HOUSE DOCKET, NO. 722 FILED ON: 1/14/2019
HOUSE . . . . . . . . . . . . . . . No. 924
The Commonwealth of Massachusetts
To the Honorable Senate and House of Representatives of the Commonwealth of Massachusetts in General
The undersigned legislators and/or citizens respectfully petition for the adoption of the accompanying bill:
An Act relative to the regulation of the business of domestic and foreign money transmission by the Division of Banks.
HOUSE DOCKET, NO. 722 FILED ON: 1/14/2019
HOUSE . . . . . . . . . . . . . . . No. 924
By Mr. Cahill of Lynn, a petition (accompanied by bill, House, No. 924) of Daniel Cahill relative to the regulation of the business of domestic and foreign money transmission by the Division of Banks. Financial Services.
The Commonwealth of Massachusetts
In the One Hundred and Ninety-First General Court
An Act relative to the regulation of the business of domestic and foreign money transmission by the Division of Banks.
Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:
SECTION 1. Chapter 167F of the General Laws is hereby amended by striking out section 4, as appearing in the 2016 Official Edition, and inserting in place thereof the following section:--
Section 4. A bank may engage directly in the business of selling, issuing or registering checks.
SECTION 2. Chapter 169 of the General Laws is hereby repealed.
SECTION 3. The General Laws are hereby amended by inserting after chapter 169A the following chapter:-
Licensing and Supervision of Money Transmitters
Section 1. As used in this chapter, the following words shall, unless the context clearly requires otherwise, have the following meanings:
“Authorized agent,” a person designated by a licensee under the provisions of this chapter to sell or issue payment instruments or engage in the business of transmitting money on behalf of a licensee at a location in the commonwealth.
“Branch office”, any office in the commonwealth operated by a licensee at which the licensee engages in money transmission.
“Commissioner,” the commissioner of banks.
“Licensee,” a person licensed under this chapter to engage in the business of money transmission; provided, however that the term “licensee” shall not include an “authorized agent.”
“Material litigation,” any litigation that, according to generally accepted accounting principles, is deemed significant to an applicant’s or licensee’s financial health and would be required to be referenced in that entity’s annual audited financial statements, report to shareholders or similar documents.
“Money transmission,” the sale or issuance of payment instruments or prepaid access for use primarily for personal, family, or household purposes, or engaging in the business of receiving money for transmission or transmitting money within the United States or to countries other than the United States by any and all means, including but not limited to payment instrument, wire, facsimile or electronic trans primarily for personal, family, or household purposes.
“Multi-state licensing system”, a system involving 1 or more states, the District of Columbia, or the Commonwealth of Puerto Rico for the sharing of regulatory information and the licensing and application processes, by electronic or other means, for the business of money transmission.
“Outstanding payment instrument,” any payment instrument issued by the licensee which has been sold in the United States directly by the licensee or any payment instrument issued by the licensee which has been sold by an authorized agent of the licensee in the United States, which has been reported to the licensee as having been sold and which has not yet been paid by or for the licensee.
“Payment instrument,” any electronic or written check, draft, money order, travelers check or other electronic or written instrument or order for the transmission or payment of money, sold or issued to one or more persons, whether or not such instrument is negotiable. The term “payment instrument” shall not include any credit card voucher, any letter of credit or any instrument which is redeemable by the issuer in goods or services.
“Person,” any individual, partnership, association, joint-stock association, trust, limited liability company, limited liability partnership or corporation.
“Prepaid access,” access to funds or the value of funds that have been paid in advance and can be retrieved or transferred at some point in the future through an electronic device or vehicle, such as a card, code, electronic serial number, mobile identification number or personal identification number. The term “prepaid access” shall not include closed loop prepaid access to funds or the value of funds that can be used only for goods or services in transactions involving a defined merchant or location (or set of locations), such as a specific retailer or retail chain, a college campus, or a subway system.
“Principal shareholder,” any person or group of persons acting in concert who is the owner of 10 per cent or more of any voting class of an applicant’s stock.
“Remit,” either to make direct payment of money to a licensee or its representatives authorized to receive the money, or to deposit money in a bank, credit union or savings and loan association or other similar financial institution in an account specified by the licensee.
Section 2. No person or entity shall engage in the business of money transmission without first obtaining a license from the commissioner pursuant to this chapter. If a licensee intends to carry on a business at a location other than its main office, including through an authorized agent, such licensee shall procure a license for each branch office or authorized agent; provided, however, that a license shall not be required for a location of an authorized agent that engages solely in the sale of prepaid access, travelers’ checks, or money orders and is not engaged in any other form of money transmission on behalf of the licensee.
Section 3. Nothing in this chapter shall be construed to apply to:
(a) the United States or a department, agency, or instrumentality thereof;
(b) money transmission by the United States Postal Service or by a contractor on behalf of the United States Postal Service;
(c) a state or a governmental subdivision, agency, or instrumentality thereof;
(d) a bank, as defined in section 1 of chapter 167, a national banking association, a federally chartered credit union, a federal savings and loan association, a federal savings bank, or any subsidiary of the above, or any bank, trust company, savings bank, savings and loan association, or credit union organized under the laws of any other state, or any subsidiary of the above, a bank holding company, an office of an international banking corporation, a branch of a foreign bank, a corporation organized pursuant to the Bank Services Act, or a corporation organized under the Edge Act under the laws of a state or the United States if the person does not issue, sell, or provide payment instruments or prepaid access through an authorized agent that is not such a person;
(e) electronic funds transfer of governmental benefits for a federal, state, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or a state or governmental subdivision, agency, or instrumentality thereof;
(f) a board of trade designated as a contract market under the Commodity Exchange Act 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 of trade;
(g) a registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant;
(h) a person that provides clearance or settlement services pursuant to a registration as a clearing agency or an exemption from such registration granted under the federal securities laws to the extent of its operation as such a provider;
(i)A transaction in which the recipient of the money or other monetary value is an agent of the payee pursuant to a written contract and delivery of the money or other monetary value to the agent satisfies the payor’s obligation to the payee.
(1)For purposes of this subsection, “payee” means the provider of goods or services, who is owed payment of money or other monetary value from the payor for the goods or services.
(2)For purposes of this subsection, “payor” means the recipient of goods or services, who owes payment of money or monetary value to the payee for the goods or services.
(j) an operator of a payment system to the extent that it provides processing, clearing, or settlement services, between or among persons excluded by this section, in connection with wire transfers, credit card transactions, debit card transactions, prepaid access transactions, automated clearing house transfers, or similar funds transfers; or
(k) 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.
Section 4. The commissioner may adopt, amend, or repeal rules and regulations, which shall include an adequate capitalization requirement in an amount not to exceed $5,000,000 for entities engaged in the business of money transmission to aid in the administration and enforcement of this chapter. Such regulation may contain such classifications, differentiations, or other provisions, and may provide for such adjustments and exceptions for any class of transactions, as in the judgment of the commissioner are necessary or proper to carry out the purposes of this chapter, to prevent circumvention or evasion thereof, or to facilitate compliance therewith.
Notwithstanding any other provision of this chapter, the commissioner may issue an advisory opinion or adopt regulations relative to the business of money transmission for the purpose of maintaining consistency with regulations adopted by a federal regulatory agency and governing provisions similar to those contained in this chapter.
Section 5. The application for a license shall be in a form prescribed by the commissioner and shall contain the name and address or addresses where the business of the applicant is located and if the applicant is a partnership, association, corporation, or other form of business organization, the names and addresses of each member, director, principal officer thereof, and any individual acting as a manager of an office location. Such application shall also include a description of the activities of the applicant, in such detail and for such periods as the commissioner may require, as well as such further information as the commissioner may require. The commissioner may require a background investigation of each applicant for a license to engage in the business of money transmission by means of fingerprint and state and national criminal history record checks by the department of criminal justice information services pursuant to section 172 of chapter 6 and the Federal Bureau of Investigation. If the applicant is a partnership, association, corporation or other form of business organization, the commissioner may require such background investigation by means of fingerprint checks on each member, director, principal officer of such applicant, and any individual acting as a manager of an office location. Receipt of criminal history record information by a private entity shall be prohibited. Each application for a license shall be accompanied by an investigation fee. Investigation and license fees shall be determined annually by the commissioner of administration under section 3B of chapter 7.
Upon the filing of an application for a license, if the commissioner finds that the financial responsibility, character, reputation, integrity and general fitness of the applicant, and of the partners or members thereof if the applicant is a partnership or association, and of the officers, directors and principal employees if the applicant is a corporation, are such as to warrant belief that the business will be operated honestly, fairly, soundly and efficiently in the public interest consistent with the purposes of this chapter, the commissioner shall thereupon issue the applicant a license to engage in the business of money transmission. If the commissioner shall not so find or: (a) the applicant made a false statement of a material fact in the application for a license; (b) an officer, director or member of the applicant business, including a proposed authorized agent, has, within 10 years prior to the filing of the application, been (1) convicted of or pleaded nolo contendere to a felony, or (2) committed an act involving fraud or deceit, which act is substantially related to the qualifications, functions or duties of a person engaged in the business of money transmission; (c) the applicant violated any of the provisions of this chapter or regulations promulgated hereunder, any similar regulatory scheme of another jurisdiction, or any other law applicable to the conduct of the business sought to be licensed; (d) a licensee or authorized agent of a licensee located at the address at which the applicant intends to operate the business has had any license, registration or other authorization issued by the commissioner suspended or revoked within 6 months of the date of the new application; the commissioner shall not issue a license and shall notify the applicant of the denial. Within 20 days thereafter, the commissioner shall enter upon the records a written decision and findings containing the reasons supporting the denial and shall forthwith give written notice thereof by registered mail to the applicant. Within 30 days after the date of such notice, the applicant may appeal from such denial to the superior court for Suffolk county, sitting in equity. The court shall hear all pertinent evidence and determine the facts and upon the facts as so determined, review said denial and, as justice and equity may require, affirm the same or order the commissioner to issue such license.
The commissioner may participate in a multi-state licensing system for entities engaged in the business of money transmission. The commissioner may establish requirements for participation by an applicant in a multi-state licensing system which may vary from the provisions set out in section 5 and section 6. The applicant shall pay directly to such multi-state licensing system any additional fee relating to participation in such multi-state licensing system.
Section 6. Each license shall contain such information and shall be displayed as may be required by regulation by the commissioner.
Such license shall not be transferable or assignable and shall expire annually at such time as determined by the commissioner. The closing of a location of the licensee at the address stated on the license, including an authorized agent, or a change of location of the licensee at the address stated on the license, including an authorized agent, shall require written notification to the commissioner in accordance with regulations promulgated by the commissioner. Notwithstanding the foregoing, if an authorized agent closes or relocates a licensed location without advance notification to the licensee, the licensee shall notify the commissioner within 15 calendar days of being so notified by the authorized agent.
If there shall be any change among the officers, partners or directors of any licensee or authorized agent, the licensee shall notify the commissioner of the name, address and occupation of each new officer, partner, director, or authorized agent and provide such other information as the commissioner may require in accordance with regulations promulgated by the commissioner.
Section 7. All money received for transmission by any licensee shall be forwarded to the person to whom the same is directed within 7 days following receipt thereof. Receipts given for deposits of money received for transmission shall contain all appropriate information relative to the transaction.
Section 8. The commissioner may suspend or revoke a license issued pursuant to this chapter if the commissioner finds that:
(a) the licensee or an authorized agent has violated a provision of this chapter or any rule or regulation adopted hereunder or any other law applicable to the conduct of its business; or
(b) a fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted said commissioner in refusing to issue such license.
Except as provided in subsection (b) of section 9, no license shall be revoked or suspended except after notice and hearing pursuant to chapter 30A.
A licensee may surrender a license by delivering to the commissioner written notice that it hereby surrenders such license; provided, however, that such surrender shall not affect the civil or criminal liability of such licensee for acts committed before such surrender.
No revocation, suspension or surrender of a license shall impair or affect the obligation of any preexisting lawful contract between the licensee, either directly or through an authorized agent, and any person.
In lieu of suspension or revocation of a license issued hereunder, the commissioner may fine a licensee up to a maximum of $500 per day for each violation.
Section 9. (a) If the commissioner determines, after giving notice of and opportunity for a hearing, that a licensee has engaged in or is about to engage in an act or practice constituting a violation of a provision of this chapter or a rule, regulation or order adopted hereunder, said commissioner may order such licensee to cease and desist from such unlawful act or practice and take such affirmative action as in the commissioner’s judgment will effect the purposes of this chapter.
(b) If the commissioner makes written findings of fact that the public interest will be irreparably harmed by a delay in issuing an order under subsection (a) the commissioner may issue a temporary cease and desist order. Upon the entry of a temporary cease and desist order, the commissioner shall promptly notify, in writing, the licensee affected thereby that such order has been so entered, the reasons therefor, and that within 20 days after the receipt of a written request for a hearing from such licensee, the matter will be scheduled for such hearing to determine whether or not such temporary order shall become permanent and final. If no such hearing is requested and none is ordered by the commissioner, the order shall remain in effect until it is modified or vacated by the commissioner. If a hearing is requested or ordered, the commissioner, after giving notice of and opportunity for a hearing to the licensee subject to such order, shall, by written finding of facts and conclusions of law, vacate, modify or issue a permanent cease and desist order.
(c) No order under this section, except an order issued pursuant to subsection (b), may be entered without prior notice and opportunity for a hearing. The commissioner may vacate or modify an order under this section upon a finding that the conditions which required such order have changed and that it is in the public interest to vacate or modify such order.
An order issued pursuant to this section shall be subject to review as provided in chapter 30A.
Section 10. A licensee shall, when directed by the commissioner, permit the commissioner or a duly authorized representative to inspect its records and evidence of compliance with this chapter or any rule and regulation issued thereunder and with any other law, rule and regulation applicable to the conduct of its business. The commissioner shall preserve a full record of each such examination of a licensee including a statement of its condition. All records of investigations and reports of examinations by the commissioner, including workpapers, information derived from such reports or responses to such reports, and any copies thereof in the possession of any licensee under the supervision of the commissioner, shall be confidential and privileged communications, shall not be subject to subpoena and shall not be a public record under clause twenty-sixth of section 7 of chapter 4. For the purpose of this paragraph, records of investigation and reports of examinations shall include records of investigation and reports of examinations conducted by a financial regulatory agency of the federal government and any other state, and of any foreign government which are considered confidential by such agency or foreign government and which are in possession of the commissioner. In any proceeding before a court, the court may issue a protective order to seal the record protecting the confidentiality of any such record, and other than any such record on file with the court or filed in connection with the court proceeding, and the court may exclude the public from any portion of a proceeding at which any such record may be disclosed. Copies of such reports of examination shall be furnished to a licensee for its use only and shall not be exhibited to any other person, organization or agency without prior written approval by the commissioner. The commissioner may furnish to regulatory agencies of the federal government, of other states, or of foreign countries, and any law enforcement agency, such information, reports, inspections and statements relating to the licensees under supervision of the division.
The commissioner, or an examiner or such others of the commissioner’s assistants as may be designated by the commissioner, may summon the directors, officers or agents of a licensee, or any other witnesses, and examine them relative to the affairs, transactions and condition of the licensee, and, for that purpose, may administer oaths. Whoever, without justifiable cause, refuses to appear and testify when so required or obstructs the person making such examination in the performance of such duties, shall be punished by a fine of not more than $1,000 or by imprisonment for not more than 1 year.
Section 11. The commissioner, if there is reason to believe that a person other than a licensee has violated any of the provisions of this chapter, shall be authorized to make such investigations as the commissioner shall deem necessary and may examine such other person and shall compel the production of all relevant books, records, accounts and documents.
Section 12. Each licensee shall annually, on or before a date to be determined by the commissioner, file a report with the commissioner containing such information as said commissioner may require concerning the business and operations during the preceding calendar year. A licensee neglecting to file such report or failing to amend the same within 15 days of notice from said commissioner directing the same shall, unless such neglect or failure is due to justifiable cause and not due to willful neglect, pay to the commonwealth $50 for each day during which such neglect or failure continues.
A licensee shall keep and use such business records in such form and at such location as said commissioner shall, by regulation, determine, which shall enable said commissioner to determine whether such licensee is complying with the provisions of this chapter and any rules or regulations promulgated hereunder by said commissioner and any other law, rule or regulation applicable to the conduct of the business for which it is licensed under this chapter. Such regulations may contain provisions for the suspension or revocation of licenses for violations hereof and for such records to be recorded, copied or reproduced by photographic, photostatic, microfilm, microcard, miniature photographic, electronic, including, but not limited to, optical imaging, or other process which accurately reproduces or forms a durable medium for reproducing the original record or document or in any other form or manner authorized by the commissioner; provided, however, that nothing in this section shall be construed to permit any such licensee to destroy original records or documents. Each such licensee shall preserve all such business records for as long a period as the commissioner shall prescribe by regulation. Notwithstanding the provisions of any general or special law or the Massachusetts Rules of Civil Procedure to the contrary, service of a subpoena for business records upon a licensee, delivered to an office of such licensee located within the commonwealth shall be deemed to have been served at the location, whether within or outside the commonwealth, where the original business records or documents are kept or maintained.
Section 13. The commissioner or an aggrieved party may enforce the provisions of this chapter, or restrain any violations thereof, by filing a civil action in a court of competent jurisdiction. A violation of this chapter or a rule or regulation adopted hereunder, shall constitute a violation of chapter 93A.
Section 14. Whoever violates any provision of this chapter or any rule or regulation made thereunder by the commissioner shall be punished by a fine of not more than $5,000 or by imprisonment in state prison for not more than 5 years, or both. Each day a violation continues shall be deemed a separate offense. The penalty provision of this section shall be in addition to, and not in lieu of, any other provision of law applicable to a licensee or other person for violating section 2 or any rule or regulation made thereunder.
Section 15. (a) Whenever the commissioner finds that any licensee or exempt person under section 2 has violated any provision of this chapter or any rule or regulation adopted thereunder, or any other law of the commonwealth applicable to the conduct of the business of money transmission, the commissioner may, by order, in addition to any other action authorized under this chapter or any rule or regulation made thereunder, impose a penalty upon such person which shall not exceed $5,000 for each violation, up to a maximum of $100,000 for such violation plus the costs of investigation. The commissioner may impose a penalty which shall not exceed $5,000 for each violation of this chapter, or any rule or regulation adopted thereunder, by a person other than a licensee or exempt person under section 2, plus the costs of investigation.
(b) Nothing in this section shall limit the right of any individual or entity who has been injured as a result of any violation of this chapter by a licensee, or any person other than a licensee or exempt person under section 2, to bring an action to recover damages or restitution in a court of competent jurisdiction.
(c) Any findings or order issued by the commissioner pursuant to this section shall be subject to review as provided in chapter 30A.
Section 16. (a) Whenever the commissioner determines that any person has, directly or indirectly, violated any section of this chapter or any rule or regulation adopted thereunder, applicable to the conduct of the business of money transmission, or any order issued by the commissioner under this chapter or any written agreement entered between such licensee and the commissioner, the commissioner may serve upon such person a written notice of intention:
(1) to prohibit such person from performing in the capacity of a principal employee on behalf of any licensee for such period of time that the commissioner deems necessary;
(2) to prohibit the person from applying for or obtaining a license from the commissioner for a period up to 36 months following the effective date of an order issued under subsection (b) or (c); or
(3) to prohibit such person from any further participation, in any manner, in the conduct of the business of money transmission in Massachusetts or to prohibit such person from being employed by, an authorized agent of, or operating on behalf of a licensee under this chapter or any other business which requires a license from the commissioner.
(b) A written notice issued under subsection (a) shall contain a written statement of the facts that support the prohibition and shall give notice of an opportunity for a hearing to be held thereon. Such hearing shall be fixed for a date not more than 30 days after the date of service upon the commissioner of such request for a hearing. If such person fails to submit a request for a hearing within 20 days of service of notice under subsection (a), or otherwise fails to appear in person or by a duly authorized representative, such party shall be deemed to have consented to the issuance of an order of such prohibition in accordance with the notice.
(c) In the event of such consent under subsection (b), or if after a hearing the commissioner finds that any of the grounds specified in such notice have been established, the commissioner may issue an order of prohibition in accordance with subsection (a) as the commissioner finds appropriate.
(d) An order issued under subsection (b) or (c) shall be effective upon service upon the person. The commissioner shall also serve a copy of the order upon the licensee of which the person is an employee or on whose behalf the person is performing. The order shall remain in effect and enforceable until it is modified, terminated, suspended, or set aside by the commissioner or a court of competent jurisdiction.
(e) Except as consented to in writing by the commissioner, any person who, pursuant to an order issued under subsection (b) or (c), has been prohibited from participating in whole or in part in the conduct of the business of money transmission in the commonwealth shall not, while such order is in effect, continue or commence to perform in the capacity of a principal employee, or otherwise participate in any manner, if so prohibited by order of the commissioner, in the conduct of the affairs of:
(1) any licensee under this chapter;
(2) any other business which requires a license from the commissioner; or
(3) any bank, as defined under section 1 of chapter 167, or any subsidiary thereof.
Section 17. (a) Except as otherwise provided in subsection (b), a surety bond, letter of credit, or other similar security acceptable to the commissioner in the amount of $50,000 plus $10,000 per location, not exceeding a total addition of $450,000, shall accompany an application for a license.
(b) Security shall be in a form satisfactory to the commissioner, payable to the commonwealth, and delivered to the state treasurer for the benefit of any claimant against the licensee to secure the faithful performance of the obligations of the licensee with respect to money transmission. The securities deposited with the state treasurer as herein provided and the money which in case of breach of the bond shall be paid by any licensee or surety thereon, shall constitute a trust fund for the benefit of such persons as shall deposit money with the licensee or authorized agent for transmission and such beneficiaries shall be entitled to an absolute preference as to such money or securities over all general creditors of the licensee.
(c) The aggregate liability on a surety bond may not exceed the principal sum of the bond. A claimant against a licensee may maintain an action on the bond, or the commissioner may maintain an action on behalf of the claimant.
(d) A surety bond shall cover claims for so long as the commissioner specifies, but for at least 5 years after the licensee ceases to provide money services in the commonwealth; provided, however, that 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 payment instruments or prepaid access obligations outstanding in the commonwealth is reduced. The commissioner may permit a licensee to substitute another form of security acceptable to the commissioner for the security effective at the time the licensee ceases to provide money services in the commonwealth.
(e) In lieu of the security prescribed in this section, an applicant for a license or a licensee may provide security in a form prescribed by the commissioner.
(f) The commissioner may increase the amount of security required if the financial condition of a licensee so requires, as evidenced by reduction of net worth, financial losses, or other relevant criteria.
Section 18. (a) A licensee engaged in the business of money transmission who intends to conduct licensed activities through the use of authorized agents shall submit the names and addresses of such persons listed in the original application to the commissioner for his approval. Upon the commissioner’s approval, a licensee may authorize any such authorized agent to conduct business as the agent for said licensee at the address approved by the commissioner; provided, however, that an authorized agent that engages solely in the sale or issuance of prepaid access, travelers’ checks, or money orders and is not engaged in any other form of money transmission on behalf of a licensee shall not require the approval of the commissioner. There shall be an express written contract between the parties detailing the duties and responsibilities of such authorized agent. Additional authorized agents shall not be appointed without the prior written approval of the commissioner, and a licensee shall notify the commissioner within 5 business days after the termination of any authorized agent by the licensee.
(b) A contract between a licensee and an authorized agent shall require the authorized agent to operate in full compliance with this chapter. The licensee shall furnish in a record to each authorized agent policies and procedures sufficient to permit compliance with this chapter.
(c) An authorized agent shall remit all money owing to the licensee in accordance with the terms of the contract between the licensee and the authorized agent.
(d) An authorized agent may not provide money transmission services outside the scope of activity permissible under the contract between the authorized agent and the licensee.
Section 19. (a) Except to the extent otherwise limited by the commissioner pursuant to section 20, the following shall be considered permissible investments:
(1) cash, a certificate of deposit, or senior debt obligation of an insured depository institution, as defined in section 3 of the Federal Deposit Insurance Act 12 U.S.C. Section 1813 (1994 & Supp. V. 1999);
(2) banker's acceptance or bill of exchange that is eligible for purchase upon endorsement by a member bank of the Federal Reserve System and is eligible for purchase by a Federal Reserve Bank;
(3) an investment bearing a rating of one of the three highest grades as defined by a nationally recognized organization that rates securities;
(4) an investment security that is an obligation of the United States or a department, agency, or instrumentality thereof; an investment in an obligation that is guaranteed fully as to principal and interest by the United States; or an investment in an obligation of a State or a governmental subdivision, agency, or instrumentality thereof;
(5) receivables that are payable to a licensee from its authorized agents, in the ordinary course of business, pursuant to contracts which are not past due or doubtful of collection. A receivable shall be deemed to be past due or doubtful of collection if the money owed to the licensee is not remitted within seven business days. However, the aggregate amount of receivables under this paragraph from any one person shall not comprise more than 10 percent of the licensee's total permissible investments; and;
(6) a share or a certificate issued by an open-end management investment company that is registered with the United States Securities and Exchange Commission under the Investment Companies Act of 1940 15 U.S.C. Section 80a-1-64 (1994 & Supp. V 1999), and whose portfolio is restricted by the management company's investment policy to investments specified in paragraphs (1) through (4).
(b) The following investments shall be permissible, but only to the extent specified in this subsection:
(1) an interest-bearing bill, note, bond, or debenture of a person whose equity shares are traded on a national securities exchange or on a national over-the-counter market, if the aggregate of investments under this paragraph does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time hold investments under this paragraph in any one person aggregating more than 10 percent of the licensee's total permissible investments;
(2) a share of a person traded on a national securities exchange or a national over-the-counter market or a share or a certificate issued by an open-end management investment company that is registered with the United States Securities and Exchange Commission under the Investment Companies Act of 1940 15 U.S.C. Section 80a-1-64 (1994 & Supp. V 1999), and whose portfolio is restricted by the management company's investment policy to shares of a person traded on a national securities exchange or a national over-the-counter market, if the aggregate of investments under this paragraph does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time hold investments in any one person aggregating more than 10 percent of the licensee's total permissible investments;
(3) a demand-borrowing agreement made to a corporation or a subsidiary of a corporation whose securities are traded on a national securities exchange if the aggregate of the amount of principal and interest outstanding under demand-borrowing agreements under this paragraph does not exceed 20 percent of the total permissible investments of a licensee and the licensee does not at one time hold principal and interest outstanding under demand-borrowing agreements under this paragraph with any one person aggregating more than 10 percent of the licensee's total permissible investments; and
(4) any other investment the commissioner designates, to the extent specified by the commissioner.
(c) The aggregate of investments under subsection (b) may not exceed 50 percent of the total permissible investments of a licensee calculated in accordance with section 20.
Section 20. (a) A licensee shall maintain at all times permissible investments that have a market value computed in accordance with generally accepted accounting principles of not less than the aggregate amount of all of its outstanding payment instruments issued or sold and money transmitted by the licensee or its authorized agents.
(b) The commissioner, with respect to any licensees, may limit the extent to which a type of investment within a class of permissible investments may be considered a permissible investment, except for money and certificates of deposit issued by a bank. The commissioner by rule may prescribe or by order allow other types of investments that the commissioner determines to have a safety standard substantially equivalent to other permissible 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 payment instruments in the event of bankruptcy or receivership of the licensee.
SECTION 4. Section 4 of chapter 169B of the General Laws, as inserted by section 3, shall take effect upon passage. Section 1 and the remainder of section 3 shall take effect 9 months after the date of its passage.
SECTION 5. (a) A license issued pursuant to chapter 169 of the General Laws or section 4 of chapter 167F of the General Laws, including all authorized agent location designations, that is in effect immediately before the effective date of this act shall remain in force as a license under said chapter 169. Such licensees shall file a renewal application in accordance with section 12 of chapter 169B of the General Laws.
(b) Any person that was not required to obtain a license pursuant to chapter 169 of the General Laws or pursuant to section 4 of chapter 167F of the General Laws, but that is now required to obtain a license under chapter 169B shall file an application for a license within 6 months of the effective date of this act in order to continue conducting money transmission in the commonwealth directly or through authorized agents. If such application is timely filed and pending with the commissioner, that person may continue to conduct money transmission in this commonwealth, until such time as the application has been approved, withdrawn or denied.
(c) All authorized agent designations under section 4 of chapter 167F of the General Laws shall be deemed in compliance with this chapter so long as within 6 months of the effective date of this act, such authorized agents are submitted for approval with the commissioner.