§ 9 — Maintenance of minimum tangible net worth; surety bond; maintenance of permissible investments; types of permissible investments

[ Text of section added by 2024, 312, Sec. 3 effective January 1, 2026. See 2024, 312, Sec. 6.]Section 9. (a)(1) A licensee under this chapter shall maintain at all times: (i) a tangible net worth of the greater of $100,000 or 3 per cent of total assets for the first $100,000,000; (ii) 2 per cent of additional assets for $100,000,000 to $1,000,000,000; and (iii) 0.5 per cent of additional assets for over $1,000,000,000.(2) Tangible net worth shall be demonstrated at initial application by the applicant's most recent audited or reviewed financial statements.(3) The commissioner may, for good cause shown, exempt, in-part or in whole, any applicant or licensee from the requirements of this section.(b)(1) An applicant for a money transmission license shall provide, and a licensee shall at all times maintain, security consisting of a surety bond in a form satisfactory to the commissioner.(2) The amount of the required security shall be the greater of $100,000 or an amount equal to 100 per cent of the licensee's average daily money transmission liability in the commonwealth calculated for the most recently completed 3-month period not more than $500,000.(3) A licensee that maintains a bond in the maximum amount provided for in paragraphs (1) and (2) shall not be required to calculate its average daily money transmission liability in the commonwealth for purposes of this subsection.(4) A licensee may exceed the maximum required bond amount pursuant to clause (v) of paragraph (1) of subsection (d).(c)(1) A licensee shall maintain at all times permissible investments, pursuant to subsection (d), that have a market value computed in accordance with the generally accepted accounting principles issued by the Financial Accounting Standards Board of not less than the aggregate amount of all of its outstanding money transmission obligations.(2) Except for permissible investments enumerated in paragraph (1) of subsection (d), the commissioner, with respect to any licensee, may limit, by rule or order, the extent to which a specific investment maintained by a licensee within a class of permissible investments may be considered a permissible investment, if the specific investment represents undue risk to customers, not reflected in the market value of investments.(3) Permissible investments, even if commingled with other assets of the licensee, shall be held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations in the event of insolvency, the filing of a petition by or against the licensee pursuant to 11 U.S.C. %48 101 to 110, inclusive, as amended or recodified from time to time, for bankruptcy or reorganization, the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization or in the event of an action by a creditor against the licensee who is not a beneficiary of this statutory trust. No permissible investments impressed with a trust pursuant to this paragraph shall be subject to attachment, levy of execution or sequestration by order of any court, except for a beneficiary of this statutory trust.(4) Upon the establishment of a statutory trust in accordance with paragraph (3) or when any funds are drawn on a letter of credit pursuant to clause (iv) of paragraph (1) of subsection (d), the commissioner shall notify the applicable regulator of each state in which the licensee is licensed to engage in money transmission, if any, of the establishment of the trust or the funds drawn on the letter of credit, as applicable. Notice shall be deemed satisfied if performed pursuant to a multistate agreement or through NMLS. Funds drawn on a letter of credit, and any other permissible investments held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations, shall be deemed held in trust for the benefit of such purchasers and holders on a pro rata and equitable basis in accordance with statutes pursuant to which permissible investments are required to be held in the commonwealth, and other states, as applicable. A statutory trust established hereunder shall be terminated upon extinguishment of all of the licensee's outstanding money transmission obligations.(5) The commissioner may, by rule or order, allow other types of investments that the commissioner determines are of sufficient liquidity and quality to be a permissible investment. The commissioner may participate in efforts with other state regulators to determine that other types of investments are of sufficient liquidity and quality to be a permissible investment.(d)(1) Investments permissible under subsection (c) shall include:(i) cash, including demand deposits, savings deposits and funds in such accounts held for the benefit of the licensee's customers in a federally insured depository financial institution and cash equivalents, including automated clearing house items in transit to the licensee and automated clearing house items or international wires in transit to a payee, cash in transit via armored car, cash in smart safes, cash in licensee-owned locations, debit card or credit card-funded transmission receivables owed by any bank or money market mutual funds rated AAA by Standard & Poor's Corporation or the equivalent from any eligible credit rating agency;(ii) certificates of deposit or senior debt obligations of an insured depository institution, as defined in section 3 of the Federal Deposit Insurance Act, 12 U.S.C. § 1813, as amended or recodified from time to time, or as defined in the Federal Credit Union Act, 12 U.S.C. § 1781, as amended or recodified from time to time;(iii) an obligation of the United States or a commission, agency or instrumentality thereof; an obligation that is guaranteed fully as to principal and interest by the United States or an obligation of a state or a governmental subdivision, agency or instrumentality thereof;(iv) the full drawable amount of an irrevocable standby letter of credit for which the stated beneficiary is the commissioner under such terms as the commissioner may define by regulation, policies, procedures or other guidance; and(v) 100 per cent of the surety bond provided for under subsection (b) that exceeds the average daily money transmission liability in the commonwealth.(2) Unless permitted by the commissioner by rule or by order to exceed the limit as set forth herein, investments permissible under subsection (c) to the extent specified shall include:(i) receivables that are payable to a licensee from its authorized delegates in the ordinary course of business that are not more than 7 days old, up to 50 per cent of the aggregate value of the licensee's total permissible investments;(ii) of the receivables permissible under clause (i) of paragraph (2), receivables that are payable to a licensee from a single authorized delegate in the ordinary course of business may not exceed 10 per cent of the aggregate value of the licensee's total permissible investments;(iii) up to 20 per cent per category and combined up to 50 per cent of the aggregate value of the licensee's total permissible investments:(A) a short-term, not more than 6 months, investment bearing an eligible rating;(B) commercial paper bearing an eligible rating;(C) a bill, note, bond or debenture bearing an eligible rating;(D) United States tri-party repurchase agreements collateralized at 100 per cent or more with United States government or agency securities, municipal bonds or other securities bearing an eligible rating;(E) money market mutual funds rated less than AAA and equal to or higher than A- by Standard & Poor's Corporation or the equivalent from any other eligible credit rating agency; and(F) a mutual fund or other investment fund composed solely and exclusively of 1 or more permissible investments listed in clauses (i) through (iii), inclusive, of paragraph (1); and(iv) cash, including demand deposits, savings deposits and funds in such accounts held for the benefit of the licensee's customers, at foreign depository institutions, up to 10 per cent of the aggregate value of the licensee's total permissible investments if the licensee has received a satisfactory rating in its most recent examination and the foreign depository institution:(A) has an eligible rating;(B) is registered under the federal Foreign Account Tax Compliance Act;(C) is not located in any country subject to sanctions from the Office of Foreign Asset Control of the United States Department of the Treasury; and(D) is not located in a high-risk or non-cooperative jurisdiction as designated by the Financial Action Task Force.