Legislature(2025 - 2026)BARNES 124
03/05/2025 03:15 PM House LABOR & COMMERCE
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| Audio | Topic |
|---|---|
| Start | |
| Presentation(s): Legislative Update on the Residency Requirements for Commercial Driver's Licenses | |
| HB99 | |
| HB25 | |
| HB113 | |
| Adjourn |
* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
+ teleconferenced
= bill was previously heard/scheduled
| + | TELECONFERENCED | ||
| + | TELECONFERENCED | ||
| += | HB 99 | TELECONFERENCED | |
| + | HB 25 | TELECONFERENCED | |
| + | TELECONFERENCED | ||
| += | HB 113 | TELECONFERENCED | |
HB 99-MONEY TRANSMISSION; VIRTUAL CURRENCY
3:32:59 PM
CO-CHAIR HALL announced that the next order of business would be
HOUSE BILL NO. 99, "An Act relating to the business of money
transmission; relating to licenses for money transmission,
licensure requirements, and registration through a nationwide
multistate licensing system; 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 exemptions to money transmission
licensure requirements; relating to payroll processing services;
relating to currency exchange licenses; amending Rules 79 and
82, Alaska Rules of Civil Procedure; and providing for an
effective date."
3:33:25 PM
CO-CHAIR FIELDS moved to adopt the proposed committee substitute
(CS) for HB 99, Version 34-LS0543\N, Gunther, 3/3/25, as a
working document. There being no objection, Version N was
before the committee.
3:33:50 PM
EVAN ANDERSON, Staff, Representative Zack Fields, Alaska State
Legislature, on behalf of Representative Fields, prime sponsor,
gave the summary of changes from Version A to Version N
[included in the committee file], which read as follows
[original punctuation provided]:
Section 37 (Page 38, Line 22)
- Removes "$1,000" and adds "$10,000".
- This change will harmonize proposed money service
business civil penalties with mortgage civil penalties
in existing AS 06.60.420.
Section 68 (Page 55, Line 8)
- Inserts transition regulations: "The Department of
Commerce, Community, and Economic Development may
adopt regulations to implement this Act. The
regulations take effect under AS 44.62 (Administrative
Procedure Act), but not before the effective date of
the law implemented by the regulations."
- This change adds a new section to allow the
department to adopt regulations to implement the bill
after its effective date.
Section 71, (Page 55, Line 18)
- Remove "January" and add "July"
- This change pushes the effective date out from
January to July 1, 2026 to give the Department of
Commerce the ability to accommodate regulation
drafting, a public comment period, and a renewal
period for licensees.
3:35:33 PM
REPRESENTATIVE SADDLER asked for the purpose of the mortgage
civil penalties.
3:35:49 PM
MX. ANDERSON deferred to the department.
ROBERT SCHMIDT, Director, Division of Banking & Securities,
Department of Commerce, Community & Economic Development
(DCCED), explained that the mortgage statute allows a civil
penalty of up to $10,000 but does not have a "menu" of
prohibited activities. He explained that the maximum penalty is
for most the most egregious conduct. He further explained that
his division works collaboratively to bring people into
compliance with statute. He stated that penalties would
approach the maximum were there any criminal conduct.
MR. SCHMIDT reported that the top two money transmitters in
Alaska are conducting billions of dollars of business annually
to, from, and within Alaska. He further reported that the top
five money transmitters in Alaska are conducting hundreds of
millions of dollars of business. He pointed out that the
penalties are appropriate in light of the risk and magnitude of
business operations and potential for criminal conduct by a
licensee.
3:37:47 PM
REPRESENTATIVE SADDLER queried what kind of activity would incur
a civil penalty.
3:38:03 PM
MR. SCHMIDT provided a few examples, including stealing from
borrowers, absconding from borrowers, and fleeing the country.
3:38:19 PM
REPRESENTATIVE SADDLER asked whether $10,000 would be a
sufficient disincentive.
3:38:37 PM
MR. SCHMIDT replied that the best sanctions for the worst
conduct are found in Title XI, criminal code. He explained that
a $10,000 penalty is applied per day of continued offense.
3:39:14 PM
CO-CHAIR HALL began discussion on an amendment deadline and her
intention to hold HB 99 over.
3:39:36 PM
The committee members discussed the amendment deadline.
3:40:50 PM
REPRESENTATIVE COULOMBE requested an explanation of the fiscal
note.
CO-CHAIR FIELDS deferred to Mr. Schmidt.
REPRESENTATIVE COULOMBE stated that the fiscal note is nearly
$900,000.
3:41:37 PM
MR. SCHMIDT asserted that the proposed legislation would pay for
itself, citing Section 51 of HB 99, which "contemplates fees
based on volume." Currently, a money transmission licensee in
Alaska pays $1,000 for the license and then an additional $3,000
for the renewal, regardless of volume of business in Alaska. He
explained that Ohio and Texas were used as examples in drafting
HB 99 and the creation of volume-based fee, which he asserts is
the mainstream. Additionally, he reported that examiners have
stated twice in the last couple of years that "Alaska is cheap."
3:42:50 PM
REPRESENTATIVE COULOMBE asked what the estimated $879,000 was
for. She requested details on the types and lengths of
positions funded by the proposed legislation.
3:43:11 PM
MR. SCHMIDT stated that the number is reflective of the growth
of the financial industry. He reported that the [Division of
Banking and Security's] budget was $3.5 million about 12 years
ago and currently sat at about $4.8 million. Additionally, he
reported that the division's revenue has increased from
approximately $12 million to $22.5 million. He noted that the
numbers signify the growth of the industry and provided an
anecdote about a former employee who left due to the increased
workload and consequential burnout.
3:44:11 PM
DAWN HANNASCH, Division Operations Manager/Licensing Chief,
Division of Banking & Securities, Department of Commerce,
Community & Economic Development, referred to page 2 of the
fiscal note, which she stated would add five new position
control numbers (PCNs) over a two-year period three positions
the first year, and two positions the second year. She
explained that there would be positions added to address the
anticipated increase in volume of examination, investigative,
and application processing and licensing needs. She further
explained that the volume-based fee assessment proposed under HB
99 would be "more than" sufficient to pay for the new positions.
3:45:31 PM
REPRESENTATIVE COULOMBE asked for confirmation that the five new
positions would be permanent, and not temporary.
MS. HANNASCH replied that it was correct.
REPRESENTATIVE COULOMBE sought clarification that the funds
would come out of the unrestricted general fund (UGF).
MR. SCHMIDT confirmed yes, the funds would come from DCCED.
3:46:36 PM
The committee took a brief at-ease at 3:46 p.m.
3:47:05 PM
MR. SCHMIDT clarified that the funds would be designated general
funds (DGFs). He reiterated that the [Division of Banking &
Securities] takes in approximately $22.5 million and the cost
would be approximately $4.8 million. He explained that the
positions included are: financial examiners to protect the
people in Alaska and ensure businesses are compliant; and
licensed examiners to ensure that businesses entering the state
are conducting business in Alaska.
3:47:52 PM
REPRESENTATIVE CARRICK queried how many licensees are
anticipated upon the passage of HB 99.
3:48:06 PM
MR. SCHMIDT reported that the number of licensees has grown
about 60 percent in last five years, with no new financial
examiners. He said that there were 113 licensees approximately
five to six years ago, and currently there are 173 licensees,
many of which are million- and billion-dollar businesses in
Alaska.
3:48:36 PM
REPRESENTATIVE CARRICK requested some examples of the types of
businesses that would fall under the purview of HB 99.
3:48:56 PM
MR. SCHMIDT replied that the current trend is the consolidation
of a spectrum of financial services, such as banking and
investing, into a single mobile application ("app") as an
emerging industry. He gave Venmo as an example of a mobile
payment app.
3:49:34 PM
CO-CHAIR FIELDS emphasized that DCCED is revenue positive and
echoed that the new positions will pay for themselves. He
acknowledged the "marketplace reality," that increasing
popularity of virtual money transmission ushers in increased
criminal activity. He shared an anecdote about online fraud
targeting elders in Alaska and drug cartels utilizing
cryptocurrencies.
3:50:35 PM
MR. SCHMIDT reported that there are between two and six
instances a month of an elderly person in Alaska being scammed,
typically involving cryptocurrency and typically going into a
non-U.S. based cryptocurrency exchange. He stated that,
according to cryptocurrency databases, funds that are scammed go
into accounts that have received billions of dollars that are
affiliated with human trafficking or organized crime.
3:51:48 PM
REPRESENTATIVE SADDLER asked for an explanation of the $10,000
listed in the fiscal note for new equipment.
MS. HANNASCH responded that the cost would include onboarding
new staff members and equipment for new staff [laptops]. She
stated that it is a one-time expense. Additionally, she stated
that staff travel to do [financial] examinations, so the fiscal
note could include a portable monitor.
REPRESENTATIVE SADDLER echoed previous speakers in noting the
increase in money transmission in Alaska. He asked whether five
new positions were sufficient for future anticipated growth in
the industry.
3:53:46 PM
MR. SCHMIDT responded that the mobile payment industry is
certain to grow, despite the volatility in cryptocurrencies. He
anticipated further increases in how often mobile payment
processers are utilized in the future. He offered hope for the
technology to provide financial services to remote communities,
where Internet connectivity could replace the need for a brick-
and-mortar store.
MR. SCHMIDT asserted that the five positions would be very
helpful but would likely not be sufficient in the future.
3:55:03 PM
CO-CHAIR HALL set an amendment deadline for HB 99.
[HB 99 was held over.]