Information and FAQs for Senate Bill 939 (2020) - Financial Regulation

New Licensing and Registration Requirements for Providers of Check Cashing Services in Maryland

During its 2020 session, the Maryland General Assembly passed Senate Bill 939, which was enacted by operation of law (see 444 Md. Laws 2020). The substantive portions of the new law impacting those providing check casher servicers take effect October 1, 2020, and change the requirements for providing check cashing services in the State of Maryland (“State”).

Under Maryland law, “provide check cashing services” means to accept or cash, for compensation, a payment instrument regardless of the date of the payment instrument (this definition is not changing). Maryland laws governing check cashing services, including the changes in the law described herein, do not apply to transactions in which a customer presents a payment instrument for the exact amount of a purchase, or to transactions involving foreign currency exchange services or the cashing of a payment instrument drawn on a financial institution other than a federal, State, or other state chartered financial institution. They also do not apply to federal and Maryland chartered financial institutions, along with certain of their subsidiaries and affiliates, as well as certain other state charted financial institutions (and certain of their subsidiaries and affiliates) as they are exempt from these requirements.

Under the new law, a person may not provide check cashing services in Maryland unless the person is either licensed by, or registered with, the Commissioner of Financial Regulation (“the Commissioner”). Note that the term, “person,” as used in the law, includes a natural person or any business organization.

The frequently-asked questions (FAQs) below provide important information about the new check cashing requirements for all who intend to provide check cashing services after the effective date. These FAQs are of particular importance to those currently unlicensed providers of check cashing services who intend to continue providing check cashing services after the effective date.

Frequently Asked Questions

Q: I have been providing check cashing services in Maryland, but have not needed a license. Under the new law, may I continue to provide check cashing services without registering or obtaining a license?

A: No. Under the new law, unless you are exempt, you may not provide check cashing services in Maryland unless you are licensed by, or registered with, the Commissioner.

Q: Who is exempt from licensure and registration?

A: The following are exempt from licensure and registration:

Any bank, trust company, savings bank, savings and loan association, or credit union incorporated or chartered under the laws of Maryland or the United States that maintains its principal office in Maryland;
Any out-of-state bank having a branch in Maryland that accepts deposits;
Any institution incorporated under federal law as a savings association or savings bank that does not maintain its principal office in Maryland but has a branch that accepts deposits in Maryland;
A subsidiary or affiliate of an institution described above, provided the subsidiary or affiliate provides certain information to the Commissioner prior to providing check cashing services (see Md. Code Ann., Financial Institutions §12-1013(b)).

Q: What is the difference between licensure and registration?

A: Licensure is an authorization to conduct business based on a set of baseline qualifications, and requires the approval of the Commissioner before you may engage in check cashing services within the State. You must apply for a license and meet those qualifications established by law. You must satisfy the Commissioner that your business will promote the convenience and advantage of the community in which your place of business is located, that you have sufficient experience, character, financial responsibility, and general fitness to command the confidence of the public and warrant the belief that the business will be operated lawfully, honestly, fairly, and efficiently, and that you have never committed any act that would be a ground for suspension or revocation of a license under the law; you must provide fingerprints and consent to a criminal background check; and you must pay a license fee.
A registration, on the other hand, does not impose qualifications or require approval before you may engage in check cashing services; rather, it is essentially the submission of certain required information to notify the Commissioner that you are conducting business within the State.

Q: Where do I get an application for license, or a registration form?

A: Licensure is currently managed through the Nationwide Multistate Licensing System (NMLS); registration will begin November 1, 2020, and will also be managed through NMLS. NMLS is a secure, online system used by all states for the licensure and registration of various financial services businesses. Instructional materials relating to the use of NMLS will be available prior to November 1, 2020. While registration will not be available until November 1, 2020, you may learn more about NMLS by visiting the NMLS Resource Center online.

Q: How do I know whether I need to register or to obtain a license?

A: You may register if ALL of the following conditions are met:

You charge a fee of no more than 1.5% of the amount of the instrument or $1, whichever is greater, to cash a payment instrument;
Your check cashing services are incidental to retail sales of goods or services;
You are registered as a money services business with the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN);
You cash payment instruments in the interior of your business location, and do not utilize a drive up or walk up window or a mobile unit;
You have conspicuously posted a notice, in 48-point or larger type, in the business location where instruments are cashed, providing the following information:

The fees charged for check cashing services; and
How to contact the Commissioner with comments or complaints; and

You provide to each check cashing services customer a receipt containing:

The date of the transaction;
The face value of the instrument cashed;
The fee charged; and
The net dollar amount paid to the customer.

If you do not meet ALL of these conditions, you must obtain a check cashing services license.

Q: I currently hold a check cashing services license. Can I surrender that license and conduct business under a registration?

A: Possibly. You should review the requirements of the new law to determine whether you need to remain licensed or whether you can register instead.

Q: How do I register with FinCEN as a money services business?

A: FinCEN is a federal entity, and is not associated with the Commissioner. Information on registration may be found on the FinCEN Money Services Business Registration page. The Commissioner’s staff cannot provide information on FinCEN registration and cannot assist in that process.

Q: If I do not cash more than $1,000 of checks for any one person in any one day, I’m not required to register with FinCEN. If I don’t register with FinCEN for this reason, am I still permitted to register with the Commissioner, rather than obtaining a license?

A: No. You may not register with the Commissioner if you are not registered with FinCEN. You may not engage in check cashing in Maryland unless you either register with FinCEN (and then register with the Commissioner) or obtain a check cashing services license.

Q: I qualify to provide check cashing services under a registration. I provide services at more than one location in Maryland. Must I register each location separately?

A: No. As long as each location meets all of the requirements for registration, the law requires only one registration for your business. As part of the registration process, you must provide a list of all addresses at which you provide check cashing services.

Q: I will need a check cashing services license under the new law. I provide services at more than one location. Do I need a license for each location?

A: Yes. If licensure is required, a separate license is required for each location or mobile unit providing check cashing services.

Q: I provide check cashing services at branch locations, but not at my principal executive office. Given that my branch locations must be licensed under the new law, must I also license my principal executive office?

A: No. Licensure of your principal executive office is required only if you provide check cashing services at that location. However, NMLS requires a record of your principal executive office; information on the business itself will be included in that record, and your branch licenses will be associated with that record. You must therefore complete an NMLS “Licensed Check Casher--Principal Executive Office Designation (No Activity)" for your principal executive office.

Q: Under the new law, my branch locations will need to be licensed. How do I know whether my main office needs to be licensed, designated, or registered?

A: If your branches must be licensed, your principal executive office must also be licensed if you provide check cashing services at that location; if you do not provide check cashing services at your principal executive office, that location must be designated. If your branches must be licensed, your principal executive office cannot be registered.

Q: I provide check cashing services at branch locations, which are already licensed, but not at my principal executive office. My principal executive office is currently registered in NMLS. Is that the same as the new registration?

A: No. The “registration” you’ve had previously will now be known in NMLS as "Licensed Check Casher--Principal Executive Office Designation (No Activity)." This was changed in order to avoid confusion with the new registration. You will maintain the designation just as you did when it was called a registration; that record remains in existence--only the NMLS name has changed.

Q: I already have a different license through NMLS. Will I need to create a separate NMLS account for my business in order to obtain a Maryland check cashing services license or to register as a check cashing services provider?

A: No. You need only one NMLS company account, no matter how many different licenses or registrations are managed through NMLS. You simply need to request the license or registration you now need, providing any information that is required for that license or registration (NOTE: certain information already in your NMLS record will be used as part of the application for a new license or registration; there is no need to reenter that information for each new license/branch license/registration). Similarly, if you are licensing branch locations, you need only a single NMLS record for each branch, regardless of how many licenses for that branch are managed in NMLS.

Q: What is the cost of a Maryland check cashing services license?

A: For initial licensure, there is a $500 license fee and a $100 investigation fee; thereafter, there is a $500 fee for annual renewal.

Q: Is there a fee for registration?

A: There is no registration fee. However, at each annual renewal, registrants must pay a processing fee to NMLS. Currently, that fee is $100.

Q: How often must licenses and registrations be renewed?

A: Licenses and registrations in NMLS expire December 31 each year, and must be renewed annually. Renewal requests must be submitted between November 1 and December 31, and take effect January 1.
NOTE: New licenses or registrations issued between November 1 and December 31 are valid through December 31 of the following year. Thus, if you obtain your initial registration between November 1 and December 31, 2020, your registration will be valid through December 31, 2021.