Connecticut Banking Commission Issues Money Transfer Recommendation – Financial Services

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On July 20, 2022, the Connecticut Department of Banking (the “Department”) issued consumer and industry advice on money transmission (the “Advice”).

The guide provides general guidance on what types of activities and facilities need to be licensed. The advisory states that a “money transfer” occurs when a person enters into “the transaction of issuing or selling a payment instrument or stored value, the receipt of money or money values ​​for current or future transfer, or the transaction of transferring money or money values” operates. Accordingly, a transfer can occur whenever “a person takes possession or controls the monetary value of another person” and holds it for a period of time or transfers it to a third party.” The guide lists companies that traditionally provide transfer services such as bill payers , subcontractors and issuers and sellers of prepaid cards and money orders.

The advisory also reminds companies that the definition of money includes transfer activities involving virtual currencies — “like bitcoin and ethereum, as well as stablecoins and any other digital assets used as a medium of exchange.” In addition, companies that hold a virtual currency wallet or operate virtual currency ATMs and that allow the transfer of such virtual or fiat currency to third parties are deemed to be involved in the transfer of funds under the Guidelines.

put into practice: In the recommendation, the department cited the recent “virtual currency explosion” as a reason to highlight some common activities that require a money-transmission license in Connecticut and provided guidance for those engaged in such activities or a money-transmission license in Connecticut To consider.

Persons involved in the virtual currency industry in Connecticut should pay particular attention to this recommendation. The Department acknowledges that many consumers “do not recognize or understand the regulatory landscape that applies to the use of money transmitters”. To that end, the department is reminding businesses of their licensing requirements and the hefty penalties for operating an unlicensed money-transmitting business, which can carry a $100,000 fine per violation and a felony charge. Businesses wishing to be licensed as a money transmitter in Connecticut should review application guidelines through the Nationwide Mortgage Licensing System and Registry (NMLS).

The content of this article is intended to provide a general guide to the topic. Professional advice should be sought in relation to your specific circumstances.

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