Maryland Legal Alert for Financial Services
Maryland Changes to Money Transmission Licensing
The Maryland Money Transmission Act (MTA) regulates entities and individuals engaged in money transmission in Maryland. The MTA requires “money transmitters” to comply with specific licensing requirements. Under the MTA, a money transmitter is defined as those engaging in the business of selling or issuing payment instruments or transmitting monetary value to another by any means. The Maryland General Assembly recently provided an additional licensing exemption under the MTA. House Bill 118 exempts from the licensing requirements specific payroll processing providers. Prior to enactment of the new law, the MTA required all payroll processors to obtain a money transmitter license.
Under the new law, payroll processors are exempt from MTA licensing if the following conditions are met: (1) a written agreement is in place directing the payroll processor to provide services on behalf of the employer; (2) the employer holds the processor out to employees as providing payroll services on the employer’s behalf; and (3) the employer’s obligation to pay the employees is not extinguished if the processor fails to deliver funds to employees.
For more information concerning this topic, please contact Christopher R. Rahl or Peri L. Schuster.