Title 19
Financial Institutions
Chapter 14.3
Currency Transmissions
R.I. Gen. Laws § 19-14.3-1
- 19-14.3-1. Exemption from licensing.
No license to engage in the business of currency transmission shall be required of any:
(1) Regulated institution, bank, or credit union organized under the laws of the United States, or subject to written notice with a designated Rhode Island agent for service of process in the form prescribed by the director, or the director’s designee, of any other state within the United States if the laws of the other state in which the bank or credit union is organized authorizes under conditions not substantially more restrictive than those imposed by the laws of this state, as determined by the director, or the director’s designee, a financial institution or credit union to engage in the business of currency transmission in the other state; no bank or credit union duly organized under the laws of any other state within the United States may receive deposits, pay checks, or lend money from any location within this state unless the bank or credit union has received approval from the director, or the director’s designee, for the establishment of an interstate branch office pursuant to chapter 7 of this title;
(2) Natural person employee who is employed by a licensee when acting on the licensee’s behalf; or
(3) Agents or authorized delegates any licensee shall designate or appoint. No currency transmission licensee shall be required to obtain a branch office license pursuant to § 19-14-12, or shall be subject to the provisions of § 19-14-24. Agents or authorized delegates, in their capacity as agents of the licensee, are subject to the supervision and regulation by the director notwithstanding exemption from licensure.
(4) This chapter shall not apply to activity by:
(i) The United States, a state, political subdivision of a state, agency or instrumentality of federal, state, or local government, or a foreign government or a subdivision, department, agency or instrumentality of a foreign government;
(ii) A person whose participation in a payment system is limited to providing processing, clearing, or performing settlement services solely for transactions between or among persons who are exempt from the licensing or registration requirements of this chapter;
(iii) A person engaged in the business of dealing in foreign exchange to the extent the person’s activity meets the definition in 31 C.F.R. 1010.605(f)(1)(iv), as may be amended from time to time;
(iv) A person who:
(A) Contributes only connectivity software or computing power to support the stability and security of the underlying network;
(B) Provides only data storage or security services for a business engaged in virtual currency business activity and does not otherwise engage in virtual currency business activity on behalf of another person;
(C) Provides only to a person otherwise exempt from this chapter virtual currency as one or more enterprise solutions used solely among each other and has no agreement or relationship with a resident that is an end-user of virtual currency; or
(D) Transmission or communications services providers that provide only the means of transmission or communications;
(v) A person using virtual currency, including creating, investing, buying, or selling, or obtaining virtual currency as payment for the purchase or sale of goods or services, solely:
(A) On its own behalf;
(B) For personal, family, or household purposes; or
(C) For academic purposes;
(vi) An attorney to the extent of providing escrow services to a resident;
(vii) A title insurance company to the extent of providing escrow services to a resident;
(viii) A securities intermediary, as defined in § 6A-8-102, or a commodity intermediary, as defined § 6A-9-102, that:
(A) Does not engage in the ordinary course of business in virtual currency business activity with or on behalf of a resident in addition to maintaining securities accounts or commodities accounts and is regulated as a securities intermediary or commodity intermediary under federal law, the law of this state other than this chapter, or the law of another state; and
(B) Affords resident protections comparable to those set forth in § 19-14.3-3.6;
(ix) A secured party defined in § 6A-9-102(a) or creditor with a judicial lien or lien arising by operation of law on collateral that is virtual currency, if the virtual currency business activity of the creditor is limited to enforcement of the security interest in compliance with chapter 9 of title 6A or a lien in compliance with the law applicable to the lien;
(x) A virtual currency control-services vendor; or
(xi) A person that:
(A) Does not receive compensation from or on behalf of a resident or from sales of data pertaining to a resident for:
(I) Providing virtual currency products or services; or
(II) Conducting virtual currency business activity; or
(B) Is engaged in testing products or services with the person’s own funds.
(5) The department may determine that a person or class of persons, given facts particular to the person or class, should be exempt from this chapter, whether the person or class is covered by requirements imposed under federal law on a money-service business.
- 19-14.3-1.1. Definitions.
In addition to the definitions provided in § 19-14-1 the following definitions are applicable to this chapter:
(1) “Control” means:
(i) When used in reference to a transaction or relationship involving virtual currency, the power to execute unilaterally or prevent indefinitely a virtual currency transaction; and
(ii) When used in reference to a person, the direct or indirect power to direct the management, operations, or policies of the person through legal or beneficial ownership of twenty-five percent (25%) or more of the voting power in the person or under a contract, arrangement, or understanding.
(2) “Department” means the department of business regulation, division of banking.
(3) “Exchange,” used as a verb, means to assume control of virtual currency from or on behalf of a resident, at least momentarily, to sell, trade, or convert:
(i) Virtual currency for legal tender, bank credit, or one or more forms of virtual currency; or
(ii) Legal tender or bank credit for one or more forms of virtual currency.
(4) “Legal tender” means a medium of exchange or unit of value, including the coin or paper money of the United States, issued by the United States or by another government.
(5) “Licensee” means a person licensed under this chapter.
(6) “Monetary value” means a medium of exchange, whether or not redeemable in money.
(7) “Reciprocity agreement” means an arrangement between the department and the appropriate licensing agency of another state that permits a licensee operating under a license granted by the other state to engage in currency transmission business activity with or on behalf of a resident.
(8) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.
(9) “Registry” means the Nationwide Multistate Licensing System.
(10) “Resident”:
(i) Means a person that:
(A) Is domiciled in this state;
(B) Is physically located in this state for more than one hundred eighty-three (183) days of the previous three hundred sixty-five (365) days; or
(C) Has a place of business in this state; and
(ii) Includes a legal representative of a person that satisfies subsection (10)(i) of this section.
(11) “Responsible individual” means an individual who has managerial authority with respect to a licensee’s currency transmission business activity with or on behalf of a resident.
(12) “Sign” means, with present intent to authenticate or adopt a record:
(i) To execute or adopt a tangible symbol; or
(ii) To attach to or logically associate with the record an electronic symbol, sound, or process.
(13) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.
(14) “Store,” except in the phrase “store of value,” means to maintain control of virtual currency on behalf of a resident by a person other than the resident. “Storage” and “storing” have corresponding meanings.
(15) “Transfer” means to assume control of virtual currency from or on behalf of a resident and to:
(i) Credit the virtual currency to the account of another person;
(ii) Move the virtual currency from one account of a resident to another account of the same resident; or
(iii) Relinquish control of virtual currency to another person.
(16) “U.S. Dollar equivalent of virtual currency” means the equivalent value of a particular virtual currency in United States dollars shown on a virtual currency exchange based in the United States for a particular date or period specified in this chapter.
(17) “Virtual currency business activity” means:
(i) Exchanging, transferring, or storing virtual currency whether directly or through an agreement with a virtual currency control-services vendor;
(ii) Holding electronic precious metals or electronic certificates representing interests in precious metals on behalf of another person or issuing shares or electronic certificates representing interests in precious metals; or
(iii) Exchanging one or more digital representations of value used within one or more online games, game platforms, or family of games for:
(A) Virtual currency offered by or on behalf of the same publisher from which the original digital representation of value was received; or
(B) Legal tender or bank credit outside the online game, game platform, or family of games offered by or on behalf of the same publisher from which the original digital representation of value was received.
(18) “Virtual currency control-services vendor” means a person who has control of virtual currency solely under an agreement with a person who, on behalf of another person, assumes control of virtual currency.
- 19-14.3-1.2. License by reciprocity.
A person licensed by another state to engage in currency transmission business activity in that state may engage in currency transmission business activity with or on behalf of a resident to the same extent as a licensee if:
(1) The department determines that the state in which the person is licensed has in force laws regulating currency transmission business activity that are substantially similar to, or more protective of rights of users than, this chapter and enters into a reciprocity agreement with the other state that the state will allow reciprocal licensing of persons licensed under this chapter.
(2) An application under this section is filed with the registry and the applicant shall notify the department in a record that the applicant has submitted the application to the registry and shall submit to the department:
(i) A certification of license history from the agency responsible for issuing a license in each state in which the applicant has been licensed to conduct currency transmission business activity;
(ii) A nonrefundable reciprocal licensing application fee in the amount required by § 19-14-4;
(iii) All other information requested by the department in the application for licensure on the registry.
- 19-14.3-1.3. Cooperation and data-sharing authority.
(a) The department may cooperate, coordinate, jointly examine, consult, and share records and other information with the appropriate regulatory agency of another state, a self-regulatory organization, federal or state regulator of banking or non-depository providers, or a regulator of a jurisdiction outside the United States, concerning the affairs and conduct of a licensee in this state.
(b) The department shall:
(1) Establish or participate in, with another state that enacts a law substantially similar to this chapter, a central depository for filings required by law of this state other than this chapter;
(2) Cooperate in developing and implementing uniform forms for applications and renewal reports and the conduct of joint administrative proceedings and civil actions;
(3) Formulate joint rules, forms, statements of policy, and guidance and interpretative opinions and releases; and
(4) Develop common systems and procedures.
(c) In deciding whether and how to cooperate, coordinate, jointly examine, consult, or share records and other information under subsection (a) of this section, the department shall consider:
(1) Maximizing effectiveness and uniformity of regulation, examination, implementation, and enforcement for the benefit of residents and licensees and registrants; and
(2) Minimizing burdens on licensees and registrants without adversely affecting protection for residents.
- 19-14.3-2. Securities in lieu of bonds.
In lieu of the required surety bond or bonds, or of any portion as required by chapter 14, the applicant may deposit with the director, or the director’s designee, with the financial institutions, credit unions, or national banks in this state that the applicant may designate and the director, or the director’s designee, may approve, United States government/agency obligation or state obligations, to an aggregate amount, based upon principal amount or market value, whichever is lower, of not less than the amount of the required surety bond. The securities shall be deposited and held to secure the same obligations as would the surety bond, but the licensee shall be entitled to receive all interest and dividends thereon, shall have the right, with the approval of the director, or the director’s designee, to substitute other securities for those deposited, and shall be required to substitute securities on the written order of the director, or the director’s designee.
- 19-14.3-3. Liability of licensees.
Each licensee shall be liable for the payment of all checks or electronic money transfer sold by the licensee in this state, in whatever form and whether directly or through an agent, as the maker or drawer of these according to the negotiable instrument laws of this state; and a licensee who sells a check or electronic money transfer, whether directly or through an agent, upon which the licensee is not designated as maker or drawer shall, nevertheless, have the same liabilities with respect to these as if signed as the maker or drawer of these. Every check or electronic money transfer sold by a licensee, directly or through an agent, shall bear the name of the licensee clearly imprinted on it.
- 19-14.3-3.1. Record of foreign exchange transactions.
Every person carrying on a foreign exchange business or the business of forwarding foreign drafts or of forwarding money or other credits to any country outside of the United States shall make and preserve a record of each transaction. The record shall contain all of the following information: the amount or value of the money or credit forwarded; the bank or depository from which the money or credit is purchased by the person; the date of the purchase; the names and addresses of the persons forwarding the money or credit; and the serial number or other symbol of any of the drafts or credits deposited with the person for forwarding. The record shall be kept in a separate book for that purpose and shall always be open to the inspection of the person who has forwarded any money or credit through the person upon his or her request. This person shall not fail, neglect, or refuse to submit or show the record or prevent a proper person, as defined in this section, to inspect the record.
- 19-14.3-3.2. Forwarding of documents to foreign correspondent — Receipt for money or documents.
Every person, whether engaged in the foreign exchange brokerage business or not, to whom any money, draft, or credit is delivered to be forwarded to a foreign correspondent, shall forward the credit, accompanied by draft credits, or any documents necessary and essential to carrying out the transaction, immediately after the receipt, sale, deposit, or other transaction by which the money, draft, or credit is delivered to the person for forwarding. That person shall also, upon delivery of any money, draft, or credit to be forwarded to a foreign correspondent, give a receipt, showing what the current rate of exchange of the foreign currency to which the money, draft, or credit is to be transferred is on the day of the transaction, and the amount expressed in the denomination of the foreign currency, according to the rate of exchange, that is to be forwarded as set forth above.
- 19-14.3-3.3. Action on bond.
Every person who has delivered or deposited money or credit to be forwarded to a foreign correspondent, who has acquired any judgment, debt, claim, or demand relating to the transaction against any person named as principal in any bond filed in accordance with the provisions of this chapter or the person’s agents or employees, arising from defalcation, embezzlement, negligence, breach of contract, or violation of any duty required under this title, shall have a cause of action upon the bond for all damages sustained, and shall upon request be furnished with a certified copy of the bond by the director, or the director’s designee, and may bring suit in the name of the obligee named in the bond for their use and benefit against the principal and surety or sureties named in the bond, and may prosecute the action to final judgment and execution; provided, that the action and its prosecution shall involve the obligee in no expense and that every action shall be commenced and sued within six (6) years after the cause of action shall accrue and not after.
- 19-14.3-3.4. Companies exempt from provisions.
The provisions of §§ 19-4.3-3.1 — 19-4.3-3.3 shall not apply to duly incorporated financial institutions or credit unions.
- 19-14.3-3.5. Required disclosures for virtual currency.
(a) A licensee engaging in virtual currency business activities shall provide to a resident who uses the licensee’s virtual currency products or service the disclosures required by subsection (b) of this section and any additional disclosure the department by rule determines reasonably necessary for the protection of residents. The department may determine by rule any additional disclosures and/or the time and form required for disclosure. A disclosure required by this section must be made separately from any other information provided by the licensee and in a clear and conspicuous manner in a record the resident may keep. A licensee may propose for the department’s approval alternate disclosures as more appropriate for its virtual currency business activity with or on behalf of residents.
(b) Before establishing a relationship with a resident, a licensee shall disclose, to the extent applicable to the virtual currency business activity the licensee will undertake with the resident:
(1) A schedule of fees and charges the licensee may assess, the manner by which fees and charges will be calculated if they are not set in advance and disclosed, and the timing of the fees and charges;
(2) Whether the product or service provided by the licensee is covered by:
(i) A form of insurance or is otherwise guaranteed against loss by an agency of the United States:
(A) Up to the full U.S. Dollar equivalent of virtual currency placed under the control of or purchased from the licensee as of the date of the placement or purchase, including the maximum amount provided by insurance under the Federal Deposit Insurance Corporation or otherwise available from the Securities Investor Protection Corporation; or
(B) If not provided at the full U.S. Dollar equivalent of virtual currency placed under the control of or purchased from the licensee, the maximum amount of coverage for each resident expressed in the U.S. Dollar equivalent of the virtual currency; or
(ii) Private insurance against theft or loss, including cyber theft or theft by other means;
(3) The irrevocability of a transfer or exchange and any exception to irrevocability;
(4) A description of:
(i) Liability for an unauthorized, mistaken, or accidental transfer or exchange;
(ii) The resident’s responsibility to provide notice to the licensee of the transfer or exchange;
(iii) The basis for any recovery by the resident from the licensee;
(iv) General error-resolution rights applicable to the transfer or exchange; and
(v) The method for the resident to update the resident’s contact information with the licensee;
(5) That the date or time when the transfer or exchange is made and the resident’s account is debited may differ from the date or time when the resident initiates the instruction to make the transfer or exchange;
(6) Whether the resident has a right to stop a pre-authorized payment or revoke authorization for a transfer and the procedure to initiate a stop-payment order or revoke authorization for a subsequent transfer;
(7) The resident’s right to receive a receipt, trade ticket, or other evidence of the transfer or exchange;
(8) The resident’s right to at least thirty (30) days’ prior notice of a change in the licensee’s fee schedule, other terms and conditions of operating its virtual currency business activity with the resident and the policies applicable to the resident’s account; and
(9) That virtual currency is not legal tender.
(c) Except as otherwise provided in subsection (d), at the conclusion of a virtual currency transaction with or on behalf of a resident, a licensee shall provide the resident a confirmation in a record that contains:
(1) The name and contact information of the licensee, including information the resident may need to ask a question or file a complaint;
(2) The type, value, date, precise time, and amount of the transaction; and
(3) The fee charged for the transaction, including any charge for conversion of virtual currency to legal tender, bank credit, or other virtual currency.
(d) If a licensee discloses that it will provide a daily confirmation in the initial disclosure under subsection (c) of this section, the licensee may elect to provide a single, daily confirmation for all transactions with or on behalf of a resident on that day instead of a per-transaction confirmation.
- 19-14.3-3.6. Property interests and entitlements to virtual currency.
(a) A licensee that has control of virtual currency for one or more persons shall maintain in its control an amount of each type of virtual currency sufficient to satisfy the aggregate entitlements of the persons to the type of virtual currency.
(b) If a licensee violates subsection (a), the property interests of the persons in the virtual currency are pro rata property interests in the type of virtual currency to which the persons are entitled, without regard to the time the persons became entitled to the virtual currency or the licensee obtained control of the virtual currency.
(c) The virtual currency referred to in this section is:
(1) Held for the persons entitled to the virtual currency;
(2) Not property of the licensee; and
(3) Not subject to the claims of creditors of the licensee.
- 19-14.3-3.7. Mandated compliance programs and monitoring.
(a) An applicant, before submitting an application, shall create and, during licensure, maintain in a record, policies and procedures for:
(1) An information-security and operational-security program;
(2) A business-continuity program;
(3) A disaster-recovery program;
(4) An anti-fraud program;
(5) An anti-money-laundering program; and
(6) A program to ensure compliance with the Bank Secrecy Act and the USA Patriot Act.
(b) A licensee’s information-security and operational-security policy must include reasonable and appropriate administrative, physical, and technical safeguards to protect the confidentiality, integrity, and availability of any non-public personal information or currency transmission it receives, maintains, or transmits.
(c) A licensee is not required to file with the department a copy of a report it makes to a federal authority unless the department specifically requires filing.
(d) After the policies and procedures required under this section are created by the licensee and approved by the department, the licensee shall engage a responsible individual with adequate authority and experience to monitor each policy and procedure, recommend changes as desirable, and enforce it.
(e) A licensee may:
(1) Request advice from the department as to compliance with this section; and
(2) With the department’s approval, outsource functions, other than compliance, required under this section.
(f) Failure of a particular policy or procedure adopted under this section to meet its goals in a particular instance is not a ground for liability of the licensee if the policy or procedure was created, implemented, and monitored properly. Repeated failures of a policy or procedure are evidence that the policy or procedure was not created or implemented properly.
- 19-14.3-3.8. Prohibited acts and practices.
No person required to be licensed under this chapter shall:
(1) Fail to remit all money or monetary value received for transmission pursuant to this chapter, or give instructions committing equivalent money or monetary value to the person designated by the sender within ten (10) days after receipt by the licensee unless otherwise directed by the sender except in cases relating to the prevention and detection of fraud or money laundering, compliance with applicable sanctions, regimes and other related compliance obligations;
(2) Fail to immediately notify the director in writing if the licensee dishonors or fails to satisfy any currency transmission transaction within the ten (10) days following receipt for any reason other than direction by the sender except in cases relating to the prevention and detection of fraud or money laundering, compliance with applicable sanctions, regimes and other related compliance obligations;
(3) Engage in the business of currency transmission in the state under any name other than that which it is organized or otherwise authorized to do business in the state;
(4) Fail to comply with the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., and 31 C.F.R. Part 1022, including maintenance of an active registration with the United States Department of Treasury Financial Crimes Enforcement Network;
(5) Fail to comply with the Electronic Fund Transfer Act, 15 U.S.C. § 1693 et seq., and Regulation E, 12 C.F.R. 1005 et seq.;
(6) Fail to safeguard identifying information obtained in the course of currency transmission and otherwise comply with the requirements set forth in chapter 52 of title 6;
(7) Fail to comply with applicable state and federal laws and regulations related to the business of currency transmission;
(8) Use or cause to be published or disseminated any advertising communication that contains any false, misleading, or deceptive statement or representation; or
(9) Engage in unfair, deceptive, or fraudulent practices.
- 19-14.3-4. Rules and regulations.
The director, or the director’s designee, may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter.
- 19-14.3-5. Severability.
If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter that can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.