SF4838

Purpose

• This bill would require Minnesota-licensed money transmitters to verify that the sender of a foreign remittance transfer is lawfully present in the United States before the transfer can be completed. It also creates recordkeeping and reporting requirements for licensees and establishes penalties for violations. The changes would amend Minnesota Statutes to add a new section (53B.521) and modify existing recordkeeping requirements (53B.50).

Key Definitions

• Foreign remittance transfer: a money transfer sent to a recipient located outside the United States.
• Lawfully present: defined by federal regulations; it describes who is legally allowed to be in the United States.
• Licensee: a licensed provider of money transmission services in Minnesota.
• Commissioner: the state official responsible for regulating licensed money transmitters.

Verification and Documentation Requirements

• Verification before transfer: a licensee cannot start a foreign remittance transfer unless the sender’s lawfully present status has been verified.
• Documentation the sender may provide: one form of documentation to verify lawfully present, including documents such as REAL ID-compliant driver’s license or state ID, unexpired U.S. passport, birth certificate, consular birth abroad documents, permanent resident card (I-551), various DHS forms (I-94, I-94A, I-766, I-551-related items), citizenship and naturalization documents, employment authorization document, and other DHS-designated documents.
• Documentation must be legible and unaltered.
• Verification confirmation: licensees must provide verification confirmations on forms prescribed by the commissioner, and submit these forms by the 15th day of the month after each calendar quarter ends.

Recordkeeping and Access to Records

• Recordkeeping standards: licensees must maintain for at least three years:
  • a record of each outstanding money transmission obligation sold,
  • a general ledger (asset, liability, capital, income, expense accounts),
  • bank statements and bank reconciliation records,
  • records of outstanding money transmission obligations and those paid during the three-year period,
  • contact information for all licensees, delegates, and their last known names/addresses,
  • documentation used to verify sender’s lawfully present status,
  • records of penalties paid under the related penalty section (including sender details),
  • and any other records the commissioner reasonably requires.
• Location of records: records may be kept outside Minnesota if they are accessible to the commissioner with seven business days’ notice.
• Access to records: all required records are open to inspection by the commissioner.

Penalties and Enforcement

• Penalty amount: a licensee that initiates a foreign remittance transfer in violation of verification requirements must pay a penalty equal to 25% of the dollar amount transferred (not including fees charged by the licensee).
• Payment and reporting: penalties must be remitted to the commissioner quarterly, along with the required forms.

Complaints, Audits, and Compliance Oversight

• Complaints: individuals can file a good-faith complaint with the commissioner if they believe a licensee is not complying; knowingly submitting a false or frivolous complaint is a misdemeanor.
• Audits: the commissioner must conduct random quarterly audits of licensees to ensure compliance; licensees must provide records used to verify sender presence; audits may occur at least every two years unless a prior audit found noncompliance within the last six months.

Summary of Changes to Law

• Adds a new verification requirement for foreign remittance transfers (53B.521) and defines how licensees must verify sender lawfully present status.
• Expands recordkeeping requirements (53B.50) to include verification documentation, penalties paid, and related records.
• Establishes a new penalty framework (25% of transfer amount) for violations and outlines enforcement, reporting, and audit procedures.

Relevant terms - foreign remittance transfer - lawfully present - verification - licensee - commissioner - REAL ID - documents (driver’s license, passport, birth certificate, permanent resident card, I-94, I-766, DS forms, etc.) - outstanding money transmission obligations - general ledger - penalties - records - audits - complaints - money transmission laws (53B.50 and 53B.521) - Form I551, Form I94, Form I766, DS232, DS1350, DS232 - money transfer amount (excluding fees)