Earlier this week, the Conference of State Bank Supervisors (CSBS) announced that seven states have agreed to a multi-state compact that standardizes key elements of the licensing process for money services businesses (MSB).  Pursuant to the agreement, if one state reviews key elements of state licensing for a money transmitter – IT, cybersecurity, business plan, background check, and compliance with the federal Bank Secrecy Act – then other participating states agree to accept the findings.  The result is expected to significantly streamline the MSB licensing process.  The states announcing this agreement are Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington. Other states are expected to join this compact.

In May 2017, state regulators, operating through the CSBS, issued a policy statement establishing the 50-state goal.  This announcement is a key component of CSBS’s Vision 2020, which is a series of implementation initiatives directed at transforming the licensing process, harmonizing supervision, engaging fintech companies, assisting state banking departments, making it easier for banks to provide services to non-banks, and making supervision more efficient for third parties.

This multi-state compact represents the first step among state regulators in moving towards an integrated, 50-state system of licensing and supervision for fintech companies.  “This MSB licensing agreement will minimize the burden of regulatory licensing, use state resources more efficiently, and allow for broad participation by other states across the country,” said John Ryan, CSBS president and chief executive officer.