Code of Maryland Regulations
Title 09 - MARYLAND DEPARTMENT OF LABOR
Subtitle 03 - COMMISSIONER OF FINANCIAL REGULATION
Chapter 09.03.14 - Money Transmitters
Section 09.03.14.01 - Definitions

Universal Citation: MD Code Reg 09.03.14.01

Current through Register Vol. 51, No. 19, September 20, 2024

A. In this chapter, the following terms have the meanings indicated.

B. Terms Defined.

(1) "Acting in concert" means persons knowingly acting together with a common goal of jointly acquiring control of a licensee whether or not pursuant to an express agreement.

(2) "Authorized delegate" has the meaning stated in Financial Institutions Article, §12-401, Annotated Code of Maryland.

(3) "Bank Secrecy Act" means the Bank Secrecy Act, 31 U.S.C. § 5311, et seq. and its implementing regulations, as amended and recodified from time to time.

(4) "Closed loop stored value" means stored value that is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value.

(5) "Control" means:
(a) The power to vote, directly or indirectly, at least 25 percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee;

(b) The power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a person in control of a licensee; or

(c) The power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee.

(6) "Corporate governance" means the management structure of the licensee and the processes by which the business is managed, including the corporate controls, rules, policies, processes, and practices used to oversee and manage the institution.

(7) "Eligible rating" means a credit rating of any of the three highest rating categories provided by an eligible rating service, whereby each category may include rating category modifiers such as "plus" or "minus" for S&P, or the equivalent for any other eligible rating service.

(8) "Eligible rating service" means any Nationally Recognized Statistical Rating Organization (NRSRO) as defined by the U.S. Securities and Exchange Commission, and any other organization designated by the Commissioner.

(9) "External audit" means the formal report prepared by an independent certified public accountant expressing an opinion on whether the financial statements are presented fairly, in all material aspects, in accordance with the applicable financial reporting framework, and is inclusive of an evaluation of the adequacy of a company's internal control structure.

(10) "Federally insured depository financial institution" means a bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank, or industrial loan company organized under the laws of the United States or any state of the United States, if that bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank, or industrial loan company has federally insured deposits.

(11) "In this State" means:
(a) For a transaction requested in person, at a physical location within Maryland; and

(b) For a transaction requested electronically or by phone, the provider of money transmission may determine if the person requesting the transaction is "in this State" by relying on other information provided by the person regarding the location of the individual's residential address or a business entity's principal place of business or other physical address location, and any records associated with the person that the provider of money transmission may have that indicate that location, including but not limited to an address associated with an account.

(12) "Individual" means a natural person.

(13) "Internal audit" means the internal independent and objective assurance and consulting activity performed to evaluate and improve the effectiveness of a licensee's operations, risk management, internal controls, and governance processes.

(14) "Key individual" means any individual ultimately responsible for establishing or directing policies and procedures of the licensee, such as an executive officer, manager, director, or trustee.

(15) "Licensee" has the meaning stated in Financial Institutions Article, §12-401, Annotated Code of Maryland.

(16) "Maryland Money Transmission Act" means Financial Institutions Article, Title 12, Subtitle 4, Annotated Code of Maryland.

(17) "Material litigation" has the meaning stated in Financial Institutions Article, §12-401, Annotated Code of Maryland.

(18) "Monetary value" means a medium of exchange, whether or not redeemable in money.

(19) Money Transmission.
(a) "Money transmission" has the meaning stated in Financial Institutions Article, §12-401, Annotated Code of Maryland.

(b) "Money transmission" includes a payroll processing service.

(20) "MSB accredited state" means a state agency that is accredited by the Conference of State Bank Supervisors and Money Transmitter Regulators Association for money transmission licensing and supervision.

(21) "Multistate licensing process" means any agreement entered into by and among state regulators relating to coordinated processing of applications for money transmission licenses, applications for the acquisition of control of a licensee, control determinations, or notice and information requirements for a change of key individuals.

(22) "NMLS" has the meaning stated in Financial Institutions Article, §1-101, Annotated Code of Maryland.

(23) "Outstanding money transmission obligations" has the meaning assigned to the term "outstanding money transmission" in Financial Institutions Article, §12-401, Annotated Code of Maryland.

(24) "Passive investor" means a person that:
(a) Does not have the power to elect a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a person in control of a licensee;

(b) Is not employed by and does not have any managerial duties of the licensee or person in control of a licensee;

(c) Does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee; and

(d) Either:
(i) Attests to §B(24)(a)-(c) of this regulation, in a form and in a medium prescribed by the Commissioner; or

(ii) Commits to the passivity characteristics of §B(24)(a)-(c) of this regulation in a written document.

(25) Payment Instrument.
(a) "Payment instrument" has the meaning stated in Financial Institutions Article, §12-401, Annotated Code of Maryland.

(b) "Payment instrument" does not include prepaid access or any instrument that is:
(i) Redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value; or

(ii) Not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

(26) Payroll Processing Services.
(a) "Payroll processing services" means receiving money for transmission pursuant to a contract with a person to deliver wages or salaries, make payment of payroll taxes to state and federal agencies, make payments relating to employee benefit plans, or make distributions of other authorized deductions from wages or salaries.

(b) "Payroll processing services" does not include an employer performing payroll processing services on its own behalf or on behalf of its affiliate.

(27) "Person" has the meaning stated in Financial Institutions Article, §1-101, Annotated Code of Maryland.

(28) Prepaid Access.
(a) "Prepaid access" has the meaning stated in Financial Institutions Article, §12-401, Annotated Code of Maryland.

(b) "Prepaid access" includes, but is not limited to, "prepaid access" as defined by 31 CFR § 1010.100, as amended or recodified from time to time.

(c) Prepaid access does not include a payment instrument or closed loop stored value, or stored value not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.

(29) "Receiving money for transmission" or "money received for transmission" means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means.

(30) "Risk management program" means the policies, procedures, and internal controls designed to identify, measure, monitor and mitigate risk.

(31) "Tangible net worth" means the aggregate assets of a licensee, excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted accounting principles.

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