivering the payment instrument or stored value at the time and place of delivery without any agreement specifying when the person taking the payment instrument will present it for collection.

  (5) “Closed loop stored value” means stored value that is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.

  (6) “Control of virtual currency,” when used in reference to a transaction or relationship involving virtual currency, means the power to execute unilaterally or prevent indefinitely a virtual currency transaction.

  (7) “Currency exchange” means receipt of revenues equal to or greater than five percent of total revenues from the exchange of money of one government for money of another government.

  (8) “Eligible rating” shall mean a credit rating of any of the three highest rating categories provided by an eligible rating service, whereby each category may include rating category modifiers such as “plus” or “minus” for S&P, or the equivalent for any other eligible rating service. Long-term credit ratings are deemed eligible if the rating is equal to A- or higher by S&P, or the equivalent from any other eligible rating service. Short-term credit ratings are deemed eligible if the rating is equal to or higher than A-2 or SP-2 by S&P, or the equivalent from any other eligible rating service. In the event that ratings differ among eligible rating services, the highest rating shall apply when determining whether a security bears an eligible rating.

  (9) “Eligible rating service” shall mean any Nationally Recognized Statistical Rating Organization (NRSRO) as defined by the U.S. Securities and Exchange Commission, and any other organization designated by the Commissioner by rule or order.

  (10) “In this State” means at a physical location within Vermont for a transaction requested in person. For a transaction requested electronically or by phone, the provider of money transmission may determine if the person requesting the transaction is “in this State” by relying on other information provided by the person regarding the location of the individual’s residential address or a business entity’s principal place of business or other physical address location, and any records associated with the person that the provider of money transmission may have to indicate such location, including an address associated with an account.

  (11) “Licensee” means a person licensed under this chapter.

  (12) “Limited station” means private premises where a check casher is authorized to engage in check cashing for not more than two days of each week solely for the employees of the particular employer or group of employers specified in the check casher license application.

  (13) “Mobile location” means a vehicle or a movable facility where check cashing occurs.

  (14) “Monetary value” means a medium of exchange, whether or not redeemable in money.

  (15) “Money” means a medium of exchange that is issued by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments.

  (16) “Money services” means money transmission, check cashing, or currency exchange.

  (17)(A) “Money transmission” means any of the following:

  (i) selling or issuing payment instruments to a person located in this State;

  (ii) selling or issuing stored value to a person located in this State; or

  (iii) receiving money for transmission from a person located in this State.

  (B) The term “money transmission” includes payroll processing services.

  (C) The term “money transmission” does not include the provision solely of telecommunications services or network access.

  (18) “Money transmission kiosk” means an automated, unstaffed electronic machine that allows users to engage in money transmission, including any machine that is capable of accepting or dispensing cash in exchange for virtual currency. The term does not include consumer cell phones and other similar personal devices.

  (19)(A) “Outstanding money transmission obligations” shall be established and extinguished in accordance with applicable state law and shall mean:

  (i) any payment instrument or stored value issued or sold by the licensee to a person located in the United States or reported as sold by an authorized delegate of the licensee to a person that is located in the United States that has not yet been paid or refunded by or for the licensee, or escheated in accordance with applicable abandoned property laws; or

  (ii) any money received for transmission by the licensee or an authorized delegate in the United States from a person located in the United States that has not been received by the payee or refunded to the sender, or escheated in accordance with applicable abandoned property laws.

  (B) For purposes of this section, “in the United States” shall include, to the extent applicable, a person in any state, territory, or possession of the United States; the District of Columbia; the Commonwealth of Puerto Rico; or a U.S. military installation located in a foreign country.

  (20) “Payment instrument” means a written or electronic check, draft, money order, traveler’s check, or other written or electronic instrument for the transmission or payment of money or monetary value, whether or not negotiable. The term does not include stored value or any instrument that is:

  (A) redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value; or

  (B) not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

  (21) “Payroll processing services” means receiving money for transmission pursuant to a contract with a person to deliver wages or salaries, make payment of payroll taxes to state and federal agencies, make payments relating to employee benefit plans, or make distributions of other authorized deductions from wages or salaries. The term does not include an employer performing payroll processing services on its own behalf or on behalf of its affiliate.

  (22) “Prevailing market value” means the value to buy or sell a particular virtual currency, as applicable, quoted on a virtual currency exchange operated by a licensee based in the United States, with sufficient volume to reflect the prevailing market price of such virtual currency.

  (23) “Receiving money for transmission” or “money received for transmission” means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means.

  (24) “Stored value” means monetary value representing a claim against the issuer evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value, or payment for goods or services. The term includes “prepaid access” as defined by 31 C.F.R. § 1010.100, as may be amended. Notwithstanding the foregoing, the term “stored value” does not include a payment instrument or closed loop stored value, or stored value not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

  (25) “Tangible net worth” means the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted accounting principles.

  (26) “U.S. dollar equivalent of virtual currency” means the prevailing market value of a particular virtual currency in United States dollars for a particular date or period specified in this chapter.

  (27)(A) “Virtual currency” means a digital representation of value that:

  (i) is used as a medium of exchange, unit of account, or store of value; and

  (ii) is not money, whether or not denominated in money.

  (B) The term “virtual currency” does not include:

  (i) a digital representation of value that can be redeemed for goods, services, discounts, or purchases solely as part of a customer affinity or rewards program with the issuing merchant or other designated merchants, or both, or can be redeemed for digital units in another customer affinity or rewards program, but cannot be, directly or indirectly, converted into, redeemed, or exchanged for money, monetary value, bank credit, or virtual currency; or

  (ii) a digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform, and:

  (I) has no market or application outside of such online game, game platform, or family of games;

  (II) cannot be, directly or indirectly, converted into, redeemed, or exchanged for money, monetary value, bank credit, or virtual currency; and

  (III) may or may not be redeemable for real-world goods, services, discounts, or purchases.

  (28) “Virtual-currency administration” means:

  (A) issuing virtual currency with the authority to redeem such virtual currency for money, monetary value, bank credit, or other virtual currency; or

  (B) issuing virtual currency that entitles the purchaser or holder of such virtual currency, or otherwise conveys or represents a right of the purchaser or holder of such virtual currency, to redeem such virtual currency for money, monetary value, bank credit, or other virtual currency.

  (29) “Virtual-currency business activity” means:

  (A) exchanging or transferring virtual currency, engaging in virtual-currency administration, or engaging in virtual-currency storage, in each case whether directly or through an agreement with a virtual-currency control-services vendor;

  (B) holding electronic precious metals or electronic certificates representing interests in precious metals on behalf of another person or issuing shares or electronic certificates representing interests in precious metals;

  (C) buying or selling virtual currency as a consumer business; or

  (D) receiving virtual currency or control of virtual currency for transmission or transmitting virtual currency, except where the transaction is undertaken for nonfinancial purposes and does not involve the transfer of more than a nominal amount of virtual currency.

  (30) “Virtual-currency control-services vendor” means a person that has control of virtual currency solely under an agreement with a person that, on behalf of another person, assumes control of virtual currency.

  (31) “Virtual-currency kiosk operator” means a person that engages in virtual-currency business activity via a money transmission kiosk located in this State or a person that owns, operates, or manages a money transmission kiosk located in this State through which virtual-currency business activity is offered.

  (32) “Virtual-currency storage” means:

  (A) maintaining possession, custody, or control over virtual currency on behalf of another person, including as a virtual-currency control-services vendor;

  (B) issuing, transferring, or otherwise granting or providing to any person in this State any claim or right, or any physical, digital, or electronic instrument, receipt, certificate, or record representing any claim or right to receive, redeem, withdraw, transfer, exchange, or control any virtual currency or amount of virtual currency; or

  (C) receiving possession, custody, or control over virtual currency from a person in this State, in return for a promise or obligation to return, repay, exchange, or transfer such virtual currency or a like amount of such virtual currency. (Added 2023, No. 110 (Adj. Sess.), § 39, eff. July 1, 2024.)

• § 2504. Exemptions

  This chapter does not apply to:

  (1) An operator of a payment system to the extent that it provides processing, clearing, or settlement services, between or among persons exempted by this section or licensees, in connection with wire transfers, credit card transactions, debit card transactions, stored-value transactions, automated clearing house transfers, or similar funds transfers.

  (2) A person appointed as an agent of a payee to collect and process a payment from a payor to the payee for goods or services, other than money transmission itself, provided to the payor by the payee, provided that:

  (A) there exists a written agreement between the payee and the agent directing the agent to collect and process payments from payors on the payee’s behalf;

  (B) the payee holds the agent out to the public as accepting payments for goods or services on the payee’s behalf; and

  (C) payment for the goods and services is treated as received by the payee upon receipt by the agent so that the payor’s obligation is extinguished and there is no risk of loss to the payor if the agent fails to remit the funds to the payee.

  (3) A person that acts as an intermediary by processing payments between an entity that has directly incurred an outstanding money transmission obligation to a sender, and the sender’s designated recipient, provided that the entity:

  (A) is properly licensed or exempt from licensing requirements under this chapter;

  (B) provides a receipt, electronic record, or other written confirmation to the sender identifying the entity as the provider of money transmission in the transaction; and

  (C) bears sole responsibility to satisfy the outstanding money transmission obligation to the sender, including the obligation to make the sender whole in connection with any failure to transmit the funds to the sender’s designated recipient.

  (4) The United States or a department, agency, or instrumentality thereof, or its agent.

  (5) Money transmission by the U.S. Postal Service or by an agent of the U.S. Postal Service.

  (6) A state, county, city, or any other governmental agency or governmental subdivision or instrumentality of a state, or its agent.

  (7) A financial institution as defined in subdivision 11101(32) of this title, or a credit union, provided their deposits are federally insured.

  (8) A financial institution holding company as defined in subdivision 11101(33) of this title; an office of an international banking corporation; a foreign bank that establishes a federal branch pursuant to the International Bank Act, 12 U.S.C. § 3102, as may be amended; a corporation organized pursuant to the Bank Services Company Act, 12 U.S.C. §§ 1862–1867, as may be amended; a corporation organized under the Edge Act, 12 U.S.C. §§ 611– 633, as may be amended; an independent trust company organized under chapter 77 of this title; or a special purpose financial institution that is organized under the laws of this State.

  (9) Electronic funds transfer of governmental benefits for a federal, state, county, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or on behalf of a state or governmental subdivision, agency, or instrumentality thereof.

  (10) A board of trade designated as a contract market under the federal Commodity Exchange Act, 7 U.S.C. §§ 1–25, as may be amended, or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board.

  (11) A registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant.

  (12) A person registered as a securities broker-dealer under federal or state securities laws to the extent of its operation as such a broker-dealer.

  (13) An individual employed by a licensee, authorized delegate, or any person exempted from the licensing requirements of this chapter when acting within the scope of employment and under the supervision of the licensee, authorized delegate, or exempted person as an employee and not as an independent contractor.

  (14) A person expressly appointed as a third-party service provider to or agent of an entity exempt under subdivision (7) of this section, solely to the extent that:

  (A) such service provider or agent is engaging in money transmission on behalf of and pursuant to a written agreement with the exempt entity that sets forth the specific functions that the service provider or agent is to perform; and

  (B) the exempt entity assumes all risk of loss and all legal responsibility for satisfying the outstanding money transmission obligations owed to purchasers and holders of the outstanding money transmission obligations upon receipt of the purchaser’s or holder’s money or monetary value by the service provider or agent.

  (15) The sale or issuance of stored value by a public or nonprofit school to its students and employees.

  (16) A debt adjuster licensed pursuant to chapter 133 of this title when engaged in the business of debt adjustment.

  (17) A person exempt by rule or order if the Commissioner finds such exemption to be in the public interest and that the regulation of such person is not necessary for the purposes of this chapter. (Added 2023, No. 110 (Adj. Sess.), § 39, eff. July 1, 2024.)

• § 2504a. Authority to require demonstration of exemption

  The Commissioner may require that any person claiming to be exempt from licensing pursuant to section 2504 of this chapter provide information and documentation to the Commissioner demonstrating that it qualifies for any claimed exemption. (Added 2023, No. 110 (Adj. Sess.), § 39, eff. July 1, 2024.)

• Subchapter 002: MONEY TRANSMISSION LICENSES

• § 2505. License required

  (a) A person shall not engage in the business of money transmission or advertise, solicit, or hold itself out as providing money transmission, unless the person is licensed under this subchapter.

  (b) Subsection (a) of this section does not apply to:

  (1) a person that is an authorized delegate of a person licensed under this subchapter acting within the scope of authority conferred by a written contract with the licensee; or

  (2) a person that is exempt pursuant to section 2504 of this chapter and does not engage in money transmission outside the scope of such exemption. (Added 2023, No. 110 (Adj. Sess.), § 40, eff. July 1, 2024.)

• § 2506. Application for license; additional information

  (a) In addition to the information required by section 2102 of this title, an application for a license under this subchapter shall state or contain:

  (1) a description of any money services previously provided by the applicant and the money services that the applicant seeks to provide in this State;

  (2) a list of the applicant’s proposed authorized delegates and the locations in Vermont where the applicant and its authorized delegates propose to engage in money transmission or provide other money services;

  (3) a list of other states in which the applicant is licensed to engage in money transmission or provide other money services;

  (4) information concerning any bankruptcy or receivership proceedings affecting the licensee or a person in control of a licensee;

  (5) a sample form of contract for authorized delegates, if applicable;

  (6) a sample form of payment instrument or instrument upon which stored value is recorded, as applicable; and

  (7) the name and address of any financial institution through which the applicant plans to conduct money services.

  (b) For good cause shown and consistent with the purposes of this section, the Commissioner may waive one or more requirements of this section or permit an applicant to submit substituted information in lieu of the required information. (Added 2023, No. 110 (Adj. Sess.), § 40, eff. July 1, 2024.)

• § 2507. Money transmission kiosk registration

  (a) A licensee shall not locate, or allow a third party to locate, a money transmission kiosk in this State that allows users of the money transmission kiosk to engage in money transmission through the licensee unless the licensee registers the money transmission kiosk and obtains the prior approval of the Commissioner for its activation.

  (b) To apply for registration and approval to activate a money transmission kiosk, a licensee shall submit an application, using a form prescribed by the Commissioner, that includes the ownership and location of the money transmission kiosk, an affidavit of all businesses and services to be offered at the kiosk, the written agreement between the licensee and the owner of the money transmission kiosk if different persons, and the text of each disclosure required pursuant to subsection (c) of this section along with a description of the form, timing, and location for each disclosure.

  (c) Each money transmission kiosk shall disclose prominently and conspicuously, using as high a contrast or resolution as any other display or graphics on the money transmission kiosk, prior to the point at which a user of the money transmission kiosk is irrevocably committed to completing any transaction:

  (1) on or at the location of the money transmission kiosk, or on the first screen of such kiosk, the name, address, and telephone number of the owner of the kiosk and the days, time, and means by which a consumer can contact the owner for consumer assistance; and

  (2) on the screen of the money transmission kiosk:

  (A) for a transaction that does not involve virtual currency, the amount of the fees or charges that will be assessed to the user of the money transmission kiosk for the transaction by the licensee and by the owner of the money transmission kiosk, a clear explanation of who is imposing each fee or charge and that such fees and charges are in addition to any fees or charges that may be imposed by other entities relevant to the particular transaction, and the method by which the user may cancel the transaction to avoid the imposition of fees or charges; and

  (B) for a transaction that involves virtual currency, all disclosures required pursuant to subsection 2574(c) of this chapter, a clear explanation of who is imposing each consideration to be charged for the transaction, and that such consideration is in addition to any fees or charges that may be imposed by other entities relevant to the particular transaction, and the method by which the user may cancel the transaction to avoid the imposition of the consideration and other fees or charges.

  (d) Any alterations in the form, content, timing, or location of previously approved disclosures must be submitted to and approved by the Commissioner prior to their adoption and use.

  (e) To ensure adequate consumer protection, the Commissioner may by rule or order specify additional minimum disclosure standards for money transmission kiosks, including the form, content, timing, and location of such disclosures.

  (f) Immediately following the completion of each transaction, each money transmission kiosk shall provide the user of the money transmission kiosk with a receipt that is compliant with sections 2562 and 2574 of this chapter as applicable to the particular transaction. (Added 2023, No. 110 (Adj. Sess.), § 40, eff. July 1, 2024.)

• Subchapter 003: CHECK CASHING AND CURRENCY EXCHANGE LICENSES

• § 2515. Check cashing and currency exchange license required

  (a) A person shall not engage in check cashing and currency exchange, or hold itself out as providing these money services, unless the person is licensed under this chapter.

  (b) Subsection (a) of this section shall not apply to:

  (1) a person licensed under subchapter 2 of this chapter;

  (2) an authorized delegate of a person licensed under subchapter 2 of this chapter if such money services are within the scope of authority conferred by a written contract between the authorized delegate and the licensee; or

  (3) a person that is exempt pursuant to section 2504 of this chapter and that does not engage in money services outside the scope of such exemption. (Added 2001, No. 55, § 1, eff. Jan. 1, 2002; amended 2023, No. 110 (Adj. Sess.), § 41, eff. July 1, 2024.)

• § 2516. Application for license; additional information

  In addition to the information required by section 2102 of this title, an application for a license under this subchapter shall state or contain:

  (1) the complete addresses of locations in this State where the applicant proposes to engage in check cashing or currency exchange, including all limited stations and mobile locations; and

  (2) a description of the source of money and credit to be used by the applicant to engage in check cashing services and currency exchange. (Added 2001, No. 55, § 1, eff. Jan. 1, 2002; amended 2011, No. 78 (Adj. Sess.), § 16, eff. April 2, 2012; 2019, No. 20, § 46.)

• § 2517. Repealed. 2019, No. 20, § 47.

• § 2518. Repealed. 2019, No. 20, § 48.

• § 2519. Activities of check cashers and currency exchanges

  (a) Check cashing.

  (1) A licensee, in every location conducting business under a license issued pursuant to this chapter, shall conspicuously post and at all times display a notice stating all fees charged. A licensee shall file with the Commissioner a statement of the fees charged at every location licensed for services offered there.

  (2) Before a licensee shall deposit, with any financial institution, a payment instrument that is cashed by a licensee, each such item shall be endorsed with the actual name under which such licensee is doing business. Additionally, the words “Licensed Check Cashing Business” must be written legibly or stamped immediately after or below the name of the endorser.

  (3) A licensee shall comply with all applicable federal statutes governing currency transaction reporting.

  (4) A licensee may not alter or delete any information on any payment instrument cashed.

  (5) A licensee shall issue a receipt for each check cashing transaction upon request. The receipt shall include, among other matters the licensee may desire to include, the amount of the payment instrument and the total fee charged.

  (6) A licensee shall not impose any fee or other charge for bad checks other than as expressly permitted under the provisions of 9 V.S.A. §§ 2311 and 2312.

  (7) Within 10 business days after being advised by the payor financial institution that a payment instrument has been altered, forged, stolen, obtained through fraudulent or illegal means, negotiated without proper legal authority, or represents the proceeds of illegal activity, the licensee shall notify the police department in the city or town where the payment instrument was cashed. If a payment instrument is returned to the licensee by the payor financial institution for any of the aforementioned reasons, the licensee may not release or destroy the payment instrument without the consent of the city or town police department, or other investigative law enforcement authority.

  (8) No licensee shall issue coupons, gift certificates, or tokens to be used in lieu of money when cashing a payment instrument.

  (9) No licensee shall require the customer to receive payment by a method which causes the customer to pay additional or further fees and charges to the licensee or other person, and no licensee shall charge or receive any other charges or fees in addition to the fees listed in this chapter.

  (10) A licensee shall pay to every customer tendering a payment instrument to be cashed the entire face amount of such instrument in cash, less any charges permitted by this section, on the same date upon which such instrument is presented to the licensee.

  (11) A licensee is prohibited from requiring that a customer cash two or more separate checks in a manner to avoid the limitations on the fees as set forth in this section.

  (12) No check casher shall:

  (A) charge check cashing fees, except as otherwise provided in this chapter, in excess of five percent of the face amount of the payment instrument or $5.00, whichever is greater;

  (B) charge check cashing fees in excess of three percent of the face amount of the payment instrument, or $2.00, whichever is greater, if such payment instrument is the payment of any kind of state public assistance or federal Social Security benefit, if the customer cashing the payment instrument is the named payee of such payment instrument; or

  (C) charge check cashing fees for personal checks or money orders in excess of 10 percent of the face amount of the personal check or money order or $5.00, whichever is less.

  (13) No licensee shall agree to hold a payment instrument for later deposit. No licensee shall cash or advance any money on a postdated payment instrument.

  (14) Licensees may charge a customer with a one-time membership fee not to exceed $10.00.

  (b) Currency exchange:

  (1) The rate of exchange and fees charged by a licensee for rendering currency exchange services shall be prominently displayed to the public at each business location.

  (2) Licensees shall provide each customer with a written receipt sufficient to identify the transaction, the licensee, the rate of exchange, the fees charged and the amount of currency exchanged. (Added 2001, No. 55, § 1, eff. Jan. 1, 2002.)

• § 2520. Applicability of subchapters

  The following subchapters of this chapter shall not apply to persons licensed under this subchapter: subchapter 4 (authorized delegates of money transmitters), subchapter 5 (reporting and records for money transmitters), subchapter 6 (prudential standards for money transmitters), subchapter 9 (timely transmission, refunds, and disclosures by money transmitters), and subchapter 10 (virtual currency). (Added 2023, No. 110 (Adj. Sess.), § 41, eff. July 1, 2024.)

• Subchapter 004: AUTHORIZED DELEGATES OF MONEY TRANSMITTERS

• § 2525. Relationship between licensee and authorized delegate

  (a) As used in this subchapter, “remit” means to make direct payments of money to a licensee or its representative authorized to receive the money, or to deposit the money in an entity identified as exempt under subdivision 2504(7) of this chapter, in an account specified by the licensee.

  (b) Before a licensee is authorized to conduct business through an authorized delegate or allows a person to act as the licensee’s authorized delegate, the licensee shall:

  (1) adopt, and update as necessary, written policies and procedures reasonably designed to ensure that the licensee’s authorized delegates comply with applicable state and federal law;

  (2) enter into a written contract that complies with subsection (d) of this section; and

  (3) conduct a reasonable risk-based background investigation sufficient for the licensee to determine whether the authorized delegate has complied and will likely comply with applicable state and federal law.

  (c) An authorized delegate must operate in full compliance with this chapter.

  (d) The written contract required by subsection (b) of this section must be signed by the licensee and the authorized delegate and, at a minimum, shall:

  (1) appoint the person signing the contract as the licensee’s authorized delegate with the authority to conduct money transmission on behalf of the licensee;

  (2) set forth the nature and scope of the relationship between the licensee and the authorized delegate and the respective rights and responsibilities of the parties;

  (3) require the authorized delegate to agree to fully comply with all applicable state and federal laws, rules, and regulations pertaining to money transmission, including this chapter and rules implementing this chapter, relevant provisions of the Bank Secrecy Act and the USA PATRIOT Act;

  (4) require the authorized delegate to remit and handle money and monetary value in accordance with the terms of the contract between the licensee and the authorized delegate;

  (5) impose a trust on money and monetary value net of fees received for money transmission for the benefit of the licensee;

  (6) require the authorized delegate to prepare and maintain records as required by this chapter or rules implementing 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 licensee 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 licensee to terminate an authorized delegate designation; and

  (9) acknowledge receipt of the written policies and procedures required under subsection (b) of this section.

  (e) If the licensee’s license is suspended, revoked, terminated, nonrenewed, surrendered or expired, the licensee must, within five business days, provide documentation to the Commissioner that the licensee has notified all applicable authorized delegates of the licensee whose names are in a record filed with the Commissioner of the suspension, revocation, termination, nonrenewal, surrender, or expiration of a license. Upon suspension, revocation, termination, nonrenewal, or surrender of a license, applicable authorized delegates shall immediately cease to provide money transmission as an authorized delegate of the licensee.

  (f) An authorized delegate of a licensee holds in trust for the benefit of the licensee all money net of fees received from money transmission. If any authorized delegate commingles any funds received from money transmission with any other funds or property owned or controlled by the authorized delegate, all commingled funds and other property shall be considered held in trust in favor of the licensee in an amount equal to the amount of money net of fees received from money transmission.

  (g) An authorized delegate shall not use a subdelegate to conduct money transmission on behalf of a licensee. (Added 2001, No. 55, § 1, eff. Jan. 1, 2002; amended 2009, No. 134 (Adj. Sess.), § 22; 2023, No. 110 (Adj. Sess.), § 42, eff. July 1, 2024.)

• § 2526. Unauthorized activities

  A person shall not engage in the business of money transmission on behalf of a person not licensed under subchapter 2 of this chapter or not exempt pursuant to subchapter 1 of this chapter. A person that engages in such activity provides money transmission to the same extent as if the person were a licensee and shall be jointly and severally liable with the unlicensed or nonexempt person. (Added 2023, No. 110 (Adj. Sess.), § 42, eff. July 1, 2024.)

• § 2527. Termination or suspension of authorized delegate activity

  (a) The authority granted to the Commissioner over licensees in section 2110 of this title applies equally to authorized delegates.

  (b) The Commissioner may issue an order suspending or barring any authorized delegate or any key individual or person in control of such authorized delegate from continuing to be or becoming an authorized delegate of any licensee during the period for which such orders are in effect or may order that an authorized delegate cease and desist in any specified conduct.

  (c) Upon issuance of a suspension or bar order, the licensee shall terminate its relationship with such authorized delegate according to the terms of the order. (Added 2023, No. 110 (Adj. Sess.), § 42, eff. July 1, 2024.)

• § 2528. Private actions against authorized delegates

  (a) Distinct from the Commissioner’s authority over licensees and authorized delegates, any court in this State with jurisdiction over a private civil action brought by a licensee against an authorized delegate shall have the ability to grant appropriate equitable or legal relief, including prohibiting the authorized delegate from directly or indirectly acting as an authorized delegate for any licensee in this State and the payment of restitution, damages, or other monetary relief, if the court finds that an authorized delegate failed to remit money in accordance with the written contract required by subsection 2525(b) of this chapter or as otherwise directed by the licensee or required by law.

  (b) If the court issues an order prohibiting a person from acting as an authorized delegate for any licensee pursuant to subsection (a) of this section, the licensee that brought the action shall report the order to the Commissioner within 30 days and shall report the order through NMLS within 90 days. (Added 2023, No. 110 (Adj. Sess.), § 42, eff. July 1, 2024.)

• Subchapter 005: REPORTING AND RECORDS FOR MONEY TRANSMITTERS

• § 2530. Report of condition

  (a) Each licensee shall submit a report of condition within 45 days of the end of the calendar quarter, or within any extended time as the Commissioner may prescribe.

  (b) The report of condition shall include:

  (1) Financial information at the licensee level.

  (2) Nationwide and state-specific money transmission transaction information in every jurisdiction in the United States where the licensee is licensed to engage in money transmission.

  (3) A permissible investments report.

  (4) Transaction destination country reporting for money received for transmission, if applicable.

  (5) Any other information the Commissioner reasonably requires with respect to the licensee. The Commissioner is authorized and encouraged to use NMLS for the submission of the report required by this section.

  (c) The information required by subdivision (b)(4) of this section shall only be included in a report of condition submitted within 45 days after the end of the fourth calendar quarter. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• § 2531. Audited financials

  (a) Each licensee shall, within 90 days after the end of each fiscal year, or within any extended time as the Commissioner may prescribe, file with the Commissioner:

  (1) an audited financial statement of the licensee for the fiscal year prepared in accordance with U.S. generally accepted accounting principles; and

  (2) any other information as the Commissioner may reasonably require.

  (b) The audited financial statements shall be prepared by an independent certified public accountant or independent public accountant who is satisfactory to the Commissioner.

  (c) The audited financial statements shall include or be accompanied by a certificate of opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the Commissioner. If the certificate or opinion is qualified, the Commissioner may order the licensee to take any action as the Commissioner may find necessary to enable the independent or certified public accountant or independent public accountant to remove the qualification. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• § 2532. Authorized delegate reporting

  (a) Each licensee shall submit a report of authorized delegates within 45 days after the end of the calendar quarter. The Commissioner is authorized and encouraged to use NMLS for the submission of the report required by this section provided that such functionality is consistent with the requirements of this section.

  (b) The authorized delegate report shall include, at a minimum, each authorized delegate’s:

  (1) company legal name;

  (2) taxpayer employer identification number;

  (3) principal provider identifier;

  (4) physical address;

  (5) mailing address;

  (6) any business conducted in other states;

  (7) any fictitious or trade name;

  (8) contact person name, phone number, and email;

  (9) start date as licensee’s authorized delegate;

  (10) end date acting as licensee’s authorized delegate, if applicable;

  (11) any administrative, civil, or criminal order against an authorized delegate concerning their activity as an authorized delegate; and

  (12) any other information the Commissioner reasonably requires with respect to the authorized delegate. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• § 2533. Change of authorized delegate

  A licensee shall notify the Commissioner in writing within 30 days after any change in the list of authorized delegates, identifying the name and street address of each new authorized delegate and of each removed authorized delegate. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• § 2534. Money laundering reports

  A licensee and an authorized delegate shall file all reports required by federal currency reporting, record keeping, and suspicious activity reporting requirements as set forth in the Bank Secrecy Act and other federal and state laws pertaining to money laundering. The timely filing of a complete and accurate report required under this section with the appropriate federal agency is deemed compliance with the requirements of this section. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• Subchapter 006: PRUDENTIAL STANDARDS FOR MONEY TRANSMITTERS

• § 2540. Net worth

  (a) A licensee under this chapter shall maintain at all times a tangible net worth of the greater of $100,000.00 or three percent of total assets for the first $100,000,000.00, two percent of additional assets for $100,000,000.00 to $1,000,000,000.00, and 0.5 percent of additional assets for over $1,000,000,000.00.

  (b) Tangible net worth must be demonstrated at initial application by the applicant’s most recent audited or unaudited financial statements pursuant to subsection 2102(e) of this title.

  (c) Notwithstanding subsections (a) and (b) of this section, the Commissioner for good cause shown has the authority to exempt an applicant or licensee from the requirements of this section, in part or in whole. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• § 2541. Security

  (a) An applicant for a money transmission license shall provide, and a licensee at all times shall maintain, security consisting of a surety bond in a form satisfactory to the Commissioner or, with the Commissioner’s approval, a deposit that meets the requirements of this section.

  (b) The amount of the required security shall be the greater of $100,000.00 or an amount equal to one hundred percent of the licensee’s average daily money transmission liability in this State calculated for the most recently completed three-month period, up to a maximum of $2,000,000.00.

  (c) A licensee that maintains a surety bond or deposit in the maximum amount provided for in subsection (b) of this section shall not be required to calculate its average daily money transmission liability in this State for purposes of this section.

  (d) A licensee may exceed the maximum required surety bond or deposit amount pursuant to subdivision 2543(a)(5) of this subchapter.

  (e) The surety bond or deposit shall be payable to the State for use of the State and for the benefit of any claimant against the licensee and its authorized delegates to secure the faithful performance of the obligations of the licensee and its authorized delegates with respect to money transmission.

  (f) The aggregate liability on a surety bond may not exceed the principal sum of the bond. A claimant against a licensee or its authorized delegate may maintain an action directly against the bond, or the Commissioner may maintain an action on behalf of the claimant against the bond. The power vested in the Commissioner by this subsection shall be in addition to any other powers of the Commissioner under this chapter.

  (g) The surety bond or deposit shall cover claims effective for as long as the Commissioner specifies, but for at least five years after the licensee ceases to provide money services in this State. However, the Commissioner may permit the amount of security to be reduced or eliminated before the expiration of that time to the extent the amount of the licensee’s outstanding money transmission obligations in this State is reduced. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• § 2542. Maintenance of permissible investments

  (a) A licensee shall maintain at all times permissible investments that have a market value computed in accordance with U.S. generally accepted accounting principles of not less than the aggregate amount of all of its outstanding money transmission obligations.

  (b) Except for permissible investments enumerated in subsection 2543(a) of this subchapter, the Commissioner, with respect to any licensee, may by rule or order limit the extent to which a specific investment maintained by a licensee within a class of permissible investments may be considered a permissible investment, if the specific investment represents undue risk to customers, not reflected in the market value of investments.

  (c) Permissible investments, even if commingled with other assets of the licensee, are held in trust for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations upon the occurrence of one or more of the following events:

  (1) the insolvency of the licensee;

  (2) the filing of a petition by or against the licensee under the U.S. Bankruptcy Code, 11 U.S.C. §§ 101–110, as may be amended, for bankruptcy or reorganization;

  (3) the filing of a petition by or against the licensee for receivership;

  (4) the commencement of any other judicial or administrative proceeding for its dissolution or reorganization; or

  (5) the commencement of an action by a creditor against the licensee who is not a beneficiary of this statutory trust.

  (d) No permissible investments impressed with a trust pursuant to subsection (c) of this section shall be subject to attachment, levy of execution, or sequestration by order of any court, except for a beneficiary of this statutory trust.

  (e) Upon the establishment of a statutory trust in accordance with subsection (c) of this section or when any funds are drawn on a letter of credit pursuant to subdivision 2543(a)(4) of this subchapter, the Commissioner shall notify the applicable regulator of each state in which the licensee is licensed to engage in money transmission, if any, of the establishment of the trust or the funds drawn on the letter of credit, as applicable. Notice shall be deemed satisfied if performed pursuant to a multistate agreement or through NMLS. Funds drawn on a letter of credit, and any other permissible investments held in trust for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations, are deemed held in trust for the benefit of such purchasers and holders on a pro rata and equitable basis in accordance with statutes pursuant to which permissible investments are required to be held in this State, and other states, as applicable. Any statutory trust established hereunder shall be terminated upon extinguishment of all of the licensee’s outstanding money transmission obligations.

  (f) The Commissioner by rule or order may allow other types of investments that the Commissioner determines are of sufficient liquidity and quality to be a permissible investment. The Commissioner is authorized to participate in efforts with other state regulators to determine that other types of investments are of sufficient liquidity and quality to be a permissible investment. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• § 2543. Types of permissible investments

  (a) The following investments are permissible under section 2542 of this subchapter:

  (1) Cash, including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee’s customers in an entity identified as exempt under subdivision 2504(7) of this chapter, and cash equivalents, including ACH items in transit to the licensee and ACH items or international wires in transit to a payee, cash in transit via armored car, cash in smart safes, cash in licensee-owned locations, debit card or credit card-funded transmission receivables owed by any bank, or money market mutual funds rated “AAA” by S&P or the equivalent from any eligible rating service.

  (2) Certificates of deposit or senior debt obligations of an insured depository institution, as defined in the Federal Deposit Insurance Act, 12 U.S.C. § 1813(c), as may be amended, or as defined under the federal Credit Union Act, 12 U.S.C. § 1781, as may be amended.

  (3) An obligation of the United States or a commission, department, agency, or instrumentality thereof; an obligation that is guaranteed fully as to principal and interest by the United States; or an obligation of a state or a governmental subdivision, agency, or instrumentality thereof.

  (4) The full drawable amount of an irrevocable standby letter of credit for which the stated beneficiary is the Commissioner that stipulates that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds up to the letter of credit amount within seven days of presentation of the items required by subdivision (a)(4)(C) of this section.

  (A) The letter of credit shall:

  (i) be issued by a financial institution as defined in subdivision 11101(32) of this title with federally insured deposits, a credit union with federally insured deposits, a foreign bank that is authorized under federal law to maintain a federal agency or federal branch office in a state or states, or a foreign bank that is authorized under state law to maintain a branch in a state that:

  (I) bears an eligible rating or whose parent company bears an eligible rating; and

  (II) is regulated, supervised, and examined by federal or state authorities having regulatory authority over banks, credit unions, and trust companies;

  (ii) be irrevocable, unconditional, and indicate that it is not subject to any condition or qualifications outside of the letter of credit;

  (iii) not contain reference to any other agreements, documents, or entities, or otherwise provide for any security interest in the licensee; and

  (iv) contain an issue date and expiration date, and expressly provide for automatic extension, without a written amendment, for an additional period of one year from the present or each future expiration date, unless the issuer of the letter of credit notifies the Commissioner in writing by certified or registered mail or courier mail or other receipted means, at least 60 days prior to any expiration date, that the irrevocable letter of credit will not be extended.

  (B) In the event of any notice of expiration or non-extension of a letter of credit issued under subdivision (a)(4)(A) of this section, the licensee shall be required to demonstrate to the satisfaction of the Commissioner, 15 days prior to expiration, that the licensee maintains and will maintain permissible investments in accordance with subsection 2542(a) of this subchapter upon the expiration of the letter of credit. If the licensee is not able to do so, the Commissioner may draw on the letter of credit in an amount up to the amount necessary to meet the licensee’s requirements to maintain permissible investments in accordance with subsection 2542(a) of this subchapter. Any such draw shall be offset against the licensee’s outstanding money transmission obligations. The drawn funds shall be held in trust by the Commissioner or the Commissioner’s designated agent, to the extent authorized by law, as agent for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations.

  (C) The letter of credit shall provide that the issuer of the letter of credit will honor, at sight, a presentation made by the beneficiary to the issuer of the following documents on or prior to the expiration date of the letter of credit:

  (i) the original letter of credit, including any amendments; and

  (ii) a written statement from the beneficiary stating that any of the following events have occurred:

  (I) the filing of a petition by or against the licensee under the U.S. Bankruptcy Code, 11 U.S.C. §§ 101–110, as may be amended, for bankruptcy or reorganization;

  (II) the filing of a petition by or against the licensee for receivership or the commencement of any other judicial or administrative proceeding for its dissolution or reorganization;

  (III) the seizure of assets of a licensee by a Commissioner pursuant to an emergency order issued in accordance with applicable law on the basis of an action, a violation, or a condition that has caused or is likely to cause the insolvency of the licensee; or

  (IV) the beneficiary has received notice of expiration or non-extension of a letter of credit and the licensee failed to demonstrate to the satisfaction of the beneficiary that the licensee will maintain permissible investments in accordance with subsection 2542(a) of this subchapter upon the expiration or non-extension of the letter of credit.

  (D) The Commissioner may designate an agent to serve on the Commissioner’s behalf as beneficiary to a letter of credit provided the agent and letter of credit meet requirements established by the Commissioner. The Commissioner’s agent may serve as agent for multiple licensing authorities for a single irrevocable letter of credit if the proceeds of the drawable amount for the purposes of subdivision (a)(4) of this section are assigned to the Commissioner.

  (E) The Commissioner is authorized and encouraged to participate in multistate processes designed to facilitate the issuance and administration of letters of credit, including but not limited to services provided by the NMLS and State Regulatory Registry, LLC.

  (5) One hundred percent of the surety bond or deposit provided for under section 2541 of this subchapter that exceeds the average daily money transmission liability in this state.

  (b) Unless permitted by the Commissioner by rule or order to exceed the limit as set forth in this subchapter, the following investments are permissible under subdivision 2542(a) of this subchapter to the extent specified:

  (1) Receivables that are payable to a licensee from its authorized delegates in the ordinary course of business that are less than seven days old, up to 50 percent of the aggregate value of the licensee’s total permissible investments.

  (2) Of the receivables permissible under subdivision (b)(1) of this section, receivables that are payable to a licensee from a single authorized delegate in the ordinary course of business may not exceed 10 percent of the aggregate value of the licensee’s total permissible investments.

  (3) The following investments are permissible up to 20 percent per category and combined up to 50 percent of the aggregate value of the licensee’s total permissible investments:

  (A) a short-term investment of up to six months bearing an eligible rating;

  (B) commercial paper bearing an eligible rating;

  (C) a bill, note, bond, or debenture bearing an eligible rating;

  (D) U.S. tri-party repurchase agreements collateralized at 100 percent or more with U.S. government or agency securities, municipal bonds, or other securities bearing an eligible rating;

  (E) money market mutual funds rated less than “AAA” and equal to or higher than “A-” by S&P or the equivalent from any other eligible rating service; and

  (F) a mutual fund or other investment fund composed solely and exclusively of one or more permissible investments listed in subdivisions (a)(1)–(3) of this section.

  (4) Cash, including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee’s customers, at foreign depository institutions are permissible up to 10 percent of the aggregate value of the licensee’s total permissible investments if the licensee has received a satisfactory rating in its most recent examination and the foreign depository institution:

  (A) has an eligible rating;

  (B) is registered under the Foreign Account Tax Compliance Act;

  (C) is not located in any country subject to sanctions from the Office of Foreign Asset Control; and

  (D) is not located in a high-risk or non-cooperative jurisdiction as designated by the Financial Action Task Force. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• Subchapter 007: REQUIREMENTS FOR MONEY SERVICERS

• § 2545. Change of location

  (a) A licensee shall notify the Commissioner in writing within 30 days following any change in locations in this State where the licensee or an authorized delegate of the licensee provides money services, including limited stations and mobile locations.

  (b) The notice required in subsection (a) of this section shall state the name and street address of each location removed or added to the licensee’s list.

  (c) Licensees shall submit with the notice required in subsection (a) of this section a nonrefundable fee of $25.00 for each new authorized delegate location and for each change in location for an authorized delegate. There is no fee to remove locations of authorized delegates. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• § 2546. Records

  (a) In addition to the records required to be maintained by section 2119 of this title and any other records the Commissioner requires pursuant to this chapter or rule, a licensee shall maintain the following records for at least five years for determining the licensee’s compliance with this chapter:

  (1) a general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts;

  (2) bank statements and bank reconciliation records; and

  (3) if the licensee is a money transmitter:

  (A) a record of each outstanding money transmission obligation sold;

  (B) records of outstanding money transmission obligations;

  (C) records of each outstanding money transmission obligation paid within the five-year period; and

  (D) a list of the last known names and addresses of all of the licensee’s authorized delegates.

  (b) The records specified in subsection (a) of this section shall be maintained in any form permitted in subsection 11301(c) of this title.

  (c) Records specified in subsection (a) of this section may be maintained outside this State if they are made accessible to the Commissioner on seven business-days’ notice. (Added 2023, No. 110 (Adj. Sess.), § 44, eff. July 1, 2024.)

• Subchapter 008: CONSERVATION, LIQUIDATION, AND INSOLVENCY

• § 2555. Conservation, liquidation, and insolvency

  To the extent applicable, the provisions of subchapters 2, 3, and 4 of chapter 209 of this title, excluding sections 19207, 19208, 19210, 19306, and 19307 of this title, shall apply to the conservation, liquidation, and insolvency of any licensee under this chapter. Such licensee shall be treated as a financial institution for the purposes of application of those subchapters. If an impaired or insolvent licensee is or becomes a debtor in bankruptcy or the subject of a bankruptcy proceeding under federal law, the Commissioner shall be relieved of any obligation otherwise imposed under this section and subchapters 2, 3, and 4 of chapter 209 of this title, and shall relinquish control of the assets and estate of such debtor to the duly appointed trustee in bankruptcy or the debtor in possession, as the case may be. (Added 2001, No. 55, § 1, eff. Jan. 1, 2002; amended 2023, No. 110 (Adj. Sess.), § 45, eff. July 1, 2024.)

• Subchapter 009: TIMELY TRANSMISSION, REFUNDS, AND DISCLOSURES BY MONEY TRANSMITTERS

• § 2560. Timely transmission

  (a) Every licensee shall forward all money received for transmission in accordance with the terms of the agreement between the licensee and the sender unless the licensee has a reasonable belief or a reasonable basis to believe that the sender may be a victim of fraud or that a crime or violation of law, rule, or regulation has occurred, is occurring, or may occur.

  (b) If a licensee fails to forward money received for transmission in accordance with this section, the licensee must respond promptly to inquiries by the sender with the reason for the failure unless providing a response would violate a state or federal law, rule, or regulation. (Added 2023, No. 110 (Adj. Sess.), § 47, eff. July 1, 2024.)

• § 2561. Refunds

  (a) This section does not apply to:

  (1) money received for transmission subject to the federal Remittance Rule, 12 C.F.R. Part 1005, subpart B, as may be amended; or

  (2) money received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee.

  (b) Every licensee shall refund to the sender within 10 days of receipt of the sender’s written request for a refund of any and all money received for transmission unless any of the following occurs:

  (1) The money has been forwarded within 10 days following the date on which the money was received for transmission.

  (2) Instructions have been given committing an equivalent amount of money to the person designated by the sender within 10 days following the date on which the money was received for transmission.

  (3) The agreement between the licensee and the sender instructs the licensee to forward the money at a time that is beyond 10 days following the date on which the money was received for transmission. If funds have not yet been forwarded in accordance with the terms of the agreement between the licensee and the sender, the licensee shall issue a refund in accordance with the other provisions of this section.

  (4) The refund is requested for a transaction that the licensee has not completed based on a reasonable belief or a reasonable basis to believe that a crime or violation of law, rule, or regulation has occurred, is occurring, or may occur.

  (5) The refund request does not enable the licensee to:

  (A) identify the sender’s name and address or telephone number; or

  (B) identify the particular transaction to be refunded in the event the sender has multiple transactions outstanding. (Added 2023, No. 110 (Adj. Sess.), § 47, eff. July 1, 2024.)

• § 2562. Receipts

  (a) This section does not apply to:

  (1) money received for transmission subject to the federal Remittance Rule, 12 C.F.R. Part 1005, subpart B, as may be amended;

  (2) money received for transmission that is not primarily for personal, family, or household purposes;

  (3) money received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee; or

  (4) payroll processing services.

  (b) As used in this section and sections 2507 and 2574 of this chapter, “receipt” means a paper receipt, electronic record, or other written confirmation. For a transaction conducted in person, the receipt may be provided electronically if the sender requests or agrees to receive an electronic receipt. For a transaction conducted electronically or by phone, a receipt may be provided electronically. All electronic receipts shall be provided in a retainable form.

  (c) Every licensee or its authorized delegate shall provide the sender a receipt for money received for transmission.

  (1) The receipt shall contain the following information, as applicable:

  (A) the name of the sender;

  (B) the name of the designated recipient;

  (C) the date of the transaction;

  (D) the unique transaction or identification number;

  (E) the name of the licensee, NMLS Unique ID, the licensee’s business address, and the licensee’s customer service telephone number;

  (F) the amount of the transaction in U.S. dollars;

  (G) for transactions that involve money sent in a different currency from the money received:

  (i) if the rate of exchange is fixed by the licensee at the time the transmission is initiated, the receipt shall disclose the rate of exchange for the transaction, and the duration, if any, for the payment to be made at the fixed rate of exchange so specified;

  (ii) if the rate of exchange is not fixed at the time the transmission is initiated, the receipt shall disclose that the rate of exchange for the transaction will be set at the time the money is received;

  (H) any fee charged by the licensee to the sender for the transaction; and

  (I) any taxes collected by the licensee from the sender for the transaction.

  (2) The receipt required by this section shall be in English and in the language principally used by the licensee or authorized delegate to advertise, solicit, or negotiate, either orally or in writing, for a transaction conducted in person, electronically, or by phone, if other than English. (Added 2023, No. 110 (Adj. Sess.), § 47, eff. July 1, 2024.)

• § 2563. Notice

  Every licensee or authorized delegate shall disclose on their website and mobile application the name of the Department and a current link to the Vermont Banking Consumer Complaint Form accompanied by statements conveying that, should the licensee’s customers have a complaint about the licensee’s money transmission services they should first contact the licensee using contact information supplied by the licensee and, if the complaint remains unresolved, they can submit a complaint to the Department using the form. (Added 2023, No. 110 (Adj. Sess.), § 47, eff. July 1, 2024.)

• § 2564. Disclosure for payroll processing services

  (a) A licensee that provides payroll processing services shall:

  (1) issue reports to clients detailing client payroll obligations in advance of the payroll funds being deducted from an account; and

  (2) make available worker paystubs or an equivalent statement to workers.

  (b) This section shall not apply to a licensee providing payroll processing services where the licensee’s client designates the intended recipients to the licensee and is responsible for providing the disclosures required by subdivision (a)(2) of this section. (Added 2023, No. 110 (Adj. Sess.), § 47, eff. July 1, 2024.)

• Subchapter 010: VIRTUAL CURRENCY

• § 2571. Definitions

  As used in this subchapter:

  (1) “Exchange,” used as a verb, means to assume or exercise control of virtual currency from or on behalf of a person, including momentarily, to buy, sell, trade, or convert:

  (A) virtual currency for money, monetary value, bank credit, or one or more forms of virtual currency, or other consideration; or

  (B) money, monetary value, bank credit, or other consideration for one or more forms of virtual currency.

  (2) “Transfer” means to assume or exercise control of virtual currency from or on behalf of a person and to:

  (A) credit the virtual currency to the account or digital wallet of another person;

  (B) move the virtual currency from one account or digital wallet of a person to another account or digital wallet of the same person; or

  (C) relinquish or transfer control or ownership of virtual currency to another person, digital wallet, distributed ledger address, or smart contract. (Added 2023, No. 110 (Adj. Sess.), § 48, eff. July 1, 2024.)

• § 2572. Exemptions

  (a) This subchapter shall not apply to the exchange or transfer of virtual currency, or to virtual-currency storage or virtual-currency administration, by a person to the extent that the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a–78oo, as may be amended, or the Commodities Exchange Act of 1936, 7 U.S.C. §§ 1–27f, as may be amended, govern such activity and the person is conducting such activity in compliance with all applicable requirements of such laws and any regulations promulgated thereunder.

  (b) This subchapter shall not apply to activity by:

  (1) a person that:

  (A) provides only data storage or security services for a business engaged in virtual-currency business activity and does not otherwise engage in virtual-currency business activity on behalf of another person; or

  (B) provides only to a person otherwise exempt from this chapter virtual currency as one or more enterprise solutions used solely among each other and has no agreement or relationship with a person that is an end-user of virtual currency;

  (2) a person using virtual currency, including creating, investing, buying or selling, or obtaining virtual currency as payment for the purchase or sale of goods or services, solely on its own behalf for personal, family, or household purposes or for academic purposes;

  (3) a person whose virtual-currency business activity with or on behalf of persons is reasonably expected to be valued, in the aggregate, on an annual basis at $5,000.00 or less, measured by the U.S. dollar equivalent of virtual currency;

  (4) a securities intermediary, as defined in 9A V.S.A. § 8-102, or a commodity intermediary, as defined in 9A V.S.A. § 9-102, that:

  (A) does not engage in the ordinary course of business in virtual-currency business activity with or on behalf of a person in addition to maintaining securities accounts or commodities accounts and is regulated as a securities intermediary or commodity intermediary under federal law, law of this State other than this chapter, or law of another state; and

  (B) affords a person protections comparable to those set forth in section 2575 of this subchapter;

  (5) a person that is engaged in testing products or services with the person’s own funds.

  (c) The Commissioner may determine that other persons or classes of persons, given facts particular to the person or class, are exempt from this chapter, when the person or class is covered by requirements imposed under federal law on business engaged in money services and the Commissioner determines that no additional requirements are necessary to ensure the protection of the public. (Added 2023, No. 110 (Adj. Sess.), § 48, eff. July 1, 2024.)

• § 2573. Conditions precedent to engaging in virtual-currency business activity

  (a) A person shall not engage in virtual-currency business activity, or hold itself out as being able to engage in virtual-currency business activity, with or on behalf of another person unless the person is:

  (1) licensed under subchapter 2 of this chapter to engage in virtual-currency business activity;

  (2) an authorized delegate of a person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity if such money services are within the scope of authority conferred by a written contract between the authorized delegate and the licensee;

  (3) exempt pursuant to section 2572 of this subchapter and engages in no licensable activity outside the scope of such exemption; or

  (4) exempt pursuant to section 2504 of this chapter and does not engage in money services outside the scope of such exemption.

  (b) A person that engages in virtual-currency business activity is engaged in the business of money transmission.

  (c) It is prohibited for a person to facilitate the provision of unlicensed virtual-currency business activity by another person that is required to be licensed under this subchapter, when the first person or the first person’s authorized agent receives notice from a regulatory, law enforcement, or similar governmental authority, or knows from its normal monitoring and compliance systems, or consciously avoids knowing that the unlicensed person is in violation of this chapter.

  (d) All provisions of this chapter, and any rule adopted under this chapter, that apply to a person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity shall apply equally to any person required to hold a license pursuant to subsection (a) of this section that does not hold one. Nothing herein shall be interpreted to permit any such unlicensed person to engage in virtual-currency business activity or hold itself out as being able to engage in any virtual-currency business activity without a license. (Added 2023, No. 110 (Adj. Sess.), § 48, eff. July 1, 2024.)

• § 2574. Required disclosures

  (a) A person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity shall provide the disclosures required by this section and any additional disclosure the Commissioner determines reasonably necessary for the protection of the public.

  (1) A disclosure required by this section must be made separately from any other information provided by the licensee and in a clear and conspicuous manner in a record the person may keep.

  (2) The Commissioner may waive one or more requirements in subsections (b)–(d) of this section and approve alternative disclosures proposed by a licensee if the Commissioner determines that the alternative disclosure is more appropriate for the virtual-currency business activity and provides the same or equivalent information and protection to the public.

  (b) Before engaging in virtual-currency business activity with a person, a licensee shall disclose, to the extent applicable to the virtual-currency business activity the licensee will undertake with the person:

  (1) a schedule of fees and charges the licensee may assess, the manner by which fees and charges will be calculated if they are not set in advance and disclosed, and the timing of the fees and charges, including general disclosure regarding mark-ups and mark-downs on purchases, sales, or exchanges of virtual currency in which the licensee or any affiliate thereof is acting in a principal capacity;

  (2) whether the product or service provided by the licensee is covered by:

  (A) a form of insurance or is otherwise guaranteed against loss by an agency of the United States:

  (i) up to the full U.S. dollar equivalent of virtual currency purchased from the licensee or for control of virtual currency by the licensee as of the date of the placement or purchase, including the maximum amount provided by insurance under the Federal Deposit Insurance Corporation or otherwise available from the Securities Investor Protection Corporation; or

  (ii) if not provided at the full U.S. dollar equivalent of virtual currency purchased from the licensee or for control of virtual currency by the licensee, the maximum amount of coverage for each person expressed in the U.S. dollar equivalent of the virtual currency; or

  (B) private insurance against theft or loss, including cyber theft or theft by other means;

  (3) the irrevocability of a transfer or exchange and any exception to irrevocability;

  (4) a description of:

  (A) liability for an unauthorized, mistaken, or accidental transfer or exchange;

  (B) the person’s responsibility to provide notice to the licensee of the transfer or exchange;

  (C) the basis for any recovery by the person from the licensee;

  (D) general error-resolution rights applicable to the transfer or exchange; and

  (E) the method for the person to update the person’s contact information with the licensee;

  (5) that the date or time when the transfer or exchange is made and the person’s account is debited may differ from the date or time when the person initiates the instruction to make the transfer or exchange;

  (6) whether the person has a right to stop a preauthorized payment or revoke authorization for a transfer and the procedure to initiate a stop-payment order or revoke authorization for a subsequent transfer;

  (7) the person’s right to receive a receipt, trade ticket, or other evidence of the transfer or exchange;

  (8) the person’s right to at least 30 days’ prior notice of a change in the licensee’s fee schedule, other terms and conditions of operating its virtual-currency business activity with the person, and the policies applicable to the person’s account; and

  (9) that virtual currency is not money.

  (c) In connection with any virtual-currency transaction effected through a money transmission kiosk in this State, or in any transaction where the licensee or any affiliate thereof is acting in a principal capacity in a sale of virtual currency to, or purchase of virtual currency from, a customer, then immediately prior to effecting such a purchase or sale transaction with or on behalf of a customer, a licensee shall prominently disclose and require the customer to acknowledge and confirm:

  (1) the type, value, date, precise time, and amount of the transaction; and

  (2) the consideration charged for the transaction, including:

  (A) any charge, fee, commission, or other consideration for any trade, exchange, conversion, or transfer involving virtual currency; and

  (B) any difference between the price paid by the customer for any virtual currency and the prevailing market price of such virtual currency, if any.

  (d) Except as otherwise provided in subsection (e) of this section, at the conclusion of a virtual-currency transaction with or on behalf of a person, a licensee shall provide the person with a receipt that contains:

  (1) the name and contact information of the licensee, including information the person may need to ask a question or file a complaint;

  (2) the type, value, date, precise time, and amount of the transaction;

  (3) the consideration charged for the transaction, including:

  (A) any charge, fee, commission, or other consideration for any trade, exchange, conversion, or transfer involving virtual currency; or

  (B) the amount of any difference between the price paid by the customer for any virtual currency and the prevailing market price of such virtual currency, if any; and

  (4) any other information required pursuant to section 2562 of this title.

  (e) If a licensee discloses that it will provide a daily confirmation in the initial disclosure under subsection (c) of this section, the licensee may elect to provide a single, daily confirmation for all transactions with or on behalf of a person on that day instead of a per-transaction confirmation. (Added 2023, No. 110 (Adj. Sess.), § 48, eff. July 1, 2024.)

• § 2575. Property interests and entitlements to virtual currency

  (a) A person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity that has control of virtual currency or provides virtual-currency storage to, for, or on behalf of one or more persons shall maintain custody and control of virtual currency in an identical type and amount of virtual currency sufficient to satisfy the aggregate entitlements of such persons to such identical types and amounts of virtual currency.

  (b) For the purposes of subsection (a) of this section, units of virtual currency are only of an identical type and amount if such units are fungible in all respects, including having the same issuer and being identical in amount, market capitalization, circulating supply, name, U.S. dollar equivalent of virtual currency, liquidity, use, rights, restrictions, functionality, permissions, and any other material attribute.

  (c) If a licensee violates subsection (a) of this section, the property interests of the persons in the virtual currency are pro rata property interests in the type of virtual currency to which the persons are entitled, without regard to the time the persons became entitled to the virtual currency or the licensee obtained control of the virtual currency.

  (d) The virtual currency referred to in this section is and shall be:

  (1) held for the persons entitled to the virtual currency;

  (2) not property of the licensee or any person required to be licensed under this chapter;

  (3) not subject to any claims, liens, or encumbrances of creditors of the licensee or any person required to be licensed under this chapter; and

  (4) deemed to be a permissible investment under this chapter to the extent that there is an outstanding money transmission obligation owed to a customer in such type and amount of virtual currency.

  (e) A person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity is prohibited from selling, transferring, assigning, lending, hypothecating, pledging, or otherwise using or encumbering virtual currency stored, held, controlled, or maintained by, or under the custody or control of, such licensee on behalf of another person except for the sale, transfer of ownership, or assignment of such assets at the direction of such other person.

  (f) A person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity shall not directly or indirectly use or engage any other person, including any virtual-currency control-services vendor, to store or hold custody or control of any virtual currency for or on behalf of any customer in this State, unless such other person is licensed under subchapter 2 of this chapter to engage in virtual-currency business activity, a financial institution or credit union that is exempt from licensing under section 2504(7) of this chapter, or a qualified custodian approved by the Commissioner by rule or order to hold virtual currency on behalf of customers in this State.

  (g) Virtual currency held in violation of subsection (f) of this section shall not be deemed to be a permissible investment for purposes of satisfying a licensee’s obligations under section 2542(a) of this chapter, but shall be deemed to be a permissible investment for purposes of section 2542(c)–(e) of this chapter.

  (h) The Commissioner may by rule or order adopt additional consumer protections concerning virtual currency, including:

  (1) rules regarding the segregation of virtual currencies and accounts held for or on behalf of customers from a licensee’s own virtual currencies and assets;

  (2) rules related to the custody, storage, security, ownership of, and title to permissible investments and customer virtual currencies and assets;

  (3) rules related to the use of virtual-currency control service vendors or other custodians to hold custody or control of virtual currency;

  (4) rules related to audit requirements for customer assets;

  (5) rules setting standards, limits, prohibitions, disclosure requirements, and procedures regarding the types of virtual currencies and related services, activities, and transactions that licensees may offer in this State as may be necessary or appropriate for the protection of consumers or compliance with the terms of this chapter;

  (6) rules requiring compliance with specific provisions of the Uniform Commercial Code; and

  (7) any rules as may be necessary or appropriate for the protection of consumers or necessary or appropriate to effectuate the purposes of this chapter. (Added 2023, No. 110 (Adj. Sess.), § 48, eff. July 1, 2024.)

• § 2576. Additional requirements and clarifications for virtual-currency business activities

  (a) To ensure adequate consumer protection, the Commissioner may adopt by rule provisions that specify limitations to and the method by which a person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity may include virtual currency and virtual currency-denominated assets in the calculation of its net worth pursuant to section 2540 of this chapter.

  (b) In addition to the records required to be maintained by sections 2119 and 2546 of this title and any other records the Commissioner requires pursuant to this chapter or rule, a person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity shall maintain, for all virtual-currency business activity with or on behalf of a person, for at least five years after the date of the activity, a record of:

  (1) each transaction of the licensee with or on behalf of the person or for the licensee’s account in this state, including:

  (A) the identity of the person;

  (B) the form of the transaction;

  (C) the amount, date, and payment instructions given by the person; and

  (D) the account number, name, and U.S. Postal Service address of the person, and, to the extent feasible, other parties to the transaction;

  (2) the aggregate number of transactions and aggregate value of transactions by the licensee with or on behalf of the person and for the licensee’s account in this State, expressed in U.S. dollar equivalent of virtual currency for the previous 12 calendar months;

  (3) each transaction in which the licensee exchanges one form of virtual currency for money or another form of virtual currency with or on behalf of the person;

  (4) a general ledger posted at least monthly that lists all assets, liabilities, capital, income, and expenses of the licensee;

  (5) each business-call report the licensee is required to create or provide to the Department or NMLS;

  (6) bank statements and bank reconciliation records for the licensee and the name, account number, and U.S. Postal Service address of each bank the licensee uses in the conduct of its virtual-currency business activity with or on behalf of the person;

  (7) a report of any dispute with the person; and

  (8) a report of any virtual-currency business activity transaction with or on behalf of a person which the licensee was unable to complete.

  (c) It is unlawful for a person licensed under subchapter 2 of this chapter to engage in virtual-currency business activity, or any other person, in connection with the offer to sell, the offer to purchase, the sale, the purchase of a virtual currency, or in connection with any virtual-currency business activity or transaction in virtual currency, directly or indirectly:

  (1) to employ a device, scheme, or artifice to defraud;

  (2) to make an untrue statement of a material fact or to omit to state a material fact necessary in order to make the statements made, in light of the circumstances under which they were made, not misleading; or

  (3) to engage in an act, practice, or course of business that operates or would operate as a fraud or deceit upon another person.

  (d) Persons licensed under subchapter 2 of this chapter to engage in virtual-currency business activity shall comply at all times with all applicable federal and state laws, rules, and regulations, including the following laws, as may be amended: the Securities Act of 1933, 15 U.S.C. §§ 77a–77aa, the Securities Exchange Act of 1934, 15 U.S.C. §§ 78a–78oo, the Commodities Exchange Act of 1936, 7 U.S.C. §§ 1–27f, and the Vermont Securities Act, 9 V.S.A. chapter 150. (Added 2023, No. 110 (Adj. Sess.), § 48, eff. July 1, 2024.)

• § 2577. Virtual-currency kiosk operators

  (a) Daily transaction limit. A virtual-currency kiosk operator shall not accept or dispense more than $1,000.00 of cash in a day in connection with virtual-currency transactions with a single customer in this State via one or more money transmission kiosks.

  (b) Fee cap. The aggregate fees and charges, directly or indirectly, charged to a customer related to a single transaction or series of related transactions involving virtual currency effected through a money transmission kiosk in this State, including any difference between the price charged to a customer to buy, sell, exchange, swap, or convert virtual currency and the prevailing market value of such virtual currency at the time of such transaction, shall not exceed the greater of the following:

  (1) $5.00; or

  (2) three percent of the U.S. dollar equivalent of virtual currency involved in the transaction or transactions.

  (c) Single transaction. The purchase, sale, exchange, swap, or conversion of virtual currency, or the subsequent transfer of virtual currency, in a series of transactions shall be deemed to be a single transaction for purposes of subsection (b) of this section.

  (d) Licensing requirement. A virtual-currency kiosk operator shall comply with the licensing requirements of this subchapter to the extent that the virtual-currency kiosk operator engages in virtual-currency business activity.

  (e) Operator accountability. If a virtual-currency kiosk operator allows or facilitates another person to engage in virtual-currency business activity via a money transmission kiosk in this State that is owned, operated, or managed by the virtual-currency kiosk operator, the virtual-currency kiosk operator shall do all of the following:

  (1) ensure that the person engaging in virtual-currency business activity is licensed under subchapter 2 of this chapter to engage in virtual-currency business activity and complies with all other applicable provisions of this chapter;

  (2) ensure that any charges collected from a customer via the money transmission kiosk comply with the limits provided by subsection (b) of this section; and

  (3) comply with all other applicable provisions of this chapter.

  (f) Moratorium. To protect the public safety and welfare and safeguard the rights of consumers, virtual-currency kiosks shall not be permitted to operate in Vermont prior to July 1, 2025. This moratorium shall not apply to a virtual-currency kiosk that was operational in Vermont on or before June 30, 2024.

  (g) Report. On or before January 15, 2025, the Commissioner of Financial Regulation shall report to the House Committee on Commerce and Economic Development and the Senate Committee on Finance on whether the requirements of this section coupled with relevant federal requirements are sufficient to protect customers in Vermont from fraudulent activity. If deemed necessary and appropriate by the Commissioner, the Commissioner may make recommendations for additional statutory or regulatory safeguards. In addition, the Commissioner shall make recommendations for enhanced oversight and monitoring of virtual-currency kiosks for the purpose of minimizing their use for illicit activities as described in the U.S. Government Accountability Office report on virtual currencies, GAO-22-105462, dated December 2021. (Added 2023, No. 110 (Adj. Sess.), § 48, eff. July 1, 2024.)