214.00.19 Ark. Code R. § 001 - Uniform Money Services Rules
Arkansas Securities Department No. 214.00
Amendments to the following Rules of the Money Services Rules Effective February 2, 2020
RULE 102.
DEFINITIONS
(4)
Audited
financial statement. The term "audited financial statement" means a
financial statement prepared in accordance with generally accepted accounting
principles and audited by an independent accountant according to generally
accepted auditing standards in the United States or for a company formed
outside the United States, "audited financial statement" means a financial
statement prepared in accordance with international financial reporting
standards promulgated by the International Financing Reporting Standards
Foundation and the International Accounting Standards Board.
(11)
Nationwide Multistate Licensing
System (NMLS) means the automated licensing system developed and
maintained by the Conference of State Bank Supervisors for the licensing and
registration of money transmitters, agents of money transmitters, and currency
exchangers.
(12)
Prepaid
Access.The term "prepaid access" means access to funds or the value of
funds that have been paid in advance and can be retrieved or transferred at
some point in the future through an electronic device or vehicle, such as a
card, code, electronic serial number, mobile identification number, or personal
identification number.
(13)
Principal. The term "principal" means any person who controls,
directly or indirectly through one or more intermediaries, alone or in concert
with others, a twenty-five percent (25%) or greater interest in a partnership,
company, corporation, or association, or the owner of a sole
proprietorship.
(14)
Staff. The term "Staff means the Staff of the Arkansas Securities
Department.
RULE 202.
APPLICATION FOR LICENSE
(a)
Additional information. The Staff will review the application and,
as authorized by Ark. Code Ann. §
23-55-205,
investigate the applicant and all related facts to determine if the applicant
possesses the qualifications and satisfies the requirements for the license. At
any time during the review and investigation process, the Department may
require such information as the Staff considers necessary to evaluate the
application, including opinion of counsel or an opinion, review, or audited
financials prepared by a certified public accountant. It is the applicant's
responsibility to provide or cause to be provided all the information the
Department requires.
(b)
Extension of time. The Commissioner may give the applicant a
thirty (30) day extension to submit the additional information requested if the
Department receives a written extension request from the applicant within ten
(10) days of the Staffs request for additional information. Upon a finding of
good cause, the Commissioner may give the applicant an additional extension if
the Department receives a written request and sworn affidavits to support the
claimed facts before the expiration of the thirty (30) day period described
above. The request must explain in detail the reasons the extension is needed.
The Commissioner will notify the applicant of the decision by letter mailed via
regular mail to the address provided by the applicant on or before the tenth
(10th) day after the date the Department receives the request.
In this rule, "good cause" means that the applicant acted diligently and took the steps reasonably necessary to enable the applicant to file the required information in a timely manner, but that circumstances beyond the applicant's control prevent it from doing so. Good cause cannot be based upon ignorance of the law or facts that could have been learned through the exercise of due diligence or failure to take the actions necessary to ensure timely and complete filing and payment.
(c)
Abandoned application. If
the applicant fails to provide any and all additional information required
within the specified timeframe, the Commissioner may determine the application
to be abandoned, without prejudice to an applicant's rights to file a new
application. The applicant will be notified that the application is considered
abandoned. The Commissioner's determination may not be appealed. The Department
will not refund the fee paid in connection with the abandoned
application.
(d)
Forms and
instructions. Pursuant to the Act, the Commissioner designates NMLS to
receive and store filings, collect related fees from applicants and licensees,
and facilitate communication with applicants and licensees on behalf of the
Commissioner.
RULE 204.
SURETY BOND
(a)
(1) $10,000 Bond. Each application must be
accompanied by a surety bond acceptable to the commissioner in the amount of
$10,000.
(2) After the initial
calendar year of licensure, a licensee shall maintain a surety bond of:
(A) $10,000 if the licensee's annualized
money transmissions in Arkansas are not more than $500,000.
(B) $50,000 if the licensee's annualized
money transmissions in Arkansas are greater than $500,000 but not more than
$5,000,000;
(C) $100,000 if the
licensee's annualized money transmissions in Arkansas are greater than
$5,000,000 but not more than $25,000,000;
(D) $200,000 if the licensee's annualized
money transmissions in Arkansas are greater than $25,000,000 but not more than
$75,000,000; or
(E) $300,000 if the
licensee's annualized money transmissions in Arkansas are greater than
$75,000,000.
(3)
Annualized money transmission means the money transmission, payment instrument,
and stored value dollar volume in Arkansas during the prior calendar
year.
(4) If an increase in surety
bond is required, the surety bond must be increased by March 31. Failure to
maintain the proper surety bond amount shall be grounds for discipline under
the Act.
(b) The
Commissioner may increase the amount of surety bond required, to a maximum of
one million dollars ($1,000,000), if the financial condition of a money
transmitter licensee so requires. The Commissioner may consider, without
limitation, the following criteria:
(1)
Significant reduction of net worth.
(2) Financial losses.
(3) Potential losses resulting from the Act,
or these Rules;
(4) Licensee filing
for bankruptcy.
(5) The initiation
of any proceedings against the licensee in any state or foreign
country.
(6) The filing of a state
or federal criminal charge against the licensee, person in control, responsible
individual, executive officer, board director, employee, authorized delegate or
principal, based on conduct related to providing money services or money
laundering.
(7) A licensee,
executive officer, board director, person in control, responsible individual,
principal or authorized delegate being convicted of a crime.
(8) Any unsafe or unsound practice.
(9) A judicial or administrative finding
against a money transmitter licensee under the Act, or an examination report
finding that the money transmitter licensee engaged in an unfair or deceptive
act or practice in the conduct of its business.
(10) Other events and circumstances that, in
the judgment of the Commissioner, impair the ability of the licensee to meet
its obligations to its money services customers.
RULE 205.
ISSUANCE OF
LICENSE
(a) The Commissioner may
consider the following factors, without limitation, in determining whether an
applicant has fulfilled the conditions for a license codified in Ark. Code Ann.
§
23-55-205(a)(2):
(1) whether the applicant, an executive
officer, proposed responsible person, board director, person in control or
authorized delegate has been convicted of any felony within the past ten (10)
years;
(2) whether the applicant,
an executive officer, proposed responsible person, board director, person in
control or authorized delegate has been convicted of a crime involving a
financial transaction or fraud within the past ten (10) years;
(3) whether the applicant, an executive
officer, proposed responsible person, board director or person in control has
criminal, civil, or administrative charges issued against him/them in any
jurisdiction for violations relating to a financial transaction(s) or fraud
within the past ten (10) years;
(4)
whether the applicant, an executive officer, proposed responsible person, board
director or person in control is the subject of an order, including any denial,
suspension, or revocation of authority to engage in a regulated activity by any
other state or federal authority to which the person is, has been, or has
sought to be subject, entered within the past ten (10) years, including, but
not limited to, the money service industry;
(5) whether the applicant, an executive
officer, proposed responsible person, board director, or person in control has
falsified any information supplied in connection with the
application;
(6) whether the
applicant, or any proposed authorized delegate thereof, has had an adverse
action taken against any business license related to providing financial
services by a jurisdiction within the United States within the past ten (10)
years;
(7) whether the applicant
has allowed a business under its control to deteriorate to a condition of
insolvency determined by the fact that its liabilities exceed its assets or it
cannot meet its liabilities as they mature;
(8) whether the applicant, or any authorized
delegate thereof, failed to respond to a request for information from the
Commissioner;
(9) whether the
description of the screening process used by the applicant in selecting
authorized delegates supplied by the applicant describes a process that is
ineffective in determining the fitness of proposed authorized
delegates;
(10) whether the
applicant has failed to register with the United States Department of the
Treasury as required by
31 U.S.C. Section
5330;
(11) whether the applicant, an executive
officer, proposed responsible individual, board director, or person in control
is listed on the specially designated nationals and blocked persons list
prepared by the United States Department of the Treasury as a potential threat
to commit terrorist acts or to finance terrorist acts.
RULE 206.
RENEWAL OF A
LICENSE
(a)
Extension of
time. Compliance with Ark. Code Ann. §
23-55-206(a)
is necessary for the Department to orderly and efficiently administer and
enforce the Act. However, Ark. Code Ann. §
23-55-206(d)
authorizes the Commissioner to allow the licensee to file or complete the
filing of its renewal report at a date later than required for good cause. The
licensee has the burden to demonstrate good cause.
(b)
Good cause. In this rule,
"good cause" means that the licensee acted diligently and took the steps
reasonably necessary to enable the licensee to file the complete renewal report
and pay the renewal fee in a timely manner, but that circumstances beyond the
licensee's control prevented it from doing so.
The licensee is expected to know and comply with the requirements of Ark. Code Ann. § 23-55-206(a) and (b). Good cause cannot be based upon ignorance of the law or facts that could have been learned through the exercise of due diligence or failure to take the actions necessary to ensure timely and complete filing and payment. For example, the licensee should know the time and information requirements necessary to obtain an audited financial statement. The inability or failure of the licensee's accountant to timely produce an audited financial statement is generally not considered to be a circumstance beyond the licensee's control.
RULE
207.
NET WORTH
A money transmitter applicant or licensee must demonstrate and maintain net worth calculated at ten thousand dollars for every one million dollars of total company-wide money transmission, payment instrument, and stored value dollar volume during the prior calendar year. The minimum net worth is fifty thousand dollars and the maximum required amount is one million dollars.
RULE 402.
APPLICATION FOR LICENSE
(a)
Additional information. The Staff will review the application and,
as authorized by Ark. Code Ann. §
23-55-403,
investigate the applicant and all related facts to determine if the applicant
possesses the qualifications and satisfies the requirements for the license. At
any time during the review and investigation process, the Department may
require such information as the Staff considers necessary to evaluate the
application, including opinion of counsel or an opinion, review, or audited
financials prepared by a certified public accountant. It is the applicant's
responsibility to provide or cause to be provided all the information the
Department requires.
(b)
Extension of time. The Commissioner may give the applicant a
thirty (30) day extension to submit the additional information requested if the
Department receives a written extension request from the applicant within ten
(10) days of the Staffs request for additional information. Upon a finding of
good cause, the Commissioner may give the applicant an additional extension if
the Department receives a written request and sworn affidavits to support the
claimed facts before the expiration of the thirty (30) day period described
above. The request must explain in detail the reasons the extension is needed.
The Commissioner will notify the applicant of the decision by letter mailed via
regular mail to the address provided by the applicant on or before the tenth
(10th) day after the date the Department receives the request.
In this rule, "good cause" means that the applicant acted diligently and took the steps reasonably necessary to enable the applicant to file the required information in a timely manner, but that circumstances beyond the applicant's control prevent it from doing so. Good cause cannot be based upon ignorance of the law or facts that could have been learned through the exercise of due diligence or failure to take the actions necessary to ensure timely and complete filing and payment.
After reviewing the information provided in response to the Staffs initial request for additional information, the Department may determine that still more information is required. The Staff will notify the applicant in writing by regular mail to the address provided by the applicant if further information is required and specify the date by which the Department must receive the information.
(c)
Abandoned application. If
the applicant fails to provide any and all additional information required
within the specified timeframe, the Commissioner may determine the application
to be abandoned, without prejudice to an applicant's rights to file a new
application. The applicant will be notified that the application is considered
abandoned. The Commissioner's determination may not be appealed.
The Department will not refund the fee paid in connection with the abandoned application.
(d)
Forms and instructions.
Pursuant to the Act, the Commissioner designates NMLS to receive and store
filings, collect related fees from applicants and licensees, and facilitate
communication with applicants and licensees on behalf of the
Commissioner.
RULE 403.
ISSUANCE OF LICENSE
(a) The
Commissioner may consider the following factors, without limitation, in
determining whether an applicant has fulfilled the conditions for a license
codified in Ark. Code Ann. §
23-55-403(a)(2):
(1) whether the applicant, an executive
officer, proposed responsible person, board director, person in control or
authorized delegate has been convicted of any felony within the past ten (10)
years;
(2) whether the applicant,
an executive officer, proposed responsible person, board director, person in
control or authorized delegate has been convicted of a crime involving a
financial transaction or fraud within the past ten (10) years;
(3) whether the applicant, an executive
officer, proposed responsible person, board director or person in control has
criminal, civil, or administrative charges issued against him/them in any
jurisdiction for violations relating to a financial transaction(s) or fraud
within the past ten (10) years;
(4)
whether the applicant, an executive officer, proposed responsible person, board
director or person in control is the subject of an order, including any denial,
suspension, or revocation of authority to engage in a regulated activity by any
other state or federal authority to which the person is, has been, or has
sought to be subject, entered within the past ten (10) years, including, but
not limited to, the money service industry;
(5) whether the applicant, an executive
officer, proposed responsible person, board director, or person in control has
falsified any information supplied in connection with the
application;
(6) whether the
applicant, or any proposed authorized delegate thereof, has had an adverse
action taken against any business license related to providing financial
services by a jurisdiction within the United States within the past ten (10)
years;
(7) whether the applicant
has allowed a business under its control to deteriorate to a condition of
insolvency determined by the fact that its liabilities exceed its assets or it
cannot meet its liabilities as they mature;
(8) whether the applicant, or any authorized
delegate thereof, failed to respond to a request for information from the
Commissioner;
(9) whether the
description of the screening process used by the applicant in selecting
authorized delegates supplied by the applicant describes a process that is
ineffective in determining the fitness of proposed authorized
delegates;
(10) whether the
applicant has failed to register with the United States Department of the
Treasury as required by
31 U.S.C. Section
5330;
(11) whether the applicant, an executive
officer, proposed responsible individual, board director, or person in control
is listed on the specially designated nationals and blocked persons list
prepared by the United States Department of the Treasury as a potential threat
to commit terrorist acts or to finance terrorist acts.
RULE 404.
RENEWAL OF A
LICENSE
(a)
Extension of
time. Compliance with Ark. Code Ann. §
23-55-404(a)
is necessary for the Department to orderly and efficiently administer and
enforce the Act. However, Ark. Code Ann. §
23-55-404(d)
authorizes the Commissioner to allow the licensee to file or complete the
filing of its renewal report at a date later than required for good cause. The
licensee has the burden to demonstrate good cause.
(b)
Good cause. In this rule,
"good cause" means that the licensee acted diligently and took the steps
reasonably necessary to enable the licensee to file the complete renewal report
and pay the renewal fee in a timely manner, but that circumstances beyond the
licensee's control prevent it from doing so.
The licensee is expected to know and comply with the requirements of Ark. Code Ann. § 23-55-404(a) and (b). Good cause cannot be based upon ignorance of the law or facts that could have been learned through the exercise of due diligence or failure to take the actions necessary to ensure timely and complete filing and payment.
RULE 603.
REPORT OF MATERIAL CHANGE
(a)
Material changes described in this section must be reported to the Commissioner
within fifteen (15) business days of the occurrence of the change.
(b) "Material change" means any change that
is not trivial, and that, if not reported, would cause an investigation or
examination to be misled or delayed. Such changes include, but are not limited
to:
(1) A change of the physical and/or
mailing address;
(2) A change of
the responsible individual;
(3) A
change of the licensee's name or trade name;
(4) A change in the location where the
records of the licensee that are required to be retained under Ark. Code Ann.
§
23-55-605 are
kept;
(5) The obtaining,
revocation, suspension, or surrender of a money services license in any other
jurisdiction;
(6) The conviction of
the licensee, an executive officer, responsible individual, board director,
principal, or person in control of a misdemeanor or gross misdemeanor involving
a financial transaction or fraud; and
(7) Other similar activities or
events.
(c) In
accordance with Ark. Code Ann. §
23-55-603(b),
a licensee shall file with the Commissioner within forty-five (45) days after
the end of each calendar quarter a current list of all authorized delegates and
locations in this state where the licensee or an authorized delegate of the
licensee provides money services. Compliance is deemed where the licensee
provides to the Commissioner:
(1) Any
addition or deletion of the licensee-owned locations where money services are
provided, including mobile locations;
(2) Any change in the name or trade name or
business address of an existing authorized delegate; and
(3) Any additions or deletions from its
roster of authorized delegates.
Notes
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