Legislature(2015 - 2016)BARNES 124
04/11/2016 03:15 PM LABOR & COMMERCE
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HB 271-MONEY SERVICES BUSINESS: REQS; LICENSING; 4:20:05 PM CHAIR OLSON announced that the next order of business would be HOUSE BILL NO. 271, "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." 4:20:13 PM REPRESENTATIVE HUGHES moved to adopt the committee substitute for HB 271, Version [29-GH2067\H], Bannister, 4/4/16, as the working document. CHAIR OLSON objected for discussion purposes. 4:20:35 PM KEVIN ANSELM, Director, Division of Banking and Securities, Department of Commerce, Community & Economic Development (DCCED), answered questions raised at a previous meeting regarding the money services business, including some ancillary issues such as gift cards and pre-paid cards. She provided a copy of a Wikipedia sourced list of the various virtual currencies available. Ms. Anselm paraphrased the summary of changes made by Version H as follows [original punctuation provided]: In general, Legislative Counsel made conforming drafting, legal and organizational improvements throughout the bill including expanding definitions to include related concepts, products or practices. Summary of Changes Article 1. Money Transmission Licenses. Sec. 1- 13. No substantive changes. Article 2. Currency Exchange Licenses. Sec. 14 - 22. No substantive changes. Article 3. Authorized Delegates. Sec. 23- 25. Sec. 23. AS 06.55.301(b). Retains "remit" definition from the current law in this Article instead of in the definition section and adds a listing of the financial institutions eligible to receive authorized delegate deposits. Proposed language relating to licensee responsibility for the acts of an authorized representative was deleted. (former Sec. 20) MS. ANSELM explained the aforementioned language was deleted because it was clear the division had the same authority elsewhere in the bill. Article 4. Examinations, Report and Records. Sec. 26- 37 Sec. 27. AS 06.55.402 Consultation was added to "Cooperation" in the title of former Sec. 23 relating to working with other regulators. MS. ANSELM related that not only does the division cooperate but also consults. Sec. 31. AS 06.55.404(a) Modified former Sec. 27 to require a licensee to give the department notice of a change of control 30 days before the proposed change of control and request approval with the required information and fee instead of within 15 days after learning of a proposed change of control. MS. ANSELM clarified that there is only one date, which is 30 days before a proposed change. Elsewhere in the law, there is a provision to notify the division within 15 days, if there is a change. Article 5. Permissible Investments. Sec. 38-39. No substantive changes. Article 6. Enforcement. Sec. 40-49. No substantive changes. Article 7. Administrative Procedures. Sec. 50. No substantive changes. Article 8. Miscellaneous Provisions. Sec. 51- 54.Sec. 54. AS 06.55.855. New section that describes how references to virtual currency will be construed. 4:23:58 PM MS. ANSELM explained that in addition to a definition of virtual currency, which has been expanded, there is also a description in lay terms that describes how those references will be construed. Article 9. Definitions. Sec. 55 - 65. Sec. 56 - 65 reordered the definitions in former Sec. 50. MS. ANSELM said the definitions were reordered. The definitions already existing in law are in the same order, any changes stay in the same order, and new definitions are added at the end. The original bill had alphabetized the definitions and this will place them back into "date" order. Notable changes include: Sec. 56. AS 06.55.990(3) "control" is more precisely defined. Formerly Sec. 50(4) Sec. 58. AS 06.55.990(15) "money transmission" is expanded to include explanations of the activities included in an informal transfer system, open-loop stored value devices, virtual currency, and retail conversion services, including those definitions or referencing definitions that were formerly separated in Sec. 50. 4:25:09 PM MS. ANSELM related that this helps people to understand how these various sorts of money transmission services meet. Sec. 66-73. No substantive changes. 4:26:02 PM CHAIR OLSON withdrew his objection. There being no further objection, Version H was before the committee. REPRESENTATIVE HUGHES commented that this is a complicated bill and she requested a written updated sectional analysis, including a summary of changes. MS. ANSELM agreed to provide further information. CHAIR OLSON noted that public testimony was closed during the last meeting. 4:27:33 PM REPRESENTATIVE KITO expressed concern regarding the regulating of fees, and about having fees on cards identified as specific profit centers by companies, so that a consumer might not be aware that they are paying a lot of money in order to maintain these instruments. He asked whether there is a way that the legislature can protect consumers from overcharges on some of these types of instruments. MS. ANSELM advised that the division reviews the fees, during examinations, as well as when the firms are initially licensed. There are three different examples of fees being charged in Alaska currently on prepaid cards. She explained that the division doesn't have limits on those fees but that could be done by regulation. She pointed out that nationally, similar fees are substantial; it takes quite a bit of administrative work to keep multiple accounts current. Ms. Anselm said she is aware there are some costs involved, but she would research that issue to determine whether it makes sense to regulate a limitation on fees, and to see what other states do. 4:29:19 PM REPRESENTATIVE HUGHES moved to report the committee substitute for HB 271, [29-GH2067\H,] Bannister, 4/4/16, out of committee with individual recommendations and the accompanying fiscal notes. There being no objection, CSHB 271(L&C), was reported out of the House Labor and Commerce Standing Committee.