Legislature(2023 - 2024)BUTROVICH 205

04/21/2023 01:30 PM Senate JUDICIARY

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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ SB 84 MONEY TRANSMISSION; VIRTUAL CURRENCY TELECONFERENCED
Heard & Held
-- Testimony <Invitation Only> --
*+ SB 128 COMMERCIAL SALMON FISHERY CLOSURE TELECONFERENCED
Heard & Held
-- Invited & Public Testimony --
Bills Previously Heard/Scheduled
          SB  84-MONEY TRANSMISSION; VIRTUAL CURRENCY                                                                       
                                                                                                                                
1:30:46 PM                                                                                                                    
CHAIR CLAMAN  announced the consideration  of SENATE BILL  NO. 84                                                               
"An Act relating to the  business of money transmission; relating                                                               
to  money  transmission  licenses,  licensure  requirements,  and                                                               
registration through  the Nationwide Multistate  Licensing System                                                               
and Registry; relating  to the use of virtual  currency for money                                                               
transmission;  relating to  authorized delegates  of a  licensee;                                                               
relating  to acquisition  of control  of a  license; relating  to                                                               
record  retention  and  reporting requirements;  authorizing  the                                                               
Department of  Commerce, Community,  and Economic  Development to                                                               
cooperate  with   other  states   in  the  regulation   of  money                                                               
transmission;  relating to  permissible investments;  relating to                                                               
violations and  enforcement of money transmission  laws; relating                                                               
to  money transmission  license exemptions;  relating to  payroll                                                               
processing  services; repealing  currency exchange  licenses; and                                                               
providing for an effective date."                                                                                               
                                                                                                                                
1:31:19 PM                                                                                                                    
ROBERT  SCHMIDT, Director,  Division  of  Banking and  Securities                                                               
(DBS),   Department   of   Commerce,   Community   and   Economic                                                               
Development   (DCCED),    Anchorage,   Alaska,    delivered   the                                                               
presentation,  "ALASKA UNIFORM  MONEY TRANSMISSION  MODERNIZATION                                                               
ACT SB 84."                                                                                                                     
                                                                                                                                
He displayed slide 2.                                                                                                           
                                                                                                                                
     What does this bill do?                                                                                                  
        • Reduces regulatory burden  by streamlining initial                                                                    
          licensing and license renewal.                                                                                        
        • Protects Alaska  consumers by  conducting criminal                                                                    
          background    checks   through    the   Nationwide                                                                    
          Multistate Licensing System (NMLS).                                                                                   
        • Ensures regulatory costs  of supervision keep pace                                                                    
          with growth.                                                                                                          
        • Broadens the definition  of money transmission and                                                                    
          defines virtual currency activities.                                                                                  
        • Requires  licensees to  comply with  federal laws,                                                                    
          including suspicious activity reporting                                                                               
        • Updates  enforcement  provisions   by  allowing  a                                                                    
          broader spectrum of orders to be issued.                                                                              
        • Ensures DBS  can coordinate  with other  states in                                                                    
          all   areas   of    regulation,   licensing,   and                                                                    
          supervision  to reduce  regulatory  burden on  the                                                                    
          industry  and more  effectively utilize  regulator                                                                    
          resources.                                                                                                            
                                                                                                                                
MR. SCHMIDT stated  that SB 84 impacts an  industry that Alaskans                                                               
use thousands  of times  an hour,  involving billions  of dollars                                                               
per year. He relayed that about  half of the bill is dedicated to                                                               
standardizing  and  streamlining  the   process  of  obtaining  a                                                               
license;  examinations  of  licensee safety  and  soundness;  and                                                               
standardizing procedures  for licensee mergers. SB  84 introduces                                                               
cryptocurrency   standards  including   disclosures,  permissible                                                               
investments,  net  worth  requirements, and  consumer  protection                                                               
provisions.  It clarifies  relationships where  a local  delegate                                                               
transmits  money on  behalf of  a licensee.  He noted  that these                                                               
historically  have been  some of  the most  problematic areas  of                                                               
money  transmission in  Alaska.  Significantly,  the bill  allows                                                               
multistate cooperation in licensing,  allowing states to leverage                                                               
other states' resources in protecting their residents.                                                                          
                                                                                                                                
1:32:37 PM                                                                                                                    
MR. SCHMIDT spoke to slide 3.                                                                                                   
                                                                                                                                
     Why do we need this law updated?                                                                                         
        • Money transmission is the fastest growing                                                                             
          financial  industry the  Division  of Banking  and                                                                    
          Securities  regulates.  Changes  in  the  industry                                                                    
          have   made   the   law    sorely   in   need   of                                                                    
          modernization.                                                                                                        
        • This growth has mostly been driven by mobile                                                                          
          payment  technologies such  as PayPal,  Venmo, and                                                                    
          Cash  App.  Cryptocurrency  has been  a  secondary                                                                    
          driver   of  money   transmission  growth.   These                                                                    
          technologies did  not meaningfully exist  when the                                                                    
          current law was adopted.                                                                                              
        • This   bill   will    modernize   Alaska's   money                                                                    
          transmission  laws to  have  common standards  for                                                                    
          licensing, operations, and consumer protection.                                                                       
        • As of April 10th, this model law has been                                                                             
          introduced in  25 states.  Ten states  have passed                                                                    
          bills with all or some sections of the Model Law.                                                                     
                                                                                                                                
MR. SCHMIDT  discussed different  aspects of  money transmissions                                                               
in Alaska based on the data  reflected in the charts on slides 4-                                                               
7.  He   stated  that  the   industry  grew  from   $1.6  billion                                                               
transmitted to, from,  and within Alaska in 2019 to  more than $7                                                               
billion in 2021.  This declined to $5.8 million in  2022, much of                                                               
which was  driven by volatility  in virtual currency,  also known                                                               
as cryptocurrency.                                                                                                              
                                                                                                                                
The graph  on slide  5 shows  the growth in  the number  of times                                                               
that Alaskans used money transmission,  regardless of the size of                                                               
the  transaction.  In three  years,  the  number of  transactions                                                               
tripled,  from $10  million to  more than  $31 million.  In 2022,                                                               
Alaskans used  money transmission  an average  of 3,540  times an                                                               
hour, 24  hours a  day, 365  days a year.  The growth  was driven                                                               
largely by  mobile phones and  payment applications.  Using money                                                               
transmission  services like  PayPal  or Cash  App  is common.  He                                                               
noted  that  a money  transmission  service  is embedded  in  all                                                               
smartphones                                                                                                                     
                                                                                                                                
1:34:58 PM                                                                                                                    
The graph  on slide  6 shows the  increase of  money transmission                                                               
licensees  from  2018 through  2022.  As  of December  31,  2022,                                                               
Alaska  had  168 money  transmitter  licensees,  which was  a  51                                                               
percent  increase  since  2018.  He   noted  that  the  top  nine                                                               
licensees perform  over $100  million of  business to,  from, and                                                               
within  Alaska each  year; the  top  two each  handle volumes  in                                                               
excess of  $1 billion each  year. He characterized these  as some                                                               
of the most complicated applications that the division handles.                                                                 
                                                                                                                                
1:35:52 PM                                                                                                                    
At ease to address technical difficulties.                                                                                      
                                                                                                                                
1:36:01 PM                                                                                                                    
CHAIR CLAMAN reconvened the meeting.                                                                                            
                                                                                                                                
1:36:02 PM                                                                                                                    
MR. SCHMIDT  advanced to  slide 7,  "What types  of transmissions                                                               
happen  in Alaska?"  He spoke  to the  pie chart  that shows  the                                                               
following breakdown in 2022 of  money transmitted based on dollar                                                               
value.                                                                                                                          
                                                                                                                                
Money Transmission 64 percent                                                                                                   
Stored Value 22 percent                                                                                                         
Virtual Currency 11 percent                                                                                                     
Payment Instruments 3 percent                                                                                                   
Fiat Currency Exchange < 1 percent                                                                                              
                                                                                                                                
1:37:17 PM                                                                                                                    
MR. SCHMIDT advanced to slide 8 and spoke to the following.                                                                     
                                                                                                                                
     Why regulate money transmission at all?                                                                                  
                                                                                                                                
        • States have licensed and regulated transmitters                                                                       
          of money for over 100 years.                                                                                          
        • 55 states and U.S. territories regulate money                                                                         
          transmission currently.                                                                                               
        • Industry wants this bill adopted.                                                                                     
        • No industry stakeholder or state regulator wants                                                                      
          federal pre-emption.                                                                                                  
        • DBS is uniquely qualified to protect Alaskans.                                                                        
        • States have the expertise and examination                                                                             
          infrastructure that the feds completely lack.                                                                         
          States are able to pivot and react more quickly                                                                       
          as events transpire.                                                                                                  
                                                                                                                                
1:38:50 PM                                                                                                                    
DEAN  FLEER,  Financial Examiner  III,  Division  of Banking  and                                                               
Securities (DBS), Department of  Commerce, Community and Economic                                                               
Development (DCCED),  Anchorage, Alaska, presented  the sectional                                                               
analysis for SB 84. It read as follows.                                                                                         
                                                                                                                                
     The  proposed   bill  is  not   a  simple   repeal  and                                                                    
     reenactment of AS 06.55. Instead,  it is a line-by-line                                                                    
     overhaul  of the  Act carefully  considering the  Model                                                                    
     Law   and  selectively   adopting   and  revising   the                                                                    
     statutes.  The  bill   repeals  the  currency  exchange                                                                    
     license and  includes that  activity in  the definition                                                                    
     of money transmission so only  one license type will be                                                                    
     required in AS 06.55 going forward.                                                                                        
                                                                                                                                
     Section 1. Adds a  section of uncodified law explaining                                                                  
     the purpose of the bill.                                                                                                   
                                                                                                                                
     Section 2.  Amends AS  06.05.101(a) requires  a license                                                                  
     to engage  in the business of  money transmission (MT).                                                                    
     The  amendment  inserts  a citation  to  the  exemption                                                                    
     statute,   AS   06.55.802,   and  clarifies   that   an                                                                    
     authorized  delegate  may  not  engage  in  MT  if  the                                                                    
     actions taken are outside the scope of the exemption.                                                                      
                                                                                                                                
     Section  3.  Repeals  and   reenacts  AS  06.55.102  to                                                                  
     conform  with  the   Model  Law  providing  application                                                                    
     requirements   for  a   MT  license   and  allows   the                                                                    
     Department   of  Commerce,   Community,  and   Economic                                                                    
     Development  (DCCED or  the  department)  to change  or                                                                    
     update   the  forms   be   consistent  with   licensing                                                                    
     requirements in NMLS.                                                                                                      
                                                                                                                                
     Section  4.  Repeals  and   reenacts  AS  06.55.105  to                                                                  
     conform with  the Model  Law and  provides that  if the                                                                    
     applicant   is  subject   to  a   multistate  licensing                                                                    
     process,  the   department  may   accept  investigation                                                                    
     results of the lead investigation state.                                                                                   
                                                                                                                                
     Section  5.  Repeals  and   reenacts  AS  06.55.106  to                                                                  
     conform with  the Model  Law changing  license renewal,                                                                    
     renewal   reporting  and   renewal  terminology.   Fees                                                                    
     collected  at  the time  of  renewal  will change  with                                                                    
     details  to be  prescribed  by  the department  through                                                                    
     regulation.                                                                                                                
                                                                                                                                
1:42:34 PM                                                                                                                    
MR. FLEER continued.                                                                                                            
                                                                                                                                
     Section  6. Amends  AS  06.55 to  add  new sections  AS                                                                  
     06.55.108, AS 06.55.109, and AS  06.55.110 to Article 1                                                                    
     to conform with the Model Law.                                                                                             
                                                                                                                                
          AS 06.55.108  states that licensees  must continue                                                                    
          to  meet  the  qualifications that  apply  to  new                                                                    
          applicants  and  states  that the  department  may                                                                    
          suspend or  revoke a license  if a  licensee fails                                                                    
          to do so.                                                                                                             
                                                                                                                                
          AS 06.55.109 contains  submission requirements for                                                                    
          individuals   in   control    of   applicants   or                                                                    
          licensees,  and  key  individuals defined  by  the                                                                    
          bill.    Criminal    background    check    report                                                                    
          requirements  are  also included  for  individuals                                                                    
          who  have resided  outside  of  the United  States                                                                    
          (US) in the last ten years.                                                                                           
                                                                                                                                
          AS 06.55.110 grants the department discretion to:                                                                     
                                                                                                                                
          1. Implement licensing  provisions consistent with                                                                    
             other states that have adopted a multistate                                                                        
             licensing process;                                                                                                 
          2. establish   relationships   or   contracts   to                                                                    
             collect and maintain records, coordinate                                                                           
             licensing, process fees, and communicate with                                                                      
             licensees, and                                                                                                     
          3. utilize the NMLS for all aspects of licensing.                                                                     
                                                                                                                                
     Section  7. Amends  AS  06.55 to  add  new sections  to                                                                  
     Article  1A concerning  virtual  currency derived  from                                                                    
     the Model Law. Virtual  Currency (VC) Business Activity                                                                    
     replaces Currency Exchange Licenses  as the heading for                                                                    
     Article 1A.                                                                                                                
                                                                                                                                
          AS 06.55.150    06.55.170  provide the  details of                                                                    
          what  is considered  and  what  is not  considered                                                                    
          licensed  activity for  companies  engaging in  VC                                                                    
          business activity. The  bill will allow regulation                                                                    
          and supervision  of persons that issue  VC or that                                                                    
          provide  services that  allow  others to  transfer                                                                    
          VC, provide  exchange services  to the  public, or                                                                    
          offer to take custody of  VC for other persons. AS                                                                    
          06.55.150  provides that  VC business  activity is                                                                    
          MT and  unless exempt, the activity  requires a MT                                                                    
          license.                                                                                                              
                                                                                                                                
          AS   06.55.155   concerns   required   disclosures                                                                    
          granting  the  department  discretion  to  require                                                                    
          additional  disclosures and  to regulate  the time                                                                    
          and form required for disclosure.                                                                                     
                                                                                                                                
          AS  06.55.160 requires  VC  business with  control                                                                    
          over VC to  maintain an amount of each  type of VC                                                                    
          sufficient to  satisfy the  aggregate entitlements                                                                    
          of  the  persons  to  each  type  of  VC  ensuring                                                                    
          consumer   protection   and  reducing   regulatory                                                                    
          burden  on  the  licensee without  increasing  net                                                                    
          worth requirements.                                                                                                   
                                                                                                                                
          AS  06.55.165  allows  a licensee  engaged  in  VC                                                                    
          business activity  to include  VC in  its tangible                                                                    
          net worth  calculation and details  record keeping                                                                    
          requirements specific to VC businesses.                                                                               
                                                                                                                                
          AS   06.55.170  contains   a   list  of   exempted                                                                    
          activities and provides  an exemption for business                                                                    
          activity of $5,000 or less.                                                                                           
                                                                                                                                
        Section  8.  Repeals   and  reenacts   AS  06.55.301                                                                  
        creating  a  requirement   that  a   licensee  adopt                                                                    
        policies and  procedures consistent  with applicable                                                                    
        state and federal law  prior to using  an authorized                                                                    
        delegate  and  provides   details  stating   that  a                                                                    
        licensee  must  enter   into  a  contract   with  an                                                                    
        authorized delegate with a list of provisions.                                                                          
                                                                                                                                
        Section   9.   Amends   AS    06.55.302   concerning                                                                  
        unauthorized  activities  and  liability  provisions                                                                    
        that apply to persons engaging in MT on behalf of an                                                                    
        unlicensed person.                                                                                                      
                                                                                                                                
        Section  10.   Amends  AS   06.55.401  relating   to                                                                  
        supervision and the department's powers with respect                                                                    
        to examination. It  allows the department  to accept                                                                    
        examination reports from  other states,  the federal                                                                    
        government, or an independent  accounting firm. This                                                                    
        section  requires   licensees  to   pay  all   costs                                                                    
        associated     with     examinations,     references                                                                    
        confidentiality  requirements,  and  eliminates  the                                                                    
        existing requirement  to notify  a licensee  45 days                                                                    
        prior to an examination.                                                                                                
                                                                                                                                
     Sections  11  -  14.  Repeals and  reenacts  or  amends                                                                  
     subsections of  AS 06.55.403  for consistency  with the                                                                    
     Model Law.  It requires quarterly reports  of condition                                                                    
     for  a  licensee's   activities  and  their  authorized                                                                    
     delegates.  It  maintains   existing  requirements  for                                                                    
     immediate  reporting knowledge  of filing  a bankruptcy                                                                    
     petition, a  proceeding to revoke or  suspend a license                                                                    
     in  another state  or  country,  bond cancellation  and                                                                    
     criminal charges. Allows the  department to utilize the                                                                    
     NMLS for reporting required  by AS 06.55.403. Executive                                                                    
     officer   is  replaced   and  repealed   utilizing  key                                                                    
     individual, a  term introduced by  the Model  Law which                                                                    
     means  "any   individual  ultimately   responsible  for                                                                    
     establishing  or directing  policies and  procedures of                                                                    
     the licensee, including  an executive officer, manager,                                                                    
     or trustee."                                                                                                               
                                                                                                                                
     Section   15.  Repeals   and   reenacts  AS   06.55.404                                                                  
     regarding  acquisition  of  control of  a  MT  licensee                                                                    
     containing  procedural and  reporting requirements  for                                                                    
     the acquisition  or transfer  of control  of licensees.                                                                    
     It  allows exceptions  for acquisition  of control  and                                                                    
     contains  discretionary provisions  for the  department                                                                    
     for  ease and  flexibility  of  administration and  the                                                                    
     utilization   of  the   NMLS.  It   adds  details   for                                                                    
     aggregation  of   interest  of  ownership   for  family                                                                    
     members for consistency with the Model Law.                                                                                
                                                                                                                                
     Sections 16 and 17. Amends  AS 06.55.405(a) and (d) for                                                                  
     consistency  with  the  Model Law.  It  details  record                                                                    
     keeping obligations  of licensees, increasing  the time                                                                    
     period from  3 years to  5 years, and  makes conforming                                                                    
     language changes.                                                                                                          
                                                                                                                                
     Section  18. Amends  AS  06.55.406(a) concerning  money                                                                  
     laundering  reports  retitling   the  heading  to  Bank                                                                    
     Secrecy  Act reports  for  consistency  with the  Model                                                                    
     Law.   Remove  the   requirement  that   certain  money                                                                    
     laundering, record keeping,  and suspicious transaction                                                                    
     reporting  requirements  be  filed  with  the  Attorney                                                                    
     General.                                                                                                                   
                                                                                                                                
     Sections 19  - 22. Amends AS  06.55.407 for consistency                                                                  
     with the Model Law.                                                                                                        
                                                                                                                                
     AS  06.55.407(d)  was  retained  and  slightly  amended                                                                    
     because it contains guidance  that is helpful regarding                                                                    
     when  a licensee  or authorized  delegate may  disclose                                                                    
     financial  information  provided  to  the  licensee  or                                                                    
     authorized delegate by a customer.                                                                                         
                                                                                                                                
     Section 23. Adds  a new subsection (f)  to AS 06.55.407                                                                  
     stating when department records  may be made public and                                                                    
     what information is confidential.                                                                                          
                                                                                                                                
     Section  24. Amends  AS 06.55  to add  new sections  to                                                                  
     article 4 from the Model Law.                                                                                              
                                                                                                                                
          AS  06.55.408  requires  licensees  to  submit  an                                                                    
          annual   audited   financial  statement   to   the                                                                    
          department  within 90  days after  the end  of the                                                                    
          licensee's fiscal year.                                                                                               
                                                                                                                                
          AS 06.55.409(a)  grants the  department discretion                                                                    
          to  enter into  agreements  with  other state  and                                                                    
          federal  agencies  to   improve  efficiencies  and                                                                    
          reduce regulatory  burden. AS  06.55.409(b) grants                                                                    
          the  department  broad discretion  to  administer,                                                                    
          interpret,  and  enforce  the  chapter,  to  adopt                                                                    
          rules and  regulations, and  to recover  its costs                                                                    
          through imposition and collection of fees.                                                                            
                                                                                                                                
          AS 06.55.410  expands the department's  ability to                                                                    
          participate  in  multistate supervisory  processes                                                                    
          such as joint investigations.                                                                                         
                                                                                                                                
          AS  06.55.411 provides  that in  the  event of  an                                                                    
          inconsistency between  state and federal  law, the                                                                    
          federal  law   governs  to   the  extent   of  the                                                                    
          inconsistency.                                                                                                        
                                                                                                                                
          AS   06.55.412  contains   the  requirements   and                                                                    
          procedures  applicable  when  a licensee  adds  or                                                                    
          replaces a key  individual allowing the department                                                                    
          to disapprove  a change of  key individual  due to                                                                    
          certain criteria.                                                                                                     
                                                                                                                                
     Sections  25 -  30. Revises  article 5  of AS  06.55 to                                                                  
     rename   and  broaden   its   scope  from   Permissible                                                                    
     Investments  to  Prudential   Standards.  Two  existing                                                                    
     sections (AS 06.55.104 and  06.55.107) are repealed and                                                                    
     reenacted, as revised,  to fit in the  new article. The                                                                    
     level   of  permissible   investments  required   by  a                                                                    
     licensee are detailed in AS 06.55.502.                                                                                     
                                                                                                                                
     Section   25.  Amends   AS  06.55.501   to  allow   the                                                                  
     department  to  limit   specific  investments  held  by                                                                    
     licensees due  to risk concerns, with  the exception of                                                                    
     permissible  investments  listed  in AS  06.55.102.  AS                                                                    
     06.55.501(c) adds language  to protect beneficiaries of                                                                    
     statutory   trusts  from   actions   by  creditors   of                                                                    
     licensees.                                                                                                                 
                                                                                                                                
     Section  26.   Amends  AS  06.55.501   to  add   a  new                                                                  
     subsection   (d)   regarding  the   establishment   and                                                                    
     termination of statutory  trusts and related department                                                                    
     obligations. Subsection  (e) was  added, and  it allows                                                                    
     the   department   to  allow   additional   permissible                                                                    
     investments  and   to  participate  with   other  state                                                                    
     regulators to identify permissible investments.                                                                            
                                                                                                                                
     Section 27  and 28. Amends  subsections (a) and  (b) of                                                                  
     AS  06.55.502  concerning permissible  investments  for                                                                    
     consistency with the Model Law.                                                                                            
                                                                                                                                
          Subsection (a) does the following:                                                                                    
                                                                                                                                
          1. Incorporates ACH items  in transit to licensees                                                                    
             and  payees, cash in  transit via  armored car,                                                                    
             cash in smart safes,  etc. ACH funds are in the                                                                    
             banking system  and the Model Law  defines cash                                                                    
             in   transit   via   ACH   as   a   permissible                                                                    
             investment;                                                                                                        
          2. allows  letters  of  credit  as  a  permissible                                                                    
             investment; and                                                                                                    
          3. allows   excess   bonding  as   a   permissible                                                                    
             investment type.                                                                                                   
                                                                                                                                
          Subsection  (b)  is   repealed  and  reenacted  to                                                                    
          include   a   list   of   investments   that   are                                                                    
          permissible up  to a  certain aggregate  value for                                                                    
          each  investment  category  as a  component  of  a                                                                    
          licensee's total investment portfolio.                                                                                
1:45:13 PM                                                                                                                    
MR. FLEER continued.                                                                                                            
                                                                                                                                
     Section 29.  Amends AS  06.55 to add  a new  section to                                                                  
     article 5.                                                                                                                 
                                                                                                                                
          AS   06.55.503  contains   the  requirements   for                                                                    
          letters of credit to align with the Model Law.                                                                        
                                                                                                                                
          Amends AS 06.55 to add new sections to article 5.                                                                     
                                                                                                                                
          AS   06.55.505   proposes  applicable   forms   of                                                                    
          security  (AS 06.55.104)  and is  a hybrid  of the                                                                    
          Model  Law and  the  existing Act.  It requires  a                                                                    
          licensee  to  hold a  security  bond  or with  the                                                                    
          department's approval,  a deposit, with  a maximum                                                                    
          amount  of $1,000,000  and  be  maintained for  no                                                                    
          less  than   5  years  with  the   details  to  be                                                                    
          determined  by  the  department in  regulation  or                                                                    
          order.                                                                                                                
                                                                                                                                
          AS 06.55.506  provides a significant  expansion of                                                                    
          net worth  requirements from $25,000 to  a new net                                                                    
          worth  based on  a  tiered level  of total  assets                                                                    
          held,  requiring  a  licensee to  demonstrate  net                                                                    
          worth   at  application.   It   also  allows   the                                                                    
          department to exempt  applicants or licensees from                                                                    
          net worth requirements.                                                                                               
                                                                                                                                
     Section 30.  Amends AS  06.55.601 for  consistency with                                                                  
     the Model  Law regarding the suspension  and revocation                                                                    
     of  a  license  by deleting  unnecessary  language  and                                                                    
     inserting  new terms  such as  key  individual and  the                                                                    
     replacement of transmission for services.                                                                                  
                                                                                                                                
     Section  31.  Amends  AS  06.55.601  by  adding  a  new                                                                  
     subsection  (c) that  allows a  licensee  to apply  for                                                                    
     relief from a suspension or revocation of a license.                                                                       
                                                                                                                                
     Section 32.  Amends AS  06.55.602 for  consistency with                                                                  
     the  Model Law,  replacing  money  services with  money                                                                    
     transmission.                                                                                                              
                                                                                                                                
     Section  33.  Amends  AS  06.55.602  by  adding  a  new                                                                  
     subsection  (c)  for  consistency with  the  Model  Law                                                                    
     allowing  an authorized  delegate to  apply for  relief                                                                    
     from a suspension or revocation of a license.                                                                              
                                                                                                                                
     Sections 34  - 36. Amends AS  06.55.603 for consistency                                                                  
     with  the   Model  Law  conforming  language   such  as                                                                    
     deleting   money    services   and    inserting   money                                                                    
     transmission.                                                                                                              
                                                                                                                                
     Section  37.   Amends  AS  06.55.605   regarding  civil                                                                  
     penalties allowing  the department to assess  its costs                                                                    
     and expenses for investigation.                                                                                            
                                                                                                                                
   1:45:38 PM                                                                                                                 
   MR. FLEER continued.                                                                                                         
                                                                                                                                
     Section  38.  Amends  AS 06.55.606(b)  for  consistency                                                                  
     with  the   Model  Law  conforming  language   such  as                                                                    
     deleting   money    services   and    inserting   money                                                                    
     transmission.                                                                                                              
                                                                                                                                
     Section  39.  Amends  AS 06.55.606(c)  for  consistency                                                                  
     with  the   Model  Law  conforming  language   such  as                                                                    
     deleting   money    services   and    inserting   money                                                                    
     transmission.                                                                                                              
                                                                                                                                
     Sections 40 and 41.  Amends subsections of AS 06.55.607                                                                  
     to  remove   citations  to   AS  06.55.201,   which  is                                                                    
     repealed.  The  existing   AS  06.55.201  contains  the                                                                    
     currency   exchange  license   requirements  and   this                                                                    
     license is  being eliminated  in the  bill in  favor of                                                                    
     one  license  type  including currency  exchange  as  a                                                                    
     money transmission activity.                                                                                               
                                                                                                                                
     Section 42. Amends  AS 06.55.702(a) concerning hearings                                                                  
     for  consistency  with  the Model  Law  deleting  money                                                                    
     services  and a  citation to  AS 06.55.702(b)  which is                                                                    
     repealed in the bill.                                                                                                      
                                                                                                                                
     Section 43.  Amends AS  06.55.802 for  consistency with                                                                  
     the  Model   Law  revising  licensing   exclusions  and                                                                    
     renames  the   section  to  exemptions.  It   adds  new                                                                    
     exemption types  and would allow the  department to add                                                                    
     additional exemptions  if it is in  the public interest                                                                    
     creating consistency from  state-to-state. It also adds                                                                    
     the  term  federally   insurance  depository  financial                                                                    
     institution  for consistency  with  other statutes  the                                                                    
     division regulates under AS 06.60.990(9).                                                                                  
                                                                                                                                
     Section 44. Amends AS 06.55  by adding a new section AS                                                                  
     06.55.803 allowing  the department to require  a person                                                                    
     who  claims an  exemption  to  provide information  and                                                                    
     documentation demonstrating the claimed exemption.                                                                         
                                                                                                                                
     Section  45.  Amends  AS  06.55.810  regarding  notices                                                                  
     requiring   licensees  and   authorized  delegates   to                                                                    
     provide  customers  with  notices  of  how  to  file  a                                                                    
     complaint and  allows the  department to  establish the                                                                    
     format and content required in the notices.                                                                                
                                                                                                                                
     Section  46.  Amends  AS  06.55.810  by  adding  a  new                                                                  
     subsection (d)  that requires licensees  and authorized                                                                    
     delegates include  on a  receipt or  through disclosure                                                                    
     on the  licensee's website  or mobile  application, the                                                                    
     name  and   phone  number  of  the   department  and  a                                                                    
     statement on  how customers can contact  the department                                                                    
     with questions or complaints.                                                                                              
                                                                                                                                
     Section 47. Amends AS 06.55  by adding a new section AS                                                                  
     06.55.815  concerning  in-state  determination  of  the                                                                    
     location of a person requesting a transaction.                                                                             
                                                                                                                                
     Section   48.  Repeals   and   reenacts  AS   06.55.830                                                                  
     regarding receipts for consistency  with the Model Law.                                                                    
     Subsections  (a)     (b)  include  content  and  format                                                                    
     requirements  for   transaction  receipts   and  define                                                                    
     receipt.  Receipts are  required to  be in  English and                                                                    
     any other language principally used  by the licensee or                                                                    
     authorized   delegate  to   negotiate  a   transaction.                                                                    
     Subsection  (c)  describes  exceptions to  the  receipt                                                                    
     requirement  including  stored  value.  Subsection  (d)                                                                    
     provides a definition of receipt.                                                                                          
                                                                                                                                
     Section 49.  Amends AS 06.55  to add a new  section, AS                                                                  
     06.55.835  concerning   timely  transmission  requiring                                                                    
     licensees  to forward  money received  for transmission                                                                    
     in accordance  with the agreement between  the licensee                                                                    
     and sender unless the licensee  determines there may be                                                                    
     fraud  involved  or  another  crime.  The  licensee  is                                                                    
     required to  respond to inquiries from  the sender with                                                                    
     the  reason for  the  failure to  forward money  unless                                                                    
     doing so violates a state or federal law.                                                                                  
                                                                                                                                
     Section   50.  Repeals   and   reenacts  AS   06.55.840                                                                    
     concerning refunds for consistency with the Model Law.                                                                     
                                                                                                                                
     Section  51.  Amends  AS 06.55.850(b)  for  consistency                                                                  
     with the Model Law.  The amendments are significant and                                                                    
     allow  the   department  greater  flexibility   in  the                                                                    
     assessment of fees.                                                                                                        
                                                                                                                                
     Section   52.   Amends   AS   06.55.850(c)   concerning                                                                  
     conducting  a  review annually  of  each  fee level  to                                                                    
     determine if fees  are sufficient to cover  the cost of                                                                    
     the administration of this chapter.                                                                                        
                                                                                                                                
     Section  53.  Amends  AS  06.55.850  by  adding  a  new                                                                  
     subsection (f)  that states an annual  renewal fee must                                                                    
     be  based  on  a   licensee's  total  volume  of  money                                                                    
     transmission in  the state with the  annual renewal fee                                                                    
     to  be determined  by the  department by  regulation or                                                                    
     order.                                                                                                                     
                                                                                                                                
     Sections  54  -  61.  Amends definitions  found  in  AS                                                                  
     06.55.990 for  consistency with the Model  Law. Changes                                                                    
     include the  incorporation of the  words in  this state                                                                    
     to  ensure  AS  06.55  protects  Alaska  consumers  and                                                                    
     insuring revisions  are made  to align the  language of                                                                    
     the  Act  with  the  model law.  It  also  includes  an                                                                    
     exception  for  a  loyalty   reward  card,  amends  the                                                                    
     definition of control to at  least 25% of ownership and                                                                    
     amends the definition of stored value.                                                                                     
                                                                                                                                
     Section  62. Amends  AS 06.55.990  to renumber  and add                                                                  
     definitions  for  terms  introduced by  the  Model  Law                                                                    
     including the following terms:                                                                                             
                                                                                                                                
          1. Accredited state                                                                                                   
          2. Acting in concert                                                                                                  
         3. Average daily money transmission liability                                                                          
          4. Bank Secrecy Act                                                                                                   
          5. Closed loop stored value                                                                                           
          6. Control of virtual currency                                                                                        
          7. Dollar equivalent                                                                                                  
          8. Eligible rating                                                                                                    
          9. Eligible rating service                                                                                            
          10. Federally    insured    depository   financial                                                                    
             institution                                                                                                        
          11. In this state 12. Individual 13. Key                                                                              
             individual 14. Passive investor 15. Payroll                                                                        
             processing services 16. Registry 17. Tangible                                                                      
             net worth 18. Virtual currency                                                                                     
                                                                                                                                
     Section 63. Amends AS 06.55.995 to refer to the Act or                                                                   
     Chapter   as   the   Alaska   Uniform   Money   Transmission                                                               
     Modernization  Act  instead  of  the  Alaska  Uniform  Money                                                               
     Services Act.                                                                                                              
                                                                                                                                
     Section  64.   Amends  AS  12.62.400(b)  to   read  that  an                                                             
     applicant  under AS  06.55 may  submit  fingerprints to  the                                                               
     registry.                                                                                                                  
                                                                                                                                
     Section  65.  Repeals  several  sections  in  AS  06.55.  AS                                                             
     06.55.104  and AS  06.55.107 are  repealed and  reenacted in                                                               
     Article 5  concerning prudential standards. All  statutes in                                                               
     Article 2 regarding currency  exchange licenses are repealed                                                               
     as  the  activity  was  added to  the  definition  of  money                                                               
     transmission.  AS   06.55.890  and  AS   06.55.990  contains                                                               
     definitions that are no longer necessary.                                                                                  
                                                                                                                                
1:47:14 PM                                                                                                                    
MR. FLEER continued.                                                                                                            
                                                                                                                                
     Section  66     68   are  transitional  provisions  amending                                                             
     uncodified   law  to   avoid   interference  with   existing                                                               
     contracts,  to allow  a transitional  period for  holders of                                                               
     existing   money   services   licenses   and   for   payroll                                                               
     processors,  to allow  adoption of  transitional regulations                                                               
     by DCCED, and  to instruct the revisor of  statutes to amend                                                               
     certain headings.                                                                                                          
                                                                                                                                
     Section  69. Provides  for an  immediate effective  date for                                                             
     sec. 68,  which would  allow DCCED  to begin  the regulation                                                               
     promulgation process.                                                                                                      
                                                                                                                                
     Section 70.  Provides for  an effective  date of  January 1,                                                             
     2024.                                                                                                                      
                                                                                                                                
1:47:33 PM                                                                                                                    
MR. SCHMIDT offered some last  thoughts, stating that SB 84 will:                                                               
protect consumers;  reduce regulatory  burden; adopt a  model law                                                               
the  industry  drafted  with state  regulators;  prevent  federal                                                               
preemption  by creating  uniform statutes  nationwide; and  allow                                                               
the  division to  update  fees  to keep  up  with technology  and                                                               
innovation in an ever-changing financial industry.                                                                              
                                                                                                                                
1:48:32 PM                                                                                                                    
SENATOR  KIEHL  referenced the  provision  in  subsection (p)  of                                                               
Section 15 relating to a  person considered to have a controlling                                                               
influence  over a  licensee  and is  thus  subject to  background                                                               
checks. The bill  establishes 25 percent as  a controlling stake.                                                               
He asked if 25 percent was the right threshold.                                                                                 
                                                                                                                                
MR.  SCHMIDT acknowledged  that  10 percent  would be  consistent                                                               
with  the  mortgage  industry  and   other  industries  that  the                                                               
division regulates.                                                                                                             
                                                                                                                                
SENATOR  KIEHL referenced  the  exemption on  page  45, line  17,                                                               
subsection  (c)(2) relating  to money  received for  transmission                                                               
that  is  not  primarily  for   personal,  family,  or  household                                                               
purposes. He  asked whether Alaskans who  receive their paychecks                                                               
in  cryptocurrency  would  get  a  receipt  because  it  was  for                                                               
personal  purposes  or  if  that  would  be  considered  business                                                               
purposes.                                                                                                                       
                                                                                                                                
MR. SCHMIDT deferred the question to Mr. Fleer or Ms. Reno.                                                                     
                                                                                                                                
1:51:30 PM                                                                                                                    
MR. FLEER offered  his understanding that there  would be receipt                                                               
requirements for a crypto transaction.                                                                                          
                                                                                                                                
SENATOR KIEHL said  he didn't believe a paycheck was  a family or                                                               
household purpose.                                                                                                              
                                                                                                                                
MR. FLEER agreed it wasn't.                                                                                                     
                                                                                                                                
SENATOR KIEHL stated  that it would not be  considered a personal                                                               
purpose.                                                                                                                        
                                                                                                                                
1:52:04 PM                                                                                                                    
SENATOR  KIEHL asked  about the  exemption, also  on page  45, in                                                               
subsection (c)(1)  relating to  money received  for transmissions                                                               
subject  to [12  C.F.R. Part  1005, Subpart  B;] that  is in  the                                                               
federal consumer financial protection  bureau. He asked what that                                                               
covers.                                                                                                                         
                                                                                                                                
MR. FLEER said the information  he sent to Senator Kiehl's office                                                               
should answer the question.                                                                                                     
                                                                                                                                
CHAIR CLAMAN asked him to send  the information to all members of                                                               
the committee.                                                                                                                  
                                                                                                                                
MR FLEER agreed.                                                                                                                
                                                                                                                                
1:53:27 PM                                                                                                                    
CHAIR CLAMAN held SB 84 in committee for further consideration.                                                                 

Document Name Date/Time Subjects
SB 84 version A 2.24.2023.PDF SJUD 4/21/2023 1:30:00 PM
SJUD 5/1/2023 1:30:00 PM
SJUD 5/5/2023 1:30:00 PM
SB 84
SB 84 Transmittal Letter 2.27.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/1/2023 1:30:00 PM
SJUD 5/5/2023 1:30:00 PM
SB 84
SB 84 Sectional Analysis version A 2.24.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/1/2023 1:30:00 PM
SJUD 5/5/2023 1:30:00 PM
SB 84
SB 84 Letters of Support - Received as of 3.23.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/1/2023 1:30:00 PM
SJUD 5/5/2023 1:30:00 PM
SB 84
SB 84 PowerPoint Presentation 4.21.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/1/2023 1:30:00 PM
SJUD 5/5/2023 1:30:00 PM
SB 84
SB 84 Fiscal Note DCCED-DBS 2.16.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/1/2023 1:30:00 PM
SJUD 5/5/2023 1:30:00 PM
SB 84
SB 128 version A 4.12.2023.PDF SJUD 4/21/2023 1:30:00 PM
SJUD 5/12/2023 1:30:00 PM
SB 128
SB 128 Sponsor Statement version A 4.19.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/12/2023 1:30:00 PM
SB 128
SB 128 Sectional Analysis version A 4.19.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/12/2023 1:30:00 PM
SB 128
SB 128 Fiscal Note DFG-DCF 4.14.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/12/2023 1:30:00 PM
SB 128
SB 128 Fiscal Note DOR-TAX 4.14.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/12/2023 1:30:00 PM
SB 128
SB 128 Letters of Opposition - Received as of 4.21.2023 v.2.pdf SJUD 4/21/2023 1:30:00 PM
SB 128
SB 128 Letters of Support - Received as of 4.21.2023 v.2.pdf SJUD 4/21/2023 1:30:00 PM
SB 128
SB 128 Opposing Testimony - Received as of 4.24.2023 2_23 PM.pdf SJUD 4/21/2023 1:30:00 PM
SB 128
SB 128 Supporting Testimony - Received as of 4.24.2023 10_10 AM.pdf SJUD 4/21/2023 1:30:00 PM
SB 128
SB 128 Supporting Document - 2022 Kusko Situation Cover Letter & Report 2.17.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/12/2023 1:30:00 PM
SB 128
SB 128 Supporting Document - Chum Decline Infographics 4.21.2023.pdf SJUD 4/21/2023 1:30:00 PM
SJUD 5/12/2023 1:30:00 PM
SB 128