WASHINGTON—Seven states have agreed to a multi-state compact that standardizes key elements of the licensing process for money services businesses (MSB), which includes fintechs.
This multi-state compact represents the first step among state regulators in moving towards an integrated, 50-state system of licensing and supervision for fintechs, stated the Conference of State Bank Supervisors (CSBS) in a release.
The agreement: If one state reviews key elements of state licensing for a money transmitter – IT, cybersecurity, business plan, background check, and compliance with the federal Bank Secrecy Act – then other participating states agree to accept the findings. The result is expected to significantly streamline the MSB licensing process, the CSBS said.
The states announcing the agreement are Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington. Other states are expected to join this compact.
In May 2017, state regulators, operating through the CSBS, issued a policy statement establishing the 50-state goal. CSBS then developed Vision 2020 as a series of implementation initiatives, including:
- Forming a Fintech Industry Advisory Panel of 33 companies to identify pain points and recommend solutions
- Building a next generation technology platform to streamline both the licensing and supervision of non-banks
- Working with states to harmonize their licensing and supervisory practices
“This MSB licensing agreement will minimize the burden of regulatory licensing, use state resources more efficiently, and allow for broad participation by other states across the country,” said John Ryan, CSBS president and chief executive officer.