Trying to get all 50 states to do anything exactly the same way may be an exercise in futility. But agreement on at least some things could still provide some relief for payment facilitators who are burdened with navigating the state-by-state patchwork of money transmitter licensing.
The Conference of State Bank Supervisors (CSBS) announced this week that seven states had agreed to standardize parts of the money services business licensing process in their states. CSBS is the national organization for state bank regulators.
“This MSB licensing agreement will minimize the burden of regulatory licensing, use state resources more efficiently, and allow for broad participation by other states across the country,” John Ryan, CSBS president and chief executive officer, said in a press release.
The agreement streamlines the process by enabling participating states to accept the findings of one state’s review of five key areas within the application: IT, cybersecurity, business plan, background check, and compliance with the federal Bank Secrecy Act, the release said.
So, while it is still far from a reciprocal agreement in which one state would simply accept the license of another, the agreement is a positive move forward that helps to streamline the process of licensing in the participating states, according to Evan Minsberg, an attorney with law firm Venable LLP focused on financial services regulation.
“It does not prevent each state from imposing other state-specific requirements,” Minsberg said. “but if a company gets licensed in Georgia, then presumably, the other six states will not need to review the standardized elements. This should move the approval process along faster, but each state will still fully review any other parts of the application.”
“This is still good news for payment facilitators and other fintech companies seeking money transmitter licenses. The areas being standardized are definitely non-trivial items when it comes to preparation and review,” he said.
The participating states so far are Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington. Other states are expected to follow suit, the CSBS announcement said.
Payment facilitators who think this applies to them should consult with their attorneys.
As PaymentFacilitator.com has previously reported, CSBS has established a goal of developing an integrated licensing system across all 50 states for financial technology companies by 2020.
The effort includes forming an industry advisory panel; upgrading its technology platform, the Nationwide Multistate Licensing System (NMLS); and – as demonstrated by this announcement – finding opportunities to bring state practices into alignment.