The South Carolina Attorney General’s office plays a crucial role in overseeing Money Services businesses within the state, as mandated by the South Carolina Anti-Money Laundering Act. This responsibility underscores the state’s commitment to regulating and monitoring financial transactions to prevent illicit activities. A significant update in this regulatory landscape is the recent adoption of the Money Transmission Modernization Act (MTMA), signaling a forward-thinking approach to money services regulation.
Embracing Modernization: South Carolina Adopts the Money Transmission Modernization Act
In a move to modernize and streamline the regulatory framework for money transmitters, South Carolina enacted 2024 Act No. 218. Signed into law on July 2, 2024, this act substantially adopts the Money Transmission Modernization Act (MTMA). The MTMA itself is a model law developed by industry experts and state regulators in 2021, designed to create consistent licensing and regulatory standards across different states. This adoption promotes a more unified and efficient system for supervising money transmission services on a multi-state level.
This legislative update brings key changes to several critical aspects of money services regulation in South Carolina. These include adjustments to:
- Net Worth Requirements: The specific financial thresholds for businesses offering money services are updated.
- Surety Bond Requirements: Regulations around surety bonds, which act as a financial guarantee, have been revised.
- Permissible Investments: The types of investments that money service businesses are allowed to hold are subject to new guidelines.
Beyond these financial adjustments, the Act also refines the definition of “control” in a regulatory context. It introduces a “passive investor exemption,” offering clarity on when investor involvement triggers regulatory oversight. Furthermore, the legislation establishes several new exemptions from licensing requirements, potentially reducing the regulatory burden for certain types of money services. It’s also important to note an adjustment to the cost of doing business: the license fee for money transmitter applications submitted after July 2, 2024, is set at $1,600.
A transitional provision within Section 35-11-905 of the new law acknowledges the needs of existing licensees. For businesses already licensed as of July 2, 2024, any conflicting provisions or newly established requirements will not take effect until January 1, 2025. This provides a grace period for current operators to adapt to the updated regulations. However, it’s crucial for both current and prospective applicants for money services licenses to be aware that all provisions of the new Act are applicable to new licenses issued after July 2, 2024.
For any inquiries or concerns regarding these changes, the Money Services Division encourages direct communication via email at [email protected]. Further clarifications and detailed guidance are anticipated through Frequently Asked Questions (FAQs) to be published on the Attorney General’s website under the Money Services section.
Understanding License Types for Money Services
The Money Services Division offers specific licenses tailored to different types of financial operations. The two primary license types are:
Money Transmitter License
This license is essential for any entity involved in the business of money transmission. This includes companies or individuals who advertise, solicit, or present themselves as providers of money transmission services. Money transmission is broadly defined as the act of selling or issuing payment instruments or stored value, or receiving money or monetary value for the purpose of transmission. It’s important to note that services solely focused on delivery, online platforms, telecommunications, or network access are excluded from this definition when offered in isolation. A Money Transmitter License in South Carolina authorizes a range of activities within the money services sector, including:
- Electronic Money Transmitting: Facilitating the transfer of funds electronically.
- Issuing and/or Selling Traveler’s Checks: Providing and selling traveler’s checks as a payment method.
- Issuing and/or Selling Money Orders: Offering money orders for secure payments.
- Bill Paying Services: Processing bill payments on behalf of customers.
- Issuing and/or Selling Drafts: Providing drafts as a form of payment instrument.
- Issuing and/or Selling Prepaid Access/Stored Value: Dealing with prepaid cards and stored value products.
- Foreign Currency Dealing or Exchanging: Engaging in the exchange of foreign currencies.
- Other Money Services: Encompassing other related financial services activities.
Statutory References: S.C. Code Ann. § 35-11-200(A)(1) – (3) and § 35-11-105(12).
Currency Exchange License
A Currency Exchange License is required for businesses that engage in currency exchange. This applies to those who advertise, solicit, or represent themselves as offering currency exchange services, particularly when the revenue from these services equals or exceeds five percent of their total revenue. Currency exchange is specifically defined as receiving revenue from exchanging the money of one government for the money of another. This license specifically authorizes foreign currency dealing or exchanging within the framework of money services.
Statutory References: S. C. Code Ann. § 35-11-300(A)(1) – (4) and § 35-11-105(6).
Essential Information for Money Services Licensees
For all entities seeking or holding a money services license in South Carolina, the application process is managed through the Nationwide Multistate Licensing & Registry System (NMLS). NMLS is a secure, online platform developed by state regulators to enhance the efficiency of state licensing processes and improve the oversight of state-regulated industries. Using NMLS, companies can maintain a single, unified record to apply for, manage, renew, and potentially surrender licenses across multiple states. The system also facilitates the submission of required financial statements, credit reports, and criminal background checks for Money Transmission and Currency Exchange licenses, streamlining the compliance process.
The NMLS Resource Center is a valuable tool for navigating the system. It offers detailed, step-by-step guidance on accessing NMLS, tutorials for completing necessary forms, information on state-specific requirements and transition plans, system alerts, fee schedules, and comprehensive background information about the platform. Furthermore, the News & Events section on the NMLS website and homepage provides information on available training opportunities to help users effectively utilize the system.
For direct support in using NMLS, the NMLS Call Center is available at 1-855-665-7123. The call center assists users with navigating the system, performing essential functions, submitting documentation, and utilizing the resources available through the NMLS Resource Center.
For licensees seeking formal interpretations of the Act, its regulations, or any related orders, requests must be submitted in writing as detailed in S.C. Code Regs. §13-2801. This ensures a formal and documented process for legal clarifications within the realm of money services regulations.
Contacting the Money Services Division
For direct communication with the Money Services Division:
Email: [email protected]
Phone: 803-734-1221
Mailing Address:
Office of the Attorney General
Attention: Money Services Division
PO Box 11549
Columbia, SC 29211-1549
Helpful Resources for Money Services Businesses
- SC Uniform Money Services Act – Effective 7/2/2024: Access the full text of the updated Money Services Act.
- SC Anti-Money Laundering Act – Effective until 7/1/2024: Review the previous Anti-Money Laundering Act, effective before the MTMA adoption.
- SC Code of Regulations, Chapter 13, Article 4: Explore the existing regulations, noting that modifications are forthcoming to align with the SCUMSA.
- NMLS Consumer Access: Verify the authorization status of financial service companies and professionals.
- Financial Crimes and Enforcement Network (FINCEN): Learn about the federal agency combating financial crimes and money laundering.
- Consumer Financial Protection Bureau (CFPB): Access resources on consumer rights and protection in the financial sector.
This guide aims to provide a clear and comprehensive overview of the updated money services regulations in South Carolina, ensuring businesses and individuals operating within this sector are well-informed and compliant.
