Money Lending is a heavily regulated industry, and South Dakota has specific requirements for anyone engaging in this practice. This guide provides a comprehensive overview of money lending regulations in South Dakota, including licensing, exemptions, renewals, required forms, and relevant laws. Understanding these regulations is crucial for both lenders and borrowers to ensure compliance and fair practices.
Who Needs a Money Lending License in South Dakota?
South Dakota considers any individual or entity engaged in the business of lending money to be a Money Lender. This includes originating, holding, purchasing, or acquiring retail installment contracts. This broad definition encompasses a variety of lending activities, making it essential to understand the specific requirements. According to South Dakota Codified Law (SDCL) 54-4, a Money Lender license is mandatory for operating legally within the state. Even payday and title lenders fall under this umbrella and must obtain the same license under SDCL 54-4..
Navigating the Application Process
The application process for a Money Lender License is facilitated through the Nationwide Multistate Licensing System & Registry (NMLS). The NMLS platform provides a streamlined approach to licensing, offering resources such as detailed instructions, application guides, state-specific requirements, tutorials, and general information. Prospective lenders can find comprehensive support and guidance throughout the application process on the NMLS website. This centralized system simplifies licensing and promotes compliance across multiple states.
Key Regulations and Requirements
South Dakota has implemented several key regulations to govern money lending activities:
Initiated Measure 21 (IM 21)
IM 21, approved by voters in 2016, significantly impacted the money lending landscape in South Dakota. This measure introduced crucial changes to lending practices and regulations. A comprehensive summary of IM 21 and associated guidance from the Division of Banking is available for detailed review. Understanding the implications of IM 21 is paramount for all money lenders operating in South Dakota.
Licensure Requirements, Exemptions, and Renewals
Specific requirements for licensure, including eligibility criteria and necessary documentation, are outlined in detail on the Requirements for Licensure page. Certain exemptions from licensing may apply to specific entities or activities. These exemptions are clearly defined on the Exemptions page. Licenses must be renewed periodically to maintain legal operation. The Renewal of License page provides information on renewal procedures and deadlines.
Important Forms and Reporting
Several crucial forms are required for money lending operations in South Dakota:
- Exempt Lender Annual Reporting Form: /banking/money_lenders/documents/annual_reporting_form.pdf
- Non-Profit Money Lender Registration Application Form: https://sdeforms.na2.documents.adobe.com/public/esignWidget?wid=CBFCIBAA3AAABLblqZhBoHmr-Dd3NVgxCJ_VjU-__0cnCf7KJn4BaLHuoOqFm3Ip77BT3j4BsRvxLOVeQUCI*
- Non-Profit Money Lender Renewal Registration Application: https://sdeforms.na2.documents.adobe.com/public/esignWidget?wid=CBFCIBAA3AAABLblqZhC-LZ24NjxfIoH_Pd-WND_yW_3aU6F1nnyxZDLwsxarYsbiNdPS8rs8Hkdrl43wnfA* (Renewal period: November 1st – December 31st)
Quarterly Reporting
Lenders must also submit quarterly reports of their money lending activity. The Division of Banking may request additional account-level data using the Uniform Loan Transaction Request (ULTR). The Uniform Loan Transaction Request (Microsoft Excel) provides a standardized format for submitting this information. The Money Lender Quarterly Report Schedule outlines specific due dates for these reports.
Relevant Laws and Rules
Staying informed about relevant laws and rules is crucial for compliance. Key resources include:
- South Dakota Codified Law (SDCL) 54-4: https://sdlegislature.gov/statutes/DisplayStatute.aspx?Type=Statute&Statute=54-4
- Administrative Rules of South Dakota (ARSD) Chapter 20:07:20: https://sdlegislature.gov/rules/DisplayRule.aspx?Rule=20:07:20
- U.S. Department of Defense Rule on Military Lending: http://dlr.sd.gov/banking/money_lenders/documents/dod_regulation_on_military_lending.pdf
- Consumer Finance Protection Bureau: https://www.consumerfinance.gov/rules-policy/final-rules/code-federal-regulations/
This comprehensive guide provides a foundational understanding of money lending regulations in South Dakota. Consulting with legal professionals for specific guidance is always recommended. Staying informed and adhering to these regulations is essential for responsible and compliant money lending practices.
