HB 180-MONEY SERVICES BUSINESS: REQS; LICENSING;  3:17:20 PM CHAIR KITO announced that the first order of business would be HOUSE BILL NO. 180, "An Act relating to money transmission and currency exchange businesses; 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 on certain stored-value cards; relating to record retention, reporting requirements, and enforcement provisions; relating to exemptions; relating to money services Internet activities; relating to transmitting value and currency; and providing for an effective date." 3:17:50 PM MARY SCHLOSSER, Staff, Representative Zach Fansler, Alaska State Legislature, presented HB 180 on behalf of Representative Fansler, prime sponsor. She stated that HB 180 would update the Alaska Money Services Act, passed in 2007. Due to technological advances over the previous eleven years, current statutes were outdated. The Act provided a legal framework for currency exchange and money transmission functions. It would update licensing and record keeping as well as deter illegal behavior. Additionally, it would support Alaska businesses by removing the 50 percent outside firm discount and encourage small businesses by replacing the $25 thousand net worth requirement with a surety bond. It would broaden the definition of money services to include virtual currency such as Bitcoin. The Act would update enforcement provisions and require background checks for all control persons, as well as increase records retention from three to five years for greater transparency. Finally, the Act would require the use of the Nationwide Multistate Licensing System (NMLS) currently used by over 90 percent of money services businesses in other states. 3:22:04 PM FRED PARADY, Deputy Commissioner, Department of Commerce, Community, and Economic Development, described the proposed legislation. He began that the primary thing HB 180 would do is modernize the statute, adopted in 2007 and which technology has rendered obsolete. This has left the industry and consumers without clearly defined regulatory requirements, and the department without the mechanisms it needs to protect Alaska consumers. MR. PARADY continued that the proposed legislation would seek to encompass current technology; changes in terminology; the use of alternative payment systems to conduct business; and allow some room within the statute for the evolution of money services transactions. Of interest to rural Alaska, HB 180 would allow the limited use of a subdelegate to load a prepaid card and the locations available for consumers to receive that service would be increased across rural Alaska. MR. PARADY added that HB 180 would conform to the Nationwide Multistate Licensing System [NMLS] and registry, currently used by over 90 percent of the licensees transacting business in other states. The NMLS standardizes annual reporting dates and the 5-year reporting term. MR. PARADY underlined that the proposed bill would remove an unfair financial and licensing advantage to out-of-state entities which had been allowed to come in with a 50 percent discount on their licensing fee which has proven to be unfair. However, the proposed bill would remove the $25,000 net worth requirement for a business to maintain. It would also increase the surety bond requirement from [a] half million dollars to a million dollars. A surety bond required would range from $25,000 to $1 million, and the criteria defining that requirement would be set in regulation. HB 180 would increase that surety bond maximum amount and would also establish a bond requirement for currency exchange licensees. MR. PARADY stated that HB 180 would add a background check component for all control persons and would expand the number of people who have to submit to that background check to ensure compliance with federal registries regarding terrorism and money laundering. It would add a requirement for an annual assessment for each licensee. MR. PARADY offered that the department could provide consumers a list of money services businesses, their authorized delegates, and consumer contact information for consumer complaints. Additionally, HB 180 would allow for suspension orders and other orders that fall short of cease and desist orders. Additionally, the proposed bill would expand a list of exemptions, namely attorneys and insurance companies for whom money transmission is ancillary to their core business activity. 3:28:22 PM CHAIR KITO opened public testimony on HB 180. After ascertaining that no one wished to testify, he closed public testimony. 3:28:35 PM REPRESENTATIVE WOOL moved to report HB 180 out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, HB 180 was reported from the House Labor and Commerce Standing Committee.