Sean Ruff and Adam J. Fleisher
Banking + Financial Services, Financial Institutions + Financial Services, Financial Services Enforcement, Financial Services Litigation, Financial Services, Financial Technology, and Mobile Payments
One of the most important questions facing non-bank providers of payments services is whether they are subject to regulation under U.S. state money transmission laws. Though almost all U.S. states regulate money transmitters, there are a number of states that provide exemptions for entities that act as an agent of the payee. While a small handful of states have had long-standing agent of the payee exemptions, California more recently addressed the applicability of a money transmission licensing law to payments services, and a number of other states followed suit. However, recent California developments suggest that the scope of what constitutes exempt payee-agency activity may be subject to greater scrutiny. In addition, the California Department of Business Oversight, which regulates money transmission in California, has indicated that it is commencing a rulemaking on the “agent of the payee” exemption and its limitations.
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