The Importance of Authorized Delegates
Effective authorized delegate management can be a very important part of running a successful money service business. Having multiple locations that consumers can go to top up a prepaid card or send money to family and loved ones located across the state or across the world is a key component in the convenience that consumers pay for and have come to expect. Companies may of course open their own branches as a way to increase locations, but it can be cost prohibitive to rent out and staff a business space in areas with low volume. Money service businesses are able to gain market exposure by allowing other businesses such as grocery stores, convenience stores and payday loan businesses to also use their network and systems to transfer money in a convenient location that the consumer might already frequent, without the attached overhead necessary in a dedicated branch location. This is where authorized delegates fit in perfectly, employees of the authorized delegates are trained to process these MSB transactions on behalf of the licensee, within the licensee’s system but still remain employees of the host business. This system works when authorized delegates are held to high standards as codified in our laws.
Doing business on behalf of licensees
Licensees are required to perform adequate due diligence on authorized delegates as well as provide training on AML/BSA obligations.
Only a licensee may designate an agent or authorized delegate, and there must be a written contract between the two parties. The contract must include several provisions such as
- The authorized delegate must operate in full compliance with chapter 19.230 RCW and the rules adopted under this chapter.
- The authorized delegate is prohibited from using sub delegates or conduction business from locations not authorized by the department
- A description of the specific money services you authorize the delegate to perform on your behalf.1
In addition, the funds cannot bypass the licensee, they must move from the authorized delegate through the licensee. The licensee has supervisory authority over the actions of the authorized delegate when providing services on behalf of the licensee. The Department may take action against a licensee and/or the authorized delegate for any actions by the authorized delegate on behalf of the licensee in violation of the act or rules.
AD reporting time frames
Authorized delegate changes must be reported to the Department within NMLS within 30 days. This means any additions and removals of authorized delegates or any other informational change must be reported within this timeframe. Licensees are charged $100 per authorized delegate when applying for licensure, and $50 per change or addition after the company has become licensed; however there is no fee for removal of authorized delegates.2
The authorized delegate must prominently and equally display the licensee’s name in close proximity on all advertising, which includes their website if they have one.3
Out of state AD’s
Getting permission for out-of-state authorized delegates requires prior approval from the Director of DFI. WAC 208-690-035(4). Your authorized delegates must be physically located in the state of Washington unless you have received prior approval from the director to designate an authorized delegate physically located outside of the state of Washington. 4