Connecticut Banking Commission Releases Advisory On Money Transmission – Financial Services & More Latest News Here – Up Jobs

On July 20, 2022, the Connecticut Department of Banking (the
“Department”) issued a Consumer and Industry Advisory on
Money Transmission (the “Advisory”).

The Advisory provides general guidance on what types of
activities and entities must be licensed. The Advisory states that
“money transmission” occurs when an individual engages
“in the business of issuing or selling payment instruments or
stored value, receiving money or monetary value for current or
future transmission or the business of transmitting money or
monetary value.” Accordingly, transmission can occur whenever
“a person takes possession or control of monetary value
belonging to another person” and holds it for a period of
time, or transmits it to a third party.” The Advisory lists
entities that traditionally provide transmission services like bill
payers, payroll processors, and issuers and sellers of prepaid
cards and money orders.

The Advisory also reminds entities that the definition of money
encompasses transmission activities involving virtual currency
– “such as Bitcoin and Ethereum, as well as stablecoins
and any other digital asset that is used as a medium of
exchange.” Further, entities holding a virtual currency wallet
or operating virtual currency ATMs and who may allow for
transmission of such virtual or fiat currency to a third party are
deemed to be engaging in money transmission according to the
guidance.

Putting It Into Practice: In the advisory, the
Department cited the recent “explosion of virtual
currency” as a reason to highlight some common activities
requiring money transmission licensure in Connecticut and provided
guidance for those engaging in such activities or considering money
transmitter licensure in Connecticut.

Individuals engaged in the virtual currency industry in
Connecticut should give this advisory special attention. The
Department acknowledges that many consumers do “not realize or
understand the regulatory landscape that applies” to using
money transmitters. To that end, the Department reminds entities of
their licensing requirements and the hefty penalties for operating
an unlicensed money transmission business, which may carry a
$100,000 fine per violation and a felony charge. Entities looking
to be licensed as a money transmitter in Connecticut should review
application guidelines via the Nationwide
Mortgage Licensing System and Registry (NMLS).

The content of this article is intended to provide a general
guide to the subject matter. Specialist advice should be sought
about your specific circumstances.