Money Transmitter and MSB Exemption

1. Overview

PayServices Bank is a banking corporation registered under the laws of Idaho. As a registered bank, it is exempt from the money transmitter licensing (MTL) and money services business (MSB) registration requirements of every U.S. state, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands — on the basis of the express statutory bank exemptions enumerated in Section 4. Montana does not maintain a standalone money transmitter licensing framework, so no licensing requirement attaches there.

This policy sets out the legal basis for that exemption, identifies the specific statutory authority for each U.S. jurisdiction, and describes the limits of the exemption — the obligations that continue to apply to PayServices Bank notwithstanding its bank status.

Bank status is the controlling fact. The federal definition of “money services business” expressly excludes banks. The money transmitter act of every U.S. state that has one contains an express bank exemption. PayServices Bank’s status as a registered bank, supervised by its banking regulator, is the basis on which the licensing requirements applicable to non-bank money transmitters and money services businesses do not apply to it.

2. Federal position

Under the regulations of the Financial Crimes Enforcement Network (FinCEN), the term “money services business” is defined at 31 CFR § 1010.100(ff). That definition does not include banks. Banks are separately defined at 31 CFR § 1010.100(d) and are regulated as depository institutions under the Bank Secrecy Act compliance framework specific to banks, codified at 31 CFR Part 1020.

The consequence is straightforward: PayServices Bank, as a registered bank, is not a money services business under federal law and is not subject to the federal MSB registration requirement at 31 CFR § 1022.380. The Bank Secrecy Act, anti-money laundering, customer identification, recordkeeping, reporting, sanctions, and other compliance obligations that apply to banks apply in full to PayServices Bank; they apply under the rules for banks, not under the rules for money services businesses.

The same logic governs the federal Travel Rule, currency transaction reporting, and suspicious activity reporting obligations. Each of those obligations applies to PayServices Bank as a bank, under the bank-specific provisions of the implementing regulations, not under the parallel provisions for money services businesses.

3. State framework

Every U.S. state that has a money transmitter act, money services modernization act (MTMA), or equivalent statutory framework contains an express bank exemption. The form of the exemption varies — some statutes exempt “banks,” some exempt “banking institutions,” some exempt “depository institutions,” some exempt “federally insured financial institutions,” and some enumerate banks alongside trust companies, savings banks, or credit unions — but the legal effect, with respect to a registered banking corporation, is the same: the licensing requirements of the statute do not apply.

PayServices Bank, as a banking corporation registered under Idaho law, falls within the bank exemption of each of these statutes. It is exempt from the money transmitter licensing requirements of every U.S. state and territory that maintains such a requirement.

The table in Section 4 lists, for each jurisdiction, the specific statutory citation supporting the exemption. The citations reflect law in effect as of the date of this policy and are subject to change. Where a statute is amended or recodified, the underlying bank exemption typically continues; the citation may need to be updated.

4. Statutory citations by jurisdiction

The following table identifies, for each U.S. jurisdiction, the statutory provision under which PayServices Bank’s exemption from money transmitter licensing is established. Citations are listed alphabetically by jurisdiction, with the 50 states first, followed by the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

Jurisdiction	Statutory exemption	Notes
Alabama	`Ala. Code § 8-7A-4(1)`	Exempts banks, bank holding companies, and credit unions.
Alaska	`Alaska Stat. § 06.55.102(1)`	Exempts federally or state-registered financial institutions.
Arizona	`A.R.S. § 6-1203(A)(1)`	MTMA adopted. Explicitly exempts FDIC-insured banks.
Arkansas	`Ark. Code Ann. § 23-55-103(1)`	Exempts banks, savings banks, and credit unions.
California	`Cal. Fin. Code § 2010(a)`	Exempts banks registered under California law or U.S. federal law.
Colorado	`C.R.S. § 11-110-104(1)(a)`	Exempts banks, bank holding companies, and savings associations.
Connecticut	`Conn. Gen. Stat. § 36a-597(c)`	Exempts federally insured banks and credit unions.
Delaware	`5 Del. C. § 2304(1)`	Exempts banks and trust companies authorized to do business in Delaware.
Florida	`Fla. Stat. § 560.104(1)`	Exempts domestic and national banking institutions.
Georgia	`O.C.G.A. § 7-1-682(a)(1)`	Modified MTMA provisions. Fully exempts registered banks.
Hawaii	`H.R.S. § 489D-5(1)`	Exempts federally insured financial institutions.
Idaho	`Idaho Code § 26-2904(1)`	Exempts banks, credit unions, and trust companies. PayServices Bank is registered under Idaho law.
Illinois	`205 ILCS 657/15(1)`	Exempts commercial banks and savings and loan associations.
Indiana	`Ind. Code § 28-1-29-1.3(1)`	MTMA adopted. Explicit bank carve-out.
Iowa	`Iowa Code § 533C.103(1)`	MTMA adopted. Exempts all regulated banking entities.
Kansas	`K.S.A. § 9-509(a)(1)`	Exempts banks, trust companies, and savings banks.
Kentucky	`KRS § 286.11-007(1)`	Exempts banks and credit unions organized under state or federal law.
Louisiana	`La. R.S. § 6:1033(1)`	Exempts federally insured financial institutions.
Maine	`32 M.R.S. § 6103(1)`	Exempts banks, credit unions, and industrial loan companies.
Maryland	`Md. Code, Fin. Inst. § 12-404(1)`	Exempts banking institutions and national banks.
Massachusetts	`M.G.L. c. 169 § 1 / 209 CMR 45`	Regulated under specific foreign transmittal rules; banks are expressly exempt.
Michigan	`MCL § 487.1004(a)`	Exempts depository financial institutions.
Minnesota	`Minn. Stat. § 53B.29 (MTMA)`	MTMA adopted. Replaced older Chapter 53B bank exemptions.
Mississippi	`Miss. Code Ann. § 75-15-7(a)`	Exempts banks and trust companies.
Missouri	`Mo. Rev. Stat. § 361.702(1)`	Exempts banks, credit unions, and trust companies.
Montana	`—`	Montana does not maintain a standalone money transmitter licensing framework, so no licensing requirement attaches in this jurisdiction.
Nebraska	`Neb. Rev. Stat. § 8-2724(1)`	Exempts state and national banks.
Nevada	`NRS § 671.020(1)`	MTMA aligned. Exempts banks and banking organizations.
New Hampshire	`N.H. Rev. Stat. § 399-G:3(I)`	Exempts federally insured depository institutions.
New Jersey	`N.J.S.A. § 17:15C-3(a)`	Exempts state and federally registered banks and savings banks.
New Mexico	`NMSA § 58-32-103(A)`	Exempts banks, savings banks, and credit unions.
New York	`N.Y. Banking Law § 641(1)`	Exempts banks, trust companies, and national banking associations.
North Carolina	`N.C.G.S. § 53-208.43(1)`	Exempts federally insured depository institutions.
North Dakota	`N.D. Cent. Code § 13-09.1-03`	MTMA adopted. Explicit institutional exemption.
Ohio	`O.R.C. § 1315.02(A)`	Exempts banks, savings banks, and credit unions.
Oklahoma	`6 O.S. § 1513(1)`	Exempts federally insured financial institutions.
Oregon	`ORS § 717.210(1)`	Exempts banking institutions and national banks.
Pennsylvania	`7 P.S. § 6103(1)`	Exempts banking institutions, national banks, and credit unions.
Rhode Island	`R.I. Gen. Laws § 19-14-3(1)`	Exempts regulated banks and credit unions.
South Carolina	`S.C. Code Ann. § 34-45-130(1)`	Exempts banks, credit unions, and savings associations.
South Dakota	`SDCL § 51A-17-4(1)`	Exempts authorized banks and trust companies.
Tennessee	`Tenn. Code Ann. § 45-7-104`	MTMA adopted. Explicit bank carve-out.
Texas	`Tex. Fin. Code § 151.003(1)`	MTMA adopted. Fully exempts federally insured banks.
Utah	`Utah Code § 7-25-103(1)`	Exempts depository institutions and their affiliates.
Vermont	`8 V.S.A. § 2503(1)`	Exempts banking institutions and credit unions.
Virginia	`Va. Code Ann. § 6.2-1902(1)`	Exempts banks, trust companies, and savings institutions.
Washington	`RCW § 19.230.020(1)`	Exempts structural banks, savings banks, and credit unions.
West Virginia	`W. Va. Code § 32A-2-3(a)`	Exempts banks and trust companies authorized to operate in West Virginia.
Wisconsin	`Wis. Stat. § 217.04(1)`	Exempts banks, credit unions, and savings associations.
Wyoming	`Wyo. Stat. Ann. § 40-22-104(a)(i)`	Exempts banks, bank holding companies, and savings banks.
District of Columbia	`D.C. Code § 26-1003(1)`	Exempts banks, credit unions, and trust companies.
Puerto Rico	`7 L.P.R.A. § 1781b(a)`	Exempts commercial banks and savings institutions.
U.S. Virgin Islands	`9 V.I.C. § 503(a)`	Exempts traditional banks and trust companies.

“MTMA” refers to the Money Transmission Modernization Act, a uniform-law framework that has been adopted, in whole or with modifications, by a number of states in recent years. In each MTMA-adopting state, the bank exemption is preserved.

5. Operating model

ITAM is a product of PayServices Bank. Accounts on the ITAM platform are bank accounts — some held directly at PayServices Bank, others held at other banks that participate as member institutions of the PayServices Network. In each case, the account is a bank account at a bank, and the payment, transfer, settlement, custody, or related activity conducted on it is the activity of a registered bank, conducted under the supervision of the account-holding bank’s regulator.

Because these activities are conducted by banks — PayServices Bank or another member bank of the PayServices Network — rather than by non-bank money transmitters or money services businesses, the licensing regimes applicable to non-bank money transmitters and money services businesses do not apply, in any U.S. jurisdiction. PayServices Bank does not hold a money transmitter license in any state because none is required of it, and it does not register as a money services business with FinCEN because the federal definition of money services business does not include banks. Each other bank participating in the PayServices Network operates on the same basis, relying on its own status as a bank.

This is the same legal framework under which every registered bank in the United States offers payment, remittance, deposit, and related services without state-by-state money transmitter licensing.

6. Limits of the exemption

The exemption described in this policy is specifically and exclusively from money transmitter licensing and money services business registration. It does not affect, and PayServices Bank remains fully subject to, the following obligations:

Bank Secrecy Act and anti-money laundering. PayServices Bank maintains a written BSA/AML program, files currency transaction reports and suspicious activity reports as required, conducts customer identification and customer due diligence, and complies with the Travel Rule, under the rules applicable to banks at 31 CFR Part 1020.
OFAC sanctions. All sanctions programs administered by the Office of Foreign Assets Control apply in full to PayServices Bank and to every transaction it processes. Bank status is not an exemption from sanctions compliance.
Consumer financial protection. Federal consumer financial protection law, including authority exercised by the Consumer Financial Protection Bureau over banks of applicable size and over specific products and services, applies in full.
State consumer protection and UDAP. State laws prohibiting unfair, deceptive, or abusive acts or practices, and other state consumer protection regimes that apply to financial institutions doing business in the state, apply to PayServices Bank’s activities directed at residents of those states. Bank status does not displace state consumer protection law.
Federal and state securities law. Where a transaction or instrument is a security under federal or state securities law, the applicable securities regulation applies independently of this policy.
Bank supervision. PayServices Bank is supervised, examined, and subject to enforcement by its banking regulator under applicable banking law. The bank exemption from money transmitter licensing reflects, in part, that banks are already supervised under a separate and dedicated regulatory framework.
Non-bank participants in the PayServices Network. The bank exemption applies to PayServices Bank. It does not extend to other persons who may participate in the PayServices Network in some capacity. Any non-bank participant is responsible for determining its own licensing obligations under the laws of the jurisdictions in which it operates and for obtaining any licenses or registrations that may be required.

Nothing in this policy is intended to suggest that PayServices Bank is exempt from any obligation other than money transmitter licensing and money services business registration; it is not.

7. Evolving law

The statutory landscape for money transmission is changing. A number of states have, in recent years, adopted the Money Transmission Modernization Act or made other material changes to their money transmitter frameworks. In each instance to date, the bank exemption has been preserved; the relevant statutory citation may, however, change as a state recodifies its provisions.

This policy reflects the law in effect as of the date shown below. PayServices Bank monitors changes to the money transmission statutory framework in each jurisdiction in which it conducts business and will update this policy as material legal or operational changes occur. Members with questions about the status of the exemption in a specific jurisdiction may contact us at the address below.

8. Contact us

PayServices Bank — Compliance
950 W Bannock Street, Suite 1100
Boise, Idaho 83702-6140
United States

info@payservices.com