Information and FAQs for Senate Bill 939 (2020) - Financial Regulation
New Licensing and Registration Requirements for Providers of Check Cashing Services in Maryland
During its 2020 session, the Maryland General Assembly passed Senate Bill 939, which was enacted by operation of law (see 444 Md. Laws 2020). The substantive portions of the new law impacting those providing check casher servicers take effect October 1, 2020, and change the requirements for providing check cashing services in the State of Maryland (“State”).
Under Maryland law, “provide check cashing services” means to accept or cash, for compensation, a payment instrument regardless of the date of the payment instrument (this definition is not changing). Maryland laws governing check cashing services, including the changes in the law described herein, do not apply to transactions in which a customer presents a payment instrument for the exact amount of a purchase, or to transactions involving foreign currency exchange services or the cashing of a payment instrument drawn on a financial institution other than a federal, State, or other state chartered financial institution. They also do not apply to federal and Maryland chartered financial institutions, along with certain of their subsidiaries and affiliates, as well as certain other state charted financial institutions (and certain of their subsidiaries and affiliates) as they are exempt from these requirements.
Under the new law, a person may not provide check cashing services in Maryland unless the person is either licensed by, or registered with, the Commissioner of Financial Regulation (“the Commissioner”). Note that the term, “person,” as used in the law, includes a natural person or any business organization.
The frequently-asked questions (FAQs) below provide important information about the new check cashing requirements for all who intend to provide check cashing services after the effective date. These FAQs are of particular importance to those currently unlicensed providers of check cashing services who intend to continue providing check cashing services after the effective date.
Frequently Asked Questions
Q: I have been providing check cashing services in Maryland, but have not needed a license. Under the new law, may I continue to provide check cashing services without registering or obtaining a license?
Q: Who is exempt from licensure and registration?
- Any bank, trust company, savings bank, savings and loan association, or credit union incorporated or chartered under the laws of Maryland or the United States that maintains its principal office in Maryland;
- Any out-of-state bank having a branch in Maryland that accepts deposits;
- Any institution incorporated under federal law as a savings association or savings bank that does not maintain its principal office in Maryland but has a branch that accepts deposits in Maryland;
- A subsidiary or affiliate of an institution described above, provided the subsidiary or affiliate provides certain information to the Commissioner prior to providing check cashing services (see Md. Code Ann., Financial Institutions §12-1013(b)).
Q: What is the difference between licensure and registration?
A registration, on the other hand, does not impose qualifications or require approval before you may engage in check cashing services; rather, it is essentially the submission of certain required information to notify the Commissioner that you are conducting business within the State.
Q: Where do I get an application for license, or a registration form?
Q: How do I know whether I need to register or to obtain a license?
- You charge a fee of no more than 1.5% of the amount of the instrument or $1, whichever is greater, to cash a payment instrument;
- Your check cashing services are incidental to retail sales of goods or services;
- You are registered as a money services business with the United States Department of the Treasury’s Financial Crimes Enforcement Network (FinCEN);
- You cash payment instruments in the interior of your business location, and do not utilize a drive up or walk up window or a mobile unit;
- You have conspicuously posted a notice, in 48-point or larger type, in the business location where instruments are cashed, providing the following information:
- The fees charged for check cashing services; and
- How to contact the Commissioner with comments or complaints; and
- You provide to each check cashing services customer a receipt containing:
- The date of the transaction;
- The face value of the instrument cashed;
- The fee charged; and
- The net dollar amount paid to the customer.
If you do not meet ALL of these conditions, you must obtain a check cashing services license.
Q: I currently hold a check cashing services license. Can I surrender that license and conduct business under a registration?
Q: How do I register with FinCEN as a money services business?
Q: If I do not cash more than $1,000 of checks for any one person in any one day, I’m not required to register with FinCEN. If I don’t register with FinCEN for this reason, am I still permitted to register with the Commissioner, rather than obtaining a license?
Q: I qualify to provide check cashing services under a registration. I provide services at more than one location in Maryland. Must I register each location separately?
Q: I will need a check cashing services license under the new law. I provide services at more than one location. Do I need a license for each location?
Q: I provide check cashing services at branch locations, but not at my principal executive office. Given that my branch locations must be licensed under the new law, must I also license my principal executive office?
Q: Under the new law, my branch locations will need to be licensed. How do I know whether my main office needs to be licensed, designated, or registered?
Q: I provide check cashing services at branch locations, which are already licensed, but not at my principal executive office. My principal executive office is currently registered in NMLS. Is that the same as the new registration?
Q: I already have a different license through NMLS. Will I need to create a separate NMLS account for my business in order to obtain a Maryland check cashing services license or to register as a check cashing services provider?
Q: What is the cost of a Maryland check cashing services license?
Q: Is there a fee for registration?
Q: How often must licenses and registrations be renewed?
NOTE: New licenses or registrations issued between November 1 and December 31 are valid through December 31 of the following year. Thus, if you obtain your initial registration between November 1 and December 31, 2020, your registration will be valid through December 31, 2021.