Regular Session 2023-2024 Senate Bill 1320 P.N. 1883

PRINTER'S NO. 1883

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

1320

Session of

2024

INTRODUCED BY DiSANTO, STREET, VOGEL AND PHILLIPS-HILL,

SEPTEMBER 16, 2024

REFERRED TO BANKING AND INSURANCE, SEPTEMBER 16, 2024

AN ACT

Amending the act of September 2, 1965 (P.L.490, No.249),

entitled "An act providing for the licensing and regulation

of the business of transmitting money or credit for a fee or

other consideration by the issuance of money orders, by the

sale of checks or by other methods; conferring powers and

duties upon the Department of Banking and Securities; and

imposing penalties," further providing for title of act and

for definitions; providing for short title; and further

providing for license required, for exemptions, for

qualifications for a license, for fee, financial statement

and security, for liability of licensees, for licensee

requirements and for agents.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The title of the act of September 2, 1965

(P.L.490, No.249), referred to as the Money Transmission

Business Licensing Law, is amended to read:

AN ACT

Providing for the licensing and regulation of the business of

transmitting money, virtual currency or credit for a fee or

other consideration by the issuance of money orders, by the

sale of checks or by other methods; conferring powers and

duties upon the Department of Banking and Securities; and

imposing penalties.

Section 2. The definitions of "agent" and "transmittal

instrument" in section 1 of the act are amended and the section

is amended by adding a definition to read:

Section 1. Definitions.--Unless the context clearly

indicates otherwise, the following words when used in this act

shall have the following meanings:

"Agent" means any person that provides money transmission or

virtual currency transmission services on behalf of another

person.

* * *

"Transmittal instrument" means any check, draft, money order,

personal money order, debit card, stored value card, electronic

transfer or other method for the payment of money or virtual

currency or transmittal of credit or virtual currency, other

than a merchandise gift certificate or instrument with a similar

purpose sold in the regular course of business by a vendor of

personal property or services in a closed loop system or hybrid

closed loop system.

"Virtual currency" means as follows:

(1) The term includes a digital representation of value

that:

(i) Is used as a medium of exchange, unit of account or

store of value.

(ii) Is not money, unless the virtual currency was adopted

or authorized by a domestic or international government as a

medium of exchange, whether denominated in cash.

(2) The term does not include:

(i) A transaction in which a merchant grants, as part of an

affinity or rewards program, value that cannot be taken from or

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exchanged with the merchant for money, bank credit or virtual

currency.

(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.

Section 3. The act is amended by adding a section to read:

Section 1.1. Short Title.-- This act shall be known and may

be cited as the Money Transmission and Virtual Currency

Transmission Business Licensing Law.

Section 4. Sections 2, 3(1), 4(a)(1) and (c)(5) introductory

paragraph, 6 heading and (a)(2) and (3) and (b.1), 11(a),

11.1(2), (3) and (4) and 12(b) and (c)(2), (3) and (6) of the

act are amended to read:

Section 2. License Required.--(a) No person shall [engage]:

(1) Engage in the business of transmitting money by means of

a transmittal instrument for a fee or other consideration with

or on behalf of an individual without first having obtained a

money transmission license from the department.

(2) Engage in the business of transmitting virtual currency

by means of a transmittal instrument for a fee or other

consideration with or on behalf of an individual without first

having obtained a virtual currency transmission license from the

department.

(b) This act does not apply to money transmission or virtual

currency transmission between business entities in connection

with commercial contracts, unless the contracts involve money

transmission or virtual currency transmission for personal or

household purposes involving individuals.

Section 3. Exemptions.--No license shall be required for any

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of the following:

(1) Banks, bank and trust companies, credit unions, savings

banks and [private banks] trust companies organized under the

laws of this Commonwealth; similar banking institutions

organized under the laws of the United States or of any other

state [which are insured by the Federal Deposit Insurance

Corporation]; similar credit unions organized under the laws of

the United States or another state[, and insured by the National

Credit Union Share Insurance Fund]; and savings and loan

associations and building and loan associations organized under

the laws of another state or of the United States; or their

affiliates or agents.

* * *

Section 4. Qualifications for a License.--(a) To qualify

for a license an applicant shall:

(1) have a tangible net worth of at least five hundred

thousand dollars ($500,000) as determined by audited financials

prepared in accordance with United States generally accepted

accounting principles; and

* * *

a license if it finds that the applicant, or a director,

officer, partner, employee, agent or ultimate equitable owner of

ten percent or more of the applicant:

* * *

(5) does not possess the financial responsibility,

character, reputation, integrity and general fitness to command

confidence of the public to warrant the belief that the money

transmission or virtual currency transmission business will be

operated lawfully, honestly, fairly and within the legislative

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intent of this act and in accordance with the general laws of

this Commonwealth. For purposes of this clause, an applicant is

not financially responsible if the applicant has shown a

disregard in the management of the applicant's own financial

condition. The factors that the department may consider in

making a determination regarding an applicant's financial

responsibility shall include:

* * *

Section 6. Fee, Financial Statement and Security Bond.--(a)

Each application for a license shall be accompanied by:

* * *

(2) a financial statement showing a tangible net worth of at

least five hundred thousand dollars ($500,000) as determined by

audited financials prepared in accordance with United States

generally accepted accounting principles;

(3) a bond in the penal sum of one million dollars

($1,000,000) executed by a surety company authorized to transact

business within the Commonwealth of Pennsylvania [or securities

as provided in the following subsection]. The bond shall run to

the Commonwealth of Pennsylvania and shall be for the use of the

Commonwealth and of any person or persons who may have a cause

of action against the licensee for failure to carry out the

terms of any transmittal instrument which the licensee shall

have issued and who were residents of the Commonwealth of

Pennsylvania at the time the cause of action arose. The

condition of the bond shall be that the licensee will comply

with and abide by the provisions of this act and the rules and

regulations of the department lawfully promulgated under this

act and that the licensee will pay to the Commonwealth, to the

department or to any other person any moneys that may become due

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from the licensee to the Commonwealth or to the department or to

any other person under the provisions of this act or of any

transmittal instrument issued by the licensee within this

Commonwealth and who were residents of the Commonwealth of

Pennsylvania at the time the cause of action arose. If any

person shall be aggrieved by the misconduct of any licensee, he

may upon recovering judgment against such licensee, issue

execution under such judgment and maintain an action upon the

bond of the licensee in any court having jurisdiction of the

amount claimed, provided the department assents thereto.

(b.1) If the department, in its discretion, shall determine

the bond [or deposit of securities] provided for in clause (3)

of subsection (a) is not adequate, the department may, after an

examination and a consent agreement or order, require an

additional bond in an amount up to the average daily outstanding

balance of money received for transmission in this Commonwealth

during the thirty days preceding the department's requirement

plus an additional ten percent of the amount of the average

daily outstanding balance subject to the same conditions and the

same right of execution provided for in clause (3) of subsection

(a).

* * *

Section 11. Liability of Licensees.--(a) Every licensee

shall be liable for the payment of all moneys or virtual

currency covered by transmittal instruments which he issues in

this Commonwealth whether directly or through an agent and

whether as a maker or a drawer.

* * *

Section 11.1. Licensee Requirements.--A licensee shall:

* * *

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(2) Comply with all applicable Federal or State laws and

rules pertaining to the business of money transmission[.] or

virtual currency transmission, including 12 U.S.C. Ch. 21

(relating to financial recordkeeping) and 31 U.S.C. Ch. 53

(relating to monetary transactions).

(3) Register all of its agents who engage in the business of

money transmission or virtual currency transmission involving

individuals who are located in this Commonwealth.

(4) On a date determined by the department, file a report

setting forth such information as the department shall require

concerning the money transmission or virtual currency

transmission business conducted by the licensee. Licensees who

fail to file the required report by the date required by the

department may be subject to a penalty of one hundred dollars

($100) for each day after the due date until the report is

filed.

* * *

Section 12. Agents.--* * *

(b) An agent engaged in the business of money transmission

or virtual currency transmission under subsection (a) or subject

to an exemption under section 3 shall be appointed pursuant to a

written agreement between the agent and the person on whose

behalf the agent is acting.

following provisions:

* * *

(2) The agent is acting on behalf of the person employing

the agent's service for the transmission of money or virtual

currency.

(3) The agent is subject to the control of the person on

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whose behalf the agent is acting, meaning that the licensee or

exempted person takes complete financial responsibility for the

money or virtual currency being transmitted from the moment an

individual initiates the transmission of money or virtual

currency until the intended recipient receives the transmitted

money or virtual currency.

* * *

(6) The agent may not provide money transmission or virtual

currency transmission outside the scope of activity permissible

under the written agreement between the agent and the person on

whose behalf the agent is acting except to the extent that the

agent is licensed itself or operating as an agent for another

person.

* * *

Section 5. This act shall take effect in 60 days.

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