State regulators expand multistate licensing process for fintechs
WASHINGTON — Nearly half the state regulators across the nation have agreed to a more uniform standard for processing licenses for money transmitters and money-services businesses.
The effort, which started in February 2018 with just seven states, was partly meant to ease the burdensome state-by-state process for money service businesses, including fintech firms, trying to expand nationwide. The Conference of State Bank Supervisors said Monday that 23 states have now joined the agreement, with a goal of having all states on board by next year as part of a larger effort to streamline nonbank supervision, called Vision 2020.
“The collaboration among these 23 states has significantly streamlined the licensing process for participating companies,” Charlie Clark, director of the Washington State Department of Financial Institutions, said in a press release. “We look forward to more states joining,”
Washington was among the initial states to start the pilot early last year, which included Georgia, Texas, Illinois, Kansas, Massachusetts and Tennessee. Other states to join in the past year include California, Connecticut, Iowa, Louisiana, Mississippi and Vermont.
The pilot licensing process is broken into two phases for applicants. The first phase combines the most common initial licensing requirements, such as background checks and anti-money- laundering requirements, into one process so the applicant does not need to refile for each state. The lead state then communicates that review, or “certification,” with the other participating states for approval.
The second phase is when each state reviews any remaining, state-specific requirements before making a decision on a license. So far, 15 companies are in the second pilot and have received 72 licenses as of June 20, the bank supervisor group said.
“This is a new era in the state system where we are not only coordinating but actively relying on our fellow regulators to safely bring new financial service products to our citizens,” Clark said.