Montana is now officially the only state in the United States that does not have a law regulating money transmitters. On June 9, 2016, South Carolina Governor Nikki Haley signed into law the South Carolina Anti-Money Laundering Act (the "Act"). Among other things, the Act imposes licensing and other obligations on businesses engaged in money transmission. The Act takes effect the later of one year after approval by the Governor or upon publication in the State Register of final regulations implementing the Act. Under the Act, a license is required to "engage in the business of money transmission" or to "advertise, solicit, or hold" one's self out as providing money transmission. Money transmission is defined as "selling or issuing payment instruments, stored value, or receiving money or monetary value for transmission." The Act exempts from its licensing requirements various entities, including banks and certain credit unions. It also provides an expedited approval procedure for entities licensed as money transmitters in other states.
The Act imposes various financial obligations on applicants and licensees. An applicant is required to submit a nonrefundable $1,500 application fee and a $750 license fee, which will be returned if the application is denied. An application must also be accompanied by "a surety bond, letter of credit, or other similar security acceptable to the commissioner" of $50,000 plus $10,000 for each location, not exceeding a total of $250,000. However, the commissioner may increase the amount of security required to a maximum of $1,000,000 "if the financial condition of a licensee so requires, as evidenced by reduction of net worth, financial losses, or other relevant criteria."
Once an entity is licensed, it must pay an annual renewal fee of $750 and maintain a new worth of at least $250,000. Like many other state money transmitter laws, the Act imposes a permissible investments requirement that a licensee maintain at all times permissible investments that have a market value "of not less than the aggregate amount of all of its outstanding payment instruments and stored value obligations issued or sold in all states and money transmitted from all states by the licensee." The Act provides a detailed list of what constitutes a permissible investment, along with limiting the amount that certain permissible investments may be used to meet the licensee's statutory obligation. It also grants the commissioner authority to permit other types of investments.
Aside from the financial obligations, the Act subjects a licensee to various examination and reporting obligations.
The commissioner is able to assess a civil penalty of $1,000 per day for each day a violation of the act is outstanding, plus costs, expenses, and attorney fees. Moreover, the Act imposes felony liability for certain knowing and intentional acts.Originally published on June 15, 2016
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