On April 16, the Colorado General Assembly enacted House Bill 25-1201, replacing the state's prior money transmitter law with the Money Transmission Modernization Act (the "Act"). Modeled on the multistate framework developed by the Conference of State Bank Supervisors (CSBS), the Act aims to align Colorado's licensing and oversight regime with standards adopted in other states, while updating key regulatory definitions, exemptions, prudential requirements, and enforcement tools.
The Act introduced several notable changes for covered entities, including:
- A broader definition of regulated activity. The law now covers digital money movement and payroll processing, expanding licensing requirements.
- Modernized control thresholds and notifications. Entities seeking to acquire control of a licensee or adding key individuals must notify or obtain approval from the Division of Banking, subject to financial and character reviews.
- Expanded exemptions. The Act exempts banks, payee agents meeting specific criteria, broker-dealers acting within the scope of securities law, and certain governmental and judicial appointees, among others.
- Enhanced supervisory authority. The Division may participate in multistate examinations and rely on reports from other accredited states, allowing for greater coordination and reduced redundancy in oversight.
- Customer protection provisions. Licensees are required to forward funds timely, provide receipts containing specific transaction information, and offer refunds unless certain exceptions apply. Required disclosures must be in the language principally used to market the service.
Putting It Into Practice: Colorado's adoption of a uniform money transmission framework is part of a growing trend among states to expand and modernize financial licensing requirements (previously discussed here and here). Companies operating in Colorado should assess whether their activities fall within the expanded scope of the new law and ensure compliance with updated licensing, control, reporting, and bonding requirements.
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