Code of Colorado Regulations
700 - Department of Regulatory Agencies
701 - Division of Banking
3 CCR 701-7 - MONEY TRANSMITTERS
Universal Citation: 3 CO Code Regs 701-7
Current through Register Vol. 47, No. 5, March 10, 2024
MO0.5 Definitions
1. "Control" is set forth in Section 11-110-103(3)(a) -(c), C.R.S.
2. "Financial institution" is set forth in Section 11-101-401(36), C.R.S.
3. "National Multistate Licensing System and Registry" (NMLS) is an information portal developed by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators and owned and operated by the State Regulatory Registry, LLC, or any successor or affiliated entity, for the licensing and registration of persons in financial services industries. https://nationwidelicensingsystem.org.
4. "Parent," when used with respect to a specified person, other than a natural person, is defined as any person, other than a natural person, which controls such specified person, directly or indirectly, through one or more intermediaries.
5. "Permissible Investment" is set forth in Section 11-110-108(3)(a) -(g), C.R.S.
6. "Person" is set forth in Section 11-110-103(14), C.R.S.
7. "Record" is the original of any record of licensee or agent that includes the data or other information comprising a record stored or transmitted in or by means of any electronic, computerized, mechanized, or other information storage or retrieval or transmission system or device that can upon request generate, regenerate, or transmit the precise data or other information comprising the record; and an original also includes the visible data or other information so generated, regenerated, or transmitted if it is legible or can be made legible by enlargement or other process. The record(s) required to be maintained may be maintained at any location, provided the licensee notifies the Division of Banking (Division) in writing of the location of its records prior to each scheduled examination.
8. "Stored Value" is set forth in Section 11-110-202(2), C.R.S.
MO1 Surety Bond [Section 11-110-108, C.R.S.]
A. A combination of a surety bond and
permissible investments pursuant to Rule MO2 must, at a minimum, equal the
amount of outstanding payment instruments in Colorado. However, the surety bond
may not be less than $250,000.
B. A
surety bond of $250,000 is permissible provided that, following application by
the licensee and an opportunity for hearing before the Colorado State Banking
Board (Banking Board), the Banking Board finds that the provisions of Rule MO2,
Permissible Investments, are met.
C. If the provisions of Rule MO2 are not met,
the licensee must maintain a surety bond in an amount of at least one million
dollars. The Banking Board may, following notice to the licensee and an
opportunity for hearing before the Banking Board, and upon the determination
that customers of the licensee are at undue risk, order the licensee to
increase the bond amount up to two million dollars based on the following
factors:
1. The nature and volume of the
business and proposed business of the licensee in Colorado;
2. The amount, nature, quality, and liquidity
of the assets of the licensee;
3.
The amount and nature of the liabilities (including contingent liabilities) of
the licensee;
4. The nature and
sufficiency of the licensee's cash flow;
5. The licensee's net worth;
6. The history of, and prospects for, the
licensee to earn and retain income;0
7. The quality of the operations of the
licensee;
8. The quality of the
management of the licensee;
9. The
nature and quality of the controlling person or persons of the licensee;
and
10. Such other factors as are,
in the opinion of the Banking Board, relevant.
D. Generally Accepted Accounting Principles
(GAAP) shall be used, where applicable, by the Banking Board in connection with
its consideration of such factors.
MO2 Permissible Investments [Section 11-110-108, C.R.S.]
A. Permissible Investments and Outstanding
Payment Instruments
A licensee who is approved by the Banking Board to cover outstanding payment instruments with a combination of a surety bond and Permissible Investments must, at all times, maintain Permissible Investments having a market value at least equal to the amount of outstanding payment instruments in Colorado not covered by the surety bond, in accordance with this Rule.
Permissible Investments may be owned by the licensee or licensee's parent. Such investments, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of the purchasers and holders of the licensee's outstanding payment instruments in Colorado in the event of the bankruptcy of the licensee.
B. Ownership of Permissible
Investments
1. A licensee shall be deemed to
own a Permissible Investment only if:
a. The
licensee or the licensee's parent owns the Permissible Investment solely and
exclusively in its own right, both of record and beneficially,
b. The Permissible Investment is not subject
to any pledge, lien, or security interest, and
c. The licensee can freely negotiate, assign,
or otherwise transfer the Permissible Investment.
2. A licensee shall not be deemed to be able
freely to transfer a Permissible Investment that consists of a deposit in a
financial institution unless such licensee is able freely to withdraw such
deposit. However, if the deposit is a savings or time deposit, as the case may
be, the licensee shall not, on account of such restrictions, be deemed unable
freely to withdraw the deposit.
3.
A licensee shall not be deemed to be able freely to negotiate, assign, or
otherwise transfer a Permissible Investment if any other transfer of such
Permissible Investment would constitute a breach or event of default by such
licensee or by any affiliate of the licensee under a contract, obligation,
note, or other security issued by the licensee or by any affiliate of the
licensee. For example, a licensee shall not be deemed to be able freely to
negotiate, assign, or otherwise transfer a Permissible Investment that consists
of a deposit in a bank if such licensee's failure to maintain such deposit
would constitute a breach of any provision for compensating balances set forth
in a loan contract between such bank and the licensee or a parent of the
licensee.
C. Liquidity
and Quality of Permissible Investments
If the Banking Board finds that any Permissible Investment or class of Permissible Investment is no longer of sufficient liquidity or quality to be a Permissible Investment, the Banking Board may by Rule or order declare such investment or class of investments to be ineligible.
MO3 Records [Section 11-110-111, 11-110-114, and 11-110-201, C.R.S.]
A. Quarterly NMLS Money Service Business Call
Reports
All licensees must submit, using the NMLS portal, the NMLS Money Service Business Call Report on a calendar quarterly basis, as outlined below:
1. Licensees must complete the
standard section, which includes the Permissible Investment Report and, if
applicable, any expanded section of the NMLS Money Service Business Call
Report.
2. The quarterly NMLS Money
Service Business Call Report is due within forty-five (45) calendar days of the
end of the calendar quarter.
3.
Failure to properly submit a NMLS Money Service Business Call Report in a
timely manner as outlined above, may result in a Late Filing Fee as set forth
in the Division's Fee Schedule.
B.
1. Each
licensee must make, keep, and preserve the following Records for a period of
seven (7) years:
a. A general ledger
containing all asset, liability, capital, income, and expense accounts, which
general ledger shall be posted at least monthly.
b. Financial institution statements and
reconciliation records.
2. Each licensee must make, keep, and
preserve the following other Records for a period of five (5) years:
a. Record or Records of payment instruments
sold, and money transmitted as required by the licensee's normal business
practices.
b. Settlement sheets
received from agents, if any.
c.
Records of outstanding payment instruments and money transmitted.
d. Records of each payment instrument paid,
and money transmitted within the period.
e. A list of the names and addresses of all
of the licensee's agents, as well as copies of each agent contract.
C.
1. Each licensee shall annually report
information as of July 31 for each agent performing money transmission services
for Colorado consumers. The information shall be submitted to the Division by
September 30, and must include:
a. Business
name of agent.
b. Street address,
City, State, and Zip code of agent.
c. Telephone number of agent.
d. Money transmission services provided at
the location.
e. Each owner of the
agent business that owns greater than ten (10) percent of the business, if a
partnership or an entity created pursuant to Title 7, C.R.S.-Corporations and
Associations, including:
(1) Street address,
City, state, and Zip code of each of the owners; and
(2) Home telephone number of each of the
owners.
2. An
agent of a licensed money transmitter involved in selling or adding additional
money to Stored Value issued by the licensed money transmitter or to
corporations organized under the general banking, savings and loan, or credit
union laws of Colorado or the United States, is not subject to this Paragraph
of this Rule.
MO4 Qualification of License Applicant [Section 11-110-107, C.R.S.]
A. To qualify for a license, the applicant
must demonstrate to the Banking Board such qualifications as to command the
confidence of the public and warrant the belief that the license applicant's
business will be operated lawfully and fairly.
B. Applicant must submit, using the NMLS
portal, all the required information. The application information shall, at a
minimum, include:
1. For all applicants:
a. The exact name of the applicant, the
applicant's principal address, any fictitious or trade name used by the
applicant in the conduct of its business and the location of the applicant's
business records.
b. The history of
the applicant's material litigation and criminal convictions for the five (5)
year period prior to the date of the application.
c. A description of the activities conducted
by the applicant and a history of operations.
d. A description of the business activities
in which the applicant seeks to be engaged in the State.
e. A list identifying the applicant's
proposed agents in the State, if any, at the time of the filing of the license
application.
f. A sample agent
contract, if applicable.
g. A
sample form of payment instrument, if applicable.
h. The location(s) at which the applicant and
its agents, if any, propose to conduct the licensed activities in the
State.
i. The name and address of
the clearing bank or banks on which the applicant's payment instruments will be
payable.
2. If the
applicant is a corporation, the applicant must also provide:
a. The date of the applicant's incorporation
and state of incorporation.
b. A
certificate of good standing from the state in which the applicant was
incorporated.
c. A description of
the corporate structure of the applicant, including the identity of any parent
or subsidiary of the applicant, and the disclosure of whether any parent or
subsidiary is publicly traded on any stock exchange.
d. The name, business and residence
addresses, and employment history for the past five (5) years of the
applicant's executive officers and the officer(s) or managers who will be in
charge of the applicant's activities to be licensed hereunder.
e. The name, business and residence address
and employment history for the period of five (5) years prior to the date of
the application of any key shareholder of the applicant.
f. The history of material litigation and
criminal convictions for the five (5) year period prior to the date of the
application of every current director, executive director, or key shareholder
of the applicant.
g. A copy of the
applicant's most recent audited financial statement (including balance sheet,
state of income or loss, statement or changes in shareholder equity and
statement of changes in financial position) and, if available, the applicant's
audited financial statements for the immediately preceding two (2) year period.
However, if the applicant is a wholly-owned subsidiary of another corporation,
the applicant may submit either the parent corporation's consolidated audited
financial statements for the current year and for the immediately preceding two
(2) year period or the parent corporation's form 10K reports filed with the
United States Securities and Exchange Commission for the prior three (3) years
in lieu of the applicant's financial statements. If the applicant is a
wholly-owned subsidiary of a corporation having its principal place of business
outside the United States, similar documentation filed with the parent
corporation's non-United States regulator may be submitted to satisfy this
provision.
h. Copies of all
filings, if any, made by the applicant with the United States Securities and
Exchange Commission, or with a similar regulator in a country other than the
United States, within the year preceding the date of filing of the application.
3. If the applicant is
not a corporation, the applicant must also provide:
a. The name, business and residence address,
personal financial statement, and employment history, for the past five (5)
years of each principal of the applicant and the name, business and resident
address, and employment history for the past five (5) years of any other person
or persons who will be in charge of the applicant's activities to be licensed
hereunder.
b. The place and date of
the applicant's registration or qualification to do business in this
State.
c. The history of material
litigation and criminal convictions for the five (5) year period prior to the
date of the application for each individual having any ownership interest in
the applicant and each individual who exercises supervisory responsibility with
respect to the applicant's activities.
d. Copies of the applicant's audited
financial statements (including balance sheet, statement of income or loss, and
statement of changes in financial position) for the current year and, if
available, for the immediately preceding two (2) year period.
4.
a. Each licensee under the Colorado Money
Transmitters Act (Act) shall at all times have a net worth of not less than
$50,000, calculated in accordance with GAAP. Licensees engaging in money
transmission at more than one location, or through authorized agents, shall
have an additional net worth of $25,000 per location or authorized agent in
this State, as applicable, to a maximum of $100,000.
b. The Banking Board may require a net worth
of up to $100,000, regardless of the number of locations or agents in this
State, subject to consideration of the following:
(1) The nature and volume of the business or
proposed business of the applicant;
(2) The amount, nature, quality, and
liquidity of the assets of the applicant;
(3) The amount and nature of the liabilities,
including contingent liabilities, of the applicant;
(4) The history of, and prospect for, the
applicant to earn and retain income;
(5) The quality of the operations of the
applicant;
(6) The quality of the
management of the applicant; and
(7) Any other factor the Banking Board deems
relevant.
5.
The Banking Board is authorized, for good cause shown to waive any requirement
of this section with respect to any license application or to permit a license
application to submit substituted information in its license application in
lieu of the information required by this section.
MO5 Change of Control [Section 11-110-103(3) and 11-110-112, C.R.S.]
A. In any case in which a person or a group
of persons, directly or indirectly or acting by or through one or more persons
(applicant), proposes to purchase or acquire a controlling interest in a
licensee, and thereby to change the control of that licensee, each applicant
shall provide the following:
1. An applicant,
which is a publicly traded corporation or a direct or indirect subsidiary of a
publicly traded corporation, shall provide the Commissioner with written notice
within 15 days after knowledge of such change in control.
2. An applicant, which is not a publicly
traded corporation, shall provide through the NMLS portal all the required
information, which at a minimum, includes:
a.
A detailed description of the proposed transaction.
b. The name, business and residence address,
personal financial statement, and employment history, for the past five (5)
years of any new executive officers and any new officers or manager who will be
in charge of the applicant's activities.
c. The name, business and residence address
and employment history for the period of five (5) years prior to the date of
any key shareholder.
d. A copy of
the applicant's most recent audited financial statement (including balance
sheet, state of income or loss, statement or changes in shareholder equity and
statement of changes in financial position) and, if available, the applicant's
audited financial statements for the immediately preceding two (2) year period.
However, if the applicant is a wholly-owned subsidiary of another corporation,
the applicant may submit either the parent corporation's consolidated audited
financial statements for the current year and for the immediately preceding two
(2) year period or the parent corporation's form 10K reports filed with the
United States Securities and Exchange Commission for the prior three (3) years
in lieu of the applicant's financial statements. If the applicant is a
wholly-owned subsidiary of a corporation having its principal place of business
outside the United States, similar documentation filed with the parent
corporation's non-United States regulator may be submitted to satisfy this
provision.
e. Any other information
the Banking Board deems relevant, but not more than required of the licensee or
persons in control of the licensee as part of its original license
application.
B. The Banking Board may deny the person or
group of persons proposing to purchase or who have acquired control of, a
licensee if, after investigation, the Banking Board determines that the person
or persons are not qualified to command the confidence of the public or have
the necessary experience or financial responsibility to control or operate the
licensee in a legal and proper manner or if the interests of the other
stockholders, if any, or the interests of the public generally may be
jeopardized by the proposed change in ownership, controlling interest, or
management.
C. The Banking Board
may disapprove any person who has a history of material litigation, criminal
convictions, or pleas of nolo contendere.
MO6 Compliance with Federal Regulations [Section 11-110-113, C.R.S.]
A. Each licensee shall develop a compliance
plan outlining policies, procedures, and practices implemented to ensure
compliance with federal laws and regulations applicable to money services
businesses, including, but not limited to, federal anti-money laundering,
record keeping, and registration requirements. Failure to develop such a
compliance plan may be considered a basis for license revocation pursuant to
Section 11-110-115, C.R.S.
MO7 Customer Notice [Section 11-110-120(3)(a), C.R.S.]
A. Every licensee shall
post and maintain at its establishment and at each agent location, or other
facility located in Colorado where exchange is sold or issued, or the business
of money transmission is conducted, a notice furnished by the Commissioner that
provides consumer information concerning the Act and how to file a consumer
complaint with the Division. Such notice must be posted conspicuously in an
easily accessible and well-lighted area that is available to the
consumer.
B.
1. If the exchange transaction is conducted
through an electronic text medium, the licensee shall communicate the text of
the customer notice to the consumer's electronic address, make the disclosure
available at another location such as an internet web site, or provide the
information in conjunction with other disclosures.
2. Notice is not required if the exchange
transaction is conducted orally by telephone.
MO8 Employee Money Laundering Affirmation [Section 11-110-203, C.R.S.]
A. Purpose. To set forth procedures for an
employee of an agent conducting money transmission services for a licensed
money transmitter to affirm in writing their understanding of state and federal
money laundering laws.
B.
Procedures for affirming knowledge of money laundering laws
1. Every agent of a licensed money
transmitter shall require each employee conducting money transmission services
to complete an Employee Notice, furnished by the Commissioner, affirming the
individual's understanding of state and federal money laundering laws prior to
performing such services.
2. In
lieu of requiring each employee to complete an Employee Notice, an agent of a
licensed money transmitter shall provide training on Section
18-5-309, C.R.S. and federal money
laundering laws within 30 days before the employee performs money transmission
services. Evidence of the employee's attendance, completion of training, and
copies of training material will be maintained by the agent.
3. Agents shall maintain copies of the forms
or records at the agent business location reported to the Division until such
time as the employee conducting the money transmission services ceases
providing such services.
4. Copies
of these records shall be made available to any law enforcement officer acting
within the scope and course of the officer's official duties.
5. The form and records may be maintained in
an electronic or digital format that reproduces the signature on the documents
by the employee.
6. Failure to
comply shall be punishable pursuant to Section
11-110-206(1),
C.R.S.
C. Exemptions. An
agent of a licensed money transmitter involved exclusively in selling or adding
additional money to "Stored Value" issued by the licensed money transmitter, or
corporations organized under the general banking, savings and loan, or credit
union laws of Colorado or of the United States, is not subject to this
Rule.
Disclaimer: These regulations may not be the most recent version. Colorado may have more current or accurate information. We make no warranties or guarantees about the accuracy, completeness, or adequacy of the information contained on this site or the information linked to on the state site. Please check official sources.
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