Overview
As stated in Section 340 of the Banking Law, “No person or other entity shall engage in the business of making loans in the principal amount of twenty-five thousand dollars or less for any loan to an individual for personal, family, household, or investment purposes and in a principal amount of fifty thousand dollars or less for business and commercial loans, and charge, contract for, or receive a greater rate of interest than the lender would be permitted by law to charge if he were not a licensee here under except as authorized by this article and without first obtaining a license from the superintendent.”
For licensing requirements see Article 9 of the Banking Law, sections 340 to 361, Superintendent's Regulations Parts 401, 407 and 300 and Penal Law Section 190.42.
Applications and NMLS
The Department of Financial Services uses the Nationwide Multistate Licensing System and Registry (NMLS) to manage the Licensed Lender License.
Access to NMLS
NMLS is a secure web-based system created by state regulators to provide efficiencies in the processing of state licenses and improve supervision of state-regulated industries. Through NMLS, companies maintain a single record to apply for, amend, surrender and change license authorities in one or more states, and make reports conveniently and safely online.
To access NMLS for the first time, you must complete a Company Account Request Form and identify a Primary Account Administrator and a Secondary Account Administrator. This form can be submitted electronically through the NMLS website in the “Getting Started” section. This form needs to be submitted only once per company, regardless of the number of NMLS participating states in which you are licensed.
Within three days of completing and submitting the Company Account Request Form, the Primary Account Administrator will receive NMLS login information. The Primary Account Administrator will have full rights to access the system, submit information to this agency and other participating state regulators, and set up other company users in the system. Instructions and tutorials on how to access and use the system are also available in the NMLS Resource Center.
Note: If your company already has a record in NMLS, you can omit this step.
Managing Your License on NMLS
Each company holding a DFS Licensed Lender License who wishes to manage their license on NMLS must create a company record in the system. To gain access to NMLS, the applicant must submit a form requesting an NMLS account.
Current New York State Licensed Lenders may transition their licenses to NMLS. See the DFS Licensed Lender Company Transition Checklist and Licensed Lender Branch Transition Checklist for more information.
Submitting a Complete Application
To submit an application and ensure your application is received, acknowledged as complete, and processed, please follow the instructions on the DFS Licensed Lender Checklists. No application shall be deemed to be complete until the Department has received all required information, documents, and fees.
In the process of reviewing and considering the application, DFS may request additional information and supporting documents.
NMLS Identification Number
In the application process, an NMLS Identification Number will be assigned to your application. Maintain a record of this NMLS Identification Number, as it will be used as your application reference number throughout the remainder of the application process.
The NMLS Identification Number must be included on every hard-copy document submitted to the DFS.
Note: If the applicant has already submitted Forms MU1 and MU2 through NMLS for another state, the applicant does not need to re-enter the company record into NMLS. However, the applicant is required to provide jurisdiction-specific information to support its New York State application.
Annual Reporting
The Annual Report is due at the Department of Financial Services (DFS) by March 15, 2024, in order to ensure sufficient time for review prior to the statutory deadline of April 1, 2024.
Examinations
The examination focuses on compliance with applicable state and federal laws and regulations and areas deemed likely to affect the safety and soundness of the licensee.
Consumer finance entities supervised by the Department include licensed lenders, premium finance agencies, and sales finance companies. The DFS assigns licensed consumer finance entities a FILMS rating based on an assessment of financial condition, internal controls and auditing, legal and regulatory compliance, management, and systems and technology. The ratings range from “1” (Strong) to “5” (Unsatisfactory).
Licensees with a FILMS rating of "4" (Marginal) or “5” (Unsatisfactory) or severe violations/deficiencies may be subject to regulatory actions such as monetary fines, and license suspension and revocation.
Details on the evaluation of the FILMS components are as follows:
Financial Condition: This evaluation considers balance sheet composition including the level of past due and non-performing loans, asset quality, the adequacy of capital to absorb losses and to support growth, the level and quality of earnings, and the adequacy of liquidity.
Internal Controls and Auditing: Internal controls and auditing are evaluated based upon the effectiveness of accounting, financial, operation, and systems controls, and the audit program. The assessment considers the extent of adherence to established policies and procedures; the independence, frequency, scope, and adequacy of the internal audit function (including risk assessment) relative to the size and business activities of the licensee; the severity of internal control and audit exceptions; the extent to which internal control and audit exceptions are tracked and resolved in a timely manner; the adequacy of management information reports; and whether the system of controls is reviewed to keep pace with changes in the licensee’s business plan.
Legal and Regulatory Compliance: This evaluation is based upon the level of adherence to applicable state and federal laws and regulations including any supervisory follow-up actions; the effectiveness of the written compliance program and training of personnel charged with maintaining compliance; the ability to submit regulatory reports in a timely and accurate manner; and management’s ability to identify and correct compliance issues in a timely manner.
Management: The rating is based upon, but not limited to the following: The overall performance of the licensee; the capability of the governing board and management in carrying out the licensee’s mission; management depth and succession; soundness of credit administration; the adequacy of risk identification processes; and responsiveness to recommendations from auditors and supervisory authorities.
Systems and Technology: The evaluation is based upon assessments of the following four critical components: IT Audit – evaluates the quality of the entire IT auditing process (including risk assessment), internal and external in terms of management and the external auditor’s ability to effectively identify, monitor and test internal controls over information systems; Management – evaluates the extent to which management effectively monitors and controls the risks inherent in information systems, including, but not limited to, resources employed and disaster recovery/business continuity planning and testing; Development and Acquisitions – addresses the adequacy of the licensee’s systems development methodology and related risk management practices for the acquisition and development of IT; Support and Delivery – measures the licensee’s ability to provide reliable and secure quality information systems services effectively and efficiently in-house and through service providers.
Changes in Certain Individuals
Pursuant to the following sections of the New York Banking Law (BL) and Superintendent’s Regulations (SR), licensees of the Department of Financial Services (DFS) are required to notify the Superintendent of changes in certain individuals, within stipulated time frames.
Licensed Lenders: BL 342 and 345; and SR 401.1, 401.2 and 401.3
Premium Finance Agencies: BL 555, 555-a and 556; and SR 405.4
Sales Finance Companies: BL 492 and 492-a; and SR 403.4
These requirements are for changes in certain individuals of licensees whose licenses are not managed on NMLS. For those managed on NMLS, visit the NMLS website area for New York and navigate to Company Licenses and Amendment under the pertinent industry type, and look under Change in Control on the Amendment Checklist.
Included Individuals
Members of the governing board such as directors, trustees, and LLC members
Officers (at a minimum Chief Executive Officer, President, Chief Financial Officer, Chief Compliance Officer, and Chief Operations Officer, and any other officers deemed necessary by DFS)
Documentary requirements for Each Included Individual Being Added
- Notification on the licensee's letterhead signed by an authorized officer containing the following:
- Name and title of the individual being added
- Effective date of the addition
- Name and title of the person being replaced, and his/her new title/position, if any
- Resolution of the governing board approving the addition
- Personal Questionnaire (PDF)
- Fingerprints
- Background Investigation Report**
- Litigation Affidavit (PDF)
- Authority to Release Information (PDF)
- Resume
Documentary requirements for Each Included Individual Being Removed
Notification on the licensee's letterhead signed by an authorized officer containing the following:
- Name and title of the individual being removed
- Reason of the removal
- Effective date of the removal
- New title/position, if any
Where To Submit?
For matters related to Budget Planners, Check Cashers, Licensed Lenders, Money Transmitters, Premium Finance Agencies, and Sales Finance Companies, submit the documents as directed by the DFS Portfolio Manager assigned to your institution.
For matters related to Virtual Currency, submit documents via email to [email protected].
**Background Investigation Reports are usually required only for individuals of licensed check cashers and money transmitters. However, Background Investigation Reports may also be required for other officers, directors, stockholders, owners, and control persons of any licensee as determined by the Superintendent in her sole discretion.
Forms
The following forms are in PDF format.
Questions?
More information about NMLS can be found in the NMLS Resource Center.
Call DFS at (212) 709-5507 for questions about DFS filings and applications.