Who needs to register?
Under Hawaiian statute, a person engaged in providing money transmission must obtain a money transmitter license if providing services to persons in Hawaii, even if the business has no physical presence in Hawaii.
Hawaii defines money transmission as engaging in the business of selling or issuing payment instruments, or receiving money or monetary value for transmission to a location within or outside the US, by any means, including wire, facsimile, or electronic transfer.
Do I need a Hawaii Money Transmitter license if I am an agent of the payee?
You may need a money transmitter license depending on the type of activities you are conducting. While Chapter 489D, HRS does not specifically address matters regarding agents of the payee, the Division of Financial Institutions has determined that certain activities may not require a Hawaii money transmitter license.
A money transmitter license will not be required if both of the following criteria are met:
- The person (as defined by Chapter 489D, HRS) operates pursuant to a written agreement with the payee to act on the payee’s behalf; and
- Any payment processed by a person acting as an agent of the payee is deemed to have been made to the payee when that payment transaction is successfully processed. A receipt provided to the payer by the person for such payment is in all legal respects provided on behalf of, and binding upon, the entity for which the person acted as agent.
Who is the regulator?
Hawaii Department of Commerce & Consumer Affairs – Division of Financial Institutions
What are the money transmitter license requirements?
To apply as a general money transmitter in Hawaii requires the following fees and documents:
- Identification information
- History of material litigation or convictions for 5 years prior
- Description of business activities and history of operations
- Description of desired activities within the state
- List of proposed authorized delegates in the state
- Sample of an authorized delegate contract
- Sample form of payment instrument
- List of proposed in-state applicant and/or delegate locations
- Name and address of banks or institutions where money will be drawn for MS
- Disclosure of regulatory discipline
- Contact person
- Complete schedule of range of costs and fees applicant charges borrowers for servicing-related activities
- States in which applicant is currently engaging in money transmission
- Fingerprint cards and consent form
- Authorization to release information form
- Net worth of no less than $1,000
- $2,000 application fee + $300 for each location, not amounting to more than $15,000
- $2,000 annual license fee + $300 for each location, not amounting to more than $15,000
Note: A possible examination fee may be assessed if an examination is deemed necessary. The fee is based on a rate of $40 per hour per person plus reasonable travel expenses. This fee must be paid within 30 days of the examination.
Corporate money transmitter
Applying as a corporation requires the following additional documentation:
- Date and state of incorporation and a Certificate of Good Standing
- Description of corporate structure
- Identifying information, employment history, legal history of officers, managers, and key shareholders
- Audited financials from most recent year, plus two previous years if available, statements of changes in shareholder equity and financial position, SEC filings, all documents for any parent companies
- Information necessary to complete a criminal history record check for every key player involved
Non-corporate money transmitter
Applying as a non-corporate money transmitter requires the following additional documentation:
- Identifying information of each principal applicant and persons in charge of applicant’s activities over last 5 years
- Place and date of applicant’s registration and qualification to do business in state
- History of material litigation or criminal convictions of each individual having ownership interest in applicant or those exercising supervisory responsibility
- Audited financial statements
What are the general bonding requirements?
General bonding requirements for money transmitters in Hawaii include:
- $10,000 surety bond or irrevocable letter of credit
- Commissioner can increase bond to $500,000 at his discretion, based on impaired financial condition of licensee
- Commissioner may approve cash, interest-bearing stocks and bonds, debentures, or other obligations: (1) Of the United States or any agency or instrumentality thereof; (2) Guaranteed by the United States; (3) Of the State, a county, or instrumentality of the State; or (4) Guaranteed by the State, in an aggregate amount based upon the principle amount or market value, whichever is lower, of not less than the amount of the security device or portion thereof.
- After the initial year of licensure, a licensee shall obtain a bond or other security device of $5K if the licensee’s annualized money transmissions as calculated in section 489D-12(a) are less than $10 million. The bond or security device shall be $10K if the licensee’s annualized money transmissions as calculated in section 489D-12(a) are $10 million or more.
Bitcoin and Cryptocurrency
Hawaii’s Senate has updated their Money Transmitter Act to define Bitcoin and blockchain based technologies (decentralized ledgers) and that they are not regulated under current statute. They have appointed a working group to investigate whether Bitcoin and other cryptocurrency should be subject to Money Transmitter Regulation.
“Decentralized virtual currency” [ Bitcoin ] means a medium of exchange that:
- Does not have legal tender status in any jurisdiction;
- Does not have a central repository or single administrator [ blockchain ledger ];
- May act as a substitute for, have an equivalent value in, or be converted to or exchanged for legal tender in at least one jurisdiction world-wide;
- Is electronically transmitted between parties without an intermediary [ digital currency ]; and
- Relies on cryptographic software protocols for currency generation and validation of transactions [ blockchain ].”
The term “payment instrument” does not include any credit card voucher, any letter of credit, any instrument that is redeemable by the issuer in goods or services, or any instrument or order for the transmission, sale, or payment of decentralized virtual currency [ Bitcoin ].”
SECTION 2. Section 489D-5, Hawaii Revised Statutes, is amended by amending subsection (a) to read as follows:
“This chapter shall not apply to:
The sale, receipt, storage, or transfer of decentralized virtual currency [ Bitcoin ]; provided that this paragraph shall not affect the status or any obligation under federal law of any person that engages in any transaction or activity involving decentralized virtual currency [ Bitcoin ].”
There is established the decentralized virtual currency working group to be placed with the department of commerce and consumer affairs for administrative purposes.
The working group shall study whether decentralized currency virtual currency should be regulated under the money transmitters act pursuant to chapter 489D, Hawaii Revised Statutes, or remain unregulated by state government.