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South Carolina is the Latest State to Implement Money Transmitter Licensing Laws and Regulations

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.

Copyright 2020 K & L GatesNational Law Review, Volume VIII, Number 215


About this Author

Eric A. Love, KL Gates, Capital Markets Compliance Lawyer, Treasury Legislation Attorney
Law Clerk

Eric A. Love is a member of K&L Gates’ Public Policy and Law Practice and is based in the Washington, D.C. office. Mr. Love focuses on federal legislative and regulatory policy issues related to financial services and capital markets, with a particular emphasis on securities and corporate governance. 

Prior to joining K&L Gates, Mr. Love served as a special assistant in the Office of Legislative Affairs at the U.S. Department of the Treasury. In this capacity, he worked to help advance Treasury’s legislative agenda on a broad portfolio...

Judith E. Rinearson, KL Gates, federal consumer protection lawyer, anti money laundering attorney

Judith Rinearson is a partner in the firm’s New York and London offices. Ms. Rinearson concentrates her practice in prepaid and emerging payment systems, electronic payments, crypto/virtual currencies, reward programs, ACH and check processing. She has more than 25 years of experience in the financial services industry, including 18 years at American Express’s General Counsel’s Office. Her expertise focuses particularly in the areas of emerging payments and compliance with state and federal consumer protection laws, anti-money laundering laws, state money transmitter licensing laws and abandoned property laws. 

Fully experienced in both the “issuing” and “acquiring” side of the payments business, Ms. Rinearson has drafted and negotiated complex agreements with strategic co-branded partners, processors and Independent Sales Organizations (ISOs), ATM networks, major retailers and service providers, prepaid card issuers and program managers, international remittance companies, virtual and mobile payment providers, as well as the Terms and Conditions and disclosures that usually accompany such products. She has hands-on experience in all legal aspects of launching and managing a range of payment products, from prepaid cards of all kinds, to Bitcoin exchanges and miners, wire transfer services, ACH, electronic banking, money orders and credit cards. Her practice includes advising on fraud avoidance and compliance with federal banking and anti-money laundering laws, as well as state money transmitter licensing laws, consumer protection laws and abandoned property laws. On the international level, Ms. Rinearson has supervised the launch of a range of payment and foreign currency products in Europe, Asia and Latin America; met with international regulators; and spoken on the issue of payment regulation.