3 AAC 13, Money Services regulations (incl. 13.005 and 13.006 on virtual currency)
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Chapter 13 Money Services Article 1 Licensing 3 AAC 13.005. Virtual currency as money transmission. An activity or transaction that would be covered as money transmission remains covered as money transmission if that activity or transaction is in the form of virtual currency. 3 AAC 13.006. Money transmitters who only conduct virtual currency activity or transactions. Beginning January 1, 2023, a person who is engaging in activities or transactions for which a license is required under AS 06.55 with activity or transactions in the form of virtual currency, shall submit an application for licensure through the registry. The department considers a person to be engaging in activities for which a license is required under AS 06.55 if the person is conducting money transmission and that activity or transaction is in the form of virtual currency being transmitted to, from, or within the state. A limited licensing agreement, as related to virtual currency activity, entered into with the state shall be void and removed from the registry. 3 AAC 13.010. Money transmission and currency exchange license applications. (a) A person applying for a money transmission or currency exchange license under AS 06.55.101 or 06.55.201 must submit an application that complies with AS 06.55.102 or 06.55.202 to the department through the registry. In addition to the information required by AS 06.55.102 or 06.55.202, the application must contain (1) a full description of the screening process used by the applicant in selecting an authorized delegate, including a sample of any forms used, and the method used to screen for criminal history; (2) satisfactory proof that, if applying for a money transmission license, the person has obtained the security required by AS 06.55.104 and that the security is in force, including the amount and type of any excess coverage provided; and (3) personal history and experience in a form prescribed by the registry and authorization for the registry and the department to obtain (A) an independent credit report from a consumer reporting agency; and (B) information related to administrative, civil, or criminal findings by a governmental jurisdiction. (b) For the purposes of this section, the department may use the registry as an agent for requesting information from and distributing information to the United States Department of Justice, another governmental agency, or another source directed by the department. (c) As part of the investigation of an application for a license under this chapter, the department will, under (a)(3) of this section, including through the registry, obtain an independent credit report and other information related to administrative, civil, or criminal findings regarding the applicant and each control person of the applicant. 3 AAC 13.020. Approval to engage in services under AS 06.55 with a license from another state. (a) A person seeking approval to engage in money transmission or currency exchange activities under AS 06.55.103 without obtaining a license under AS 06.55.101 from the department must submit to the department (1) the items described in AS 06.55.103(a)(2) and 3 AAC 13.010(a); (2) satisfactory proof that the person holds a license in good standing to engage in money transmissions in at least one other state that has either adopted the Uniform Money Services Act or has money transmission laws that are substantially similar to those of this state; (3) satisfactory proof that the person has obtained the security required by AS 06.55.104 and that the security is in force, including the amount and type of any excess coverage provided; (4) a signed release of information that allows the department to obtain information from licensing agencies of other states necessary to verify the person's eligibility to engage in money transmission or currency exchange under AS 06.55.103; and (5) any other information that the department reasonably requires with respect to the applicant. (b) The department will deny approval to offer money transmission or currency exchange services under AS 06.55.103 if (1) the person fails to comply with 3 AAC 13.010(a), (a) of this section, or AS 06.55.103; (2) the person or any of the person's authorized delegates are the subject of a negative licensing action in any of the states in which the person is licensed; (3) the person is not licensed to provide money transmission services in at least one state that has enacted the Uniform Money Services Act or has money transmission laws that are substantially similar to those of this state; (4) the department finds that the person would not qualify for a money transmission license under AS 06.55.105(a)(2) or this chapter if the person applied for one; (5) the person has not met the security requirements of AS 06.55.104 or the net worth requirement of AS 06.55.107; (6) another state has suspended or revoked the person's money transmission license or currency exchange license within the last five years; or (7) the person knowingly makes a false statement or knowingly submits false information in order to obtain an approval to offer services under AS 06.55.103. (c) An application for approval under AS 06.55.103 must be made to the department through the registry. 3 AAC 13.030. Security requirement. (a) An applicant for a money transmission license or for approval under AS 06.55.103 must provide, and must maintain at all times, security that satisfies the requirements of AS 06.55.104. The security must secure the faithful performance of the obligations of the money transmission licensee, including its principals, responsible individuals, employees, and authorized delegates, with respect to money transmission. For purposes of this subsection, the obligations of the money transmission licensee are (1) its legal obligations to its customers; (2) its obligation to comply with AS 06.55, with this chapter, with any order issued under AS 06.55 or this chapter, and with any other applicable law; and (3) for a money transmission licensee that engages in currency exchange or advertises, solicits, or holds itself out as providing currency exchange under AS 06.55.201(a)(2) or (3), obligations listed in (1) and (2) of this subsection and related to currency exchange. (b) If a surety bond is used to satisfy AS 06.55.104, it must be in a form acceptable to the department, issued by a surety company authorized to engage in business in this state and acceptable to the department with an assignment in favor of the department. The surety bond must cover claims for the entire period that the person who is licensed under AS 06.55.105 or is offering services under AS 06.55.103 provides money transmission services in this state and for at least five years after the person ceases to provide those services. The department may require that the surety bond be kept in place for more than five years after the services are no longer provided in the state if the department determines that the surety bond will be needed to satisfy claims against the person after expiration of the five-year period. (c) Not later than 14 days after the money transmission licensee receives notice of an action against the money transmission licensee that could result in recovery against the bond, a money transmission licensee shall provide written or electronic notice to the department of the action. (d) The bond must provide that, not later than 14 days after the surety receives notice of an action against the bond or a final order of a court under (c) of this section, the surety shall provide written or electronic notice of the action or final order to the department. (e) The bond must provide that immediately upon a payment by the surety under the bond, the surety shall provide written or electronic notice of the payment to the department. (f) If a letter of credit is used to satisfy the security requirement of AS 06.55.104, it must be (1) in a form acceptable to the department; (2) clean and unconditional; (3) irrevocable for a period not less than five years after the person obtaining the letter of credit ceases to provide services in the state; and (4) issued or confirmed by, and payable and presentable at, a financial institution whose deposits are insured by the federal government. (g) The security remains in effect until canceled. Cancellation may occur only after at least 30 days' written or electronic notice to the department. Nothing in this subsection affects any liability incurred or accrued during the period covered by the security. Cancellation of a security used to satisfy the requirements of AS 06.55.104 constitutes grounds for suspension or revocation of a license issued under AS 06.55 or the department's approval to offer services in the state under AS 06.55.103. (h) If the department at any time reasonably determines that the required security is insecure, deficient in amount, or exhausted in whole or in part, the department will require the money transmission licensee to provide new or additional security to comply with AS 06.55.104 and this section. The department may increase the amount of security required, to a maximum of $500,000, if the financial condition of a money transmission licensee requires the increase. In determining whether to require new, additional, or increased security, the department may consider one or more of the following criteria: (1) significant reduction of net worth; (2) financial losses; (3) potential losses resulting from violations of AS 06.55 or this chapter; (4) the licensee filing for bankruptcy; (5) a judicial or administrative finding against the licensee in any state or foreign country based on the conduct of a money services business; (6) a licensee, executive officer, board director, person in control, responsible individual, principal, or authorized delegate being convicted of a felony; (7) any unsafe or unsound practice; (8) other events and circumstances that the department considers to impair the ability of the licensee to meet its obligations to its customers. 3 AAC 13.040. Money services license denial. (a) Subject to (b) and (c) of this section, the department will deny a money services license application if the department determines that (1) the applicant has not submitted all the information required by AS 06.55 or this chapter; (2) the application is for a money transmission license and the applicant has not met the security requirements of AS 06.55.104 or the net worth requirement of AS 06.55.107; (3) under AS 06.55.105(a)(2) or 06.55.203(a)(2), as applicable, permitting the applicant to engage in money transmission or currency exchange is not in the public interest, as demonstrated by findings that may include one or more of the following: (A) the applicant, an executive officer, a board director, a person in control, or an authorized delegate has been convicted of any felony involving fraud or dishonesty within the past 10 years; (B) the applicant, an executive officer, a board director, a person in control, or an authorized delegate has been convicted of a crime involving a financial transaction within the past 10 years; (C) the applicant, an executive officer, a board director, or a person in control has knowingly falsified any information supplied in connection with the application; (D) the applicant, or any proposed authorized delegate of the applicant, has had an adverse action taken against any license related to providing financial services by a jurisdiction within the United States within the past five years; (E) the applicant has allowed a business under its control to deteriorate to a condition of insolvency determined by the fact that its liabilities exceed its assets or it cannot meet its liabilities as they mature; (4) the applicant, or any authorized delegate of the applicant, fails to respond to a request for information from the department; (5) the applicant's proposed screening process for selecting authorized delegates will be ineffective in determining the fitness of proposed delegates; (6) the applicant has failed to register with the United States Department of Treasury when required to do so by 31 U.S.C. 5330; or (7) the applicant, an executive officer, a board director, or a person in control is listed on the specially designated nationals and blocked persons list prepared by the United States Department of Treasury. (b) Instead of denying an application under (a) of this section, the department may return the application or extend the application period if the department determines that the condition or circumstances that would likely lead to denial may be temporary and resolved satisfactorily within a reasonable period of time. The department may resume processing the application if the department determines that a favorable resolution of the disqualifying condition has occurred. (c) The department may extend the application period for processing a money services license application if due to staff shortages or encountered problems the department is unable to process the application and complete the investigation mandated by AS 06.55.105(a) or 06.55.203(a) within 120 days after the department receives the complete application. 3 AAC 13.050. Renewal of approval or money transmission license. (a) The department may deny renewal of a money transmission license, including an approval under AS 06.55.103, on the same grounds for which the license may be revoked or suspended under AS 06.55.601 or this chapter, including the failure to provide proof of adequate security. (b) If the money transmission licensee fails to make a timely request for renewal of the license, the department will send a notice of suspension to the licensee at the address most recently provided to the department by the licensee. (c) The department will extend the date for renewing a money transmission license if the licensee makes a written request for an extension not later than 30 days before the anniversary date of the issuance of the money transmission license and the department finds that the licensee has shown the requested extension of time is reasonably necessary in order to submit the documentation required in AS 06.55.106. (d) A request to renew a money transmission license must be made to the department through the registry. 3 AAC 13.060. Renewal of currency exchange license. (a) The department may deny renewal of a currency exchange license on the same grounds for which the license may be revoked or suspended under AS 06.55.601 or this chapter. (b) If the currency exchange licensee fails to make a timely request for renewal of the license, the department will send a notice of suspension to the licensee at the address most recently provided to the department by the licensee. (c) The department will extend the date for renewing a currency exchange license if the licensee makes a written request for an extension not later than 30 days before the anniversary date of the issuance of the currency exchange license and the department finds that the licensee has shown the requested extension of time is reasonably necessary in order to submit the documentation required in AS 06.55.204. (d) A request to renew a currency exchange license must be made to the department through the registry. 3 AAC 13.070. Abandoned applications. (a) An application is considered abandoned if the department does not receive any response from the applicant or licensee for 60 days after the department assigns a notice of deficiency to the record of the applicant or licensee in the registry. (b) An abandoned application is denied without prejudice and all fees are forfeited. Article 2 Business Duties and Restrictions 3 AAC 13.110. Conduct of business through authorized delegate. (a) A money transmission licensee may conduct business regulated under AS 06.55 through an authorized delegate designated by the money transmission licensee in accordance with AS 06.55 and this chapter. (b) Before a money transmission licensee is authorized to conduct business through an authorized delegate or allows a person to act as the money transmission licensee's authorized delegate, the money transmission licensee must (1) adopt, and update as necessary, written policies and procedures sufficient to ensure that the authorized delegate complies with AS 06.55 and this chapter; and (2) enter into a written contract that complies with AS 06.55.301. (c) The written contract required by (b)(2) of this section must be signed by the money transmission licensee and the authorized delegate and, at a minimum, must (1) designate the person signing the contract as the money transmission licensee's authorized delegate with the authority to conduct business regulated under AS 06.55 on behalf of the money transmission licensee; (2) require the authorized delegate to certify that the delegate is familiar with and agrees to operate in full compliance with AS 06.55 and this chapter, including the requirements of AS 06.55.301(b) for remission of money, the trust and other requirements of AS 06.55.301(d), and the record maintenance requirements of AS 06.55.405 and this chapter; (3) acknowledge that the authorized delegate consents to examination or investigation by the department; (4) state that the money transmission licensee is subject to regulation by the department and that, as part of that regulation, the department may suspend or revoke an authorized delegate designation or require the money transmission licensee to terminate an authorized delegate designation; and (5) acknowledge receipt of the written policies and procedures required under AS 06.55.301(a). (d) A money transmission licensee must maintain on file with the department a current list of its authorized delegates operating in this state that includes the name and business address of each delegate. The money transmission licensee must update the list within 15 business days after any change in the list. 3 AAC 13.120. Request for approval of change of control. (a) A request for approval of change of control required by AS 06.55.404 must include a comprehensive description of the proposed change and be submitted to the department through the registry. The description must set out (1) the identity of each person acquiring control under the proposed change; (2) the ownership interest and managerial authority of each person in control under the proposed change; and (3) for each new person in control under the proposed change, information about personal history and experience as described in 3 AAC 13.010(a)(3), including employment history for the immediate previous 10 years. (b) Any request under AS 06.55.404(e) for an exemption from any of the requirements of AS 06.55.404(a)(2) and (3) must be received by the department at least 30 days before the proposed change of control, and must set out the grounds on which the request relies. Article 3 Examinations Reports and Records 3 AAC 13.210. Authority to conduct examinations and investigations. (a) When the department conducts an on-site investigation under AS 06.55.105(a), 06.55.103(b), or 06.55.203(a) or an examination under AS 06.55.401, (1) the applicant, money services licensee, or authorized delegate shall provide the department free access to the place of business, books, accounts, safes, and vaults of that person to examine and make copies as necessary; (2) the department may retain accountants, professionals, or specialists as examiners, auditors, or investigators, to conduct or assist in the conduct of an investigation or examination; and (3) the applicant, money services licensee, or authorized delegate shall pay the department examination and investigation fees in accordance with AS 06.01.010 and any expenses required to be paid under 3 AAC 13.850 for each representative of the department who is reasonably necessary to conduct the investigation or examination. (b) Instead of an on-site investigation under AS 06.55.105(a) or 06.55.203(a) or an examination under AS 06.55.401, the department will accept the audit of a licensed certified public accountant, if (1) the applicant, money services licensee, or authorized delegate pays the costs of the audit; (2) the audit is equal in scope to the investigation or examination required by the department; (3) the licensee provides written or electronic notice through the registry that the licensee is having the audit prepared instead of the investigation or examination required by the department; and (4) the department has given prior written or electronic approval for the person to conduct the audit. 3 AAC 13.220. Records. In addition to the records required to be maintained under AS 06.55.405(a), a money transmission licensee shall maintain a record of money transmittals in accordance with 31 C.F.R. 103.33(f). 3 AAC 13.230. Access to confidential information. (a) Before disclosing confidential information under AS 06.55.407(b), the department will send written notice to the applicant, money services licensee, or authorized delegate with a confidentiality interest in the information of the department's intent to release the information. The department will not release the information for at least 14 days following the date of the notice unless the delay would defeat the interests of justice or endanger the public. The applicant, money services licensee, or authorized delegate may request a further delay of release, and the department will grant that request if the person establishes that additional time is required to obtain a judicial order preventing the release, unless granting the extension would defeat the interests of justice or an earlier release is reasonably necessary to protect the public. (b) The department will not release information made confidential by AS 06.55.407(a) to a representative of a state or federal agency under AS 06.55.407(b) unless an employee of the agency (1) executes and delivers to the department a written certification that the agency will maintain the confidentiality of the information received from the department; and (2) has the authority to make that certification on behalf of the state or federal agency. Article 4 Miscellaneous Provisions 3 AAC 13.810. Additional permissible investments. In addition to the assets and securities listed in AS 06.55.502, a permissible investment for purposes of AS 06.55 includes (1) commercial paper within the top three rating categories of a nationally recognized rating service; (2) interest-bearing bills, notes, or bonds that bear a rating within the top three rating categories of a nationally recognized rating service; and (3) virtual currency for outstanding obligations denominated in the same virtual currency. 3 AAC 13.820. Required office notice. The sign required by AS 06.55.810 must utilize a large enough font to be easily read by persons visiting the location where it is displayed. 3 AAC 13.830. Termination of operations. A money services licensee shall provide electronic notice to the department through the registry in writing of its decision to cease operations as a money services licensee or the cessation of operations of any of its authorized delegates not later than seven days after that decision or cessation. 3 AAC 13.840. Fees. (a) The following nonrefundable fees are established for services provided under AS 06.55 or this chapter and shall be paid to the department through the registry: (1) an application fee for a money transmission license under AS 06.55.102, approval under AS 06.55.103, or currency exchange license under AS 06.55.202, $2,000, plus $200 for each additional location; (2) an annual renewal fee for a money transmission license, including an approval under AS 06.55.103, $1000; (3) a biennial renewal fee for a currency exchange license under AS 06.55.204, $2,000; the fee shall be paid through the registry in two annual installments of $1,000 each; (4) a late fee for each day after suspension that the department does not receive the renewal report or the renewal fee under AS 06.55.106(c)(2), $25; (5) a request for approval of a change in control of a money services licensee under AS 06.55.404(a), $750; (6) a request for a change in mailing address, $50; (7) a request for a change in name, $100. (b) The following fees, paid to the department through the registry, are refundable if the application is denied, are nonrefundable if the application is withdrawn or abandoned, and are established for services provided under AS 06.55 or this chapter: (1) license fee for a license under AS 06.55.102 or 06.55.202, $1000 for the initial location, $200 for each additional physical location, and $1,000 for each additional Internet-based location where the applicant or its authorized delegate will provide services; (2) a fee for the first year of operating with the approval given under AS 06.55.103, $1,000 for the initial location, $200 for each additional physical location, and $1,000 for each additional Internet-based location where the applicant or its authorized delegate will provide services. (c) Nothing in this section relieves an applicant from the obligation to pay processing or other fees that the registry sets for services that the registry provides. 3 AAC 13.850. Reimbursement of expenses. When the department conducts an investigation under AS 06.55.103(b), 06.55.105(a), or 06.55.203(a) or an examination under AS 06.55.401, the applicant, money services licensee, or authorized delegate shall pay the actual expenses of required travel, including transportation, lodging, and per diem expense not to exceed the per diem allowance for employees of the state under AS 39.20.110. Article 5 General Provisions 3 AAC 13.910. Filing or submission date. (a) An application for department action under AS 06.55 and this chapter will be considered filed or submitted at the time the filing or submission is received in electronic form by the department through the registry. (b) Repealed 11/22/2017. 3 AAC 13.920. Name and address changes. (a) A money services licensee shall maintain a current, valid, mailing address and electronic mail address on file with the department through the registry at all times. An applicant or licensee shall monitor its record in the registry and its electronic mail address filed with the registry for communications from the department and information regarding its license or registration. The department will use the latest mailing address submitted to the registry for official communications, notifications, and service of legal process. (b) A person required to be licensed under AS 06.55 shall file an application to amend its record with the department through the registry 30 days before a change of a mailing address and immediately upon change of an electronic mail address. A money services licensee shall submit the required fee to the department through the registry with an application to amend its record because of a change of a mailing address. A change of the mailing address of a licensee in the registry is effective when approved by the department in the registry. (c) If a money services licensee seeks to change its name, the licensee must submit an application to amend its Form MU1 and the required fee to the department through the registry. Not later than seven days after filing the application to amend the Form MU1 for a change of name, a licensee must submit directly to the department (1) organizational documents filed with the domestic state under AS 06.55.102 with the changed name and, if the licensee is organized outside this state, documentation of authority to conduct business in this state with the changed name; and (2) a copy of the name registration form with the changed name, stamped "received" by the regulatory agency overseeing corporations. (d) Repealed 11/22/2017. (e) A name change takes effect in the registry upon the approval of the department. 3 AAC 13.990. Definitions. In AS 06.55 and this chapter, (1) "business day" means a day other than Saturday, Sunday, or a state or federal holiday; (2) "department" means the Department of Commerce, Community, and Economic Development; (3) "Form MUI" means the uniform money services license application developed and used by the registry; (4) "monetary value" has the meaning of AS 06.55.990(10) and includes virtual currency; (5) "registry" means the Nationwide Multistate Licensing System and Registry; in this paragraph, "Nationwide Multistate Licensing System and Registry" means a licensing system developed by the Conference of State Bank Supervisors and the American Association of Residential Registry, LLC, or a successor or an affiliated entity, for the licensing and registration of persons in the mortgage and other financial services industries; (6) "virtual currency" (A) means a digital representation of value that is used as a medium of exchange, unit of account, or store of value; and is not money, whether or not denominated in money; (B) does not include (i) a transaction in which a merchant grants, as part of an affinity or rewards program, value that cannot be taken from or exchanged with the merchant, bank credit, or virtual currency; or (ii) a digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform.