South Carolina recently became the 49th state to regulate money transmitters, leaving Montana the only state that has yet to do so. The Anti-Money Laundering Act will take effect one year after its June 9, 2016 passage, or upon its publication in the State Register, whichever is later. The Act includes a surety bond provision for money transmitters.
Money transmitters sell or issue payment instruments and stored value—monetary value evidenced by an electronic record—and/or receive money or monetary value for transmission. Transmitters include companies, like Facebook, that allow users to send money through their platforms, as well as more obvious money transmission companies like MoneyGram.
Under the Act, transmitters will need to become licensed before doing business. The licensing application requires some of the following information:
- Applicant’s name, business and residential addresses and any trade names used in conducting business
- Any criminal convictions or material litigation the applicant has been involved in in the preceding ten years
- Description of money services the applicant has previously provided, and of services they intend to provide
- Name and address of any bank through which the applicant’s payment instruments or stored value will be paid
- Description of the source of money and credit the applicant will use to provide services
- Nonrefundable $1,500 application fee
- Licensing fee of $750—will be refunded if the application is denied
The application process includes the purchase of a $50,000 surety bond, with an additional $10,000 per location, not to exceed $250,000. The bond must cover claims for at least five years after the licensee no longer provides services in South Carolina, though the Attorney General may choose to lengthen or shorten the time period.
The Act does not apply to money transmitters in federal, state or local government, the USPS or banks. More information is required with the application if the applicant is a corporation or other partnership. Under certain conditions, detailed in Subsection A of Section 35-11-210 of the Act, some money transmitters may not need to become licensed in South Carolina.