HB 1049: RELATING TO THE MONEY TRANSMITTERS MODERNIZATION ACT.

A BILL FOR AN ACT

RELATING TO THE MONEY TRANSMITTERS MODERNIZATION ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 489D-4, Hawaii Revised Statutes, is amended by amending the definition of "permissible investments" to read as follows:

     ""Permissible investments" means:

     (1)  Cash;

     (2)  Certificates of deposit or other debt obligations of a financial institution, either domestic or foreign;

     (3)  Bills of exchange or time drafts drawn on and accepted by a commercial bank, known as bankers' acceptances, that are eligible for purchase by member banks of the Federal Reserve System;

     (4)  Any investment bearing a rating of one of the three highest grades as defined by a nationally recognized organization that rates securities;

     (5)  Investment securities that are obligations of the United States, its agencies, or its instrumentalities, obligations that are guaranteed fully as to principal and interest by the United States, or any obligations of any state, municipality, or any political subdivision thereof;

     (6)  Shares in a money market mutual fund, interest-bearing bills, notes, or bonds, debentures or stock traded on any national securities exchange or on a national over-the-counter market, mutual funds primarily composed of these securities, or a fund composed of one or more permissible investments as set forth in paragraphs (1) to (5);

     (7)  Any demand borrowing agreement or agreements made with a corporation or a subsidiary of a corporation whose capital stock is listed on a national exchange;

     (8)  Receivables that are due to a licensee from its authorized delegates pursuant to a contract under section 489D-21, that are not past due or doubtful of collection; [or]

     (9)  Receivables that are due to the licensee from its payment processors for debit or credit card transactions authorized by the licensee's customers for money transmission services obtained from the licensee; or

    [(9)] (10)  Any other investments or security device approved by the commissioner."

     SECTION 2.  Section 489D-6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  A licensee shall maintain at all times a tangible net worth of the greater of:

     (1)  $100,000; or [three]

     (2)  The total of:

          (A)  Three per cent of [tangible] total assets for the first $100,000,000;

     [(2)] (B)  Two per cent of additional assets for $100,000,000 to $1,000,000,000; and

     [(3)] (C)  0.5 per cent of additional assets for over $1,000,000,000.

[Tangible net worth at all times shall be calculated in accordance with generally accepted accounting principles.]"

     SECTION 3.  Section 489D-10, Hawaii Revised Statutes, is amended to read as follows:

     "§489D-10  Application and license fees.  (a)  Each application shall be accompanied by[:

     (1)  A] a nonrefundable application fee in the amount of $5,000[; and

     (2)  An initial annual license fee of $5,000].

     (b)  [The license fee shall be refunded if the application is denied.] An initial license fee of $5,000 shall be assessed upon approval of the application."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act shall take effect on July 1, 3000.

Report Title:

DCCA; Division of Financial Institutions; Money Transmitters Modernization Act; Permissible Investments; Tangible Net Worth

Description:

Includes, for purposes of the Money Transmitters Modernization Act, receivables due from payment processors for certain debit or credit card transactions.  Clarifies the calculation of tangible net worth.  Changes the initial annual fee assessed upon the submission of the application to an initial fee assessed upon the approval of the application.  Effective 7/1/3000.  (HD1)

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

A BILL FOR AN ACT

RELATING TO THE MONEY TRANSMITTERS MODERNIZATION ACT.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

     SECTION 1.  Section 489D-4, Hawaii Revised Statutes, is amended by amending the definition of "permissible investments" to read as follows:

     ""Permissible investments" means:

     (1)  Cash;

     (2)  Certificates of deposit or other debt obligations of a financial institution, either domestic or foreign;

     (3)  Bills of exchange or time drafts drawn on and accepted by a commercial bank, known as bankers' acceptances, that are eligible for purchase by member banks of the Federal Reserve System;

     (4)  Any investment bearing a rating of one of the three highest grades as defined by a nationally recognized organization that rates securities;

     (5)  Investment securities that are obligations of the United States, its agencies, or its instrumentalities, obligations that are guaranteed fully as to principal and interest by the United States, or any obligations of any state, municipality, or any political subdivision thereof;

     (6)  Shares in a money market mutual fund, interest-bearing bills, notes, or bonds, debentures or stock traded on any national securities exchange or on a national over-the-counter market, mutual funds primarily composed of these securities, or a fund composed of one or more permissible investments as set forth in paragraphs (1) to (5);

     (7)  Any demand borrowing agreement or agreements made with a corporation or a subsidiary of a corporation whose capital stock is listed on a national exchange;

     (8)  Receivables that are due to a licensee from its authorized delegates pursuant to a contract under section 489D-21, that are not past due or doubtful of collection; [or]

     (9)  Receivables that are due to the licensee from its payment processors for debit or credit card transactions authorized by the licensee's customers for money transmission services obtained from the licensee; or

    [(9)] (10)  Any other investments or security device approved by the commissioner."

     SECTION 2.  Section 489D-6, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:

     "(a)  A licensee shall maintain at all times a tangible net worth of the greater of:

     (1)  $100,000 [or three per cent of tangible assets for the first $100,000,000;

     (2)  Two per cent of additional assets for $100,000,000 to $1,000,000,000; and

     (3)  0.5 per cent of additional assets for over $1,000,000,000.]; or

     (2)  The total of

          (A)  Three per cent of total assets for the first $100,000,000; and

          (B)  Two per cent of additional assets for $100,000,000 to $1,000,000,000; and

          (C)  0.5 per cent of additional assets for over $1,000,000,000.

     [Tangible net worth at all times shall be calculated in accordance with generally accepted accounting principles.]"

     SECTION 3.  Section 489D-10, Hawaii Revised Statutes, is amended to read as follows:

     "§489D-10  Application and license fees.  (a)  Each application shall be accompanied by[:

     (1)  A] a nonrefundable application fee in the amount of $5,000[; and

     (2)  An initial annual license fee of $5,000].

     (b)  [The license fee shall be refunded if the application is denied.] An initial license fee of $5,000 shall be assessed upon approval of the application."

     SECTION 4.  Statutory material to be repealed is bracketed and stricken.  New statutory material is underscored.

     SECTION 5.  This Act, upon its approval, shall take effect on July 1, 2025.

Report Title:

Department of Commerce and Consumer Affairs; Division of Financial Institutions; Money Transmitter; Permissible Investments

Description:

Aligns the State's Money Transmitters Modernization Act with the Model Money Transmitters Modernization Act, thereby enabling Hawaii to work within a network of states to license, supervise, and examine transglobal money transmission companies as a multistate system; adopts nationwide standards that provide clarity and consistency in calculating the tangible net worth of licensees; ensures that licensees have sufficient financial resources to conduct their business in a safe and sound manner; and promotes efficiency throughout the licensing process.

The summary description of legislation appearing on this page is for informational purposes only and is not legislation or evidence of legislative intent.

STAND. COM. REP. NO.  423

Honolulu, Hawaii

                , 2025

RE:   H.B. No. 1049

      H.D. 1

Honorable Nadine K. Nakamura

Speaker, House of Representatives

Thirty-Third State Legislature

Regular Session of 2025

State of Hawaii

Madame:

     Your Committee on Consumer Protection & Commerce, to which was referred H.B. No. 1049 entitled:

"A BILL FOR AN ACT RELATING TO THE MONEY TRANSMITTERS MODERNIZATION ACT,"

begs leave to report as follows:

     The purpose of this measure is to make various amendments to the Money Transmitters Modernization Act to be more consistent with the Model Money Transmitters Modernization Act by:

     (1)  Amending the definition of "permissible investments" to include certain receivables;

     (2)  Correcting the required tangible net worth that must be maintained by a licensee and repealing language that specified the manner in which tangible net worth is to be calculated; and

     (3)  Removing the refundable $5,000 initial annual license fee and instead allowing a fee to be assessed after an application has been approved.

     Your Committee received testimony in support of this measure from the Department of Commerce and Consumer Affairs.

     Your Committee finds that the existing calculation for tangible net worth under the State's Money Transmitters Modernization Act is based on an older model law and does not comport with national standards.  This measure will correct the existing calculation to ensure that licensees can operate and conduct their business in a safe and sound manner across the nation and in Hawaii.

     Your Committee further finds that existing law requires an applicant for licensure as a money transmitter to pay a $5,000 initial annual license fee with their application, which is then returned if the application is denied.  This process is administratively burdensome and frustrating to an applicant.  This measure therefore streamlines the process to only require the $5,000 fee once an applicant's application has been approved.

     Your Committee has amended this measure by:

     (1)  Changing the effective date to July 1, 3000, to encourage further discussion; and

     (2)  Making technical, nonsubstantive amendments for the purposes of clarity, consistency, and style.

     As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of H.B. No. 1049, as amended herein, and recommends that it pass Second Reading in the form attached hereto as H.B. No. 1049, H.D. 1, and be referred to your Committee on Finance.

Respectfully submitted on behalf of the members of the Committee on Consumer Protection & Commerce,