South Carolina Is the Latest State to Implement Money Transmitter Licensing Laws and Regulations
By Eric A. Love and Judith E. Rinearson
On May 25, 2018, South Carolina’s money transmitter licensing law, the South Carolina Anti-Money Laundering Act, and its implementing regulations (collectively, the “Act”) became effective.
This means that the newly established Money Services Division (the “Division”) within the SC Attorney General’s Office is now accepting applications for licensure to engage in money transmission and currency exchange in that state. Entities that were engaging in such activities in South Carolina as of May 25 had until June 29, 2018 to submit an application. After submission, such entities were able to continue operating while their applications were being reviewed.
Under the Act, a license is required for an entity to “engage in the business of money transmission or advertise, solicit, or hold” itself out as providing money transmission, unless an exemption applies. The term “money transmission” is defined “as selling or issuing payment instruments, stored value, or receiving money or monetary value for transmission.”
Cryptocurrencies are not expressly mentioned in the Act, but the Division has issued FAQs about the Act which indicate that “further guidance will be provided regarding the applicability to virtual currencies in the near future.”
Applications must be submitted through the Nationwide Multistate Licensing System. Among other things, the Act requires applicants to pay a $1,500 application fee and a $750 license fee and to obtain an acceptable security (e.g., a surety bond) of $50,000, plus $10,000 for each location (up to an additional $250,000). Other requirements include background checks on principals, Bank Secrecy Act/AML policies, a business plan and a flow of funds description. When licensed, entities are required to pay a $750 annual license renewal fee, maintain a net worth of at least $250,000, and hold sufficient permissible investments. The Act also requires licensees to comply with certain ongoing examination, reporting and record-keeping requirements. If an entity is already licensed in another state that has adopted the Uniform Money Services Act or “substantially similar” requirements to those of South Carolina, it may submit an abbreviated application.
The FAQs are available here. Montana is now the only U.S. state without a money transmitter licensing law.