The Conference of State Bank Supervisors (CSBS) is encouraging state adoption of the Uniform Money Transmission Modernization Act as part of an effort to modernize the state financial regulatory system.
The measure seeks to replace 50 sets of state-specific money transmitter laws and rules with one single set of nationwide standards and requirements via state and industry experts, according to the CSBS.
“This model law streamlines regulation for an evolving payments space where the number of companies operating nationwide has doubled since 2015,” CSBS President and CEO John W. Ryan said. “States that implement the model law will be better positioned to regulate new developments in a rapidly changing financial services market.”
Officials indicated state financial agencies supervise 79 percent of the nation’s banks and serve as the primary regulator of the nonbank financial sector — including mortgage lenders and servicers, consumer finance companies, debt collectors and money transmitters.
The legislation is also known as the Money Transmitter Model Law, officials noted, adding it establishes a common regulatory floor for money transmission that includes stored value, sale of payment instruments and transmission of fiat and virtual currency.
Per the CSBS, companies offering digital wallets, prepaid cards, money orders and cash or virtual currency transmissions are slated to benefit from the law’s standardized and risk-based requirements. Additionally, authorities maintain customers will benefit from strong consumer protections that cross state lines.