Multi-State Compact Forms to Standardize Lender Licensing

Seven states have banded together to develop a multi-state licensing system for money service businesses (MSB). As the Conference of State Bank Supervisors (CSBS) explains, “if one state reviews key elements of state licensing for a money transmitter – IT, cybersecurity, business plan, background check, and compliance with the federal Bank Secrecy Act – then other participating states agree to accept the findings. The result is expected to significantly streamline the MSB licensing process.”

The states participating in the new compact are Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas, and Washington. Under what has been dubbed Vision 2020, CSBS hopes to standardize licensing among all 50 states and U.S. territories for lenders and other MSBs.

Many experts feel CSBS is pushing Vision 2020 in response to potentially dwindling authority over non-bank financial institutions, spurred by the Office of the Comptroller of the Currency’s announcement in late 2016 that it would pursue granting special purpose bank charters to FinTech institutions. The CSBS, along with the state of New York, went so far as to sue the OCC over its FinTech charter proposal, despite the fact that the federal bank agency is still unsure as to if it will even offer the non-bank charters.