Recently, the Connecticut Department of Banking issued an advisory on money transmission, providing general guidance on what types of activities and entities must be licensed. According to the advisory, 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 Department noted that “[t]he increased use of technology to enable immediate payment mechanisms, as well as the explosion of virtual currency, has caused significant disruption to traditional money transmission systems.” The Department also acknowledged that many consumers do “not realize or understand the regulatory landscape that applies” to using money transmitters. Among other things, the advisory listed entities that traditionally provide transmission services like bill payers, payroll processors, and issuers and sellers of prepaid cards and money orders. The advisory also discussed Connecticut’s license application and penalties for unlicensed transmission, explaining that licensure goes through the Nationwide Multistate Licensing System and involves disclosing pertinent information concerning all “control persons.”
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