The governors of Virginia and South Dakota have each signed a bill – HB 2690 and HB 1032, respectively – that moves the state’s licensing of money transmitters to the National Multistate Licensing System (“NMLS”). Both bills become effective on July 1, 2019. In addition to moving the money transmitter licensing process to NMLS, the Virginia bill makes the following changes to the state’s law concerning money transmitters:
- Moves the due date of the annual license renewal fee and other requirements related to license renewal from September 1 to December 31;
- Authorizes the submission through NMLS of reports and filings for the Virginia Commissioner of Financial Institutions, should NMLS prove capable of receiving them; and
- Raises from five to 10 percent the interest that a person must own or control in a limited liability company to be considered a “member” that is subject to certain legal requirements.
Virginia’s and South Dakota’s changes follow a larger trend over the past few years of states consolidating their financial services-related licenses into NMLS. Despite beginning only as a platform for states to administer mortgage lender licensing, NMLS has proven useful to states for administering other financial services licenses. In addition to mortgage lenders and money transmitters, some of the services for which NMLS now manages licenses include small loan lenders, motor vehicle financing, pawnbrokers, payday lenders, student loan servicers, and escrow agents, among others.
As more states consolidate their financial services licenses into NMLS, an increasing number of financial services providers will need to become familiar with and develop procedures for remaining in compliance with the requirements of NMLS, while continuing to satisfy state-specific statutory and or regulatory licensing requirements. If these changes serve as any indication, NMLS’s role in the financial services industry will only continue to grow.