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Summer 2019 Newsletter
Guidance for Money Transmitters: Reporting Adverse Actions Against Your License
Money services businesses (MSBs) providing services in Washington are required by law to report adverse actions taken against them. This guide is a starting point to help you develop policies in compliance with RCW 19.230.150(3) and RCW 19.230.152. Keep in mind that reporting requirements may vary in different states.
Identifying an Adverse License Action
Adverse license actions can fall under multiple categories, as defined in RCW 19.230.150(3)(a)-(f) and WAC 208-690-112(1)-(7). Most aadverse actions restrict and condition the license. While generally this may not be good, favorable outcomes may follow and are common.
Many adverse actions take the form of orders or other administrative actions resulting in a disciplinary action against the licensee. Such proceedings include, but are not limited to, license revocation, suspension, or restriction. A bond cancellation is also a reportable event.
Additionally, reportable judicial proceedings include bankruptcy, receivership, filing of material litigation, or proceedings of dissolution. Also, a criminal charge or conviction for a felony of a responsible individual (defined in RCW 19.230.010), executive officer, director or an authorized delegate, is reportable.
Agreements, such as memorandums of understanding (MOUs) in most cases would not be considered reportable, unless license restrictions are put in place.
Under RCW 19.230.150(3)(c), the initial notification or knowledge of a pre-adverse action notification could be defined as a commencement of proceedings to condition a license in some way. The point of the commencement notice is to inform the licensee that proceedings to otherwise restrict the license is likely. The commencement of the underlying proceeding is also reportable.
Reporting of the adverse action as defined by RCW 19.230.150(3)(a)-(f) et al. and WAC 208-690-112(1)-(7), is done through the NMLS, within one business day after the licensee has reason to know of the occurrence. See RCW 19.230.150(3) and WAC 208-690-112.
Licensees must continue to update the status of an adverse action in the NMLS. Licensees may also provide evidence of corrections or additional information to the Department to consider when actions have been finalized. Any supporting documentation should also be referenced and maintained.