After attending the 2016 Nationwide Multistate Licensing System & Registry (NMLS) Conference (the “Conference”) and Training in Phoenix, Arizona, Chartwell Compliance Consultants, Cris Fernandes and Jen Naudin, were happy to see more representatives from the Money Services Business Industry (MSB) at the Conference. The Mortgage Industry is still by far the largest group to appear at the Conference; however, as other money services industries attend, we will start getting MSB voices heard and some valuable changes coming to the MSB Industry.
When major changes are proposed, NMLS has various working groups, from industry and regulators, discussing what and how to best implement these changes. The NMLS Policy Committee (NMLSPC) regularly invites public comments on significant changes to the System. Industry trade groups, state licensed financial services companies, consulting firms, and law firms are all welcome to provide comments.
As discussed at the Conference, the current NMLS system is not as flexible or as intuitive as it could be, and does not meet all current business needs. To resolve this issue, NMLS 2.0 is in the planning stage with no estimated date for completion. As stated at the NMLS conference, this is an “opportunity not to just improve the system, but to rethink the system.” The good news is that regulators and the industry will be able to provide input into NMLS 2.0. Suggestions for enhancements are welcome and NMLS will be posting updates to the NMLS Resource Center on details of engagement. A suggestion that Chartwell recently provided to NMLS 2.0 is to have a list of all changes made within a certain filing listed under the attestation page, so the employee attesting to the filing can confirm all changes prior to attesting and correct any changes made by mistake.
While we wait for NMLS 2.0, some enhancements have been made to the Document Uploads with the inclusion of credit report explanations, memorandum of tax certification, verification of experience, personal financial statement (which can only be viewed by the state requesting it), and state background check authorization forms. NMLS is also evaluating the need to add additional document categories.
In discussing the Document Uploads at the Conference, a major request from regulators was for users not to upload any items that have not been requested by a state and not use the Document Samples category as catch-all category. If users strictly follow the upload guide and use the NMLS suggested naming convention, it will help regulators find documents they are looking for easily.
Additionally, below are some of the new enhancements targeted for September 2016:
New functionality would permit MU2 individuals, whose companies are licensed in states that opt to utilize the new functionality, to process a CBC directly through NMLS. Similarly to Mortgage Loan Officers (MLOs), to ease the submission of background checks, fingerprints would remain on file in NMLS for three years. Currently, MLOs request a background check directly in NMLS and then submit fingerprints (if prints are not already on file) through a Live Scan location provided by the NMLS fingerprinting vendor. The prints are then sent directly to NMLS and to the FBI. Once the CBC result is received in NMLS, the regulator is notified and is permitted to view it directly in NMLS. Only states that the individual holds a license in are permitted to view the CBC result. The new functionality will work similar, but with modifications to the state authorization process to view CBC results.
April 28, 2016 is the deadline to submit comments for another piece of the attestation language included in proposed changes to the Company and Branch Filing Attestations. You can submit comments at here. Current attestation language says “(1) That the information and statements contained herein, including exhibits attached hereto, and other information filed herewith, all of which are made a part of this application, are current, true and complete and are made under the penalty of perjury, or un-sworn falsification to authorities, or similar provisions as provided by law” which industry hopes to replace with “…to the best of my knowledge, information, and belief…,” which better represents the facts.
Under the same Proposal for Comment (Proposal 2016-1) there is a possible change in language that would require an employee of the company, who is authorized to attest on behalf of the company, to submit and attest to filings. This change may not be in the best interest of certain licensees that use the help of their compliance firms or their law firms with reporting. The idea is that, in the future, third party users will be assigned a different user role, as Organizational Users, which will allow them to assist with completing company filings without the ability to attest and submit a filing. The proposed attestation language is as follows:
“I, <<NAME>>, <<TITLE/POSITION>>, am employed by or am an officer or a control person of <<COMPANY>> (Applicant). I am authorized to verify the foregoing responses, attest to, execute and submit this filing on Applicant’s behalf.”
In the future, NMLS anticipates implementing the Examination Management Tool Suite (EMTS), which will include “a full-service examination management suite of tools for state agency use for single, multistate, and state/federal non-depository examinations.” The goal is to create uniformity, modernization, and effectiveness, while allowing for record retention, file transmission, scheduling, and exam communication (regulators assigned, request list, invoicing, etc.). Requirements of the system have been identified and, currently, under the Request for Proposal (RFP) process for vendor selection.
With Phase 1 completed, Phase 2 is expected to be completed by Q3 2016, and Phase 3 and the final phase expected for 2017. Current implementation includes the issuance of electronic surety bonds, which will foster real-time communication among licensees, bond producers, regulators, and sureties. This communication will be through the system (amount, states where bond is needed, issuance, cancellation, rider and reinstatement etc.). All surety bond carriers are now able to apply to provide bonds via NMLS.
Other NMLS enhancements targeted for first half of 2017 include the implementation of an MSB Call Report, a quarterly report that would include transaction volumes and financial information submitted directly in NMLS.
Trish Lagodzinski has more than 19 years of experience in government contracting, project management and support. At Chartwell Compliance and, previously, Ascella Compliance, she has assisted with regulatory compliance matters dealing with state money services business licenses and related state and federal compliance regulations for a wide range of non-bank financial services companies. Her work has included leading a 50-state license application project in six months for a publicly traded customer. She also serves as an outsourced state license administrator for customers. For more information please visit www.chartwellcompliance.com.
Jennifer Naudin, J.D. is a Senior Compliance Analyst with Chartwell Compliance, where she focuses on state money transmitter licensing. She is a former Compliance Analyst for ADP, Inc., and has 9 years of experience in compliance, lending and money transmission licensing. For more information please visit www.chartwellcompliance.com.
Cristiane Fernandes has over 5 years of experience working in the payments industry and previously worked in Blackhawk Network’s Legal Department where she was involved in obtaining Blackhawk’s 46-states, plus the District of Columbia and Puerto Rico money transmitter licenses. For more information please visit www.chartwellcompliance.com.