Legislature(2023 - 2024)SENATE FINANCE 532
03/20/2024 09:00 AM Senate FINANCE
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| Audio | Topic |
|---|---|
| Start | |
| SB84 | |
| SB206 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | SB 84 | TELECONFERENCED | |
| + | SB 206 | TELECONFERENCED | |
| + | TELECONFERENCED |
SENATE FINANCE COMMITTEE
March 20, 2024
9:03 a.m.
9:03:24 AM
CALL TO ORDER
Co-Chair Olson called the Senate Finance Committee meeting
to order at 9:03 a.m.
MEMBERS PRESENT
Senator Lyman Hoffman, Co-Chair
Senator Donny Olson, Co-Chair
Senator Bert Stedman, Co-Chair
Senator Click Bishop
Senator Jesse Kiehl
Senator Kelly Merrick
Senator David Wilson
MEMBERS ABSENT
None
ALSO PRESENT
Rob Schmidt, Director, Division of Banking and Securities,
Department of Commerce, Community and Economic Development;
Tracy Reno, Chief of Examinations, Division of Banking and
Securities, Department of Commerce, Community, and Economic
Development; Dawn Hannasch, Division Operations Manager,
Division of Banking and Securities, Department of Commerce,
Community, and Economic Development; Senator Elvi Gray-
Jackson, Sponsor; Charles Collins, Director, Division of
Workers Compensation, Department of Labor and Workforce
Development; Luma Diaz, Staff, Senator Elvi-Gray Jackson.
PRESENT VIA TELECONFERENCE
Lahka Peacock, Quyana Card, Nome; Adam Fleischer, Money
Services Roundtable, Washington DC; Adam Atlas, Money
Services Business Association, Maryland.
SUMMARY
SB 84 MONEY TRANSMISSION; VIRTUAL CURRENCY
SB 84 was HEARD and HELD in committee for further
consideration.
SB 206 WORKERS' COMP. STAY-AT-WORK PROGRAM
SB 206 was HEARD and HELD in committee for
further consideration.
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."
9:03:32 AM
ROB SCHMIDT, DIRECTOR, DIVISION OF BANKING AND SECURITIES,
DEPARTMENT OF COMMERCE, COMMUNITY AND ECONOMIC DEVELOPMENT,
(DCCED) discussed the presentation, "Alaska Uniform Money
Transmission and Modernization Act" (copy on file). He
pointed to slide 2, "What does this bill do?":
• This bill is a generational update to financial laws
to accommodate new technologies and ensure uniformity.
• This bill is based on the Uniform Money Transmission
Modernization Act (Model Law), which was developed by
state regulators, the Conference of State Bank
Supervisors (CSBS), with input and participation from
industry stakeholders.
• Reduces regulatory burden by streamlining licensing,
renewal, and examinations.
• Protects Alaska consumers by conducting criminal
background checks through the Nationwide Multistate
Licensing System (NMLS).
• Broadens the definition of money transmission and
defines virtual currency activities.
• 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.
9:05:02 AM
Mr. Schmidt highlighted slide 3, "Background":
This legislation amends and modernizes the Alaska
Uniform Money Services Act (AS 06.55) and adopts
pertinent sections of the Uniform Money Transmission
Modernization Act (Model Law).
• In 2008, money transmission was sending a wire
transfer at your local grocery store or purchasing a
money order or traveler's checks at the bank.
• This bill will modernize Alaska's money transmission
laws to include cryptocurrency (aka "virtual
currency," Bitcoin, Ethereum, DogeCoin).
• Effective January 1, 2023, DBS adopted regulations
to include crypto in current law as an interim
solution.
• As of January 31, 2024, eighteen states have enacted
bills with all or parts of the Model Law. The Model
Law is pending before ten legislatures.
Mr. Schmidt addressed slide 4, "Money Transmission Volume."
Mr. Schmidt displayed slide 5, "Alaska Money Transmission
Transactions."
Mr. Schmidt highlighted slide 6, "Money Transmission
Licensees."
9:11:15 AM
Mr. Schmidt discussed slide 7, "Money Transmission Volume
Virtual Currency."
Mr. Schmidt pointed to slide 8, "What types of
transmissions happen in Alaska?"
Mr. Schmidt displayed slide 9, "Fee Modernization Examples
-Ohio."
Mr. Schmidt addressed slide 10, "Fee Modernization Examples
-Texas."
9:16:10 AM
Mr. Schmidt highlighted slide 12, "Fiscal Impact":
• Receipts in FY2013 were $12.9 million. The FY2012
budget was $3.58 million.
• Receipts in FY2023 were $22.4 million. The FY2023
budget was $4.32 million.
The fiscal note for this position includes five full-
time positions with the passage of this bill: three in
FY2025 and two in FY2026. The operating expenditures
for DBS for the added personnel are estimated to be
$496,100 in FY2025 increasing to $787,400in FY2026.
DBS anticipates revenue from a new volume based annual
fee assessment, created by regulation, will cover all
costs of supervision of the industry and additional
staffing.
Mr. Schmidt highlighted slide 13, "Why is this bill
important?"
This bill will:
• Protect Alaska consumers
• Reduce regulatory burden
• Adopt a Model Law that industry drafted with
state regulators
• Prevent federal pre-emption by creating uniform
statutes across the country
• Allow the division to have the ability to
update fees and activities that require a license
in regulation to keep up with technology and
innovation with this ever-evolving financial
industry
In 2023, Alaskans sent or received over 25
million money transmission transactions worth
$4.5 billion most of them involving technology
that did not exist when the current law was
written.
Mr. Schmidt looked at slide 11, "Why regulate money
transmission at all?":
• 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 licensed and regulated transmitters of
money for over 100 years.
• States have the expertise and examination
infrastructure that the feds completely lack. States
are able to pivot and react more quickly as events
transpire.
9:21:16 AM
Co-Chair Stedman wondered why the average Alaska should
care about the bill.
Mr. Schmidt replied that the cryptocurrency provisions of
the bill specified that an account belonged to the account
holder, and was not an asset of the company.
Senator Kiehl queried the things that were controlled
through the bill.
Mr. Schmidt replied that the bill established uniformity
across the states and allowed for innovation.
9:25:18 AM
Senator Kiehl queried the reason for fingerprinting.
Mr. Schmidt replied that there was an examination of the
shareholders of the companies, because there could be a
problem in the character of those operating the businesses.
Senator Kiehl wondered what was of significance that would
have the state tell a company how to do its business.
Mr. Schmidt deferred to Ms. Reno.
9:27:18 AM
TRACY RENO, CHIEF OF EXAMINATIONS, DIVISION OF BANKING AND
SECURITIES, DEPARTMENT OF COMMERCE, COMMUNITY, AND ECONOMIC
DEVELOPMENT, stated that the intent was to examine the
companies in order to provide licensees for appropriate
financiers.
Senator Bishop wondered whether the crypto currency was
FDIC insured.
Mr. Schmidt replied that it was not.
9:30:13 AM
Co-Chair Stedman queried whether the fee structure would be
in statute or regulation.
Mr. Schmidt responded that there would be fee continuity.
Co-Chair Stedman wanted information about what was in
statute versus regulation.
Mr. Schmidt deferred to Ms. Reno.
Ms. Reno explained that the department would establish the
fees, so it would be in statute, but the department looked
to regulation for details.
Co-Chair Stedman wondered whether this was a common
practice in the department.
Mr. Reno replied that the banks and credit unions also had
an assessment.
Mr. Schmidt furthered that the banks also had a tiered
structure.
9:35:09 AM
Senator Wilson queried the rolldown costs to the user.
Mr. Schmidt replied that there will be no direct charge to
the consumer.
Senator Wilson asked about entities that did not use
traditional banking services.
Mr. Schmidt stated that any industry utilized the
legislation.
Senator Wilson wondered whether there would be a negative
or positive impact.
Mr. Schmidt replied that there would be a significant
positive impact.
9:39:32 AM
Co-Chair Olson wondered how the protections would impact
rural communities.
Mr. Schmidt believed that it would greatly benefit rural
Alaskans.
Ms. Reno furthered that there would be greater examinations
on the financial entities.
Senator Wilson asked about privacy, and whether the
transactions would be private for Alaskans.
Mr. Schmidt responded that privacy was a top priority.
Ms. Reno explained there were various actions finance
institutions must do to protect the privacy of account
holders.
9:45:30 AM
Co-Chair Olson asked where Alaska fell in the level of
protective technology as compared to other states.
Mr. Schmidt shared that Alaska lacked the tools as compared
to other states.
Co-Chair Olson asked which tools the state was lacking.
Mr. Schmidt replied that the statutory tools were not there
to ensure the safety of operations.
Senator Bishop asked about forensic examiners.
Mr. Schmidt replied that forensic examiners were a long
standing subject of conversation in his division.
9:49:00 AM
DAWN HANNASCH, DIVISION OPERATIONS MANAGER, DIVISION OF
BANKING AND SECURITIES, DEPARTMENT OF COMMERCE, COMMUNITY,
AND ECONOMIC DEVELOPMENT, replied to a question from
Senator Bishop.
Senator Bishop wondered whether there was access to a third
party forensics examiner.
Mr. Schmidt replied that most states had a forensics
examiner. He stated that the examinations were conducted on
a multi-state basis.
Co-Chair Stedman surmised that the bill would be revenue
neutral. He asked for more information about the process to
find the people to fill the requested positions.
Mr. Schmidt replied that the division only had two
vacancies, as a result of retirement and advancement. He
was confident that the division could fill the vacancies.
9:53:17 AM
LAHKA PEACOCK, QUYANA CARD, NOME (via teleconference),
explained the support of the bill.
9:57:55 AM
Co-Chair Olson wondered whether a regulation was required
to ensure that rural Alaska had an easier time.
Mr. Peacock replied that there was a burden of time and
technology, but he stressed that he wanted to provide the
service in rural Alaska.
Co-Chair Olson asked for comment on the possible amendment
for the bill.
Mr. Schmidt replied that the bill would provide a rapid and
significant to Mr. Peacock's concerns.
Senator Kiehl wondered whether there were any added
requirements for small businesses within the bill.
Mr. Schmidt replied in the negative.
Senator Kiehl noted the minimum net worth. He wondered
whether a small operator would no longer have same minimum
net worth requirements.
Mr. Schmidt replied that the bill was based on model law,
so the minimum net worth requirement was not the right fit
for Alaska and small businesses.
10:03:19 AM
ADAM FLEISCHER, MONEY SERVICES ROUNDTABLE, WASHINGTON DC
(via teleconference), spoke in support of the bill.
10:12:19 AM
Co-Chair Olson queried the reasons for the additional
fingerprint requirements.
Mr. Schmidt recalled that the bill had been amended to
remove the fingerprint requirement to allow for fingerprint
cards. He stressed that the intent was to participate in
the nationwide fingerprint system.
Senator Bishop queried the location of the master
fingerprint files.
Mr. Schmidt replied that they were provided to the
Nationwide Multistate Licensee Service, which was run by
the Conference of Statebank Supervisors. He did not know
the fingerprint filing and destruction process.
10:14:39 AM
Senator Bishop wondered whether the group was under the
Treasury Department.
Mr. Schmidt deferred to Ms. Reno.
Ms. Reno explained that the fingerprints were sent to the
vendor, was sent to the licensing system, and then expired
after three years.
Senator Bishop felt that the bill was duplicative.
Ms. Reno stressed that it was burdensome on the industry to
have paper fingerprints processed in the system. She
stressed that the electronic fingerprints needed to be
processed through the FBI.
Senator Kiehl wondered whether there was independent access
to the FBI records.
Ms. Reno replied in the affirmative.
Co-Chair Olson asked whether there was an added burden with
the amendment.
10:18:46 AM
ADAM ATLAS, MONEY SERVICES BUSINESS ASSOCIATION, MARYLAND
(via teleconference), spoke in support of the bill.
10:22:37 AM
Co-Chair Olson wondered whether the bill gave a more robust
protection of the Alaskan financial consumer.
Mr. Schmidt replied in the affirmative.
SB 84 was HEARD and HELD in committee for further
consideration.
SENATE BILL NO. 206
"An Act relating to workers' compensation reemployment
benefits; establishing a workers' compensation stay-
at-work program; and providing for an effective date."
10:22:39 AM
SENATOR ELVI GRAY-JACKSON, SPONSOR, introduced the bill.
10:29:48 AM
CHARLES COLLINS, DIRECTOR, DIVISION OF WORKERS
COMPENSATION, DEPARTMENT OF LABOR AND WORKFORCE
DEVELOPMENT, spoke on the bill.
10:37:59 AM
LUMA DIAZ, STAFF, SENATOR ELVI-GRAY JACKSON, discussed the
Sectional Analysis (copy on file):
Section 1: Amends AS 23.30.005 (h) by adding a
reference to new stay at work program under AS
23.30.043.
Section 2: Amends existing statute, AS 23.30.041 (b)
by moving the annual reporting of reemployment
benefits from May until October to match the other
annual reports due. Includes each specific reporting
criteria.
Section 3: Makes changes to AS 23.30.041 (c) adding
thirty days to the time of required reemployment
evaluations to allow for the medical stability of
claimants. The amendment requires the Workers'
Compensation Division to notify injured employees of
rights under this section within 25 days of inability
to return to the employee's employment at the time of
injury, including the option of participation in the
Stay At Work Program.
Section 4: Amends AS 23.30.041 (f) by adding that an
employee is not eligible for reemployment benefits if
a selection under AS 23.30.041(c) is not made. Or if
an employee has completed a stay at work program
previously or has been found non-cooperative in the
stay at work process under AS 23.30.043(l).
Section 5: A new section (Sec. 23.30.043) is added to
establish a stay at work benefits program.
A new position is added as a subject matter expert to
oversee the program.
A rehabilitation specialist is assigned to develop a
stay at work plan requiring participation and approval
from the employee, employer, and attending physician
and a timeline for submission of plan.
Costs are the responsibility of the employer and shall
not exceed $3,000. The maximum time frame is two
years.
Noncooperation is defined.
Participation is voluntary. The employee may pursue
reemployment benefits under AS 23.30.041 as an
alternative if the employer chooses not to
participate. An appeal process is outlined.
Section 6: Amends existing statute AS 23.30.100 (a) by
adjusting the timeframe by 15 days for notification of
a work-related injury or death.
Section 7: Amends AS 23.30.105 (a) by adding a
reference to a new stay at work program established
under AS 23.30.043
Section 8: Sets an effective date.
10:41:15 AM
Senator Wilson wondered whether the participation was
voluntary for the participant or the employer.
Ms. Diaz replied that it was for both.
Co-Chair Olson wondered whether the rehabilitation
specialists were licensed, and whether their availability
was difficult to find.
Senator Gray-Jackson deferred to Mr. Collins.
Mr. Collins replied that there was already engagement with
the rehabilitation specialists, which were within a private
industry in the state. He stated that there were about
sixteen or seventeen rehabilitation specialists in the
state. He explained the credentials required to become a
rehabilitation specialist.
Co-Chair Olson discussed the following day's meeting.
SB 206 was HEARD and HELD in committee for further
consideration.
ADJOURNMENT
10:43:33 AM
The meeting was adjourned at 10:43 a.m.
| Document Name | Date/Time | Subjects |
|---|---|---|
| SB 84 DCCED DBS 021324.pdf |
SFIN 3/20/2024 9:00:00 AM |
SB 84 |
| SB 84 Financial Technology Association MTMA 20240301.pdf |
SFIN 3/20/2024 9:00:00 AM |
SB 84 |
| SB 84 Letters of Support 2.20.24.pdf |
SFIN 3/20/2024 9:00:00 AM |
SB 84 |
| SB 84 Sectional Analysis ver B 2.20.24.pdf |
SFIN 3/20/2024 9:00:00 AM |
SB 84 |
| SB 84 Transmittal Letter 2.20.24.pdf |
SFIN 3/20/2024 9:00:00 AM |
SB 84 |
| SB 84 White Paper 2.20.24.pdf |
SFIN 3/20/2024 9:00:00 AM |
SB 84 |
| SB206 Sponsor Statement.pdf |
SFIN 3/20/2024 9:00:00 AM SL&C 2/14/2024 1:30:00 PM |
SB 206 |
| SB206 Supporting Document-Stay at Work_Return to Work _ U.S. Dept of Labor.pdf |
SFIN 3/20/2024 9:00:00 AM SL&C 2/14/2024 1:30:00 PM |
SB 206 |
| SB206 Sectional Analysis.pdf |
SFIN 3/20/2024 9:00:00 AM SL&C 2/14/2024 1:30:00 PM |
SB 206 |
| SB 84 Presentation to SFIN 3.14.24.pdf |
SFIN 3/20/2024 9:00:00 AM |
SB 84 |