As a first step in reducing the burden of applying for state financial services licenses, the Conference of State Bank Supervisors (CSBS) announced that seven states have agreed to work together to streamline the process of applying for money transmission licenses: Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas, and Washington. CSBS expects additional states to join the agreement in the future.

According to the announcement, these states have agreed that if one of the participating states reviews key elements of a company's license application, the other states will accept that state's findings. Those elements include:

  • Information technology;
  • Cybersecurity;
  • Business plan;
  • Background checks; and
  • Federal Bank Secrecy Act compliance.

Presumably, this means that if a company's application is approved in one state, the time and effort required to receive approval in the other six states would be significantly reduced. Although each state is still free to impose its own state-specific requirements, the elements above are among the most important and time-consuming parts of an application. Further, coordination on these issues will hopefully lead to more uniform standards and avoid each state creating its own requirements in areas such as cybersecurity.

This development comes at a time when federal and state regulators are exploring various options for streamlining regulations that impact fintech and other payments companies. In 2016, the Office of the Comptroller of the Currency (OCC) announced plans to accept applications from fintech companies for a limited national bank charter. Although a recent lawsuit seeking to block the initiative was dismissed because the application process was "purely hypothetical," new Comptroller of the Currency Joseph Otting has stated he believes there is a future for the fintech charter. In 2017, CSBS also announced "Vision 2020," an initiative designed to make the multistate licensing experience "as seamless as possible" by harmonizing multistate supervision and redesigning the online licensing portal used by states to accept applications.