Regulatory Alerts2023-01-19
Third-Party Service Provider MSB Licensing Exemption 04-19-2021
The New Mexico Financial Institutions Division issued a ruling exempting third-party service providers from licensing under the state's Uniform Money Services Act. The Acting Director determined that while these entities technically engage in money services, federal regulations exclude them from the definition of money transmitter when acting as payment processors. This exemption aligns state requirements with federal law to avoid unnecessary regulatory burden on entities facilitating payments for goods or services.
Financial Institutions Division | 2550 Cerrillos Road | P.O. Box 25101 Santa Fe, NM 87504 | (505) 476-4885 | rld.state.nm.us STATE OF NEW MEXICO MICHELLE LUJAN GRISHAM, GOVERNOR Linda M. Trujillo, Superintendent Rebecca S. Moore, Acting Director April 19, 2021 The Acting Director of FID has determined that third-party service providersi (TSPs) are not required to be licensed under the Uniform Money Service Act (MSA), NMSA 1978, Sections 58- 32-1 – 1004 (2017 as amended through 2019). FID has carefully reviewed FinCEN Ruling 2003- 8 – Definition of Money Transmitter, New Mexico law, and Federal law to come to its conclusion. FID determined that TSPs are engaging in “money services” as defined by New Mexico law. § 58-32-102(P) (“[M]oney services” means money transmission, check cashing or currency exchange). In addition, according to MSA, money transmission includes receiving money for transmission. Id. (Q). Further, FID determined that TSPs do not meet any of the exclusionary provisions in the MSA. See generally, NMSA 1978, § 58-32-103 (2017). Therefore, based on the strict reading of the MSA, TSPs would be required to obtain a license in order to “engage in the business of money transmission […]”. § 58-32-201 (2017). However, FID’s review of Federal law provided additional context, which produced a more reasonable resolution to TSPs’ exemption. Like New Mexico’s MSA, the Code of Federal Regulations defines a “money transmitter” broadly. The regulations define “money transmitter” as, “[a] person that provides money transmission services” 31 C.F.R. § 1010.100(ff)(5)(i)(A). However, the definition of a “money transmitter” specifically excludes any person who, “[a]cts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller.” Therefore, according to Federal law, TSPs are not money transmitters. FID has determined the Federal law’s exclusion of TSPs is a more balanced approach than the strict application of MSA. Therefore, pursuant to Section 58-32-103(M), the Acting Director rules that requiring TSPs to be licensed is not necessary “to achieve the purposes of the Uniform Money Services Act.” Rebecca S. Moore Acting Director i Definition of third-party service provider for the purposes of this guidance: any person who “[a]cts as a payment processor to facilitate the purchase of, or payment of a bill for, a good or service through a clearance and settlement system by agreement with the creditor or seller.”
REGULATORY GUIDANCE