Magazine article American Banker

State Regulators Launch Joint Multistate Licensing Process for Fintechs, MSBs

Magazine article American Banker

State Regulators Launch Joint Multistate Licensing Process for Fintechs, MSBs

Article excerpt

Byline: Rachel Witkowski

WASHINGTON -- A group of state regulators will soon begin offering a simpler licensing process for money-services businesses, including fintech firms, to operate across multiple states.

The pilot for licensing money servicers will initially be offered by seven states including Washington, Georgia, Texas and Illinois, the Conference of State Bank Supervisors announced Tuesday. The move is mainly in response to fintech firms that have long argued that the main route to doing business is by getting a license in each state, which can be a cumbersome and repetitive process.

"This is something that we can do to create licensing efficiencies with these companies, hopefully help get them off the ground and it doesn't sacrifice consumer protection," Charlie Clark, agency deputy director and director of consumer services at the Washington Department of Financial Institutions, said in an interview.

Kansas, Massachusetts and Tennessee are the other state regulators that are part of the pilot. The Conference of State Bank Supervisors plans to launch a pilot program in April, when regulators will begin identifying companies as potential candidates, Clark said.

"Our goal is that this will be a model for an agreement that other states can adopt and sign onto," he added.

Creating a more uniform licensing process is a part of a larger strategy launched last May called Vision 2020 in which the state regulators are trying to streamline state regulation to help fintech firms and other nonbank money-services businesses, called MSBs.

Each state will keep its own differences in licensing laws, but there are ways of using the same paperwork and sharing exams, for example, that regulators are currently reviewing. The Conference of State Bank Supervisors aims to have all 50 states agree to a uniform licensing process by 2020. …

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