Legislature(2015 - 2016)BELTZ 105 (TSBldg)

03/08/2016 01:30 PM LABOR & COMMERCE


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* first hearing in first committee of referral
+ teleconferenced
= bill was previously heard/scheduled
*+ SB 168 BOARD OF BARBERS AND HAIRDRESSERS TELECONFERENCED
Heard & Held
+= SB 152 MONEY SERVICES BUSINESS: REQS; LICENSING; TELECONFERENCED
Heard & Held
+ Bills Previously Heard/Scheduled: TELECONFERENCED
-- Public Testimony --
+= SB 165 ALCO. BEV. CONT. BOARD; MINORS; ALCOHOL TELECONFERENCED
Moved CSSB 165(L&C) Out of Committee
        SB 152-MONEY SERVICES BUSINESS: REQS; LICENSING;                                                                    
                                                                                                                                
1:47:04 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   announced  the                                                               
consideration of  SB 152; "An  Act relating  to a  money services                                                               
business;  relating to  transmitting value  that substitutes  for                                                               
money;  relating  to   licensing  requirements  and  registration                                                               
through the Nationwide Multistate  Licensing System and Registry;                                                               
relating  to  surety  bonding requirements;  authorizing  certain                                                               
licensees  to contract  to use  subdelegates for  reloading funds                                                               
onto stored-value cards; relating  to record retention, reporting                                                               
requirements,   and    enforcement   provisions;    relating   to                                                               
exemptions;  relating  to  money  services  Internet  activities;                                                               
relating  to   definitions  regarding  the   transmitting  value,                                                               
currency,  and   money  transmission  business   activities;  and                                                               
providing for  an effective  date." She noted  this is  the first                                                               
hearing.                                                                                                                        
                                                                                                                                
1:47:45 PM                                                                                                                    
KEVIN  ANSELM,  Director,  Division   of  Banking  and  Security,                                                               
Department  of  Commerce,  Community  and  Economic  Development,                                                               
provided an overview  of SB 152 on behalf  of the administration.                                                               
She  explained that  a money  service business  (MSB) deals  with                                                               
currency  exchange  and  money transmission  functions.  Currency                                                               
exchange,  also  called  exchange  of fiat  currency,  means  the                                                               
receipt of  revenue from the  exchange of one  government's money                                                               
to  another  government's  money.  U.S.  dollars  to  Euros,  for                                                               
example. A  payment instrument, which is  what money transmission                                                               
does, includes  a check, money order,  traveler's checks, prepaid                                                               
or  stored-value cards,  wiring money,  and moving  money from  a                                                               
deposit account to a loadable card.                                                                                             
                                                                                                                                
MS. ANSELM told the committee  that SB 152 updates the definition                                                               
of "money  transmission" to include  virtual currency. This  is a                                                               
digital representation of  value that does not  have legal tender                                                               
status in the U.S. but can  be digitally traded and function as a                                                               
medium  of  exchange, a  unit  of  account,  a stored  value,  or                                                               
incorporated into  the payment system  technology. She  said none                                                               
of  this  was  anticipated  in  2007 when  this  body  heard  the                                                               
original Money Services Act.                                                                                                    
                                                                                                                                
She  described  the  bill  as timely,  because  the  division  is                                                               
receiving requests  to license money  transmitters that  are also                                                               
involved in virtual currency. Virtual  currency has also expanded                                                               
to more than just Bitcoin. She  reported that the division is not                                                               
licensing money  transmitters to  deal in virtual  currencies and                                                               
is requiring them to disclose that to their Alaska customers.                                                                   
                                                                                                                                
MS.   ANSELM  reported   that  there   currently  are   73  money                                                               
transmitters,  at  least  two  of  which  are  providing  virtual                                                               
currency to customers. SB 152  would allow the division to better                                                               
regulate  these riskier  forms of  currency in  a consistent  and                                                               
efficient  manner.   Additionally,  the  bill   will  incorporate                                                               
alternative payment systems and  instruments, allow a licensee to                                                               
contract  with a  delegate  who  may then  use  their network  of                                                               
delegates to  reload funds onto  cards without having  a separate                                                               
contract between a  licensee and subdelegate. She  noted that she                                                               
would  discuss  what  that means  specifically  for  Alaska-based                                                               
money transmitters  later in the presentation.  Finally, the bill                                                               
removes the  out-of-state business advantage  that is a  quirk in                                                               
the original bill.                                                                                                              
                                                                                                                                
1:51:16 PM                                                                                                                    
MS. ANSELM  explained that  SB 152  will require  the use  of the                                                               
Nationwide  Multistate  System  and Registry  (NMLS)  for  filing                                                               
documents  and  paying  fees.  The  NMLS  is  currently  used  by                                                               
mortgage brokers and originators  in Alaska and most out-of-state                                                               
MSBs are already  using it. The merit is  that these transmitters                                                               
will be able  to electronically file documents  with the division                                                               
rather than paper  copies. It also means that  Alaska can receive                                                               
these  payments  electronically  which reduces  staff  processing                                                               
time.                                                                                                                           
                                                                                                                                
The bill  also replaces  the current  net worth  requirement with                                                               
the surety  bond requirement  that can be  adjusted based  on the                                                               
risk  presented  by  the licensee's  business  model  and  focus.                                                               
Currently, a  money service business  holds a $25,000  deposit in                                                               
reserve so  being able to change  that to a bond  frees that cash                                                               
and often allows  for a much higher surety bond  amount that will                                                               
better protect  Alaska consumers. SB  152 also will  allow annual                                                               
assessment fees  to cover periodic  examination fees  and ongoing                                                               
administrative costs to be set by regulation.                                                                                   
                                                                                                                                
MS. ANSELM  listed the enhancements  to consumer  protection that                                                               
SB 152 will provide:                                                                                                            
                                                                                                                                
    ·  It adds a background check component for all control                                                                     
      persons.  Right  now, only  control  persons  that have  25                                                               
      percent or more control,  and certain other attributes, are                                                               
      required to undergo fingerprinting.                                                                                       
    ·  It requires licensees to comply with the federal anti-                                                                   
      money  laundering  law, the  Bank  Secrecy  Act, and  other                                                               
      requirements that protect consumers and the marketplace.                                                                  
    ·  It also allows a broader spectrum of orders to be issued                                                                 
      beyond a cease and desist  order so that enforcement can be                                                               
      tailored to the issue.                                                                                                    
    ·  It removes the advance exam notification requirement and                                                                 
      allows  joint examinations  and  investigations with  other                                                               
      regulators. In the  last few years Alaska  has been working                                                               
      with other states  to do joint exams  on money transmitters                                                               
      and money  service businesses that are  located outside the                                                               
      state. Using staff  from other states makes  it possible to                                                               
      accomplish more in  shorter time and is  less an imposition                                                               
      on the business.                                                                                                          
                                                                                                                                
She  noted that  the bill  suggests an  exemption for  businesses                                                               
that really  aren't in  the money services  business but  need to                                                               
move  money  around incidental  to  the  business. The  exemption                                                               
would apply  to insurance companies, title  companies, and escrow                                                               
agents  or  attorneys that  engage  in  ancillary money  services                                                               
business.                                                                                                                       
                                                                                                                                
1:54:29 PM                                                                                                                    
MS.   ANSELM  highlighted   that  the   definition  of   "payment                                                               
instrument" has  been updated to  include an electronic  check or                                                               
electronic  instrument  so  as to  capture  changing  technology.                                                               
Examples of  new ways  to transfer  money include  PayPal, Square                                                               
Cash, Venmo, Mobile Wallets and Apple Pay.                                                                                      
                                                                                                                                
SB 152 affects  prepaid or stored value cards that  are both open                                                             
loop and reloadable.  The definitions of "open  loop" and "stored                                                               
value" are updated:  the monetary value of the  card is prefunded                                                               
and  reduced  with  each  use;  there  is  a  card  code;  it  is                                                               
redeemable at  multiple, unaffiliated  merchants or ATMs;  and it                                                               
does not include  an electronic record. She  reviewed examples of                                                               
what  is and  is not  an open  loop stored  value card.  An Olive                                                               
Garden $50  gift card is not  reloadable and does not  require an                                                               
MSB  licensee  or  delegate  to   issue  or  sell  the  card.  By                                                               
comparison,  a  VISA/Green  Dot card  purchased  at  Fred  Meyer,                                                               
Safeway, and  Walgreens requires an  MSB licensee or  delegate to                                                               
issue, sell, or reload the card.                                                                                                
                                                                                                                                
CHAIR COSTELLO asked if the bill changes that.                                                                                  
                                                                                                                                
MS. ANSELM said no, but it  does change what would be allowed for                                                               
another entity - subdelegates. This is a new provision.                                                                         
                                                                                                                                
1:58:22 PM                                                                                                                    
MS.  ANSELM directed  attention to  the white  paper in  the bill                                                               
packets that  provides information  about Alaska Prepaid  Card in                                                               
Nome, Alaska  that conducts business as  Q-card. Q-Card contracts                                                               
with Western  Union Financial Services  (WUFSI) to  allow WUFSI's                                                               
delegates in Alaska  (32 locations at Fred  Meyer, Walgreens, and                                                               
Safeway) to  offer reload services  to Q-Card  customers. Current                                                               
Alaska  law does  not allow  the  use of  subdelegates so  Alaska                                                               
Prepaid  Card must  also have  contracts with  each of  the WUFSI                                                               
delegates in  the 32 store  locations that will offer  reloads to                                                               
Q-Card customers.  The law also  requires Alaska Prepaid  Card to                                                               
increase  the amount  of its  bond to  include Western  Union and                                                               
each of those 32 delegates. This  is in addition to the bond that                                                               
Western  Union   already  pays  for  its   delegates  in  Alaska.                                                               
Maintaining  the   higher  bond   amount  places   an  additional                                                               
financial burden  on the  business. SB  152 would  streamline the                                                               
process  by allowing  the limited  use  of subdelegates.  Western                                                               
Union's 32 delegates would be subdelegates.                                                                                     
                                                                                                                                
2:01:56 PM                                                                                                                    
SENATOR STEVENS  asked the maximum that  can be placed on  a card                                                               
and if they could be used for money laundering.                                                                                 
                                                                                                                                
MS. ANSELM  said she didn't  know the  maximum and they  could be                                                               
used for  money laundering. However,  people in the  villages use                                                               
them  to pay  bills and  take  care of  day-to-day business  when                                                               
there  isn't  a bank  in  the  area.  When  they go  shopping  in                                                               
Anchorage, they want  to be able to recharge their  cards. SB 152                                                               
provides limited authorization of  subdelegates so it wouldn't be                                                               
such a convoluted process to get the money onto the cards.                                                                      
                                                                                                                                
MS. ANSELM  reviewed the list  of new or expanded  definitions in                                                               
SB 152.                                                                                                                         
                                                                                                                                
2:04:26 PM                                                                                                                    
MS.  ANSELM  displayed  the  following  list  of  what  the  bill                                                               
sections  address  and offered  to  go  through each  section  in                                                               
detail:                                                                                                                         
                                                                                                                                
     Sec. 01 - 07 Money Transmission Licenses                                                                                   
     Sec. 08 - 17 Currency Exchange Licenses                                                                                    
     Sec. 09 - 21 Authorized Delegates                                                                                          
     Sec. 22 - 33 Examinations, Reports, Records                                                                                
     Sec. 34 - 35 Permissible Investments                                                                                       
     Sec. 36 - 44 Enforcement                                                                                                   
     Sec. 45 - 48 Miscellaneous Provisions                                                                                      
     Sec. 49 - 51 General Provisions (includes definitions)                                                                     
     Sec. 54      Lists repealed provisions                                                                                     
                                                                                                                                
She  informed the  committee that  since 2009,  the division  has                                                               
issued 18 Money Service Business  final orders, generally against                                                               
firms operating in  Alaska unlawfully. Many are  large firms that                                                               
deal internationally  and over the  Internet. The  bill clarifies                                                               
that companies that work with  Alaskans over the Internet must be                                                               
appropriately licensed in Alaska.                                                                                               
                                                                                                                                
2:05:46 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:06:20 PM                                                                                                                    
CHAIR COSTELLO asked  Ms. Anselm to provide  a sectional analysis                                                               
for SB 152.                                                                                                                     
                                                                                                                                
MS.  ANSELM informed  the members  that the  bill packets  have a                                                               
brief sectional  analysis that  focuses on  the major  changes in                                                               
the bill;  a detailed analysis  or "crosswalk" is  available upon                                                               
request. She discussed the following:                                                                                           
                                                                                                                                
     Sections  1-2. AS  06.55.101.  Clarifies  a license  or                                                                  
     exemption is needed  to engage in money  and a licensee                                                                    
     must  register  with  a  designated  national  registry                                                                    
     (streamlines the licensing process).                                                                                       
                                                                                                                                
     Section  3.  AS  06.55.102.  Application  for  license.                                                                  
     Repeals  and reenacts  current  provision  to move  the                                                                    
     detailed  application  information to  regulations  and                                                                    
     adds  requirements  for  control  person  criminal  and                                                                    
     civil  background  checks  and authority  to  obtain  a                                                                    
     credit report.                                                                                                             
                                                                                                                                
SENATOR STEVENS asked what a designated national registry does.                                                                 
                                                                                                                                
MS. ANSELM said they are a  repository for documents that come in                                                               
from nationwide companies, including  Alaska. It allows the money                                                               
service business to  make just one filing and  the information is                                                               
available to  any state where  the company wishes to  be licensed                                                               
and wherever they  are registered. A national registry  also is a                                                               
central  place to  collect money  that then  is disbursed  to the                                                               
various states.  Most states are participating  and most mortgage                                                               
lenders, mortgage loan originators,  and money service businesses                                                               
also participate because  it's a lot less expensive  than to file                                                               
with each individual state. It's  a matter of efficiency for both                                                               
the states and licensees.                                                                                                       
                                                                                                                                
SENATOR STEVENS asked  if any legal of moral  judgements are made                                                               
at that point by the designated national registry.                                                                              
                                                                                                                                
MS. ANSELM  said no, but the  regulators that look at  the filing                                                               
may make a judgment because it's the official filing.                                                                           
                                                                                                                                
CHAIR  COSTELLO requested  a  copy of  the  detailed analysis  or                                                               
"crosswalk" that was previously mentioned.                                                                                      
                                                                                                                                
2:08:42 PM                                                                                                                    
MS.  ANSELM agreed  to  provide it  and  continued the  sectional                                                               
analysis.                                                                                                                       
                                                                                                                                
     Section   4.  AS   06.55.104.  Security.   Repeals  and                                                                  
     reenacts  the current  provision  to  require a  surety                                                                    
     bond in  the amount  required by  the department  up to                                                                    
     $1,000,000  issued  by  a   company  authorized  to  do                                                                    
     business  in this  state and  allows the  department to                                                                    
     issue  an order  if the  licensee fails  to maintain  a                                                                    
     bond.                                                                                                                      
                                                                                                                                
MS. ANSELM noted  that this would replace the cash  that needs to                                                               
be placed on deposit.                                                                                                           
                                                                                                                                
     Section 5.  AS 06.55.105. Issuance of  license. Repeals                                                                  
     and  reenacts  the  current provision  to  clarify  the                                                                    
     department   may  be   reimbursed  for   any  applicant                                                                    
     investigation, may  exclude any applicant,  employee or                                                                    
     independent   contract  that   is  listed   on  certain                                                                    
     designated lists,  and establishes  December 31  as the                                                                    
     license expiration date.                                                                                                   
                                                                                                                                
MS.  ANSELM  explained  that  under   existing  law  the  license                                                               
expiration  date is  an annual  event 12  months after  the money                                                               
service  business is  licensed. This  consolidation will  make it                                                               
easier for both the division and the licensees.                                                                                 
                                                                                                                                
     Section 6.  AS 45.55.106.  Renewal of  license. Repeals                                                                  
     and  reenacts   the  current  provision  to   move  the                                                                    
     detailed   application   information  to   regulations,                                                                    
     requires  applicant  provide   updated  and  additional                                                                    
     information and provides  a 60 day time  period for the                                                                    
     department to approve or deny the application.                                                                             
                                                                                                                                
     Section  7. AS  06.55.108.  Annual  assessment fee  and                                                                  
     annual  report.  Replaces  the nominal,  static  annual                                                                  
     renewal fee with a  volume-based annual assessment fee,                                                                    
     requires  an   annual  report   be  submitted   to  the                                                                    
     department,  and assesses  a  fee for  late filings  or                                                                    
     payment.                                                                                                                   
                                                                                                                                
                   Currency Exchange Licenses                                                                                 
                                                                                                                                
     Sections   8-9.   AS   06.55.201.   License   required.                                                                  
     Clarifies  license  is  needed to  engage  in  currency                                                                    
     exchange or  money transmission and  deletes authorized                                                                    
     delegate  of  a  licensed money  transmitter.  Requires                                                                    
     registration  with   a  designated   national  registry                                                                    
     (streamlines the licensing process).                                                                                       
                                                                                                                                
     Section  10.  AS  06.55.202. Application  for  license.                                                                  
     Repeals  and reenacts  current  provision  to move  the                                                                    
     detailed  application  information to  regulations  and                                                                    
     adds  requirements  for  control  person  criminal  and                                                                    
     civil  background  checks  and authority  to  obtain  a                                                                    
     credit report.                                                                                                             
                                                                                                                                
2:11:04 PM                                                                                                                    
CHAIR COSTELLO asked if Section 10 is identical to Section 3.                                                                   
                                                                                                                                
MS.  ANSELM  replied they're  similar  but  the applications  are                                                               
different. Section  3 deals with money  transmission licenses and                                                               
Section 10  deals specifically  with currency  exchange licenses.                                                               
Under  the  money  transmission   law,  a  currency  exchange  is                                                               
considered money  transmission. It  can be a  standalone license,                                                               
but it  doesn't allow as  many offerings as a  money transmission                                                               
license. The  latter applies  to the  reloadable cards  and other                                                               
things.                                                                                                                         
                                                                                                                                
     Sections  11-14.  AS  06.55.203. Issuance  of  license.                                                                  
     Repeals and reenacts the  current provisions to clarify                                                                    
     the  department may  be  reimbursed  for any  applicant                                                                    
     investigation, may  exclude any applicant,  employee or                                                                    
     independent   contract  that   is  listed   on  certain                                                                    
     designated  lists,  establishes   December  31  as  the                                                                    
     license expiration/renewal date and  provides a 120 day                                                                    
     period  for  the  department to  approve  or  deny  the                                                                    
     application (30 day appeal period for a denial).                                                                           
                                                                                                                                
     Section 15.  AS 06.55.204. Renewal of  license. Repeals                                                                
     and  reenacts   the  current  provision  to   move  the                                                                    
     detailed   application   information  to   regulations,                                                                    
     requires  applicant  provide   updated  and  additional                                                                    
     information and provides  a 60 day time  period for the                                                                    
     department to approve or deny the application.                                                                             
                                                                                                                                
     Section 16.  AS 06.55.206. Security. Requires  a surety                                                                  
     bond in  the amount  required by  the department  up to                                                                    
     $1,000,000  issued  by  a   company  authorized  to  do                                                                    
     business  in this  state and  allows the  department to                                                                    
     issue  an order  if the  licensee fails  to maintain  a                                                                    
     bond. Allows either a claimant  against the licensee or                                                                    
     the  department  to file  an  action  on the  bond  and                                                                    
     requires that  the bond remain  in effect a  minimum of                                                                    
     five years after licensure.                                                                                                
                                                                                                                                
     Section  17. AS  06.55.207. Annual  assessment fee  and                                                                
     annual  report.  Replaces  the nominal,  static  annual                                                                  
     renewal fee with a  volume-based annual assessment fee,                                                                    
     requires  an   annual  report   be  submitted   to  the                                                                    
     department,  and assesses  a  fee for  late filings  or                                                                    
     payment.                                                                                                                   
                                                                                                                                
                      Authorized Delegates                                                                                    
                                                                                                                                
     Sections  18-20.  AS  06.55.301.  Relationship  between                                                                  
     licensee  and authorized  delegate. Removes  definition                                                                  
     of "Remit" and moves  it to definition section. Expands                                                                    
     statutory references for  scope of permissible activity                                                                    
     of authorized  delegate and  clarifies that  a licensee                                                                    
     is  responsible  for  the   actions  of  an  authorized                                                                    
     delegate.                                                                                                                  
                                                                                                                                
     Section  21.  AS  06.55.304. Limited  authorization  of                                                                  
     subdelegate.  Allows   a  licensee  to   contract  with                                                                  
     another licensee  to use that other  license's existing                                                                    
     authorized delegate as a  subdelegate to reload prepaid                                                                    
     cards and  requires the licensee to  maintain books and                                                                    
     records of contracts.                                                                                                      
                                                                                                                                
                 Examinations, Reports, Records                                                                               
                                                                                                                              
     Section   22.  AS   06.55.401.  Authority   to  conduct                                                                  
     examinations.   Repeals   and  reenacts   the   current                                                                  
     provisions  for  authority  to  examine,  interview  or                                                                    
     investigate;   removes   the  45-day   advance   notice                                                                    
     requirement    and   specifically    authorizes   joint                                                                    
     examination and  investigations with  other regulators.                                                                    
     Allows  department to  gather evidence  relevant for  a                                                                    
     hearing  or investigation  and allows  reimbursement of                                                                    
     examination or investigation costs.                                                                                        
                                                                                                                                
     Section  23. AS  06.55.402.  Cooperation. Repealed  and                                                                  
     reenacted to allow cooperation with other regulators.                                                                    
                                                                                                                                
     Sections  24-25.  AS  06.55.403. Reports.  Expands  the                                                                  
     required   quarterly   report   information.   Requires                                                                    
     licensee  to notify  the department  within one  day of                                                                    
     most petition filings,  lawsuits, bond cancellation, or                                                                    
     criminal  charges or  convictions against  the licensee                                                                    
     or  authorized  delegate.   Allows  the  Department  to                                                                    
     assess a late  fee or other consequence  for failure to                                                                    
     report as required.                                                                                                        
                                                                                                                                
     Sections  26-28.  AS   06.55.404.  Change  of  control.                                                                
     Requires  a  30-day  advance  notice  of  a  change  of                                                                    
     control  and notice  within 15  days of  learning of  a                                                                    
     proposed  change   in  control  be  submitted   to  the                                                                    
     department along with any  required fee. The department                                                                    
     as  120 days  to approve  or deny  a change  in control                                                                    
     request.                                                                                                                   
                                                                                                                                
     Sections  29-30. AS  06.55.405. Records.  Adds currency                                                                
     transaction reports and  suspicious activity reports to                                                                    
     the  types  of  records  to be  retained.  Extends  the                                                                    
     retention period from three to  five years and requires                                                                    
     the records to  be provided in a  format established by                                                                    
     the department.                                                                                                            
                                                                                                                                
     Section  31. AS  06.55.406.  Money laundering  reports.                                                                  
     Repealed and reenacted  to align reporting requirements                                                                    
     with federal law.                                                                                                          
                                                                                                                                
     Sections 32-33.  AS 06.55.407.  Confidentiality. Allows                                                                
     the  department  to  share information  with  state  or                                                                    
     federal  agencies  without  giving prior  notice  to  a                                                                    
     licensee and  expands the list of  licensee information                                                                    
     that may  be publicly disclosed to  include the address                                                                    
     and name  of a  contact individual  for a  licensee and                                                                    
     their authorized delegate.                                                                                                 
                                                                                                                                
2:15:42 PM                                                                                                                    
CHAIR COSTELLO asked if Sections 32 and 33 are a uniform law or                                                                 
align with other states.                                                                                                        
                                                                                                                                
MS. ANSELM replied this generally aligns with other states, but                                                                 
it shouldn't be called a uniform act because the states are no                                                                  
longer all the same.                                                                                                            
                                                                                                                                
                    Permissible Investments                                                                                   
                                                                                                                              
     Sections   34-35.   AS    06.55.501.   Maintenance   of                                                                  
     permissible  investments.  Clarifies  that  permissible                                                                  
     investment calculations  must consider  any limitations                                                                    
     imposed by the department.                                                                                                 
                                                                                                                                
     Sections   36-37.  AS   06.55.   601.  Suspension   and                                                                  
     revocation of  licensees; receivership.  Clarifies that                                                                  
     the department  may issue an  order against  a licensee                                                                    
     if  either the  licensee or  an authorized  delegate is                                                                    
     convicted of or violates  certain provisions; a fact or                                                                    
     condition  that may  have been  grounds for  denial was                                                                    
     not  disclosed with  license application;  the licensee                                                                    
     engaged in false,  misleading or deceptive advertising,                                                                    
     failed to pay a judgement  or knowingly made a material                                                                    
     misstatement   or    withheld   material   information.                                                                    
     Includes currency  exchange operations,  potential loss                                                                    
     and  any  order  issued  by  the  department  or  other                                                                    
     regulators  in   determining  whether  a   licensee  is                                                                    
     engaging in an unsafe or unsound practice.                                                                                 
                                                                                                                                
     Sections   38-39.   AS    06.55.602.   Suspension   and                                                                  
     revocation  of authorized  delegates and  subdelegates.                                                                  
     Expands the  department's ability to issue,  suspend or                                                                    
     revoke  the designation  of an  authorized delegate  or                                                                    
     subdelegate.                                                                                                               
                                                                                                                                
2:17:47 PM                                                                                                                    
     Section  40.   AS  06.55.603.   Administrative  orders.                                                                  
     Repealed and reenacted to change  "cease and desist" to                                                                    
     "administrative"  order.  Expands the  requirements  of                                                                    
     administrative  orders  that   can  be  issued.  Allows                                                                    
     person to  petition superior  court for  judicial order                                                                    
     to   modify  the   order  pending   completion  of   an                                                                    
     administrative proceeding.                                                                                                 
                                                                                                                                
     Sections  41-44.  AS   06.55.607.  Unlicensed  persons.                                                                  
     Repealed   and   reenacted   to  add   subdelegate   to                                                                    
     unlicensed  activity  provisions   and  establishes  an                                                                    
     additional monetary penalty for unlicensed activity.                                                                       
                                                                                                                                
                    Miscellaneous Provisions                                                                                  
                                                                                                                              
     Section   45.   AS  06.55.802.   Exemptions.   Includes                                                                  
     insurance companies, title  insurance companies, escrow                                                                    
     agents, and attorneys as exempt  from the provisions of                                                                    
     this chapter.                                                                                                              
                                                                                                                                
     Section  46. AS  06.55.810. Notices  required. Repealed                                                                  
     and  reenacted to  require  a  money services  licensee                                                                  
     provide  notice   at  locations  where   no  authorized                                                                    
     delegate  or  subdelegate   is  designated  to  provide                                                                    
     services;    require     authorized    delegates    and                                                                    
     subdelegates to  provide customer  complaint resolution                                                                    
     information  at  locations  where  they  provide  money                                                                    
     services;  and allows  department to  establish content                                                                    
     of notices.                                                                                                                
                                                                                                                                
MS. ANSELM said  if somebody is reloading a card  in person, they                                                               
need to know that is the only  place they can reload that card as                                                               
opposed  to having  those  delegations set  up  with other  money                                                               
service businesses.                                                                                                             
                                                                                                                                
     Section  47. AS  06.55.820. Transmission,  receipt, and                                                                  
     refund.  Repealed and  reenacted to  require compliance                                                                  
     with the  Federal Transmittance Rule  for transmission,                                                                    
     receipt and refunds and department requirements.                                                                           
                                                                                                                                
     Section  48.  AS  06.55.860.  Compliance  with  federal                                                                  
     requirements.  Required  compliance   with  the  listed                                                                  
     federal laws related to money services businesses.                                                                         
                                                                                                                                
MS. ANSELM added that this clarifies that Internet money service                                                                
activity is regulated by this chapter.                                                                                          
                                                                                                                                
     AS   06.55.870   Escheatment  of   property.   Requires                                                                  
     compliance with unclaimed property laws in Alaska.                                                                         
                                                                                                                                
     AS  06.55.880.  Application   to  Internet  activities.                                                                  
     Clarifies   internet   money   services   activity   is                                                                    
     regulated by this chapter.                                                                                                 
                                                                                                                                
                      General Provisions.                                                                                     
                                                                                                                                
     Section  49. AS  06.55.900. Administration.  Authorizes                                                                  
     use of  a registry  for obtaining  information required                                                                    
     for licensing purposes.                                                                                                    
                                                                                                                                
     AS  06.55.920. Regulations.  Authorizes the  department                                                                  
     to adopt regulations.                                                                                                      
                                                                                                                                
     Section  50. AS  06.55.990.  Definitions. Repealed  and                                                                  
     reenacted. Amends or adds the following definitions:                                                                       
                                                                                                                                
     (1) applicant - new                                                                                                        
     (4) control - amended                                                                                                      
     (5) currency - new                                                                                                         
     (10) fiat currency - new                                                                                                   
     (11) funds - new                                                                                                           
     (12) informal value transfer system - new                                                                                  
     (13) medium of exchange - new                                                                                              
     (16) money laundering - new                                                                                                
     (20) money transmission - amended                                                                                          
     (21) money transmission license - amended                                                                                  
     (23)   Nationwide  Multistate   Licensing  System   and                                                                    
     Registry - new                                                                                                             
     (24) officer - new                                                                                                         
     (25) open-loop stored value - new                                                                                          
     (26) outstanding - amended                                                                                                 
     (27) payment instrument - amended                                                                                          
     (28) payment system - new                                                                                                  
     (31) registry - new                                                                                                        
     (32) remit - new                                                                                                           
     (34) stored value - amended                                                                                                
     (35) subdelegate - new                                                                                                     
     (36) unsafe or unsound practice - amended                                                                                  
     (37) virtual currency - new                                                                                                
     (38) virtual currency business activity                                                                                    
                                                                                                                                
     Section 51. AS 06.55.995. Short title. Removes                                                                           
     "Uniform" from the title of the Act.                                                                                       
                                                                                                                                
     Sections 52 - 53. Adds provisions relating to new law                                                                    
     in AS 12.62.                                                                                                               
                                                                                                                                
     Section 54. Enumerates provisions repealed.                                                                              
                                                                                                                                
     Section 55. Allows transition regulations.                                                                               
                                                                                                                                
     Section 56. Revisor's instructions.                                                                                      
                                                                                                                                
     Section 57. Section 55 takes effect immediately.                                                                         
                                                                                                                                
     Section 58. Effective date is July 1, 2016, except as                                                                    
     provided in Section 57.                                                                                                    
                                                                                                                                
2:21:24 PM                                                                                                                    
CHAIR COSTELLO  asked if anything  in the legislation  causes her                                                               
concern and if it is in the best interest of Alaskans.                                                                          
                                                                                                                                
MS. ANSELM replied  it is in the best interest  of Alaskans right                                                               
now, but the  money services industry changes  quickly. She noted                                                               
her office  received a  request to review  several items  and she                                                               
isn't sure what  would come from that but the  committee may hear                                                               
from the industry during public testimony.                                                                                      
                                                                                                                                
2:23:29 PM                                                                                                                    
CHAIR COSTELLO  asked if she  would share what issues  her office                                                               
was asked to review.                                                                                                            
                                                                                                                                
MS. ANSELM said she didn't mind at  all as the letter was sent to                                                               
the committee as well.                                                                                                          
                                                                                                                                
2:23:50 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:27:34 PM                                                                                                                    
CHAIR  COSTELLO   reconvened  the   meeting  and   opened  public                                                               
testimony on  SB 152. Finding  none, she closed  public testimony                                                               
on SB 152.                                                                                                                      
                                                                                                                                
2:28:03 PM                                                                                                                    
At ease                                                                                                                         
                                                                                                                                
2:29:32 PM                                                                                                                    
CHAIR COSTELLO  reconvened the  meeting and  asked Ms.  Anselm to                                                               
discuss the issues  raised in the letter from  the Money Services                                                               
Round Table (MSRT).                                                                                                             
                                                                                                                                
MS. ANSELM discussed the following points:                                                                                      
                                                                                                                              
Liability  for Authorized  Delegate Conduct.  MSRT expressed  the                                                             
view that  the broad assignment  of vicarious liability  could be                                                               
construed as excusing an  authorized delegate from responsibility                                                               
for its own  conduct. Ms. Anselm said she doesn't  agree based on                                                               
the  way the  law  is proposed.  The  subdelegate's authority  is                                                               
limited to  reloading cards  and it's  the responsibility  of the                                                               
licensee to make sure that  both the delegate and the subdelegate                                                               
and doing the right things.                                                                                                     
                                                                                                                                
Recordkeeping Requirements. Ms. Anselm  said the department feels                                                             
it's necessary  to set out  guidelines about what it  can access.                                                               
The  industry generally  uses more  current  technology than  the                                                               
department so it  will need to keep records in  a format that the                                                               
department can  access. The department  would be able to  look at                                                               
the  Suspicious Activity  Reports  filed under  the Bank  Secrecy                                                               
Act.  She  said  she  isn't specifically  familiar  with  Project                                                               
Gateway  but   the  department  works  closely   with  FinCEN  on                                                               
Suspicious  Activity  Reports  and  that may  be  the  piece  the                                                               
department ultimately  uses. She  assured the committee  that the                                                               
department will  make it  as easy on  industry as  possible while                                                               
still protecting Alaskan consumers.                                                                                             
                                                                                                                                
2:33:11 PM                                                                                                                    
Fingerprinting Requirements.  MSRT objects to  the fingerprinting                                                             
requirement extending  to the control persons  of publicly traded                                                               
corporations  or   their  subsidiaries  and  maintains   that  is                                                               
consistent with other state transmitter  laws. Ms. Anselm said if                                                               
that  is true,  the department  could  look at  whether it  makes                                                               
sense to make an exception.                                                                                                     
                                                                                                                                
Change   of  Control   Notice  Requirements.   Specifically,  the                                                             
department is  asking for  notice in  a record  30 days  before a                                                               
proposed change of control and notice  in a record not later than                                                               
15 days  after learning  of the proposed  change of  control. Ms.                                                               
Anselm said  the department recognizes that  entities often don't                                                               
know they're being taken over  until after it's happened. If they                                                               
do know beforehand  the department wants to be  notified of that,                                                               
but if they  don't know until afterwards the  department wants to                                                               
know quickly.  The department hasn't  had an opportunity  to talk                                                               
with MSRT to discuss the intent.                                                                                                
                                                                                                                                
Special  Reporting Requirements.  MSRT is  pointing out  that the                                                             
one day  notice is  very short,  but if a  licensee has  a person                                                               
that is being charged with a  felony, they generally know it very                                                               
quickly. Ms. Anselm  said this is a fast moving  business so it's                                                               
important that  the department knows  right away if  something is                                                               
going  wrong.  In  Alaska  there  have  been  instances  where  a                                                               
licensee knew that somebody had  been charged but the law doesn't                                                               
require their  removal until  they've been  sentenced. This  is a                                                               
concern for  money transmission and currency  exchange, she said.                                                               
She acknowledged that there may need to be some exceptions.                                                                     
                                                                                                                                
Limited  Authorization  of  Subdelegate.   MSRT  is  looking  for                                                             
clarification in the proposal that  the term "licensee's existing                                                               
open-loop stored-value cards"  includes stored-value cards issued                                                               
by a  bank and distributed by  a licensee under its  own license.                                                               
Ms.  Anselm  said  that  probably could  be  further  defined  in                                                               
regulation.                                                                                                                     
                                                                                                                                
Publication  of   Authorized  Delegates.  The  bill   allows  the                                                             
department to  publish a list  of authorized  delegates including                                                               
the  names of  contact individuals  of each  authorized delegate.                                                               
MSRT   is   concerned   that  a   published   list   will   cause                                                               
administrative and  technical challenges  for both  licensees and                                                               
the department.  Ms. Anselm said  the department already  keeps a                                                               
list like  that and will explore  whether or not there  will be a                                                               
problem they haven't experienced.                                                                                               
                                                                                                                                
Authority  to  Suspend/Revoke  an   Authorized  Delegate.  If  an                                                             
authorized delegate  or subdelegate  violated any other  state or                                                               
federal law  applicable to  a money  transmitter, MSRT  is asking                                                               
that it be  limited to its original scope and  that the provision                                                               
applies only to any other state  or federal order enforcing a law                                                               
applicable to  a money  services business.  Ms. Anselm  she isn't                                                               
sure why  that's a problem  but it may  be clear when  she speaks                                                               
with MSRT.                                                                                                                      
                                                                                                                                
2:37:47 PM                                                                                                                    
CHAIR COSTELLO  thanked Ms.  Anselm for  the thorough  review and                                                               
held SB 152 in committee for further consideration.                                                                             

Document Name Date/Time Subjects
SB 152 - Fiscal Note.PDF SL&C 3/8/2016 1:30:00 PM
SB 152
SB 152 - Hearing Request.pdf SL&C 3/8/2016 1:30:00 PM
SB 152
SB 152 - Presentation.pdf SL&C 3/8/2016 1:30:00 PM
SB 152
SB 152 - Sectional Analysis.pdf SL&C 3/8/2016 1:30:00 PM
SB 152
SB 152 - White Paper.pdf SL&C 3/8/2016 1:30:00 PM
SB 152
SB 152.PDF SL&C 3/8/2016 1:30:00 PM
SB 152
SB 168 - Background Document - Board of Barbers and Hairdressers.pdf SL&C 3/8/2016 1:30:00 PM
SB 168
SB 168 - Background Document - Structuring Boards.pdf SL&C 3/8/2016 1:30:00 PM
SB 168
SB 168 - Board Support Letter.pdf SL&C 3/8/2016 1:30:00 PM
SB 168
SB 168 - Fiscal Note.pdf SL&C 3/8/2016 1:30:00 PM
SB 168
SB 168 - Sponsor Statement.pdf SL&C 3/8/2016 1:30:00 PM
SB 168
SB 168.PDF SL&C 3/8/2016 1:30:00 PM
SB 168
CS SB 165 (L&C) Ver. W.pdf SL&C 3/8/2016 1:30:00 PM
SB 165