Legislature(2023 - 2024)BARNES 124
03/17/2023 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| HB86 | |
| HB85 | |
| HB99 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| *+ | HB 91 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 85 | TELECONFERENCED | |
| += | HB 63 | TELECONFERENCED | |
| *+ | HB 99 | TELECONFERENCED | |
| += | HB 86 | TELECONFERENCED | |
| += | HB 87 | TELECONFERENCED | |
HB 86-MONEY TRANSMISSION; VIRTUAL CURRENCY
3:16:17 PM
CHAIR SUMNER announced that the first order of business would be
HOUSE BILL NO. 86, "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."
3:16:44 PM
ROBERT SCHMIDT, Director, Division of Banking and Securities,
Department of Commerce, Community, and Economic Development, on
behalf of the sponsor, House Rules by request of the governor,
co-presented the sectional analysis for HB 86 in a PowerPoint
presentation [hard copy included in the committee packet].
3:17:00 PM
TRACY RENO, Examinations Chief, Division of Banking and
Securities, Department of Commerce, Community, and Economic
Development, co-presented the sectional analysis in a
PowerPoint. On slide 2, she gave a brief overview of the goals
of the proposed legislation, which included repealing and re-
enacting language to adopt the [Money Transmission Modernization
Act], which was written by money transmitters and state
regulators over a two-year period. Other goals include
coordination with other states in regulation, licensing, and
supervision; reducing the regulatory burden on Alaska
businesses; protecting Alaska consumers; ensuring money
transmitters are well run and compliant; and acting at the state
level to prevent preemption by the federal government. On slide
3, she stated that the bill is based on the Money Transmitter
Model Law ("Model Law"), which is expected to be passed or
introduced by 40 states by the end of 2024.
MS. RENO continued to slide 4 and slide 5. She stated that
Section 1 of the proposed legislation would modernize licensure
requirements; add Model Law language for the burgeoning virtual
currency industry; allow DCCED to coordinate with other states
in regulation, licensing, and supervision; standardize the types
of activities which are subject to licensing; and modernize
safety and soundness requirements for money transmission. She
stated that Section 2 through Section 4 would modify the
requirements for licensure applications. She continued to slide
6 and stated that Section 5 of the proposed legislation would
repeal and reenact AS 06.55.106, modifying language regarding
license renewal. She explained that the cost of renewal would
be based on the volume of money moved through a money
transmitter. She stated that Section 6 would add new sections
to AS 06.55 to provide for background checks for money
transmitters, and Section 7 would add new provisions to AS 06.55
to account for business involving virtual currency.
3:23:20 PM
MS. RENO continued to slide 9, stating that Section 8 and
Section 9 would repeal and reenact AS 06.55.301 and amend AS
06.55.302 to conform to the Model Law. A licensee would be
allowed to sign a written contract to have an individual act as
a delegate on his/her behalf. She stated that Section 10 would
repeal and reenact AS 06.55.401 to provide details on
examinations and reduce the regulatory burden by accepting an
examination performed by another state. Sections 11 through 15
would repeal and reenact AS 06.55.403 and AS 06.55.404 to
require quarterly reports and access of such information by
DCCED. She said that Section 16 and Section 17 would require
records to be kept for five years, while Section 18 would
require licensees to comply with federal law on matters of money
laundering reports. She stated that Section 19 through Section
28 would repeal and reenact, or amend, AS 06.55.407-412, 501,
and 502 to provide for greater consistency between state statute
and the Model Law.
3:26:27 PM
MS. RENO continued to slide 14 through slide 16 and stated that
Section 29 would create credit, securities, and net worth
requirements to AS 06.55, making licensees demonstrate net worth
as part of their application. She said Section 30 through
Section 37 would amend the penalties for regulatory violations
relating to money services in AS 06.55. She stated that Section
38, Section 39, and Section 42 would amend the criminal
penalties, and Section 40 and Section 41 would classify currency
exchange as a form of money transmission, eliminating the need
for a second license.
3:28:20 PM
MS. RENO moved to slide 17 through slide 20 and stated that
Section 43 would create certain exceptions, including payroll
processing. Section 44 would allow the department to require
documentation demonstrating the stated exception. She said that
Section 45 and Section 46 would require licensees to provide
customers with notices of how to file a complaint, should they
have one. If done by telephone, she said, Section 47 would
require the determination of the state of the transaction. She
continued that Section 48 through Section 50 would require
receipt availability, timely transmission of funds, and outline
of refunds consistent with the Model Law.
3:30:39 PM
MS. RENO moved to slide 21 through slide 24 and stated that
Section 54 through Section 62 would modify definitions of the
terms of control to be consistent with the Model Law. These
terms include money transmission, payment instrument, person,
state, and stored value. She stated that Section 63 would
create a short title for the bill, Section 64 would require
background checks for money transmitters and money transmission
employment, and Section 65 would list repealed statutes rendered
unnecessary by the legislation. She said that Section 66
through Section 70 would create effective dates and a period of
transition for new regulations.
3:32:42 PM
MR. SCHMIDT continued to slide 25 and slide 26 and gave a brief
overview of the money transmission volume in Alaska. He
reiterated that the proposed legislation is important because it
would protect consumers, reduce regulatory burden, and place
states on the same playing field without the need for federal
intervention.
3:34:38 PM
REPRESENTATIVE PRAX asked why this type of legislation should be
handled at the state level rather than the federal level, and
whether individual states could change certain aspects of the
legislation.
MR. SCHMIDT answered that states still could have their own
statutes. He stated that both the industry and states have an
interest in solving the issue without the intervention of the
federal government because of their proximity to the consumer.
3:36:22 PM
CHAIR SUMNER questioned how there would be an assurance that the
funds are available if a transaction is across state lines.
MR. SCHMIDT answered that money transmitters would have daily
transmission liability, which would be reported to DCCED.
MS. RENO added that the Division of Banking and Securities
conducts multi-state examinations to ensure regulations are
being followed.
CHAIR SUMNER asked if money being held in other states could
create jurisdictional issues.
MR. SCHMIDT answered that bonding requirements and examinations
are designed to prevent such occurrences.
3:39:16 PM
REPRESENTATIVE RUFFRIDGE asked whether the proposed legislation
would create new types of licenses.
MR. SCHMIDT answered that it would not; however, some license
types will be combined into a single license. In response to a
follow-up question, he stated that the regulatory burden would
be reduced by using the same regulations for money transmission
from state to state. In response to a follow-up question, he
stated that new regulations would be created.
3:41:22 PM
REPRESENTATIVE CARRICK questioned the number of states which are
using or plan to use the Model Law. He questioned whether there
is a similarity in the wording to HB 86.
MR. SCHMIDT answered that 40 states have passed or are planning
to introduce similar legislation, with Arizona's legislation
nearly identical to HB 86. In response to a follow-up question,
he expressed the opinion that DCCED would be a better place to
enact these regulations, rather than the federal government.
3:44:29 PM
REPRESENTATIVE WRIGHT asked how a money transmission could be
determined to be fraudulent.
MS. RENO answered that money transmitters may receive
information which indicates fraud, and it must act on such
information if it is reasonably believed to be fraud. In
response to a follow-up question, she said that everything in a
fraud investigation is well documented.
3:47:05 PM
CHAIR SUMNER announced HB 86 was held over.