The varied state approaches to money transmitter laws are a common headache for many payment facilitators. Affected companies dream of a uniform system, where adhering to the requirements in one state means that you can operate in other states as well.
The road to that system is long, but the good news is, baby steps down the path are continuing.
As PaymentFacilitator.com has previously reported, the Conference of State Bank Supervisors (CSBS) has announced plans – known as its Vision 2020 initiative – to move toward an integrated system for regulating non-bank entities, including financial technology companies, across state lines.
Underlying that system is a common infrastructure. Managed by CSBS, the Nationwide Multistate Licensing System and Registry (NMLS) originated as a portal for mortgage companies to obtain licenses. Some states are expanding their use of the portal to include other non-depository institutions, including money transmitters.
New York recently announced that it is adding money transmitters to its own usage of the system.
“[The New York Department of Financial Services] is pleased to bring the efficiencies and robust oversight that the NMLS platform provides to additional financial services industries regulated by DFS,” Financial Services Superintendent Maria T. Vullo said in a press release. “The Department joins CSBS in the continual modernization of state regulation, enhancing the strong regulatory framework created by states, and supporting industry innovation.”
The CSBS has also made additional progress, recently announcing the formation of a fintech advisory panel it announced as part of the Vision 2020 initiative. The panel will discuss current issues with multi-state licensing, brainstorm solutions, and provide feedback on state initiatives, the organization said.
CSBS is seeking participants to represent the fintech sector on the panel, and is accepting statements of interest until July 28.
“Through the CSBS advisory panel, state regulators are seeking industry partners to help achieve a common goal: modernize state financial regulation for fintech firms and other financial service providers. If we succeed, then we will see more businesses producing more innovations for more consumers – all in a safe and sound manner,” Albert Forkner, chairman of CSBS and commissioner of the Wyoming Division of Banking, said in a press release.
As we have previously noted in PaymentFacilitator.com, these are all steps headed in the right direction, but a uniform system ultimately relies on state regulators sitting down and agreeing on common standards. Fulfillment of that dream is a long way down the road.