The Conference of State Bank Supervisors (CSBS) recently announced that seven states, Georgia, Illinois, Kansas, Massachusetts, Tennessee, Texas and Washington, have agreed to a multi-state compact (the Compact) that will standardize certain aspects of the licensing process for money services businesses (MSBs).

Under the Compact, if one of the participating states reviews “key elements of state licensing for a money transmitter” as part of that state’s initial licensing process, the other participating states agree to accept the findings of the review. The CSBS identifies the key elements as IT, cybersecurity, business plan, background check, and compliance with federal Bank Secrecy Act requirements. With the announcement of the Compact, the CSBS took a notable step toward accomplishing one of the six objectives provisioned under its “Vision 2020” initiative — harmonizing multistate supervision. Its other objectives include: creating a FinTech advisory panel; redesigning the Nationwide Multistate Licensing System; assisting state banking regulators; enabling banks to service non-banks; and improving third-party supervision.

The Compact will begin as a pilot program in early April 2018, and MSBs that are interested in licensure through the program may contact the Washington State Department of Financial Institutions. According to the CSBS, additional states are expected to join the Compact in the future.

Many industry participants will likely view the Compact as a welcome attempt at streamlined licensing and coordinated regulatory supervision at the state level, while they continue awaiting a decision from the Office of the Comptroller of the Currency (OCC) on possible issuance of a federal FinTech charter and the outcome of a pending lawsuit brought by the CSBS challenging the OCC’s authority to issue such a charter. Others may view this effort as too little, too late. Even with streamlined applications, licensed money transmitters will still have to obtain separate licenses, pay separate application fees, establish separate bonds, and comply with other separate, non-uniform state law requirements. Nevertheless, it is good to see some states recognizing and trying to address the significant burdens of the current state money transmitter licensing framework.