June 11, 2009
Dear Mr. [---]:
This letter is in response to yours of February and April of this year. You ask for confirmation that your client ("Client") does not require licensing as a money transmitter under Article XIII-B of the New York Banking Law (the "Banking Law").
Based on the information provided in your letter, I understand that Client is a New Jersey based corporation, licensed as a transmitter in New Jersey and Illinois. Client recently leased an office in New York for the purpose of conducting private business meetings, but not to conduct any money transmission business "with the public." I also understand from your letter that Client conducts internet-based money transmission business from New Jersey, and that it is possible that persons located in New York may use this internet-based service.
In February, upon receipt of your first letter requesting confirmation that Client does not require licensing as a money transmitter from the New York State Banking Department (the "Department"), my colleague, Christine Cardi and I spoke with you on the phone to ask you to clarify the business to be conducted from the New York office. You responded in a letter dated April 28, 2009, and informed the Department that the New York office is leased purely for convenience. It is a one-room office with a common conference room shared by other unaffiliated offices on that floor. No money transfer business is conducted with the public; no cash will ever be received there for transmission; Client has no agent locations in New York, and all money transfer operations (including the receipt of all funds for internet-based transmissions) are conducted at Client's New Jersey headquarters.
I will first note that Article XIII-B of the Banking Law requires a person (i) engaged in selling or issuing checks; (ii) engaged in the business of receiving money for transmission, or (iii) transmitting such money to be licensed by the Department. I will also note that Article XIII-B does not contain a definition of transmitting money and that the Department takes the position that, given the legislative intent, the term must be interpreted broadly.
Based on the facts set forth by you, I would agree that Client is not required to be licensed as a money transmitter in New York State, to the extent that no money transmitter business at all is conducted from the New York office. Since you make a note of writing that Client will make no transactions from that office "with the public," you should be aware that no money transmission business whatsoever may be conducted in New York without a license, whether with "the public" or other entities. Article XIII-B does not pertain only to transmitters for the general public (i.e. natural persons), but to most legal entities, including, for example, corporations. In fact, the Department has taken the position that Article XIII-B properly applies to money transmitters that serve any entity.
Moreover, you should be aware that there is pending legislation in this State that may impact money transmitter licensing with respect to internet transactions from or to entities and individuals in New York. You should keep abreast of this development, and feel free to write again to the Department for further guidance, should that law take effect.
I hope you find this advice useful.
Very truly yours,Elizabeth Nochlin