As most fintech companies know, determining whether state financial services licenses are required, let alone applying for and obtaining them, is an expensive and time-consuming process. In the past few years, the Conference of State Bank Supervisors (CSBS) has pursued various ways to reduce these burdens, including as part of its "Vision 2020" initiative. That initiative saw the creation of a Fintech Advisory Panel composed of 33 companies in the fintech industry. On February 14, 2019, CSBS agreed to implement 14 recommendations proposed by the panel's small business lending and payments subgroups.
The recommendations CSBS agreed to adopt include:
- Expanding use of the Nationwide Multistate Licensing System (NMLS) to all states and all financial services license types
- Building a new, coordinated state examination system
- Exploring standardized approaches to control person disclosures and change in control application processes
- Standardizing definitions and exemptions for money services businesses (MSBs) through a new 50-state model MSB law.
Among those recommendations CSBS did not adopt, but agreed to "consider for future action," are several related to small business lending. These include creating consistent definitions of "commercial loan" based on the use of proceeds and developing consistent commercial loan disclosure requirements. The full list of recommendations CSBS agreed to support or consider for future action is available here.
Although many of the recommendations focused on harmonizing licensing requirements and processes among states, the announcement did not explicitly address another CSBS initiative for streamlining the money transmission application process. In February 2018, 7 states agreed that if one of the participating states reviews key elements of a company's license application, the other states will accept that state's findings. Currently, that initiative has expanded to 21 states.
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