TITLE 7. BANKING AND SECURITIES

PART 2. TEXAS DEPARTMENT OF BANKING

CHAPTER 33. MONEY SERVICES BUSINESSES

7 TAC §33.13

The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), proposes to amend Chapter 33, §33.13 concerning how to obtain a new license and the deadlines associated with applications. The amended rule is proposed to clarify the accepted payment form and refund of money services businesses (MSB) license application fees.

Amendments to §33.13(d)(1)(B)

Current §33.13(d)(1)(B) requires a MSB license applicant to submit the application fee in the form of a check. In practice, an applicant will often submit the fee through the Nationwide Multistate Licensing System and Registry (NMLS). The proposed amendment clarifies that an applicant may submit the fee either through the NMLS or in the form of a check.

Amendments to §33.13(d)(2)

Current §33.13(d)(2) allows the department to return an MSB license application before processing if the application is missing one of the items required by §33.13(d)(1), such as the application fee, search firm reports, or financial statements. The department can determine if one of these items is missing with an initial cursory review of the application. If the application fee is submitted, but other items are missing, current §33.13(d)(2) allows the department to either return the application fee or apply it to a "promptly" submitted "subsequent application" containing the missing items. In most cases where the department receives an application missing the required items, an applicant submits the missing items within several business days and before the department returns the application or fee; therefore, the department applies the fee to the initial application and no subsequent application is submitted. If a subsequent application or the missing items are not submitted promptly, it is unclear under current §33.13(d)(2) whether the department is required to refund the fee.

Proposed amended §33.13(d)(2) eliminates the ambiguity of the term "promptly" by requiring the applicant to submit missing items within 10 days of the department receiving the application and removes reference to a "subsequent application." The proposed amendment to §33.13(d)(2) also clarifies that the department will refund an application fee if the missing items are not submitted within 10 days. Thus, as proposed, §33.13(d)(2) will allow the department to either: (1) return an application and refund the application fee; or (2) apply the fee to the application within 10 days if missing items are submitted. If missing items are not submitted within 10 days, the department will return the application and refund the fee.

Amendments to §33.13(f)

When an application contains all required items and is not returned, the department must process and investigate the application before it is accepted for filing. This often involves making a request for additional information from the applicant pursuant to §33.13(e)(1). After reviewing the additional information, the department can make follow-up requests for additional information pursuant to §33.13(f)(3). If the applicant does not provide the requested information, the application can be considered abandoned pursuant to TAC §33.13(g)(1), and the application fee is not refunded pursuant to §33.13(g)(2). After the department has fully processed and investigated an application, the department accepts the application for filing, and the application fee is non-refundable pursuant to §33.27(d)(1).

In a limited number of cases, an applicant withdraws the application and demands a refund of the fee after the department has made multiple requests for additional information and expended significant resources processing it, but before the department has accepted it for filing. Current §33.13 does not explicitly give the department the right to keep the application fee in these situations.

Proposed amended §33.13(f) clarifies at what point in the application process the application fee becomes non-refundable if the applicant withdraws the application. As amended, §33.13(f) provides that the application fee will not be refunded after the applicant responds to the department's initial request for additional information pursuant to §33.13(e)(1). Thus, as proposed, after the department has requested additional information, an applicant will have the option to either: (1) allow the department to continue to process the application but not receive a refund if the application is later withdrawn; or (2) withdraw their application at that time and receive a refund.

Russell Reese, Assistant Deputy Commissioner, Texas Department of Banking, has determined that for the first five-year period the proposed rule is in effect, there will be minimal fiscal implications for state government as a result of enforcing or administering the rule.

Mr. Reese has also determined that, for each year of the first five years the rule as proposed is in effect, the public benefit anticipated as a result of enforcing the rule is that MSB license applicants will know with greater certainty whether their application fee is refundable or non-refundable, and may make an informed decision about whether to proceed with the application or withdraw it.

For each year of the first five years that the rule will be in effect, there will be minimal economic costs to persons required to comply with the rule as proposed.

For each year of the first five years that the rule will be in effect, the rule:

-- will not create or eliminate a government program;

-- will not require the creation of new employee positions or the elimination of existing employee positions;

-- will not require an increase or decrease in future legislative appropriations to the agency;

-- will not create a new regulation;

-- will not expand, limit or repeal an existing regulation;

-- will not increase or decrease the number of individuals subject to the rule's applicability;

-- will not positively or adversely affect this state's economy; and

-- will not require an increase or decrease in fees paid to the agency for an individual MSB license application but may increase or decrease the aggregate fees collected by the agency depending on how many applications require a fee refund.

There will be no adverse economic effect on small businesses, micro-businesses, or rural communities. There will be no difference in the cost of compliance for these entities.

To be considered, comments on the proposed amendments must be submitted no later than 5:00 p.m. on January 25, 2021. Comments should be addressed to General Counsel, Texas Department of Banking, Legal Division, 2601 North Lamar Boulevard, Suite 300, Austin, Texas 78705-4294. Comments may also be submitted by email to legal@dob.texas.gov.

The amendments to Chapter 33 are proposed under Texas Finance Code (Finance Code), §151.102, which authorizes the commission to adopt rules for the regulation of money services businesses.

Finance Code, §151.304 is affected by the proposed amendments.

§33.13.How Do I Obtain a New License and What are the Deadlines Associated with Applications?

(a) - (c) (No change.)

(d) What is required for the department to begin processing my application?

(1) Your application must provide and be accompanied by the following at the time you submit the application to the department:

(A) your signature or the signature of your duly authorized officer, as applicable, sworn to before a notary, affirming that the information in the application and accompanying documentation is true;

(B) an application fee, in the amount established by commission rule, in the form of a check payable to the Texas Department of Banking or through the Nationwide Multistate Licensing System and Registry;

(C) all required search firm reports; and

(D) if you are applying for a money transmission license:

(i) security in the amount of at least $300,000 that complies with Finance Code, §151.308, and an undertaking to increase the amount of the security if additional security is required under that section; and

(ii) an audited financial statement demonstrating that you satisfy the minimum net worth requirement established by Finance Code, §151.307(a), and that, if the license is issued, you are likely to maintain the required minimum; or

(E) if you are applying for a currency exchange license:

(i) security in the amount of $2,500 that complies with Finance Code, §151.308; and

(ii) a financial statement demonstrating your solvency.

(2) The department may refuse to process and may return to you an application submitted without all the items identified in paragraph (1) of this subsection. If you submit your application fee, but fail to include one or more of the other items identified in paragraph (1) of this subsection, the department will return the application and refund the fee or, if you submit the missing items within 10 days of the department receiving your application, apply the fee to your application. [or refund the fee or, if you promptly submit an application that includes the missing items, apply the fee to your subsequent application.] If the missing items are not received within 10 days of the department receiving your application, the department will return the application and refund the fee.

(e) (No change.)

(f) When must I provide the additional information the department requires to consider my application complete and to accept it for filing?

(1) Subject to paragraph (2) of this subsection, the department must receive all information required to consider your application complete and to accept it for filing on or before the 61st day after the date the department receives your initial application.

(2) Upon a finding of good and sufficient cause, the banking commissioner shall grant an applicant additional time to complete the application. Extensions will be communicated to the applicant before the expiration of the filing period.

(3) After reviewing the information you provide in response to the department's initial request for additional information, the department may determine that still more information is required to consider your application complete and to accept it for filing. The department will notify you in writing if further information is required and specify the date by which the department must receive the information.

(4) After the department receives any information you provide in response to the department's initial request for additional information under subsection (e)(1) of this section, the application fee will not be refunded if you withdraw your application.

(g) - (j) (No change.)

The agency certifies that legal counsel has reviewed the proposal and found it to be within the state agency's legal authority to adopt.

Filed with the Office of the Secretary of State on December 11, 2020.

TRD-202005447

Catherine Reyer

General Counsel

Texas Department of Banking

Earliest possible date of adoption: January 24, 2021

For further information, please call: (512) 475-1301