The number of states that do not regulate money transmitters grows ever smaller as New Mexico recently enacted the New Mexico Uniform Money Services Act. Prior to the enactment, New Mexico only regulated issuers and sellers of checks and money orders. Under the new law, a money transmitter — including an issuer or seller of payment instruments and stored value other than closed-loop gift cards — check casher or currency exchanger (“money services business”) providing services to New Mexico residents must obtain a license, subject to exemptions typical of other state laws for certain banks and other regulated entities, among others.
As a result, a money services business that is not currently required to be licensed will face a heavy compliance burden beginning Jan. 1, 2017 (the effective date of the law), as the security and net worth requirements under the UMSA will be among the highest of all states. For example, the required security will be the higher of $300,000, or an amount equal to 1% of the licensee’s total annual volume of business in New Mexico, up to a maximum of $2,000,000. In addition, an MSB that is internet-based or has 5 or more locations in New Mexico will be required to maintain a minimum net worth of $500,000.
We understand that the New Mexico Regulation and Licensing Department is currently developing licensing procedures with a targeted completion date of Sept. 1, 2016. We expect license applications will be accepted through the NMLS, and the RLD’s Financial Institution Division website updated with its new licensing requirements, rules, updates, and other relevant information as it becomes available.