TITLE 7. BANKING AND SECURITIES

PART 2. TEXAS DEPARTMENT OF BANKING

CHAPTER 33. MONEY SERVICES BUSINESSES

7 TAC §33.55

The Finance Commission of Texas (the commission), on behalf of the Texas Department of Banking (the department), proposes new §33.55, concerning the exemption to money transmission licensing under Finance Code §152.004(9), relating to certain activity by attorneys and title companies. The new rule is proposed to clarify the term "attorney" for purposes of §152.004(9) and the conditions necessary to invoke the exemption.

Finance Code §152.004(9), in relevant part, exempts an attorney that "in connection with a real property transaction receives and disburses domestic currency or issues an escrow or trust fund check only on behalf of a party to the transaction," from licensing under Chapter 152. As Finance Code §152.004(9) is written, the reference to "an attorney" is ambiguous and the necessary conditions to qualify for the exemption are unclear.

The proposed new rule clarifies that only licensed attorneys who are a member of the State Bar of Texas, or Texas professional corporations organized to provide professional legal services, who receive and disburse escrow or trust funds in the course of providing legal representation may avail themselves of §152.004(9)--so long as all other conditions of the exemption are met.

Related provisions in the Texas Finance Code ("Finance Code") and Texas Insurance Code ("Insurance Code") which exempt attorneys from regulation are similarly limited to services a Texas-licensed attorney renders in the course of legal representation. For example, Finance Code §182.021, which lists exemptions to charter requirements for trust companies, exempts a company "rendering a service customarily performed as an attorney in a manner approved and authorized by the Supreme Court of Texas or State Bar of Texas." Tex. Fin Code §182.021(2).

Additionally, Insurance Code §2551.001(e), which clarifies the licensing requirements for escrow officers, states that "[t]his title does not regulate the practice of law by an attorney." TEX. INS CODE §2551.001(e). "Attorney" under the Insurance Code is further defined as "a person who is licensed to practice law and is a member of the State Bar of Texas," or "a Texas professional corporation organized to provide professional legal services." Id. §2501.003(2)(A)-(B).

Read together, these provisions indicate that the Texas Legislature does not intend to regulate an attorney's performance of legal work, which is already governed by the Texas Disciplinary Rules of Professional Conduct and subject to oversight by the State Bar of Texas. However, the private business activities of a person who incidentally holds a law license, which are separate from the person's practice of law, remain subject to licensure. Moreover, given the context of the exemption in Section 152.004(9), relating specifically to escrow activity associated with a real property transaction, the exemption should be interpreted consistently with the comparable provisions of the Insurance Code.

Jesus (Jesse) Saucillo, Director of Non-Depository Supervision, Texas Department of Banking, has determined that for the first five-year period the proposed rule is in effect, there will be no fiscal implications for state government or for local government as a result of enforcing or administering the rule.

Director Saucillo 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 more effective implementation of the Money Services Modernization Act and enhanced consumer protection by providing clarity as to who qualifies for this exemption.

For each year of the first five years that the rule will be in effect, there will be no 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;

- require the creation of new employee positions or the elimination of existing employee positions;

- require an increase or decrease in future legislative appropriations to the agency;

- require an increase or decrease in fees paid to the agency;

- create a new regulation;

- expand, limit or repeal an existing regulation;

- increase or decrease the number of individuals subject to the rule's applicability; and

- positively or adversely affect this state's economy.

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 new section must be submitted no later than 5:00 p.m. on August 4, 2025. 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 new rule is proposed under Texas Finance Code §152.052, which provides that the commission may adopt rules to administer and enforce chapter 152, including rules necessary and appropriate to implement and clarify the chapter.

Finance Code §152.004(9) is affected by the proposed new rule.

§ 33.55. Clarification of Texas Finance Code § 152.004(9).

For an attorney to qualify for the exemption under Texas Finance Code § 152.004(9), the attorney must be licensed to practice law and a member of the State Bar of Texas, or a Texas professional corporation organized to provide professional legal services, and must be performing legal services in connection with the real property transaction.

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 June 20, 2025.

TRD-202502076

Robert K. Nichols, III

General Counsel

Texas Department of Banking

Earliest possible date of adoption: August 3, 2025

For further information, please call: (512) 475-1327