| OFFERED FOR CONSIDERATION | 2/17/2025 |
HOUSE BILL NO. 1942
AMENDMENT IN THE NATURE OF A SUBSTITUTE
(Proposed by the Senate Committee on Commerce and Labor
on ________________)
(Patron Prior to Substitute—Delegate Cole)
A BILL to amend and reenact §§ 6.2-1523.1, 6.2-2001, 18.2-516, 19.2-10.1, 19.2-56, and 19.2-389 of the Code of Virginia, to amend the Code of Virginia by adding in Title 6.2 a chapter numbered 19.1, consisting of sections numbered 6.2-1922 through 6.2-1957, and to repeal Chapter 19 (§§ 6.2-1900 through 6.2-1921) of Title 6.2 of the Code of Virginia, relating to financial institutions; regulation of money transmitters; penalty.
Be it enacted by the General Assembly of Virginia:
1. That §§ 6.2-1523.1, 6.2-2001, 18.2-516, 19.2-10.1, 19.2-56, and 19.2-389 of the Code of Virginia are amended and reenacted and that the Code of Virginia is amended by adding in Title 6.2 a chapter numbered 19.1, consisting of sections numbered 6.2-1922 through 6.2-1957, as follows:
§ 6.2-1523.1. Access partners.
A. Notwithstanding the provisions of §§ 6.2-1501 and 6.2-1518, a licensee may use the services of one or more access partners, provided that all of the following conditions are met:
1. All loans made in connection with an access partner comply with the requirements of this chapter.
2. The licensee maintains a written agreement with each access partner. The written agreement shall (i) require the access partner to comply with this section and all rules adopted under this section regarding the activities of access partners; (ii) give the Commission access to the access partner's books and records pertaining to the access partner's operations under the agreement with the licensee in accordance with § 6.2-1533 and authority to examine the access partner pursuant to § 6.2-1531; (iii) prohibit the access partner from charging or accepting any fees or compensation in connection with a loan from any person, other than what the licensee pays to the access partner under the terms of the contract; and (iv) require the access partner to keep written records sufficient to ensure compliance with this chapter, including records of all loan disbursements and loan payments for at least three years.
3. A licensee shall conduct a due diligence review of all access partners. The due diligence shall include a review of the access partner's financial soundness and legal compliance and the criminal history of the access partner and its employees. A licensee shall be responsible for implementing and maintaining a reasonable risk-based supervision program to monitor its access partners. The licensee shall provide to the Commission any information relating to the access partners as the Commissioner prescribes. Such information shall be provided in a form and manner as prescribed by the Commissioner.
4. The services of an access partner shall be limited to (i) distributing written materials or providing written factual information about loans that has been prepared or authorized in writing by the licensee; (ii) explaining the loan application process to prospective borrowers or assisting applicants to complete a loan application according to procedures the licensee approves; (iii) processing credit applications provided by the licensee, which applications shall clearly state that the licensee is the lender and disclose the licensee's contact information and how to submit complaints to the Commission; (iv) communicating with the licensee or the applicant about the status of applications; (v) obtaining the borrower's signature on documents prepared by the licensee and delivering final documents to the borrower; (vi) disbursing loan proceeds or receiving loan payments, provided the access partner provides a plain and complete written receipt at the time each disbursement or payment is made; and (vii) operating electronic access points through which a prospective borrower may directly access the website of the licensee to apply for a loan.
5. An access partner shall not (i) provide counseling or advice to a borrower or prospective borrower with respect to any loan term; (ii) provide loan-related marketing material that has not previously been approved by the licensee; (iii) negotiate a loan term between a licensee and a prospective borrower; (iv) offer information pertaining to a single prospective borrower to more than one licensee, except that if a licensee has declined to offer a loan to a prospective borrower in writing the access partner may offer information pertaining to that borrower to another licensee with whom it has an access partner agreement; or (v) offer information pertaining to any prospective borrower to any person or entity other than a licensee operating under this chapter, subject to clause (iv).
6. A licensee shall apply any payment a borrower makes to an access partner as of the date on which the payment is received by the access partner.
7. A licensee shall not (i) hold a borrower liable for a failure or delay by an access partner in transmitting a payment to the licensee; (ii) knowingly conduct business with an access partner that has solicited or accepted fees or compensation in connection with a licensee's loan other than what is specified in the written agreement described in subdivision 2; or (iii) directly or indirectly pass on to a borrower any fee or other compensation that a licensee pays to an access partner in connection with such borrower's loan.
B. A licensee shall be responsible for any act of its access partner if such act would violate any provision of this chapter.
C. The Commission may (i) bar a licensee that violates any part of this chapter from using the services of specified access partners, or access partners generally; (ii) subject a licensee to disciplinary action for any violation of this chapter committed by a contracted access partner; or (iii) bar any person who violates the requirements of this chapter from performing services pursuant to this chapter generally or at particular locations.
D. The Commission shall have the authority to conduct investigation and examination of access partners, provided the scope of any investigation or examination shall be limited to those books, accounts, records, documents, materials, and matters reasonably necessary to determine compliance with this chapter.
E. An access partner location shall not be considered an office for purposes of § 6.2-1508.1.
F. An access partner shall not be required to be licensed under Chapter 19 (§ 6.2-1900 et seq.) Chapter 19.1 (§ 6.2-1922 et seq.) to provide the services of an access partner described in subdivision A 4.
CHAPTER 19.1.
MONEY TRANSMITTERS.
§ 6.2-1922. Definitions.
As used in this chapter, unless the context requires a different meaning:
"Authorized delegate" means a person a licensee designates to engage in money transmission on behalf of the licensee.
"Average daily money transmission liability" means the amount of a person's outstanding money transmission obligations in the Commonwealth at the end of each day in a given period of time, added together, and divided by the total number of days in the given period of time. For purposes of calculating average daily money transmission liability under this chapter for any person required to do so, the given period of time shall be the quarters ending March 31, June 30, September 30, and December 31.
"Bank Secrecy Act" means the federal Bank Secrecy Act (31 U.S.C. § 5311 et seq.) and its implementing regulations.
"Closed loop stored value" means stored value that is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value;
"Control" means the power to (i) vote, directly or indirectly, at least 25 percent of the outstanding voting shares or voting interests of a licensee, applicant, or person in control of a licensee or applicant; (ii) elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a person in control of a licensee or applicant; or (iii) exercise, directly or indirectly, a controlling influence over the management or policies of a licensee, applicant, or person in control of a licensee or applicant. A person shall be presumed to exercise a controlling influence when the person holds the power to vote, directly or indirectly, at least 10 percent of the outstanding voting shares or voting interests of a licensee, applicant, or person in control of a licensee or applicant. Such presumption is rebuttable if the person is a passive investor. For purposes of determining the percentage of a person controlled by any other person, the person's interest shall be aggregated with the interest of any other immediate family member, including the person's spouse, parents, children, siblings, mothers-in-law and fathers-in law, sons-in-law and daughters-in-law, brothers-in-law and sisters-in-law, and any other person who shares such person's home.
"Eligible rating" means a credit rating of any of the three highest rating categories provided by an eligible rating service, whereby each category may include rating category modifiers such as "plus" or "minus" for S&P, or the equivalent for any other eligible rating service. Long-term credit ratings shall be deemed eligible if the rating is equal to A- or higher by S&P, or the equivalent from any other eligible rating service. Short-term credit ratings shall be deemed eligible if the rating is equal to or higher than A-2 or SP-2 by S&P, or the equivalent from any other eligible rating service. In the event that ratings differ among eligible rating services, the highest rating shall apply when determining whether a security bears an eligible rating.
"Eligible rating service" means any Nationally Recognized Statistical Rating Organization (NRSRO), as defined by the U.S. Securities and Exchange Commission, and any other organization designated by the Commission by regulation or order.
"Federally insured depository financial institution" means a bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank, or industrial loan company organized under the laws of the United States or any state of the United States, when such bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank, or industrial loan company has federally insured deposits.
"Group of persons acting in concert" means two or more persons knowingly acting together with a common goal of jointly acquiring control of a licensee whether or not pursuant to an express agreement.
"In the Commonwealth" means at a physical location within the Commonwealth for a transaction requested in person. For a transaction requested electronically or by phone, the provider of money transmission shall determine if the person requesting the transaction is in the Commonwealth by relying on other information provided by the person regarding the location of the individual's residential address or a business entity's principal place of business or other physical address location, and any records associated with the person that the provider of money transmission may have that indicate such location, including an address associated with an account.
"Individual" means a natural person.
"Key individual" means any individual ultimately responsible for establishing or directing policies and procedures of the licensee or applicant, such as an executive officer, manager, director, or trustee.
"Licensee" means a person licensed under this chapter.
"Material litigation" means litigation that, according to generally accepted accounting principles, is significant to a person's financial health and would be required to be disclosed in the person's annual audited financial statements, report to shareholders, or similar records.
"Monetary value" means a medium of exchange, whether or not redeemable in money.
"Money" means a medium of exchange that is authorized or adopted by the United States or a foreign government. The term includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments. Notwithstanding the foregoing, "money" does not include virtual currency.
"Money transmission" means (i) selling or issuing payment instruments to a person located in the Commonwealth, (ii) selling or issuing stored value to a person located in the Commonwealth, or (iii) receiving money for transmission from a person located in the Commonwealth. "Money transmission" includes payroll processing services and does not include the provision solely of online or telecommunications services or network access.
"MSB-accredited state" means a state agency or a division, department, or instrumentality thereof that is accredited by the Conference of State Bank Supervisors and Money Transmitter Regulators Association for money transmission licensing and supervision.
"Multistate licensing process" means any agreement entered into by and among state regulators relating to coordinated processing of applications for money transmission licenses, applications for the acquisition of control of a licensee, control determinations, or notice and information requirements for a change of key individuals.
"Nationwide Multistate Licensing System and Registry" or "NMLS" means the licensing and registration system operated by the State Regulatory Registry LLC.
"Outstanding money transmission obligations" means (i) any payment instrument or stored value issued or sold by the licensee to a person located in the United States or reported as sold by an authorized delegate of the licensee to a person that is located in the United States that has not yet been paid or refunded by or for the licensee, or escheated in accordance with applicable abandoned property laws or (ii) any money received for transmission by the licensee or an authorized delegate in the United States from a person located in any state that has not been received by the payee or refunded to the sender, or escheated in accordance with applicable abandoned property laws.
"Passive investor" means a person that (i) does not have the power to elect a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a person in control of a licensee; (ii) is not employed by and does not have any managerial duties of the licensee or person in control of a licensee; (iii) does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee; and (iv) attests to clauses (i), (ii), and (iii) in a form and in a medium prescribed by the Commission or commits to the passivity characteristics of (i), (ii), and (iii) in a written document.
"Payment instrument" means a written or electronic check, draft, money order, traveler's check, or other written or electronic instrument for the transmission or payment of money or monetary value, whether or not negotiable. "Payment instrument" does not include stored value or any instrument that (i) is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value or (ii) is not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.
"Payroll processing services" means receiving money for transmission pursuant to a contract with a person to deliver wages or salaries, make payment of payroll taxes to state and federal agencies, make payments relating to employee benefit plans, or make distributions of other authorized deductions from wages or salaries. "Payroll processing services" does not include an employer performing payroll processing services on its own behalf or on behalf of its affiliate, or a professional employment organization subject to regulation under other applicable state law.
"Person" means any individual, general partnership, limited partnership, limited liability company, corporation, trust, association, joint stock corporation, or other corporate entity identified by the Commission.
"Receiving money for transmission" or "money received for transmission" means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means.
"Stored value" means monetary value representing a claim against the issuer evidenced by an electronic or digital record, and that is intended and accepted for use as a means of redemption for money or monetary value, or payment for goods or services. "Stored value" includes prepaid access, as that term is defined by 31 C.F.R. § 1010.100. Notwithstanding the foregoing, the term "stored value" does not include a payment instrument or closed loop stored value, or stored value not sold to the public but issued and distributed as part of a loyalty, rewards, or promotional program.
"Tangible net worth" means the aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with generally accepted accounting principles.
"Virtual currency" means a digital representation of value that is (i) used as a medium of exchange, unit of account, or store of value and (ii) not money, whether or not denominated in money. Notwithstanding the foregoing, "virtual currency" does not include (a) a transaction in which a merchant grants, as part of an affinity or rewards program, value that cannot be taken from or exchanged with the merchant for money, bank credit, or virtual currency or (b) a digital representation of value issued by or on behalf of a publisher and used solely within an online game, game platform, or family of games sold by the same publisher or offered on the same game platform.
§ 6.2-1923. Exemptions.
The provisions of this chapter shall not apply to:
1. An operator of a payment system, to the extent that it provides processing, clearing, or settlement services between or among persons exempted by this section, or licensees, in connection with wire transfers, credit card transactions, debit card transactions, stored-value transactions, automated clearing house transfers, or similar funds transfers.
2. A person appointed as an agent of a payee to collect and process a payment from a payor to the payee for goods or services, other than money transmission itself, provided to the payor by the payee, provided that (i) there exists a written agreement between the payee and the agent directing the agent to collect and process payments from payors on the payee's behalf; (ii) the payee holds the agent out to the public as accepting payments for goods or services on the payee's behalf; and (iii) payment for the goods and services is treated as received by the payee upon receipt by the agent so that the payor's obligation is extinguished and there is no risk of loss to the payor if the agent fails to remit the funds to the payee.
3. A person that acts as an intermediary by processing payments between an entity that has directly incurred an outstanding money transmission obligation to a sender and the sender's designated recipient, provided that the entity (i) is properly licensed or exempt from licensing requirements under this chapter; (ii) provides a receipt, electronic record, or other written confirmation to the sender identifying the entity as the provider of money transmission in the transaction; and (iii) bears sole responsibility to satisfy the outstanding money transmission obligation to the sender, including the obligation to make the sender whole in connection with any failure to transmit the funds to the sender's designated recipient.
4. The United States or any department, agency, or instrumentality thereof, or its agent.
5. Money transmission by the United States Postal Service or by an agent of the United States Postal Service.
6. A state, county, city, or any other governmental agency or governmental subdivision or instrumentality of a state, or its agent.
7. A federally insured depository financial institution, bank holding company, office of an international banking corporation, foreign bank that establishes a federal branch pursuant to the federal International Bank Act (12 U.S.C. § 3102 et seq.), corporation organized pursuant to the federal Bank Service Company Act (12 U.S.C. § 1861 et seq.), or corporation organized under the federal Edge Act (12 U.S.C. § 611 et seq.).
8. An electronic funds transfer of governmental benefits for a federal, state, county, or governmental agency by a contractor on behalf of the United States or a department, agency, or instrumentality thereof, or on behalf of a state, county, or governmental subdivision, agency, or instrumentality thereof.
9. A board of trade designated as a contract market under the federal Commodity Exchange Act (7 U.S.C. § 1 et seq.) or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for such a board.
10. A registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant.
11. A person registered as a securities broker-dealer under federal or state securities laws to the extent of its operation as such a broker-dealer.
12. An individual employed by a licensee, authorized delegate, or any person exempted from the licensing requirements of this chapter when acting within the scope of employment and under the supervision of the licensee, authorized delegate, or exempted person as an employee and not as an independent contractor.
13. A person expressly appointed as a third-party service provider to or agent of an entity exempt under subdivision 7 solely to the extent that (i) such service provider or agent is engaging in money transmission on behalf of and pursuant to a written agreement with the exempt entity that sets forth the specific functions that the service provider or agent is to perform and (ii) the exempt entity assumes all risk of loss and all legal responsibility for satisfying the outstanding money transmission obligations owed to purchasers and holders of the outstanding money transmission obligations upon receipt of the purchaser's or holder's money or monetary value by the service provider or agent.
14. Any private security services business, licensed under § 9.1-139, that transports or offers to transport money.
15. A person appointed as an agent of a payor for purposes of providing payroll processing services for which the agent would otherwise need to be licensed, provided that (i) there is a written agreement between the payor and the agent that directs the agent to provide payroll processing services on the payor's behalf; (ii) the payor holds the agent out to employees and other payees as providing payroll processing services on the payor's behalf; and (iii) the payor's obligation to a payee, including an employee or any other party entitled to receive funds via the payroll processing services provided by the agent, shall not be extinguished if the agent fails to remit the funds to the payee.
§ 6.2-1924. Implementation.
A. In order to carry out the purposes of this chapter, the Commission may:
1. Enter into agreements or relationships with other government officials or federal and state regulatory agencies and regulatory associations in order to improve efficiencies and reduce regulatory burden by standardizing methods or procedures, and sharing resources, records, or related information obtained under this chapter;
2. Use, hire, contract, or employ analytical systems, methods, or software to examine or investigate any person subject to this chapter;
3. Accept, from other state or federal government agencies or officials, licensing, examination, or investigation reports made by such other state or federal government agencies or officials; and
4. Accept audit reports made by an independent certified public accountant or other qualified third-party auditor for an applicant or licensee and incorporate the audit report in any report of examination or investigation.
B. In addition to the authority provided elsewhere in this chapter, the Commission shall have the broad administrative authority to administer, interpret, and enforce this chapter and to recover the cost of administering and enforcing this chapter by imposing and collecting proportionate and equitable fees and costs associated with applications, examinations, investigations, and other actions required to achieve the purpose of this chapter.
§ 6.2-1925. Regulations.
The Commission shall adopt such regulations as it deems appropriate to effect the purposes of this chapter. Before adopting any such regulation, the Commission shall give reasonable notice of its content and shall afford interested parties an opportunity to be heard, in accordance with the Commission's Rules.
§ 6.2-1926. Supervision.
A. The Commission may conduct an examination or investigation of a licensee or authorized delegate or otherwise take independent action authorized by this chapter or by a regulation adopted or order issued under this chapter as reasonably necessary or appropriate to administer and enforce this chapter, regulations implementing this chapter, and other applicable law, including the Bank Secrecy Act and the federal U.S.A. Patriot Act of 2001 (49 U.S.C. § 5103a et seq.). The Commission may:
1. Conduct an examination or investigation either on site or off site as the Commission may reasonably require;
2. Conduct an examination or investigation in conjunction with an examination or investigation conducted by representatives of other state agencies or agencies of another state or of the federal government;
3. Accept the examination or investigation report of an agency of another state or of the federal government, or a report prepared by an independent accounting firm, which on being accepted is considered for all purposes as an official report of the Commission; and
4. Examine or investigate under oath a key individual or employee of a licensee or authorized delegate and require the person to produce records regarding any matter related to the condition and business of the licensee or authorized delegate.
B. A licensee or authorized delegate shall provide, and the Commission shall have full and complete access to, all records the Commission may reasonably require to conduct a complete examination. The records shall be provided at the location and in the format specified by the Commission, provided that the Commission may utilize multistate record production standards and examination procedures when such standards and procedures will reasonably achieve the requirements of this section.
C. Unless otherwise directed by the Commission, a licensee shall pay all costs reasonably incurred in connection with an examination of the licensee or the licensee's authorized delegates.
§ 6.2-1927. Networked supervision.
A. To efficiently and effectively administer and enforce this chapter and to minimize regulatory burden, the Commission is authorized and encouraged to participate in multistate supervisory processes established between states and coordinated through the Conference of State Bank Supervisors, the Money Transmitter Regulators Association, and affiliates and successors thereof for all licensees that hold licenses in the Commonwealth and other states. As a participant in multistate supervision, the Commission may:
1. Cooperate, coordinate, and share information with other state and federal regulators;
2. Enter into written cooperation, coordination, or information-sharing contracts or agreements with organizations whose membership is made up of state or federal governmental agencies; and
3. Cooperate, coordinate, and share information with organizations whose membership is made up of state or federal governmental agencies, provided that the organizations agree in writing to maintain the confidentiality and security of the shared information.
B. The Commission shall not waive, and nothing in this section shall constitute a waiver of, the Commission's authority to conduct an examination or investigation or otherwise take independent action authorized by this chapter or a regulation adopted or order issued under this chapter to enforce compliance with applicable state or federal law.
C. A joint examination or investigation, or acceptance of an examination or investigation report, shall not waive an examination assessment provided for in this chapter.
§ 6.2-1928. Relationship to federal law.
A. In the event state money transmission jurisdiction is conditioned on a federal law, any inconsistencies between a provision of this chapter and the federal law governing money transmission shall be governed by the applicable federal law to the extent of the inconsistency.
B. In the event of any inconsistencies between this chapter and a federal law that governs pursuant to subsection A, the Commission may provide interpretive guidance that identifies the inconsistency and identifies the appropriate means of compliance with federal law.
§ 6.2-1929. License required.
A. No person shall engage in the business of money transmission or advertise, solicit, or hold itself out as providing money transmission unless the person is licensed under this chapter.
B. No person that is an authorized delegate of a person licensed under this chapter acting within the scope of authority conferred by a written contract with the licensee shall be required to be licensed under this chapter.
C. A license issued under § 6.2-1933 is not transferable or assignable.
§ 6.2-1930. Consistent state licensing.
A. In order to establish consistent licensing between the Commonwealth and other states, the Commission may (i) implement all licensing provisions of this chapter in a manner that is consistent with other states that have adopted similar provisions or multistate licensing processes and (ii) participate in nationwide protocols for licensing cooperation and coordination among state regulators provided that such protocols are consistent with this chapter.
B. In order to fulfill the purposes of this chapter, the Commission may establish relationships or contracts with NMLS or other entities designated by NMLS to enable the Commission to (i) collect and maintain records, (ii) coordinate multistate licensing processes and supervision processes, (iii) collect and process fees, and (iv) facilitate communication between the Commonwealth and licensees or other persons subject to this chapter. In establishing such contracts, the Commission shall not be subject to the Virginia Public Procurement Act (§ 2.2-4300 et seq.).
C. The Commission may utilize NMLS for all aspects of this chapter, including license applications, applications for acquisitions of control, surety bonds, reporting, criminal history background checks, credit checks, fee processing, and examinations.
D. The Commission may utilize NMLS forms, processes, and functionalities in accordance with this chapter. In the event NMLS does not provide functionality, forms, or processes for a provision of this chapter, the Commission may strive to implement the requirements in a manner that facilitates uniformity with respect to licensing, supervision, reporting, and regulation of licensees that are licensed in multiple jurisdictions.
E. Every person required to be licensed under this chapter shall register with NMLS and be subject to such registration and renewal requirements as may be established by NMLS, in addition to any requirements of this chapter.
§ 6.2-1931. Application for license.
A. Applicants for a license, which shall be entities, shall apply in a form and in a medium as prescribed by the Commission. Each such form shall contain content as set forth in regulation, instruction, or procedure of the Commission and may be changed or updated by the Commission in accordance with applicable law in order to carry out the purposes of this chapter and maintain consistency with NMLS licensing standards and practices. The application shall include, as applicable:
1. The legal name and business address of the applicant and any fictitious or trade name used by the applicant in conducting its business;
2. A list of (i) any material litigation in which the applicant or any person in control of the applicant that is not an individual has been the subject of or involved in during the 10-year period preceding the submission of the application and (ii) criminal convictions of the applicant and each person in control of the applicant that is not an individual;
3. A description of any money transmission previously provided by the applicant and the money transmission that the applicant seeks to provide under this chapter;
4. A list of the applicant's proposed authorized delegates and the locations where the applicant and its authorized delegates propose to engage in money transmission;
5. A list of other states in which the applicant is licensed to engage in money transmission and any license revocations, suspensions, or other disciplinary action taken against the applicant in another state;
6. Information concerning any bankruptcy or receivership proceedings affecting the applicant or a person in control of the applicant;
7. A sample form of contract for authorized delegates;
8. A sample form of payment instrument or stored value;
9. The name and address of any federally insured depository financial institution through which the applicant plans to conduct money transmission;
10. The date of the applicant's incorporation or formation and jurisdiction of incorporation or formation;
11. A certificate of good standing from the jurisdiction in which the applicant is incorporated or formed, provided that such jurisdiction furnishes certificates of good standing;
12. A brief description of the structure or organization of the applicant, including any parents or subsidiaries of the applicant, and whether any parents or subsidiaries are publicly traded;
13. The legal name and any fictitious or trade name of each key individual and person in control of the applicant;
14. All business and residential addresses, and the employment history, as applicable, in the 10-year period preceding the submission of the application of each key individual and person in control of the applicant;
15. A copy of audited financial statements of the applicant for the most recent fiscal year and for the two-year period preceding the submission of the application;
16. A certified copy of unaudited financial statements of the applicant for the most recent fiscal quarter;
17. If the applicant is a publicly traded corporation, a copy of the most recent report filed with the U. S. Securities and Exchange Commission under § 13 of the federal Securities Exchange Act of 1934;
18. If the applicant is a wholly owned subsidiary of (i) a corporation publicly traded in the United States, a copy of audited financial statements for the parent corporation for the most recent fiscal year or a copy of the parent corporation's most recent report filed under § 13 of the federal Securities Exchange Act of 1934, or (ii) a corporation publicly traded outside the United States, a copy of similar documentation filed with the regulator of the parent corporation's domicile outside the United States;
19. The name and address of the applicant's registered agent in the Commonwealth; and
20. Any other information the Commission reasonably requires with respect to the applicant and all key individuals and persons in control of the applicant.
B. A nonrefundable application fee of $1,000 shall accompany an application for a license under this section.
C. If any material information provided in connection with an application changes during the investigation period, the applicant shall immediately notify the Commission.
§ 6.2-1932. Information required for certain individuals.
A. Any individual in control of a licensee or applicant, any individual that seeks to acquire control of a licensee, and each key individual shall furnish to the Commission through NMLS the following items:
1. The individual's fingerprints for submission to the Federal Bureau of Investigation for purposes of a national criminal history background check unless the person currently resides outside of the United States and has resided outside of the United States for the last 10 years.
2. Personal history and experience in a form and in a medium prescribed by the Commission, including (i) information enabling the Commission to obtain an independent credit report from a consumer reporting agency unless the individual does not have a social security number, in which case this requirement shall be waived; (ii) information related to any criminal convictions or pending charges; and (iii) information related to any regulatory or administrative action and any civil litigation involving claims of fraud, misrepresentation, conversion, mismanagement of funds, breach of fiduciary duty, or breach of contract.
B. If an individual referenced in subsection A has resided outside of the United States at any time in the last 10 years, the individual shall also cause an investigative background report to be prepared by an independent search firm. The individual shall pay for the cost of such report, and the report shall be sent directly by the search firm to the Commission. At a minimum, the search firm shall (i) demonstrate that it has sufficient knowledge and resources and employs accepted and reasonable methodologies to conduct the research of the background report and (ii) not be affiliated with or have an interest with the individual it is researching. At a minimum, the investigative background report shall be written in the English language and shall contain the following: (a) if available in the individual's current jurisdiction of residency, a comprehensive credit report, or any equivalent information obtained or generated by the independent search firm to accomplish such report, including a search of the court data in the countries, provinces, states, cities, towns, and other areas where the individual resided and worked; (b) criminal records information for the past 10 years, including felonies, misdemeanors, or similar convictions for violations of law in the countries, provinces, states, cities, towns, and other areas where the individual resided and worked; (c) employment history; (d) media history, including an electronic search of national and local publications, wire services, and business applications; and (e) financial services-related regulatory history, including money transmission, securities, banking, insurance, and mortgage-related industries.
§ 6.2-1933. Issuance of license.
A. When the Commission determines that an application is complete, the Commission shall promptly notify the applicant in a record of the date on which the application is determined to be complete, and shall approve or deny the application within 120 days after the completion date. If the application is not approved or denied within 120 days after the completion date, the application shall be deemed approved and the license shall take effect as of the first business day after expiration of the 120-day period. The Commission may for good cause extend the application period.
B. A determination by the Commission that an application is complete and is accepted for processing means only that the application, on its face, appears to include all of the items, including the criminal background check response from the Federal Bureau of Investigation, and address all of the matters that are required and is not an assessment of the substance of the application or of the sufficiency of the information provided.
C. When an application is filed and considered complete under this section, the Commission shall investigate the financial condition and responsibility, financial and business experience, competence, character, and general fitness of the applicant, each key individual, and each person in control of the applicant. The Commission may conduct an on-site investigation of the applicant, the reasonable cost of which the applicant shall pay. The Commission shall issue a license to an applicant if the Commission finds that (i) the applicant, each key individual, and each person in control of the applicant have complied with §§ 6.2-1931 and 6.2-1932; (ii) the applicant meets the requirements in §§ 6.2-1950, 6.2-1951, and 6.2-1952; and (iii) the financial condition and responsibility, financial and business experience, competence, character, and general fitness of the applicant and the competence, experience, character, and general fitness of the key individuals and persons in control of the applicant indicate that it is in the interest of the public to permit the applicant to engage in money transmission.
D. If an applicant avails itself or is otherwise subject to a multistate licensing process, (i) the Commission may accept the investigation results of a lead investigative state for the purpose of subsection C if the Commission finds that the lead investigative state has sufficient staffing, expertise, and minimum standards or (ii) if the Commonwealth is a lead investigative state, the Commission may investigate the applicant pursuant to subsection C and the timeframes established by agreement through the multistate licensing process, provided, however, that in no case shall such timeframe be noncompliant with the application period established in subsection A.
E. The Commission shall issue a formal written notice of the denial of a license application within 30 days of the decision to deny the application. The Commission shall set forth in the notice of denial the specific reasons for the denial of the application. An applicant whose application is denied by the Commission under this subsection may appeal in accordance with applicable law.
F. The initial license term shall begin on the day the application is approved. The license shall expire on December 31 of the year in which the license term began, unless the initial license date is between November 1 and December 31, in which instance the initial license term shall run through December 31 of the following year.
§ 6.2-1934. License renewal.
A. A license issued under this chapter shall be renewed annually. An annual renewal fee of $750 shall be paid no more than 60 days before the license expiration. The renewal term shall be for a period of one year and shall begin on January 1 of each year after the initial license term and shall expire on December 31 of the year the renewal term begins.
B. A licensee shall submit a renewal report with the renewal fee, in a form and in a medium prescribed by the Commission. The renewal report shall state or contain a description of each material change in information submitted by the licensee in its original license application that has not been reported to the Commission.
C. The Commission for good cause may grant an extension of the expiration date.
D. The Commission may utilize NMLS to process license renewals provided that such functionality is consistent with this section.
§ 6.2-1935. Maintenance of license.
If a licensee does not continue to meet the qualifications or satisfy the requirements that apply to an applicant for a new money transmission license, the Commission may suspend or revoke the licensee's license in accordance with the procedures established by this chapter or other applicable state law for such suspension or revocation.
§ 6.2-1936. Acquisition of control.
A. Any person, or group of persons acting in concert, seeking to acquire control of a licensee shall obtain the written approval of the Commission prior to acquiring control. An individual shall not be deemed to acquire control of a licensee and shall not be subject to the provisions of this section solely because that individual becomes a key individual.
B. A person, or group of persons acting in concert, seeking to acquire control of a licensee shall, in cooperation with the licensee, submit (i) an application in a form and in a medium prescribed by the Commission and (ii) a nonrefundable fee of $1,000 with the request for approval.
C. Upon request, the Commission may permit a licensee or the person, or group of persons acting in concert, to submit some or all information required by the Commission without using NMLS.
D. The application required by subsection B shall include the items required by § 6.2-1932 for any new key individuals that have not previously completed the requirements of § 6.2-1932 for a licensee.
E. When the Commission determines that an application is complete, the Commission shall promptly notify the applicant in a record of the date on which the application was determined to be complete and shall approve or deny the application within 60 days after the completion date. If the application is not approved or denied within 60 days after the completion date, the application shall be deemed approved and the person, or group of persons acting in concert, may acquire control. The Commission may for good cause extend the application period.
F. A determination by the Commission that an application is complete and is accepted for processing means only that the application, on its face, appears to include all of the items and address all of the matters that are required and is not an assessment of the substance of the application or of the sufficiency of the information provided.
G. If any material information provided in connection with an application changes during the investigation period, the applicant shall immediately notify the Commission.
H. When an application is filed and considered complete under subsection E, the Commission shall investigate the financial condition and responsibility, financial and business experience, competence, character, and general fitness of (i) the person, or group of persons acting in concert, seeking to acquire control and (ii) each key individual and person in control of such person or group of persons acting in concert. The Commission shall approve an acquisition of control if the Commission finds that:
1. The requirements of subsections B and D have been met, as applicable; and
2. The financial condition and responsibility, financial and business experience, competence, character, and general fitness of the person, or group of persons acting in concert, seeking to acquire control, and the competence, experience, character, and general fitness of the proposed new key individuals and persons that would be in control of the licensee after the acquisition of control indicate that it is in the public interest to permit the person, or group of persons acting in concert, to control the licensee.
I. If an applicant invokes or is otherwise subject to a multistate licensing process, (i) the Commission may accept the investigation results of a lead investigative state for the purpose of subsection H if the Commission finds that the lead investigative state has sufficient staffing, expertise, and minimum standards or (ii) if the Commonwealth is a lead investigative state, the Commission may investigate the applicant pursuant to subsection H and the timeframes established by agreement through the multistate licensing process.
J. The Commission shall issue a formal written notice of the denial of an application to acquire control within 30 days of the decision to deny the application. The Commission shall set forth in the notice of denial the specific reasons for the denial of the application. An applicant whose application is denied by the Commission may appeal in accordance with applicable law.
K. The requirements of subsections A and B do not apply to any of the following:
1. A person that acts as a proxy for the sole purpose of voting at a designated meeting of the shareholders or holders of voting shares or voting interests of a licensee or a person in control of a licensee;
2. A person that acquires control of a licensee by devise or descent;
3. A person that acquires control of a licensee as (i) a personal representative, custodian, guardian, conservator, or trustee or (ii) an officer appointed by a court of competent jurisdiction or by operation of law;
4. A person that is exempt under subdivision A 7 of § 6.2-1923;
5. A person that the Commission determines is not subject to subsection A based on the public interest;
6. A public offering of securities of a licensee or a person in control of a licensee; or
7. An internal reorganization of a person in control of the licensee where the ultimate person in control of the licensee remains the same.
L. Persons described in subdivisions K 2, 3, 4, 6, and 7 shall notify the Commission within 15 days after the acquisition of control.
M. The requirements of subsections A and B do not apply to a person that has complied with and received approval to engage in money transmission under this chapter or was identified as a person in control in a prior application filed with and approved by the Commission under this chapter or by an MSB-accredited state pursuant to a multistate licensing process, provided that:
1. The person has not had a license revoked or suspended or controlled a licensee that has had a license revoked or suspended while the person was in control of the licensee in the previous five years;
2. If the person is a licensee, the Commission finds that the person is well-managed and has received at least a satisfactory rating for compliance at its most recent examination by an MSB-accredited state if such rating was given;
3. The licensee to be acquired is projected to meet the requirements of §§ 6.2-1950, 6.2-1951, and 6.2-1952 beginning on the date the acquisition of control is completed, and if the person acquiring control is a licensee, that licensee is also projected to meet the requirements of §§ 6.2-1950, 6.2-1951, and 6.2-1952 beginning on the date the acquisition of control is completed;
4. The licensee to be acquired will not implement any material changes to its business plan as a result of the acquisition of control, and if the person acquiring control is a licensee, that licensee also will not implement any material changes to its business plan as a result of the acquisition of control; and
5. The person notifies the Commission of the acquisition in cooperation with the licensee and attests to subdivisions 1 through 4 in a form and in a medium prescribed by the Commission.
If such notice is not disapproved within 30 days after the date on which the notice was determined to be complete, the notice shall be deemed approved.
N. Before filing an application for approval to acquire control of a licensee, a person may request in writing a determination from the Commission as to whether the person would be considered a person in control of a licensee upon consummation of a proposed transaction. If the Commission determines that the person would not be a person in control of a licensee, the person and transaction is not subject to the requirements of subsections A and B.
O. If a multistate licensing process includes a determination pursuant to subsection N or the equivalent law of another state and a person invokes or is otherwise subject to the multistate licensing process, (i) the Commission may accept the control determination of a lead investigative state if the Commission finds that the lead investigative state has sufficient staffing, expertise, and minimum standards or (ii) if the Commonwealth is a lead investigative state, the Commission may investigate the person using the timeframes established by agreement through the multistate licensing process.
P. If any person acquires an ownership interest in a licensee without obtaining prior approval from the Commission as required by this section, the Commission may for good cause shown order such person to divest himself or itself of such ownership interest.
Q. The Commission shall not enter an order requiring divestiture pursuant to subsection P until it has given the person 21 days' notice in writing of the reasons for the proposed divestiture and has given the person an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to such person and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not require divestiture except based upon findings made at such hearing.
§ 6.2-1937. Change of key individual; notice and required information.
A. A licensee adding or replacing any key individual shall (i) provide notice in a manner prescribed by the Commission within 15 days after the effective date of the key individual's appointment and (ii) cause the new key individual to provide the items required by § 6.2-1932 within 45 days after the effective date.
B. Within 90 days after the date on which the notice provided pursuant to subsection A was determined by the Commission to be complete, the Commission may investigate the key individual and issue a notice of disapproval of a key individual if the competence, experience, character, or integrity of the individual is not in the best interests of the public or the customers of the licensee to permit the individual to be a key individual of such licensee.
C. A notice of disapproval shall contain a statement of the basis for disapproval and shall be sent to the licensee and the disapproved individual. A licensee may appeal a notice of disapproval in accordance with applicable law.
D. If the notice provided pursuant to subsection A is not disapproved within 90 days after the date on which the notice was determined to be complete, the key individual shall be deemed approved.
E. If a multistate licensing process includes a key individual notice review and disapproval process and the licensee avails itself or is otherwise subject to the multistate licensing process, (i) the Commission may accept the determination of a lead investigative state if the Commission finds that the lead investigative state has sufficient staffing, expertise, and minimum standards or (ii) if the Commonwealth is a lead investigative state, the Commission may investigate the key individual using the timeframes established by agreement through the multistate licensing process notwithstanding the timeframes prescribed in subsections B and D.
§ 6.2-1938. Report of condition.
A. Each licensee shall submit to the Commission a report of condition within 45 days after the end of every calendar quarter, or within any extended time as the Commission may prescribe.
B. The report of condition shall include:
1. Financial information at the licensee level;
2. Nationwide and state-specific money transmission transaction information for every jurisdiction in the United States where the licensee is licensed to engage in money transmission;
3. A permissible investments report;
4. Transaction destination country reporting for money received for transmission, if applicable; and
5. Any other information the Commission reasonably requires with respect to the licensee. The Commission is authorized and encouraged to allow or require licensees to utilize NMLS for the submission of the report required by this section.
C. The information required by subdivision B 4 shall only be included in a report of condition submitted within 45 days after the end of the fourth calendar quarter.
§ 6.2-1939. Audited financials.
A. Each licensee shall, within 90 days after the end of each fiscal year, or within any extended time as the Commission may prescribe, file with the Commission:
1. Its audited financial statements for the fiscal year prepared in accordance with generally accepted accounting principles; and
2. Any other information as the Commission may reasonably require.
B. The audited financial statements shall be prepared by an independent certified public accountant.
C. The audited financial statements shall include or be accompanied by a certificate of opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the Commission. If the certificate of opinion is qualified, the Commission may require the licensee to take any action as the Commission may find necessary to enable the independent certified public accountant or independent public accountant to remove the qualification.
§ 6.2-1940. Authorized delegate reporting.
Each licensee shall submit to the Commission a report of its authorized delegates within 45 days after the end of every calendar quarter. The report shall contain such information as may be prescribed by the Commission about all authorized delegates that were under contract with the licensee at any point during the calendar quarter. The Commission is authorized and encouraged to allow or require licensees to utilize NMLS for the submission of such reports provided that such functionality is consistent with the requirements of this section.
§ 6.2-1941. Reports of certain events.
A. A licensee shall file a report with the Commission within one business day after the licensee has reason to know of the occurrence of any of the following events:
1. The filing of a petition by or against the licensee under the United States Bankruptcy Code (11 U.S.C. § 101 et seq.) for bankruptcy or reorganization;
2. 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 the making of a general assignment for the benefit of its creditors;
3. The commencement of a proceeding to revoke or suspend its license or other authority to operate in another jurisdiction; or
4. Such other events as the Commission may prescribe by regulation.
B. A licensee shall file a report with the Commission within three business days after the licensee has reason to know of the occurrence of any of the following events:
1. An indictment, charge, or conviction of the licensee or of a key individual or person in control of the licensee for a felony;
2. An indictment, charge, or conviction of an authorized delegate for a felony; or
3. Such other events as the Commission may prescribe by regulation.
§ 6.2-1942. Reports required by federal law.
A licensee and its authorized delegates shall comply with all federal currency reporting, record keeping, and suspicious activity reporting requirements as set forth in the Bank Secrecy Act and other federal laws pertaining to money laundering. The timely filing of a complete and accurate report required by this section with the appropriate federal agency is deemed compliant with the requirements of this section.
§ 6.2-1943. Records.
A. A licensee shall maintain the following records for determining its compliance with this chapter for at least three years:
1. A record of each outstanding money transmission obligation sold;
2. A general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts;
3. Bank statements and bank reconciliation records;
4. Records of outstanding money transmission obligations;
5. Records of each money transmission obligation paid within the three-year period;
6. A list of the last known names and addresses of all of the licensee's authorized delegates; and
7. Any other records the Commission reasonably requires by regulation.
B. The items specified in subsection A shall be maintained in written or electronic form.
C. Records specified in subsection A may be maintained outside the Commonwealth if they are made accessible to the Commission on seven business days' written notice.
D. All records maintained by the licensee as required in this section are open to inspection by the Commission pursuant to § 6.2-1926.
E. Each licensee shall maintain policies and procedures sufficient for it to comply with this chapter and all other laws and regulations applicable to the conduct of its licensed business.
§ 6.2-1944. Relationship between licensee and authorized delegate; prohibited activities.
A. As used in this section, "remit" means (i) to make direct payments of money to a licensee or its representative authorized to receive money or (ii) to deposit money in a bank account specified by the licensee.
B. Before a licensee conducts business through an authorized delegate or allows a person to act as the licensee's authorized delegate, the licensee shall:
1. Adopt, and update as necessary, written policies and procedures reasonably designed to ensure that the licensee's authorized delegates comply with applicable state and federal law;
2. Enter into a written contract that complies with subsection D; and
3. Conduct a reasonable risk-based background investigation sufficient for the licensee to determine whether the authorized delegate has complied and will likely comply with applicable state and federal law.
C. The licensee's authorized delegates shall operate in full compliance with applicable state and federal law, and the licensee shall be responsible for implementing and maintaining a reasonable risk-based supervision program to monitor its authorized delegates.
D. The written contract required by subsection B shall be signed by the licensee and the authorized delegate and, at a minimum, shall:
1. Designate the person signing the contract as the licensee's authorized delegate with the authority to conduct money transmission on behalf of the licensee;
2. Set forth the nature and scope of the relationship between the licensee and the authorized delegate and the respective rights and responsibilities of the parties;
3. Require the authorized delegate to fully comply with all applicable state and federal laws and regulations;
4. Require the authorized delegate to remit and handle money in accordance with the terms of the contract between the licensee and the authorized delegate;
5. Impose a trust on money and monetary value net of fees received for money transmission for the benefit of the licensee;
6. Require the authorized delegate to prepare and maintain records as required by this chapter or regulations implementing this chapter, or as reasonably required by the Commission;
7. Acknowledge that the authorized delegate consents to examination or investigation by the Commission;
8. State that the licensee is subject to regulation by the Commission and that, as part of that regulation, the Commission may require the licensee to revoke an authorized delegate designation; and
9. Acknowledge receipt of the written policies and procedures required under subdivision B 1.
E. If the licensee's license is suspended, revoked, surrendered, or expired, the licensee shall, within five business days, provide documentation to the Commission that the licensee has notified all authorized delegates of the licensee whose names are in a record filed with the Commission of the suspension, revocation, surrender, or expiration of its license. Upon suspension, revocation, surrender, or expiration of the license, all authorized delegates shall immediately cease to provide money transmission on behalf of the licensee.
F. An authorized delegate of a licensee shall hold in trust for the benefit of the licensee all money net of fees received from money transmission. If any authorized delegate commingles any funds received from money transmission with any other funds or property owned or controlled by the authorized delegate, all commingled funds and other property shall be considered held in trust in favor of the licensee in an amount equal to the amount of money net of fees received from money transmission.
G. An authorized delegate shall not use a subdelegate or otherwise designate or appoint another person to conduct money transmission on behalf of a licensee.
H. No person shall engage in the business of money transmission on behalf of a person not licensed under this chapter or exempt pursuant to § 6.2-1923. A person that engages in such activity provides money transmission to the same extent as a person required to be licensed under this chapter and shall be jointly and severally liable with the unlicensed and nonexempt person.
§ 6.2-1945. Timely transmission.
A. Every licensee shall forward all money received for transmission in accordance with the terms of the agreement between the licensee and the sender unless the licensee has a reasonable belief or a reasonable basis to believe that the sender may be a victim of fraud or that a crime or violation of law or regulation has occurred, is occurring, or may occur.
B. If a licensee fails to forward money received for transmission in accordance with this section, the licensee shall respond to inquiries by the sender with the reason for the failure unless providing a response would violate a state or federal law or regulation.
§ 6.2-1946. Refunds.
A. Every licensee shall refund to the sender within 10 days of receipt of the sender's written request for a refund of any or all money received for transmission unless any of the following occurs:
1. The money has been forwarded within 10 days of the date on which the money was received for transmission;
2. Instructions have been given committing an equivalent amount of money to the person designated by the sender within 10 days of the date on which the money was received for transmission;
3. The agreement between the licensee and the sender instructs the licensee to forward the money at a time that is beyond 10 days of the date on which the money was received for transmission. If funds have not yet been forwarded in accordance with the terms of the agreement between the licensee and the sender, the licensee shall issue a refund in accordance with the other provisions of this section;
4. The refund is requested for a transaction that the licensee has not completed based on a reasonable belief or a reasonable basis to believe that a crime or violation of law or regulation has occurred, is occurring, or may occur; or
5. The refund request does not enable the licensee to identify (i) the sender's name and the sender's address or telephone number or (ii) the particular transaction to be refunded in the event the sender has multiple transactions outstanding.
B. The provisions of subsection A shall not apply to (i) money received for transmission subject to the federal Remittance Rule (12 C.F.R. Part 1005, Subpart B) or (ii) money received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee.
§ 6.2-1947. Receipts.
A. As used in this section, "receipt" means a paper, electronic, or other written confirmation of money received for transmission.
B. Every licensee or its authorized delegate shall provide the sender a receipt for money received for transmission. The receipt shall contain, as applicable:
1. The name of the sender;
2. The name of the designated recipient;
3. The date of the transaction;
4. The unique transaction or identification number;
5. The name of the licensee, the licensee's NMLS Unique ID number, the licensee's business address, and the licensee's customer service telephone number;
6. The amount of money to be transmitted in United States dollars;
7. Any fee charged by the licensee to the sender for the transaction; and
8. Any taxes collected by the licensee from the sender for the transaction.
C. For a transaction conducted in person, the receipt may be provided electronically if the sender requests or agrees to receive an electronic receipt. For a transaction conducted electronically or by phone, a receipt shall be provided electronically. All electronic receipts shall be provided by email or in another retainable form. The receipt shall be in English and in the language principally used by the licensee or authorized delegate, if other than English, to advertise, solicit, or negotiate a transaction.
D. The provisions of this section shall not apply to (i) money received for transmission subject to the federal Remittance Rule (12 C.F.R. Part 1005, Subpart B); (ii) money received for transmission that is not primarily for personal, family, or household purposes; (iii) money received for transmission pursuant to a written agreement between the licensee and a payee to process payments for goods or services provided by the payee; or (iv) payroll processing services.
§ 6.2-1948. Notice.
Every licensee or authorized delegate shall include on a receipt or disclose on the licensee's website and mobile application the phone number and website of the Commission and a statement that the licensee's customers can contact the Commission with complaints about the licensee's money transmission services.
§ 6.2-1949. Payroll processing services.
A. A licensee that provides payroll processing services shall:
1. Issue reports to customers detailing customer payroll obligations in advance of the payroll funds being deducted from an account; and
2. Make available worker paystubs or equivalent statements to workers.
B. The provisions of subsection A shall not apply to a licensee providing payroll processing services where the licensee's customer designates the intended recipients to the licensee and is responsible for satisfying the requirement in subdivision A 2.
§ 6.2-1950. Net worth.
A. A licensee shall maintain at all times a tangible net worth in an amount not less than the following:
1. For a licensee with total assets in an amount not greater than $100 million, the greater of $100,000 or three percent of the value of the licensee's total assets.
2. For a licensee with total assets in an amount greater than $100 million and not greater than $1 billion, the sum of $3 million and two percent of the additional assets in excess of $100 million.
3. For a licensee with total assets in an amount greater than $1 billion, the sum of $21 million and 0.5 percent of the additional assets in excess of $1 billion.
B. Tangible net worth shall be demonstrated at initial application and thereafter in a manner prescribed by the Commission.
§ 6.2-1951. Surety bond.
A. An applicant for a money transmission license shall provide, and a licensee at all times shall maintain, security consisting of a surety bond, in a form satisfactory to the Commission, or, with the Commission's approval, a deposit instead of a bond in accordance with this section.
B. The minimum amount of the required security shall be:
1. The greater of $100,000 or an amount equal to 100 percent of the applicant's or licensee's average daily money transmission liability in the Commonwealth calculated for the most recent quarter, up to a maximum of $1 million; or
2. $100,000 in the event that the applicant's or licensee's tangible net worth exceeds 10 percent of total assets.
C. An applicant or licensee that maintains a bond of $1 million pursuant to subdivision B 1 or $100,000 pursuant to subdivision B 2 shall not be required to calculate its average daily money transmission liability in the Commonwealth for purposes of this section.
D. An applicant or licensee may exceed the required security amount, including pursuant to subdivision A 5 of § 6.2-1953.
E. The security device required by this section shall remain in place for five years after a licensee ceases money transmission activities. The Commission may permit the security device to be reduced or eliminated prior to that time to the extent the amount of such licensee's outstanding money transmission transactions are reduced. The Commission may also permit any licensee to substitute a letter of credit, or such other form of security device as may be acceptable to the Commission, for the security device in place at the time the licensee ceases money transmission activities.
F. A surety bond shall remain effective until cancellation, which may occur only after 90 days' written notice to the Commission. Cancellation does not affect the rights of any claimant for any liability incurred or accrued during the period for which the bond was in force.
§ 6.2-1952. Maintenance of permissible investments.
A. A licensee shall maintain at all times permissible investments that have a market value computed in accordance with generally accepted accounting principles of not less than the aggregate amount of all of its outstanding money transmission obligations in all states.
B. Except for permissible investments enumerated in subsection A of § 6.2-1953, the Commission, with respect to any licensee, may by regulation or order limit the extent to which a specific investment within a class of permissible investments may be considered a permissible investment if the specific investment represents undue risk to customers that is not reflected in the market value of the investment.
C. Permissible investments, even if commingled with other assets of the licensee, shall be deemed to 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 under the United States Bankruptcy Code (11 U.S.C. § 101 et seq.) 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 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 subsection shall be subject to attachment, levy of execution, or sequestration by order of any court, except when for a beneficiary of this statutory trust.
D. Upon the establishment of a statutory trust in accordance with subsection C or when any funds are drawn on a letter of credit pursuant to subdivision A 4 of § 6.2-1953, the Commission 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 given if provided 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 to be 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. Any statutory trust established hereunder shall be terminated upon extinguishment of all of the licensee's outstanding money transmission obligations.
E. The Commission by regulation or by order may allow other types of investments that the Commission determines are of sufficient liquidity and quality to be a permissible investment. The Commission is authorized to participate in efforts with other state regulators to determine whether other types of investments are of sufficient liquidity and quality to be a permissible investment.
§ 6.2-1953. Permissible investments.
A. The following investments are permissible under § 6.2-1952:
1. 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 ACH items in transit to the licensee and ACH 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-funded or credit card-funded transmission receivables owed by any bank, or money market mutual funds rated "AAA" by S&P, or the equivalent from any eligible rating service.
2. Certificates of deposit or senior debt obligations of an insured depository institution, as defined in the Federal Deposit Insurance Act (12 U.S.C. § 1811 et seq.) or as defined under the Federal Credit Union Act (12 U.S.C. § 1751 et seq.).
3. 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.
4. The full drawable amount of an irrevocable standby letter of credit for which the stated beneficiary is the Commission that stipulates that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds up to the letter of credit amount within seven days of presentation of the items required by subdivision c.
a. Such letter of credit shall:
(1) Be issued by a federally insured depository financial institution, a foreign bank that is authorized under federal law to maintain a federal agency or federal branch office in a state or states, or a foreign bank that is authorized under state law to maintain a branch in a state that:
(a) Bears an eligible rating or whose parent company bears an eligible rating; and
(b) Is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks, credit unions, and trust companies;
(2) Be irrevocable, unconditional, and indicate that it is not subject to any condition or qualifications outside of the letter of credit;
(3) Not reference any other agreements, documents, or entities, or otherwise provide for any security interest in the licensee; and
(4) Contain an issue date and expiration date, and expressly provide for automatic extension, without a written amendment, for an additional period of one year from the initial expiration date and each successive expiration date, unless the issuer of the letter of credit notifies the Commission in writing by certified or registered mail or courier mail or other receipted means at least 60 days prior to any expiration date that the irrevocable letter of credit will not be extended.
b. In the event of any notice of expiration or nonextension of a letter of credit issued under subdivision a (4), the licensee shall be required to demonstrate to the satisfaction of the Commission, at least 15 days prior to expiration, that the licensee will maintain permissible investments in accordance with subsection A of § 6.2-1952 upon the expiration of the letter of credit. If the licensee is not able to do so, the Commission may draw on the letter of credit in an amount up to the amount necessary for the licensee to comply with subsection A of § 6.2-1952. Any such draw shall be offset against the licensee's outstanding money transmission obligations. The drawn funds shall be held in trust by the Commission or the Commission's designated agent, to the extent authorized by law, as agent for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations.
c. The letter of credit shall provide that the issuer of the letter of credit will honor, at sight, a presentation made by the beneficiary to the issuer of the following documents on or prior to the expiration date of the letter of credit:
(1) The original letter of credit including any amendments; and
(2) A written statement from the beneficiary stating that any of the following events have occurred:
(a) The filing of a petition by or against the licensee under the United States Bankruptcy Code (11 U.S.C. § 101 et seq.) for bankruptcy or reorganization;
(b) The filing of a petition by or against the licensee for receivership, or the commencement of any other judicial or administrative proceeding for its dissolution or reorganization;
(c) The seizure of assets of a licensee by any state pursuant to an emergency order issued in accordance with applicable law, on the basis of an action, violation, or condition that has caused or is likely to cause the insolvency of the licensee; or
(d) The beneficiary has received notice of expiration or nonextension of a letter of credit and the licensee failed to demonstrate to the satisfaction of the beneficiary that the licensee will maintain permissible investments in accordance with subsection A of § 6.2-1952 upon the expiration or nonextension of the letter of credit.
d. The Commission may designate an agent to serve on the Commission's behalf as beneficiary to a letter of credit so long as the agent and letter of credit meet any requirements established by the Commission. The Commission's agent may serve as agent for multiple licensing authorities for a single irrevocable letter of credit if the proceeds of the drawable amount for the purposes of this subdivision A 4 are assigned to the Commission.
e. The Commission may participate in multistate processes designed to facilitate the issuance and administration of letters of credit, including the use of services provided by the NMLS and State Regulatory Registry LLC.
5. The amount of the surety bond that exceeds the amount required by § 6.2-1951.
B. Unless permitted by the Commission by regulation or by order to exceed the limit as set forth herein, the following investments are permissible under § 6.2-1952 to the extent specified:
1. Receivables that are payable to a licensee from its authorized delegates in the ordinary course of business that are less than seven calendar days old, up to 50 percent of the aggregate value of the licensee's total permissible investments.
2. Of the receivables permissible under subdivision 1, receivables that are payable to a licensee from a single authorized delegate in the ordinary course of business shall not exceed 10 percent of the aggregate value of the licensee's total permissible investments.
3. The following investments are permissible up to 20 percent per category and combined up to 50 percent of the aggregate value of the licensee's total permissible investments:
a. A short-term, up to six 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 percent 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 S&P, or the equivalent from any other eligible rating service; and
f. A mutual fund or other investment fund composed solely and exclusively of one or more permissible investments listed in subdivisions A 1, 2, and 3.
4. Cash, including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee's customers, at foreign depository institutions are permissible up to 10 percent 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 Foreign Account Tax Compliance Act;
c. Is not located in any country subject to sanctions from the Office of Foreign Asset Control; and
d. Is not located in a high-risk or noncooperative jurisdiction as designated by the Financial Action Task Force.
§ 6.2-1954. Suspension or revocation of license.
A. The Commission may suspend or revoke a license issued under this chapter upon any of the following grounds:
1. The licensee violates any provisions of this chapter or a regulation adopted or an order issued under this chapter or violates any other law or regulation applicable to the conduct of the licensee's business;
2. The licensee does not cooperate with an examination or investigation by the Commission;
3. The licensee has engaged or is engaging in fraud, misrepresentation, deceit, or gross negligence;
4. An authorized delegate of the licensee (i) is convicted of a violation of a state or federal money laundering statute, (ii) violates any provisions of this chapter or a regulation adopted or an order issued under this chapter, or (iii) violates any other law or regulation applicable to the conduct of the licensee's business;
5. Any ground for denial of a license under this chapter;
6. The licensee has engaged or is engaging in an unsafe or unsound practice;
7. The licensee is insolvent, suspends payment of its obligations, or makes a general assignment for the benefit of its creditors;
8. The licensee does not remove an authorized delegate after the Commission issues and serves upon the licensee a final order including a finding that the authorized delegate has violated this chapter;
9. The Commission reasonably determines that (i) the licensee may be unable to perform its obligations or (ii) the licensee has willfully failed without reasonable cause to pay or provide for the payment of any of its obligations;
10. Entry of a federal or state administrative order against the licensee for violation of any law or regulation applicable to the conduct of its business;
11. Failure to pay any fee imposed by this chapter; or
12. Such other grounds as the Commission may prescribe by regulation.
B. In determining whether a licensee is engaging in an unsafe or unsound practice, the Commission may consider the volume and condition of the licensee's money transmission business, the magnitude of any loss, the gravity of any violation of this chapter, the previous conduct of the person involved, and any other factors that the Commission deems relevant.
C. For the purposes of this section, acts of any key individual or person in control of a licensee shall be deemed acts of the licensee.
D. The Commission shall not revoke or suspend a license issued under this chapter upon any of the grounds set forth in this section until it has given the licensee 21 days' notice in writing of the reasons for the proposed revocation or suspension and has given the licensee an opportunity to introduce evidence and be heard. The notice shall be sent by certified mail to the principal place of business of such licensee or other address authorized under § 12.1-19.1 and shall state with particularity the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. If a hearing is requested, the Commission shall not revoke or suspend the license except based upon findings made at such hearing. The hearing shall be conducted in accordance with the Commission's Rules.
§ 6.2-1955. Civil penalties.
The Commission may impose a civil penalty not exceeding $2,500 upon any person licensed or required to be licensed under this chapter who the Commission determines has violated any of the provisions of this chapter or any other law or regulation applicable to the conduct of the person's business. For the purposes of this section, each separate violation shall be subject to the civil penalty herein prescribed. In the case of a violation of § 6.2-1929, each money transmission transaction shall constitute a separate violation.
§ 6.2-1956. Cease and desist orders.
A. If the Commission determines that (i) any person has violated any provision of this chapter or any regulation adopted hereunder or (ii) a licensee is engaging in one or more unsafe or unsound practices, the Commission may, upon 21 days' notice in writing, order such person to cease and desist from such practices and to comply with the provisions of this chapter. The notice shall be sent by certified mail to the principal place of business of such person or other address authorized under § 12.1-19.1 and shall state the grounds for the contemplated action. Within 14 days of mailing the notice, the person or persons named therein may file with the clerk of the Commission a written request for a hearing. The Commission may enforce compliance with any such order issued under this section by imposition and collection of such fines and penalties as may be prescribed by law.
B. The Commission may, pursuant to the procedures set forth in subsection A, order a licensee to cease and desist from allowing an authorized delegate to engage in money transmission on the licensee's behalf upon any of the following grounds:
1. The authorized delegate violated this chapter or a regulation adopted or an order issued under this chapter or violated any other law or regulation applicable to the conduct of the licensee's business;
2. The authorized delegate did not cooperate with an examination or investigation by the Commission;
3. The authorized delegate engaged in fraud, misrepresentation, deceit, or gross negligence;
4. The authorized delegate has been convicted of a violation of a state or federal money laundering statute;
5. The competence, experience, character, or general fitness of the authorized delegate indicates that it is not in the public interest to permit the authorized delegate to engage in money transmission; or
6. The authorized delegate is engaging in an unsafe or unsound practice. In determining whether the authorized delegate is engaging in an unsafe or unsound practice, the Commission may consider the volume and condition of the licensee's money transmission business, the magnitude of any loss, the gravity of any violation of this chapter, the previous conduct of the person involved, and any other factors that the Commission deems relevant.
C. When, in the opinion of the Commission, immediate action is required to protect the public interest, a cease and desist order may be issued immediately without a prior hearing. In such cases, the Commission shall make a hearing available to the person on an expedited basis.
D. If required to conserve the assets of a licensee or protect the public interest, the Commission may order a licensee and its authorized delegates to cease and desist from selling or issuing payment instruments or stored value or receiving additional money for transmission.
E. The Commission shall have jurisdiction to enter and enforce a cease and desist order against any person, regardless of whether such person is present in the Commonwealth, who directly or indirectly (i) sells or issues payment instruments or stored value to any person located in the Commonwealth or (ii) receives money from such persons.
§ 6.2-1957. Criminal penalty.
Any person required by this chapter to have a license who engages in the business of money transmission without first being licensed as required by § 6.2-1929 is guilty of a Class 1 misdemeanor.
§ 6.2-2001. License requirement; exceptions.
A. No person shall engage in the business of providing or offering to provide a DMP to any consumer, whether or not the person has an office, facility, agent, or other physical presence in the Commonwealth, unless such person obtains from the Commission a license issued pursuant to this chapter. The provisions of this chapter shall not apply to any bank, savings institution, or credit union, or to a person licensed to practice law in the Commonwealth.
B. This chapter shall be construed by the Commission to promote sound personal financial advice and management, and protect against financial loss consumers who place money or control of their funds or credit into the custody of an agency for transmission to such consumers' creditors.
C. A person licensed under this chapter is not required to be licensed as a money transmitter under Chapter 19 (§ 6.2-1900 et seq.) Chapter 19.1 (§ 6.2-1922 et seq.), if the person's money transmission activities are limited to providing debt pooling and distribution services in accordance with this chapter.
§ 18.2-516. Prohibition of illegal money transmitting.
A. Any person who controls, manages, or owns all or part of an enterprise, engaged in money transmission as defined in § 6.2-1900 6.2-1922, and transmits money, which he knows or should have known was derived from or traceable to racketeering activity, is guilty of a Class 6 felony.
B. All property, real or personal, including money, used in substantial connection with, intended for use in the course of, or traceable to, conduct in violation of any provision of subsection A is subject to civil forfeiture to the Commonwealth. The forfeiture proceeding shall be conducted pursuant to the provisions of Chapter 22.1 (§ 19.2-386.1 et seq.) of Title 19.2.
§ 19.2-10.1. Subpoena duces tecum for obtaining records concerning banking and credit cards.
A. A financial institution as defined in § 6.2-604, money transmitter as defined in § 6.2-1900 6.2-1922, or commercial businesses providing credit history or credit reports; or an issuer as defined in § 6.2-424 shall disclose a record or other information pertaining to a customer, to a law-enforcement officer pursuant to a subpoena duces tecum issued pursuant to this section.
1. In order to obtain such records, the law-enforcement official shall provide a statement of the facts documenting the reasons that the records or other information sought are relevant to a legitimate law-enforcement inquiry, relating to a named person or persons, to the attorney for the Commonwealth. A court shall issue a subpoena duces tecum upon motion of the Commonwealth only if the court finds that there is probable cause to believe that a crime has been committed and to believe the records sought or other information sought, including electronic data and electronic communications, are relevant to a legitimate law-enforcement inquiry into that offense. The court may issue a subpoena duces tecum under this section regardless of whether any criminal charges have been filed.
2. A court issuing an order pursuant to this section, on a motion made promptly by the financial institution or credit card issuer, or enterprise may quash or modify the subpoena duces tecum, if the information or records requested are unusually voluminous in nature or compliance with such subpoena duces tecum would otherwise cause an undue burden on such provider.
B. No cause of action shall lie in any court against a financial institution or credit card issuer, or enterprise, its officers, employees, agents, or other specified persons for providing information, facilities, or assistance in accordance with the terms of a subpoena duces tecum under this section.
C. Upon issuance of a subpoena duces tecum under this section, the statement shall be temporarily sealed by the court upon application of the attorney for the Commonwealth for good cause shown in an ex parte proceeding. Any individual arrested and claiming to be aggrieved by the order may move the court for the unsealing of the statement, and the burden of proof with respect to continued sealing shall be upon the Commonwealth.
D. Any and all records received by law enforcement pursuant to this section shall be utilized only for a reasonable amount of time and only for a legitimate law-enforcement purpose. Upon the completion of the investigation the records shall be submitted to the court by the attorney for the Commonwealth along with a proposed order requiring the records to be sealed. Upon entry of such order, the court shall seal the records in accordance with the requirements contained in subsection C.
§ 19.2-56. To whom search warrant directed; what it shall command; warrant to show date and time of issuance; copy of affidavit to be part of warrant and served therewith; warrants not executed within 15 days.
A. The judge, magistrate, or other official authorized to issue criminal warrants shall issue a search warrant only if he finds from the facts or circumstances recited in the affidavit that there is probable cause for the issuance thereof.
Every search warrant shall be directed (i) to the sheriff, sergeant, or any policeman of the county, city, or town in which the place to be searched is located; (ii) to any law-enforcement officer or agent employed by the Commonwealth and vested with the powers of sheriffs and police; or (iii) jointly to any such sheriff, sergeant, policeman, or law-enforcement officer or agent and an agent, special agent, or officer of the Federal Bureau of Investigation, the Bureau of Alcohol, Tobacco, Firearms and Explosives of the U.S. Department of Justice, the United States Naval Criminal Investigative Service, the United States Army Criminal Investigation Division, the United States Air Force Office of Special Investigations, or the U.S. Department of Homeland Security or any inspector, law-enforcement official, or police personnel of the United States Postal Service or the U.S. Drug Enforcement Administration. The warrant shall (a) name the affiant, (b) recite the offense or the identity of the person to be arrested for whom a warrant or process for arrest has been issued in relation to which the search is to be made, (c) name or describe the place to be searched, (d) describe the property or person to be searched for, and (e) recite that the magistrate has found probable cause to believe that the property or person constitutes evidence of a crime (identified in the warrant) or tends to show that a person (named or described therein) has committed or is committing a crime or that the person to be arrested for whom a warrant or process for arrest has been issued is located at the place to be searched.
The warrant shall command that the place be forthwith searched and that the objects or persons described in the warrant, if found there, be seized. An inventory shall be produced before a court having jurisdiction of the offense or over the person to be arrested for whom a warrant or process for arrest has been issued in relation to which the warrant was issued as provided in § 19.2-57.
Any such warrant as provided in this section shall be executed by the policeman or other law-enforcement officer or agent into whose hands it shall come or be delivered. If the warrant is directed jointly to a sheriff, sergeant, policeman, or law-enforcement officer or agent of the Commonwealth and a federal agent or officer as otherwise provided in this section, the warrant may be executed jointly or by the policeman, law-enforcement officer, or agent into whose hands it is delivered. No other person may be permitted to be present during or participate in the execution of a warrant to search a place except (1) the owners and occupants of the place to be searched when permitted to be present by the officer in charge of the conduct of the search and (2) persons designated by the officer in charge of the conduct of the search to assist or provide expertise in the conduct of the search.
Any search warrant for records or other information pertaining to a subscriber to, or customer of, an electronic communication service or remote computing service, whether a domestic corporation or foreign corporation, that is transacting or has transacted any business in the Commonwealth, to be executed upon such service provider may be executed within or outside the Commonwealth by hand, United States mail, commercial delivery service, facsimile, or other electronic means upon the service provider. Notwithstanding the provisions of § 19.2-57, the officer executing a warrant pursuant to this paragraph shall endorse the date of execution thereon and shall file the warrant, with the inventory attached (or a notation that no property was seized) and the accompanying affidavit, unless such affidavit was made by voice or videotape recording, within three days after the materials ordered to be produced are received by the officer from the service provider. The return shall be made in the circuit court clerk's office for the jurisdiction wherein the warrant was (A) executed, if executed within the Commonwealth, and a copy of the return shall also be delivered to the clerk of the circuit court of the county or city where the warrant was issued or (B) issued, if executed outside the Commonwealth. Saturdays, Sundays, or any federal or state legal holiday shall not be used in computing the three-day filing period.
Electronic communication service or remote computing service providers, whether a foreign or domestic corporation, shall also provide the contents of electronic communications pursuant to a search warrant issued under this section and § 19.2-70.3 using the same process described in the preceding paragraph.
Notwithstanding the provisions of § 19.2-57, any search warrant for records or other information pertaining to a customer of a financial institution as defined in § 6.2-604, money transmitter as defined in § 6.2-1900 6.2-1922, commercial business providing credit history or credit reports, or issuer as defined in § 6.2-424 may be executed within the Commonwealth by hand, United States mail, commercial delivery service, facsimile, or other electronic means upon the financial institution, money transmitter, commercial business providing credit history or credit reports, or issuer. The officer executing such warrant shall endorse the date of execution thereon and shall file the warrant, with the inventory attached (or a notation that no property was seized) and the accompanying affidavit, unless such affidavit was made by voice or videotape recording, within three days after the materials ordered to be produced are received by the officer from the financial institution, money transmitter, commercial business providing credit history or credit reports, or issuer. The return shall be made in the circuit court clerk's office for the jurisdiction wherein the warrant was executed. Saturdays, Sundays, or any federal or state legal holiday shall not be used in computing the three-day filing period. For the purposes of this section, the warrant will be considered executed in the jurisdiction where the entity on which the warrant is served is located.
Every search warrant shall contain the date and time it was issued. However, the failure of any such search warrant to contain the date and time it was issued shall not render the warrant void, provided that the date and time of issuing of said warrant is established by competent evidence.
The judge, magistrate, or other official authorized to issue criminal warrants shall attach a copy of the affidavit required by § 19.2-54, which shall become a part of the search warrant and served therewith. However, this provision shall not be applicable in any case in which the affidavit is made by means of a voice or videotape recording or where the affidavit has been sealed pursuant to § 19.2-54.
Any search warrant not executed within 15 days after issuance thereof shall be returned to, and voided by, the officer who issued such search warrant.
B. No law-enforcement officer shall seek, execute, or participate in the execution of a no-knock search warrant. A search warrant for any place of abode authorized under this section shall require that a law-enforcement officer be recognizable and identifiable as a uniformed law-enforcement officer and provide audible notice of his authority and purpose reasonably designed to be heard by the occupants of such place to be searched prior to the execution of such search warrant.
After entering and securing the place to be searched and prior to undertaking any search or seizure pursuant to the search warrant, the executing law-enforcement officer shall give a copy of the search warrant and affidavit to the person to be searched or the owner of the place to be searched or, if the owner is not present, to at least one adult occupant of the place to be searched. If the place to be searched is unoccupied by an adult, the executing law-enforcement officer shall leave a copy of the search warrant and affidavit in a conspicuous place within or affixed to the place to be searched.
Search warrants authorized under this section for the search of any place of abode shall be executed by initial entry of the abode only in the daytime hours between 8:00 a.m. and 5:00 p.m. unless (i) a judge or a magistrate, if a judge is not available, authorizes the execution of such search warrant at another time for good cause shown by particularized facts in an affidavit or (ii) prior to the issuance of the search warrant, law-enforcement officers lawfully entered and secured the place to be searched and remained at such place continuously.
A law-enforcement officer shall make reasonable efforts to locate a judge before seeking authorization to execute the warrant at another time, unless circumstances require the issuance of the warrant after 5:00 p.m., pursuant to the provisions of this subsection, in which case the law-enforcement officer may seek such authorization from a magistrate without first making reasonable efforts to locate a judge. Such reasonable efforts shall be documented in an affidavit and submitted to a magistrate when seeking such authorization.
Any evidence obtained from a search warrant executed in violation of this subsection shall not be admitted into evidence for the Commonwealth in any prosecution.
C. For the purposes of this section:
"Foreign corporation" means any corporation or other entity, whose primary place of business is located outside of the boundaries of the Commonwealth, that makes a contract or engages in a terms of service agreement with a resident of the Commonwealth to be performed in whole or in part by either party in the Commonwealth, or a corporation that has been issued a certificate of authority pursuant to § 13.1-759 to transact business in the Commonwealth. The making of the contract or terms of service agreement or the issuance of a certificate of authority shall be considered to be the agreement of the foreign corporation or entity that a search warrant or subpoena, which has been properly served on it, has the same legal force and effect as if served personally within the Commonwealth.
"Properly served" means delivery of a search warrant or subpoena by hand, by United States mail, by commercial delivery service, by facsimile or by any other manner to any officer of a corporation or its general manager in the Commonwealth, to any natural person designated by it as agent for the service of process, or if such corporation has designated a corporate agent, to any person named in the latest annual report filed pursuant to § 13.1-775.
§ 19.2-389. Dissemination of criminal history record information.
A. Criminal history record information shall be disseminated, whether directly or through an intermediary, only to:
1. Authorized officers or employees of criminal justice agencies, as defined by § 9.1-101, for purposes of the administration of criminal justice and the screening of an employment application or review of employment by a criminal justice agency with respect to its own employees or applicants, and dissemination to the Virginia Parole Board, pursuant to this subdivision, of such information on all state-responsible inmates for the purpose of making parole determinations pursuant to subdivisions 1, 2, 3, 4, and 6 of § 53.1-136 shall include collective dissemination by electronic means every 30 days. For purposes of this subdivision, criminal history record information includes information sent to the Central Criminal Records Exchange pursuant to §§ 37.2-819 and 64.2-2014 when disseminated to any full-time or part-time employee of the State Police, a police department or sheriff's office that is a part of or administered by the Commonwealth or any political subdivision thereof, and who is responsible for the prevention and detection of crime and the enforcement of the penal, traffic or highway laws of the Commonwealth for the purposes of the administration of criminal justice;
2. Such other individuals and agencies that require criminal history record information to implement a state or federal statute or executive order of the President of the United States or Governor that expressly refers to criminal conduct and contains requirements or exclusions expressly based upon such conduct, except that information concerning the arrest of an individual may not be disseminated to a noncriminal justice agency or individual if an interval of one year has elapsed from the date of the arrest and no disposition of the charge has been recorded and no active prosecution of the charge is pending;
3. Individuals and agencies pursuant to a specific agreement with a criminal justice agency to provide services required for the administration of criminal justice pursuant to that agreement which shall specifically authorize access to data, limit the use of data to purposes for which given, and ensure the security and confidentiality of the data;
4. Individuals and agencies for the express purpose of research, evaluative, or statistical activities pursuant to an agreement with a criminal justice agency that shall specifically authorize access to data, limit the use of data to research, evaluative, or statistical purposes, and ensure the confidentiality and security of the data;
5. Agencies of state or federal government that are authorized by state or federal statute or executive order of the President of the United States or Governor to conduct investigations determining employment suitability or eligibility for security clearances allowing access to classified information;
6. Individuals and agencies where authorized by court order or court rule;
7. Agencies of any political subdivision of the Commonwealth, public transportation companies owned, operated or controlled by any political subdivision, and any public service corporation that operates a public transit system owned by a local government for the conduct of investigations of applicants for employment, permit, or license whenever, in the interest of public welfare or safety, it is necessary to determine under a duly enacted ordinance if the past criminal conduct of a person with a conviction record would be compatible with the nature of the employment, permit, or license under consideration;
7a. Commissions created pursuant to the Transportation District Act of 1964 (§ 33.2-1900 et seq.) of Title 33.2 and their contractors, for the conduct of investigations of individuals who have been offered a position of employment whenever, in the interest of public welfare or safety and as authorized in the Transportation District Act of 1964, it is necessary to determine if the past criminal conduct of a person with a conviction record would be compatible with the nature of the employment under consideration;
8. Public or private agencies when authorized or required by federal or state law or interstate compact to investigate (i) applicants for foster or adoptive parenthood or (ii) any individual, and the adult members of that individual's household, with whom the agency is considering placing a child or from whom the agency is considering removing a child due to abuse or neglect, on an emergency, temporary, or permanent basis pursuant to §§ 63.2-901.1 and 63.2-1505, subject to the restriction that the data shall not be further disseminated to any party other than a federal or state authority or court as may be required to comply with an express requirement of law;
9. To the extent permitted by federal law or regulation, public service companies as defined in § 56-1, for the conduct of investigations of applicants for employment when such employment involves personal contact with the public or when past criminal conduct of an applicant would be incompatible with the nature of the employment under consideration;
10. The appropriate authority for purposes of granting citizenship and for purposes of international travel, including, but not limited to, issuing visas and passports;
11. A person requesting a copy of his own criminal history record information as defined in § 9.1-101 at his cost, except that criminal history record information shall be supplied at no charge to a person who has applied to be a volunteer with (i) a Virginia affiliate of Big Brothers/Big Sisters of America; (ii) a volunteer fire company; (iii) the Volunteer Emergency Families for Children; (iv) any affiliate of Prevent Child Abuse, Virginia; (v) any Virginia affiliate of Compeer; or (vi) any board member or any individual who has been offered membership on the board of a Crime Stoppers, Crime Solvers or Crime Line program as defined in § 15.2-1713.1;
12. Administrators and board presidents of and applicants for licensure or registration as a child welfare agency as defined in § 63.2-100 for dissemination to the Commissioner of Social Services' representative pursuant to § 63.2-1702 for the conduct of investigations with respect to employees of and volunteers at such facilities, caretakers, and foster and adoptive parent applicants of private child-placing agencies, pursuant to §§ 63.2-1719, 63.2-1720, and 63.2-1721, subject to the restriction that the data shall not be further disseminated by the facility or agency to any party other than the data subject, the Commissioner of Social Services' representative or a federal or state authority or court as may be required to comply with an express requirement of law for such further dissemination; however, nothing in this subdivision shall be construed to prohibit the Commissioner of Social Services' representative from issuing written certifications regarding the results of a background check that was conducted before July 1, 2021, in accordance with subsection J of § 22.1-289.035 or § 22.1-289.039;
13. The Department of Social Services for the purpose of screening individuals as a condition of licensure, employment, volunteering, or providing services on a regular basis in a licensed child welfare agency pursuant to §§ 63.2-1721 and 63.2-1726 or foster or adoptive home approved by a child-placing agency pursuant to § 63.2-901.1;
14. The school boards of the Commonwealth for the purpose of screening individuals who are offered or who accept public school employment and those current school board employees for whom a report of arrest has been made pursuant to § 19.2-83.1;
15. The Virginia Lottery for the conduct of investigations as set forth in the Virginia Lottery Law (§ 58.1-4000 et seq.) and casino gaming as set forth in Chapter 41 (§ 58.1-4100 et seq.) of Title 58.1, and the Department of Agriculture and Consumer Services for the conduct of investigations as set forth in Article 1.1:1 (§ 18.2-340.15 et seq.) of Chapter 8 of Title 18.2;
16. Licensed nursing homes, hospitals and home care organizations for the conduct of investigations of applicants for compensated employment in licensed nursing homes pursuant to § 32.1-126.01, hospital pharmacies pursuant to § 32.1-126.02, and home care organizations pursuant to § 32.1-162.9:1, subject to the limitations set out in subsection E;
17. Licensed assisted living facilities and licensed adult day centers for the conduct of investigations of applicants for compensated employment in licensed assisted living facilities and licensed adult day centers pursuant to § 63.2-1720, subject to the limitations set out in subsection F;
18. The Virginia Alcoholic Beverage Control Authority for the conduct of investigations as set forth in § 4.1-103.1;
19. The State Board of Elections and authorized officers and employees thereof and general registrars appointed pursuant to § 24.2-110 in the course of conducting necessary investigations with respect to voter registration, limited to any record of felony convictions;
20. The Commissioner of Behavioral Health and Developmental Services (the Commissioner) or his designees for individuals who are committed to the custody of or being evaluated by the Commissioner pursuant to §§ 19.2-168.1, 19.2-169.1, 19.2-169.2, 19.2-169.5, 19.2-169.6, 19.2-182.2, 19.2-182.3, 19.2-182.8, and 19.2-182.9 where such information may be beneficial for the purpose of placement, evaluation, treatment, or discharge planning;
21. Any alcohol safety action program certified by the Commission on the Virginia Alcohol Safety Action Program for (i) interventions with first offenders under § 18.2-251 or (ii) services to offenders under § 18.2-51.4, 18.2-266, or 18.2-266.1;
22. Residential facilities for juveniles regulated or operated by the Department of Social Services, the Department of Education, or the Department of Behavioral Health and Developmental Services for the purpose of determining applicants' fitness for employment or for providing volunteer or contractual services;
23. The Department of Behavioral Health and Developmental Services and facilities operated by the Department for the purpose of determining an individual's fitness for employment pursuant to departmental instructions;
24. Pursuant to § 22.1-296.3, the governing boards or administrators of private elementary or secondary schools which are accredited pursuant to § 22.1-19 or a private organization coordinating such records information on behalf of such governing boards or administrators pursuant to a written agreement with the Department of State Police;
25. Public institutions of higher education and nonprofit private institutions of higher education for the purpose of screening individuals who are offered or accept employment;
26. Members of a threat assessment team established by a local school board pursuant to § 22.1-79.4, by a public institution of higher education pursuant to § 23.1-805, or by a private nonprofit institution of higher education, for the purpose of assessing or intervening with an individual whose behavior may present a threat to safety; however, no member of a threat assessment team shall redisclose any criminal history record information obtained pursuant to this section or otherwise use any record of an individual beyond the purpose that such disclosure was made to the threat assessment team;
27. Executive directors of community services boards or the personnel director serving the community services board for the purpose of determining an individual's fitness for employment, approval as a sponsored residential service provider, permission to enter into a shared living arrangement with a person receiving medical assistance services pursuant to a waiver, or permission for any person under contract with the community services board to serve in a direct care position on behalf of the community services board pursuant to §§ 37.2-506, 37.2-506.1, and 37.2-607;
28. Executive directors of behavioral health authorities as defined in § 37.2-600 for the purpose of determining an individual's fitness for employment, approval as a sponsored residential service provider, permission to enter into a shared living arrangement with a person receiving medical assistance services pursuant to a waiver, or permission for any person under contract with the behavioral health authority to serve in a direct care position on behalf of the behavioral health authority pursuant to §§ 37.2-506, 37.2-506.1, and 37.2-607;
29. The Commissioner of Social Services for the purpose of locating persons who owe child support or who are alleged in a pending paternity proceeding to be a putative father, provided that only the name, address, demographics and social security number of the data subject shall be released;
30. Authorized officers or directors of agencies licensed pursuant to Article 2 (§ 37.2-403 et seq.) of Chapter 4 of Title 37.2 by the Department of Behavioral Health and Developmental Services for the purpose of determining if any applicant who accepts employment in any direct care position or requests approval as a sponsored residential service provider, permission to enter into a shared living arrangement with a person receiving medical assistance services pursuant to a waiver, or permission for any person under contract with the provider to serve in a direct care position has been convicted of a crime that affects his fitness to have responsibility for the safety and well-being of individuals with mental illness, intellectual disability, or substance abuse pursuant to §§ 37.2-416, 37.2-416.1, 37.2-506, 37.2-506.1, and 37.2-607;
31. The Commissioner of the Department of Motor Vehicles, for the purpose of evaluating applicants for and holders of a motor carrier certificate or license subject to the provisions of Chapters 20 (§ 46.2-2000 et seq.) and 21 (§ 46.2-2100 et seq.) of Title 46.2;
32. The Chairman of the Senate Committee for Courts of Justice or the Chairman of the House Committee for Courts of Justice for the purpose of determining if any person being considered for election to any judgeship has been convicted of a crime;
33. Heads of state agencies in which positions have been identified as sensitive for the purpose of determining an individual's fitness for employment in positions designated as sensitive under Department of Human Resource Management policies developed pursuant to § 2.2-1201.1;
34. The Office of the Attorney General, for all criminal justice activities otherwise permitted under subdivision A 1 and for purposes of performing duties required by the Civil Commitment of Sexually Violent Predators Act (§ 37.2-900 et seq.);
35. Shipyards, to the extent permitted by federal law or regulation, engaged in the design, construction, overhaul, or repair of nuclear vessels for the United States Navy, including their subsidiary companies, for the conduct of investigations of applications for employment or for access to facilities, by contractors, leased laborers, and other visitors;
36. Any employer of individuals whose employment requires that they enter the homes of others, for the purpose of screening individuals who apply for, are offered, or have accepted such employment;
37. Public agencies when and as required by federal or state law to investigate (i) applicants as providers of adult foster care and home-based services or (ii) any individual with whom the agency is considering placing an adult on an emergency, temporary, or permanent basis pursuant to § 63.2-1601.1, subject to the restriction that the data shall not be further disseminated by the agency to any party other than a federal or state authority or court as may be required to comply with an express requirement of law for such further dissemination, subject to limitations set out in subsection G;
38. The Department of Medical Assistance Services, or its designee, for the purpose of screening individuals who, through contracts, subcontracts, or direct employment, volunteer, apply for, are offered, or have accepted a position related to the provision of transportation services to enrollees in the Medicaid Program or the Family Access to Medical Insurance Security (FAMIS) Program, or any other program administered by the Department of Medical Assistance Services;
39. The State Corporation Commission for the purpose of investigating individuals who are current or proposed members, senior officers, directors, and principals of an applicant or person licensed under Chapter 16 (§ 6.2-1600 et seq.), Chapter 19 (§ 6.2-1900 et seq.) 19.1 (§ 6.2-1922 et seq.), or Chapter 26 (§ 6.2-2600 et seq.) of Title 6.2. Notwithstanding any other provision of law, if an application is denied based in whole or in part on information obtained from the Central Criminal Records Exchange pursuant to Chapter 16, 19, or 26 of Title 6.2, the Commissioner of Financial Institutions or his designee may disclose such information to the applicant or its designee;
40. The Department of Professional and Occupational Regulation for the purpose of investigating individuals for initial licensure pursuant to § 54.1-2106.1;
41. The Department for Aging and Rehabilitative Services and the Department for the Blind and Vision Impaired for the purpose of evaluating an individual's fitness for various types of employment and for the purpose of delivering comprehensive vocational rehabilitation services pursuant to Article 11 (§ 51.5-170 et seq.) of Chapter 14 of Title 51.5 that will assist the individual in obtaining employment;
42. Bail bondsmen, in accordance with the provisions of § 19.2-120;
43. The State Treasurer for the purpose of determining whether a person receiving compensation for wrongful incarceration meets the conditions for continued compensation under § 8.01-195.12;
44. The Department of Education or its agents or designees for the purpose of screening individuals seeking to enter into a contract with the Department of Education or its agents or designees for the provision of child care services for which child care subsidy payments may be provided;
45. The Department of Juvenile Justice to investigate any parent, guardian, or other adult members of a juvenile's household when completing a predispositional or postdispositional report required by § 16.1-273 or a Board of Juvenile Justice regulation promulgated pursuant to § 16.1-233;
46. The State Corporation Commission, for the purpose of screening applicants for insurance licensure under Chapter 18 (§ 38.2-1800 et seq.) of Title 38.2;
47. Administrators and board presidents of and applicants for licensure or registration as a child day program or family day system, as such terms are defined in § 22.1-289.02, for dissemination to the Superintendent of Public Instruction's representative pursuant to § 22.1-289.013 for the conduct of investigations with respect to employees of and volunteers at such facilities pursuant to §§ 22.1-289.034 through 22.1-289.037, subject to the restriction that the data shall not be further disseminated by the facility or agency to any party other than the data subject, the Superintendent of Public Instruction's representative, or a federal or state authority or court as may be required to comply with an express requirement of law for such further dissemination; however, nothing in this subdivision shall be construed to prohibit the Superintendent of Public Instruction's representative from issuing written certifications regarding the results of prior background checks in accordance with subsection J of § 22.1-289.035 or § 22.1-289.039;
48. The National Center for Missing and Exploited Children for the purpose of screening individuals who are offered or accept employment or will be providing volunteer or contractual services with the National Center for Missing and Exploited Children;
49. The Executive Director or investigators of the Board of Accountancy for the purpose of the enforcement of laws relating to the Board of Accountancy in accordance with § 54.1-4407; and
50. Other entities as otherwise provided by law.
Upon an ex parte motion of a defendant in a felony case and upon the showing that the records requested may be relevant to such case, the court shall enter an order requiring the Central Criminal Records Exchange to furnish the defendant, as soon as practicable, copies of any records of persons designated in the order on whom a report has been made under the provisions of this chapter.
Notwithstanding any other provision of this chapter to the contrary, upon a written request sworn to before an officer authorized to take acknowledgments, the Central Criminal Records Exchange, or the criminal justice agency in cases of offenses not required to be reported to the Exchange, shall furnish a copy of conviction data covering the person named in the request to the person making the request; however, such person on whom the data is being obtained shall consent in writing, under oath, to the making of such request. A person receiving a copy of his own conviction data may utilize or further disseminate that data as he deems appropriate. In the event no conviction data is maintained on the data subject, the person making the request shall be furnished at his cost a certification to that effect.
B. Use of criminal history record information disseminated to noncriminal justice agencies under this section shall be limited to the purposes for which it was given and may not be disseminated further, except as otherwise provided in subdivision A 47.
C. No criminal justice agency or person shall confirm the existence or nonexistence of criminal history record information for employment or licensing inquiries except as provided by law.
D. Criminal justice agencies shall establish procedures to query the Central Criminal Records Exchange prior to dissemination of any criminal history record information on offenses required to be reported to the Central Criminal Records Exchange to ensure that the most up-to-date disposition data is being used. Inquiries of the Exchange shall be made prior to any dissemination except in those cases where time is of the essence and the normal response time of the Exchange would exceed the necessary time period. A criminal justice agency to whom a request has been made for the dissemination of criminal history record information that is required to be reported to the Central Criminal Records Exchange may direct the inquirer to the Central Criminal Records Exchange for such dissemination. Dissemination of information regarding offenses not required to be reported to the Exchange shall be made by the criminal justice agency maintaining the record as required by § 15.2-1722.
E. Criminal history information provided to licensed nursing homes, hospitals and to home care organizations pursuant to subdivision A 16 shall be limited to the convictions on file with the Exchange for any offense specified in §§ 32.1-126.01, 32.1-126.02, and 32.1-162.9:1.
F. Criminal history information provided to licensed assisted living facilities and licensed adult day centers pursuant to subdivision A 17 shall be limited to the convictions on file with the Exchange for any offense specified in § 63.2-1720.
G. Criminal history information provided to public agencies pursuant to subdivision A 37 shall be limited to the convictions on file with the Exchange for any offense set forth in clause (i) of the definition of barrier crime in § 19.2-392.02.
H. Upon receipt of a written request from an employer or prospective employer, the Central Criminal Records Exchange, or the criminal justice agency in cases of offenses not required to be reported to the Exchange, shall furnish at the employer's cost a copy of conviction data covering the person named in the request to the employer or prospective employer making the request, provided that the person on whom the data is being obtained has consented in writing to the making of such request and has presented a photo-identification to the employer or prospective employer. In the event no conviction data is maintained on the person named in the request, the requesting employer or prospective employer shall be furnished at his cost a certification to that effect. The criminal history record search shall be conducted on forms provided by the Exchange.
I. Nothing in this section shall preclude the dissemination of a person's criminal history record information pursuant to the rules of court for obtaining discovery or for review by the court.
2. That Chapter 19 (§§ 6.2-1900 through 6.2-1921) of Title 6.2 of the Code of Virginia is repealed.
3. That any person licensed under the provisions of Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia, as repealed by this act, on June 30, 2026, shall be deemed to be licensed under the provisions of Chapter 19.1 (§ 6.2-1922 et seq.) of Title 6.2 of the Code of Virginia, as created by this act, as of the effective date of this act. Such persons shall be subject to provisions of Chapter 19.1 (§ 6.2-1922 et seq.) of Title 6.2 of the Code of Virginia, as created by this act.
4. That any regulation adopted by the State Corporation Commission under Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia, as repealed by this act, that is in effect on June 30, 2026, shall continue in effect under Chapter 19.1 (§ 6.2-1922 et seq.) of Title 6.2 of the Code of Virginia, as created by this act, to the extent it is not in conflict with the provisions of this act and shall be deemed to be a regulation adopted under Chapter 19.1 (§ 6.2-1922 et seq.) of Title 6.2 of the Code of Virginia, as created by this act.
5. That the repeal of Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia shall not affect the validity, enforceability, or legality of any agreement or any right established or accrued under any such agreement that existed prior to such repeal.
6. That any violation of Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia, as repealed by this act, or of any regulation adopted thereunder that occurred prior to July 1, 2026, by a person licensed or required to be licensed under Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia, as repealed by this act, shall be deemed to be a violation of Chapter 19.1 (§ 6.2-1922 et seq.) of Title 6.2, as created by this act, or a regulation adopted thereunder.
7. That the repeal of Chapter 19 (§ 6.2-1900 et seq.) of Title 6.2 of the Code of Virginia shall not affect any (i) act, omission, violation committed, order entered, penalty incurred, or right established or accrued prior to July 1, 2026, or (ii) investigation, examination, proceeding, prosecution, or other action that commenced prior to July 1, 2026.
8. That the provisions of this act shall become effective on July 1, 2026.