On April 22, the Governor of Maine signed into law LD 2112 (the “Act”), which codifies a new law titled the “Maine Money Transmission Modernization Act.” The Act amends and repeals many parts of the state’s money transmission laws and brings the law more in alignment with the model Money Transmission Modernization Act (MTMA). The stated purpose of the Act will be to coordinate with states to reduce the regulatory burden, protect the public from financial crimes, and standardize licensing activities allowed and exempted by Maine.
Among many other new provisions, the Act requires any person which engages in the business of money transmission or advertises, solicits, or holds itself out as providing money transmission to obtain a license. The Act defines “money transmission” as “(i) [s]elling or issuing payment instruments to a person located in [Maine]; (ii) [s]elling or issuing stored value to a person located in [Maine]; or (iii) [r]eceiving money for transmission from a person located in [Maine].” However, the Act exempts payee agents collecting and processing payments from a payors to a payee for goods or services other than money transmission services, provided certain criteria are met. Additionally, the Act exempts certain persons acting as intermediaries, persons expressly appointed as third-party service providers to an exempt entity, payroll processors, registered futures commission merchants and securities broker-dealers, among others. Anyone claiming to be exempt from licensing may be required to provide information and documentation demonstrating their qualification for the claimed exemption.
The Act also includes a section on virtual currency, defined as “a digital representation of value that: (i) [i]s used as a medium of exchange, unit of account or store of value, and (ii) [i]s not money, whether or not denominated in money.” The Act specifies that “virtual currency business activity” includes, among other activities, exchanging, transferring, storing, or engaging in virtual currency administration, whereas “virtual currency administration” is defined as issuing virtual currency with the authority to redeem the currency for money, bank credit, or other virtual currency.
The Act requires certain reporting, including about the licensee’s condition, financial information, and money transmission transactions from every jurisdiction, among other types of information. The amendments also outline numerous licensing application and renewal procedures, including net worth, surety bond, and permissible investment requirements. Maine will now join several other states that adopted the model law. The Act takes effect on July 16.
This content originally appeared in the InfoBytes blog, a collection of news and alerts covering legal and regulatory developments for the financial services industry. To read more or have the InfoBytes weekly newsletter delivered to your inbox, please visit infobytesblog.com.