51A-17-1. Definition of terms.
Terms used in this chapter mean:
(1) “Applicant,” any person filing an application for a license under this chapter;
(2) “Authorized delegate,” any entity designated by the licensee under the provisions of this chapter to sell or issue payment instruments or engage in the business of transmitting money on behalf of a licensee;
(3) “Controlling person,” any person in control of a licensee;
(4) “Director,” the director of the Division of Banking;
(5) “Division,” the Division of Banking;
(6) “Electronic instrument,” any card or other tangible object for the transmission or payment of money that contains a microprocessor chip, magnetic stripe, or other means for the storage of information, that is prefunded, and for which the value is decremented upon each use. The term does not include a card or other tangible object that is redeemable by the issuer in goods or services;
(7) “Executive officer,” the licensee’s president, chair of the executive committee, senior officer responsible for the licensee’s business, chief financial officer, and any other person who performs similar functions;
(8) “Key shareholder,” any person, or group of persons acting in concert, who is the owner of twenty-five percent or more of any voting class of an applicant’s stock;
(9) “Licensee,” any person licensed pursuant to this chapter;
(10) “Material litigation,” any litigation that, according to generally accepted accounting principles, is deemed significant to an applicant’s or licensee’s financial health and would be required to be referenced in that entity’s annual audited financial statements, report to shareholders, or similar documents;
(11) “Monetary value,” any medium of exchange, whether or not redeemable in money;
(12) “Money transmission,” engagement in the business of the sale or issuance of payment instruments or stored value or of receiving money or monetary value for transmission to a location within or outside the United States by any means;
(13) “Nationwide mortgage licensing system and registry,” a licensing system developed and maintained by the Conference of State Bank Supervisors and the American Association of Residential Mortgage Regulators for the licensing and registration of licensed mortgage loan originators and other regulated entities;
(14) “Outstanding payment instrument,” any payment instrument issued by the licensee which has been sold in the United States directly by the licensee or any payment instrument issued by the licensee which has been sold by an authorized delegate of the licensee in the United States, which has been reported to the licensee as having been sold, and which has not yet been paid by or for the licensee;
(15) “Payment instrument,” any electronic or written check, draft, money order, travelers check, or other electronic or written instrument or order for the transmission or payment of money, sold or issued to one or more persons, whether or not such instrument is negotiable. The term, payment instrument, does not include any credit card voucher, any letter of credit, or any instrument which is redeemable by the issuer in goods or services;
(16) “Remit,” either the direct payment of the funds to the licensee or its representatives authorized to receive those funds, or the deposit of the funds in a bank, credit union, savings and loan association, or other similar financial institution in an account specified by the licensee;
(17) “Security device,” any surety bond, irrevocable letter of credit, or similar security device;
(18) “Stored value,” monetary value that is evidenced by an electronic record. Stored value does not include any item that is redeemable by the issuer or its affiliates in goods or services of the issuer or its affiliates;
(19) “Tangible net worth,” aggregate assets of a licensee excluding all intangible assets, less liabilities, as determined in accordance with United States generally accepted accounting principles.
Source: SL 2008, ch 253, § 1; SL 2015, ch 241, § 1; SL 2022, ch 178, § 1.
51A-17-2. Permissible investments defined.
For the purposes of this chapter, the term, permissible investments, means any of the following:
(1) Cash;
(2) Certificates of deposit or other debt obligations of a financial institution, either domestic or foreign;
(3) Bills of exchange or time drafts drawn on and accepted by a commercial bank, otherwise known as bankers’ acceptances, which are eligible for purchase by member banks of the Federal Reserve System;
(4) Any investment bearing a rating of one of the three highest grades as defined by a nationally recognized organization that rates such securities;
(5) Investment securities that are obligations of the United States, its agencies or instrumentalities, or obligations that are guaranteed fully as to principal and interest of the United States, or any obligations of any state, municipality, or any political subdivision thereof;
(6) Shares in a money market mutual fund, interest-bearing bills or notes or bonds, debentures or stock traded on any national securities exchange or on a national over-the-counter market, or mutual funds primarily composed of such securities, or a fund composed of one or more permissible investments as set forth in this section;
(7) Any demand borrowing agreement or agreements made to a corporation or a subsidiary of a corporation whose capital stock is listed on a national exchange;
(8) Receivables which are due to a licensee from its authorized delegates, which are not past due or doubtful of collection; or
(9) Any other investments or security device approved by the director.
Source: SL 2008, ch 253, § 2.
51A-17-2.1. Control defined.
For purposes of this chapter, the term, control, means:
(1) The power to vote, directly or indirectly, at least twenty-five percent of the outstanding voting shares or voting interests of a licensee or controlling person;
(2) The power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a licensee or controlling person; or
(3) The power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or controlling person.
A person is presumed to exercise controlling influence when the person holds the power to vote, directly or indirectly, at least ten percent of the outstanding voting shares or voting interests of a licensee or controlling person. A person presumed to exercise controlling influence as defined by this section may rebut the presumption of control if the person is a passive investor.
To determine the percentage of a licensee or controlling person controlled by any other person, the person’s interest must be aggregated with the interest of the person’s spouse, parents, children, siblings, mothers- and fathers-in-law, sons- and daughters-in-law, brothers- and sisters-in-law, and any other person who shares the person’s home.
Source: SL 2022, ch 178, § 2.
51A-17-2.2. Passive investor defined.
For purposes of this chapter, the term, passive investor, means a person that:
(1) Does not have the power to elect a majority of key individuals or executive officers, managers, directors, trustees, or other persons exercising managerial authority of a licensee or controlling person;
(2) Is not employed by and does not have any managerial duties of the licensee or controlling person;
(3) Does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or controlling person; and
(4) Either:
(a) Attests to subdivisions (1), (2), and (3), in a form and in a medium prescribed by the director; or
(b) Commits to the passivity characteristics of subdivisions (1), (2), and (3) in a written document.
Source: SL 2022, ch 178, § 3.
51A-17-3. Entities exempt from chapter.
This chapter does not apply to:
(1) The United States or any department, agency, or instrumentality thereof;
(2) The United States Post Office;
(3) The state or any political subdivisions thereof;
(4) Banks, bank holding companies, credit unions, building and loan associations, savings and loan associations, savings banks, or mutual banks organized under the laws of any state or the United States, and any subcontractor, agent, or independent contractor that sells payment instruments issued by any such entity or sells such entity’s money transmission services on behalf of such entity;
(5) A South Dakota chartered trust company;
(6) The provision of electronic transfer of government benefits for any federal, state, or county governmental agency as defined in Federal Reserve Board Regulation E, by a contractor for and on behalf of the United States or any department, agency, or instrumentality thereof, or any state or any political subdivisions thereof;
(7) An operator of a payment system to the extent that the system provides processing, clearing, or settlement services, between or among persons excluded by this section, in connection with wire transfers, credit card transactions, debit card transactions, stored-value transactions, automated clearing house transfers, or similar funds transfers; and
(8) An agent appointed by a payee to collect and process payment as the agent of the payee, if the agent can demonstrate that:
(a) A written agreement exists between the payee and the agent directing the agent to collect and process payments on the payee’s behalf;
(b) The payee holds the agent out to the public as accepting payments on the payee’s behalf; and
(c) Payment is treated as received by the payee upon receipt by the agent so there is no risk of loss to the individual initiating the transaction if the agent fails to remit the funds to the payee.
Source: SL 2008, ch 253, § 3; SL 2020, ch 205, § 1.
51A-17-4. License to engage in business of money transmission required.
No person, other than a person who is exempt under § 51A-17-3, may engage in the business of money transmission in this state without obtaining a license in accordance with this chapter and undergoing a criminal background investigation. A person is engaged in providing money transmission if the person provides those services to residents of this state, including any person who has no physical presence in this state. Each person subject to this section shall be licensed under and maintain a unique identifier through the nationwide mortgage licensing system and registry.
Source: SL 2008, ch 253, § 4; SL 2015, ch 241, § 3; SL 2019, ch 206, § 1.
51A-17-5. Single license to conduct business at multiple locations–Authorized delegates.
If a licensee has a physical presence in this state, the licensee may conduct its business at one or more locations, directly or indirectly owned, or through one or more authorized delegates, or both, pursuant to the single license granted to the licensee.
Any authorized delegate of a licensee, acting within the scope of authority conferred by a written contract as described in § 51A-17-31, is not required to become licensed pursuant to this chapter. However, any such authorized delegate is subject to all other relevant portions of this chapter.
Source: SL 2008, ch 253, § 5.
51A-17-6. Minimum net worth required.
Each licensee under this chapter shall maintain at all times a tangible net worth of the greater of one hundred thousand dollars or three percent of total assets for the first one hundred million dollars, two percent of additional assets from one hundred million dollars to one billion dollars, and one-half of one percent of additional assets over one billion dollars. Tangible net worth must be demonstrated in an initial application by the applicant’s most recent audited financial statement pursuant to §§ 51A-17-13(8) and 51A-17-14(5).
The director has the authority to exempt, in whole or in part, any applicant or licensee from the requirements of this section for good cause.
Source: SL 2008, ch 253, § 6; SL 2022, ch 178, § 4.
51A-17-7. Qualification to do business of corporate and noncorporate applicants and licensees.
Every corporate applicant, at the time of filing of an application for a license under this chapter and at all times after a license is issued, shall be in good standing in the state of its incorporation. All noncorporate applicants shall, at the time of the filing of an application for a license under this chapter and at all times after a license is issued, be registered or qualified to do business in the state.
Source: SL 2008, ch 253, § 7.
51A-17-8. Security device or deposit required.
Each application shall be accompanied by a security device acceptable to the director in the amount of one hundred thousand dollars. The director may increase the amount of the security device to a maximum of five hundred thousand dollars upon the basis of the impaired financial condition of a licensee, as evidenced by a reduction in net worth, financial losses, or other relevant criteria. The security device shall be in a form satisfactory to the director and shall run to the state for the benefit of any claimants against the licensee to secure the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission, and payment of money in connection with the sale and issuance of payment instruments or the transmission of money, or both. In the case of a surety bond, the aggregate liability of the surety may not exceed the principal sum of the bond. Any claimant against the licensee may bring suit directly on the security device or the director may bring suit on behalf of any claimant, either in one action or in successive actions.
In lieu of a security device or of any portion of the principal thereof, as required by this section, the licensee may deposit with the director, or with such banks in this state as the licensee may designate and the director may approve, cash, interest-bearing stocks and bonds, notes, debentures, or other obligations of the United States or any agency or instrumentality thereof, or guaranteed by the United States, or of this state, or of a city, county, school district, or instrumentality of this state, or guaranteed by this state, to an aggregate amount, based upon principal amount or market value, whichever is lower, of not less than the amount of the security device or portion thereof. The securities or cash shall be deposited as provided in this section and held to secure the same obligations as would the security device, but the depositor is entitled to receive all interest and dividends thereon, has the right, with the approval of the director, to substitute other securities for those deposited, and shall be required so to do on written order of the director made for good cause shown.
No security device may be cancelled without thirty days’ written notice to the director. Cancellation does not affect any liability incurred or accrued during the period the security device was in effect.
Source: SL 2008, ch 253, § 8.
51A-17-9. Security after licensee ceases operations.
The security device shall remain in place for five years after the licensee ceases money transmission operations in the state. However, the director may permit the security device to be reduced or eliminated prior to that time to the extent that the amount of the licensee’s payment instruments outstanding in this state are reduced. The director may also permit a licensee to substitute a letter of credit or other form of security device acceptable to the director for the security device in place at the time the licensee ceases money transmission operations in the state.
Source: SL 2008, ch 253, § 9.
51A-17-10. Investments required–Waiver by director.
Each licensee under this chapter shall at all times possess permissible investments having an aggregate market value, calculated in accordance with United States generally accepted accounting principles, of not less than the aggregate face amount of all outstanding payment instruments and stored value issued or sold by the licensee in the United States. A licensee transmitting virtual currencies shall hold like-kind virtual currencies of the same volume as that held by the licensee but that is obligated to consumers, in lieu of the permissible investments otherwise required in this section. A licensee conducting money transmission activities shall maintain applicable amounts and types of permissible investments at all times. The requirements of this section may be waived by the director if the dollar volume of a licensee’s outstanding payment instruments and stored value does not exceed the security devices posted by the licensee pursuant to § 51A-17-8.
Permissible investments, even if commingled with other assets of the licensee, must be held in trust for the benefit of the purchasers and holders of the licensee’s outstanding payment instruments in the event of the bankruptcy of the licensee.
Source: SL 2008, ch 253, § 10; SL 2022, ch 178, § 5.
51A-17-11. Criminal history background check required .
Each applicant for licensure under this chapter, except publicly traded corporations and their subsidiaries, shall provide to the nationwide mortgage licensing system and registry a complete set of the applicant’s fingerprints for submission to the Federal Bureau of Investigation and any other government agency authorized to receive fingerprints for the purposes of a state, national, and international criminal history background check prior to permanent licensure of the applicant. The division may require a state and federal criminal history background check for any licensee who is the subject of a disciplinary investigation by the division. The failure to submit or cooperate with the criminal history background check under this section may result in denial of an application or revocation of a license. The applicant shall pay for any fees charged for the cost of fingerprinting or the criminal history background check.
Source: SL 2008, ch 253, § 11; SL 2019, ch 206, § 2.
51A-17-12. Application for license–Form–Contents.
Each application for a license under this chapter shall be made in writing on a form prescribed by the director that includes:
(1) The exact name of the applicant, the applicant’s principal address, any fictitious or trade name used by the applicant in the conduct of business, and the location of the applicant’s business records;
(2) The history of the applicant’s material litigation for the preceding five-year period;
(3) A complete set of the applicant’s fingerprints and a signed waiver authorizing the division to conduct a criminal history background check of the applicant;
(4) A description of the business activities conducted by the applicant and a history of operations;
(5) A description of the business activities in which the applicant seeks to be engaged in the state;
(6) A list identifying the applicant’s proposed authorized delegates in the state, if any, at the time of the filing of the application;
(7) A sample authorized delegate contract, if applicable;
(8) A sample form of payment instrument, if applicable;
(9) Each location at which the applicant and its authorized delegates, if any, propose to conduct the licensed activities in the state; and
(10) The name and address of the clearing bank or banks on which the applicant’s payment instruments will be drawn or through which the payment instruments will be payable.
Source: SL 2008, ch 253, § 12; SL 2019, ch 206, § 3.
51A-17-13. Corporate applicants–Additional requirements.
In addition to the requirements of § 51A-17-12, an applicant that is a corporation shall provide:
(1) The date of the applicant’s incorporation and state of incorporation;
(2) A certificate of good standing from the state in which the applicant was incorporated;
(3) A description of the corporate structure of the applicant, including the identity of any parent or subsidiary of the applicant, and the disclosure of whether any parent or subsidiary is publicly traded on any stock exchange;
(4) The name, business and residence address, and employment history for the preceding five years of the applicant’s executive officers and any officer or manager who will be in charge of the applicant’s activities to be licensed;
(5) The name, business and residence address, and employment history for the preceding five years of any key shareholder of the applicant;
(6) The history of material litigation for the preceding five-year period of every executive officer or key shareholder of the applicant;
(7) A complete set of fingerprints and a signed waiver authorizing the division to conduct a criminal history background check of each executive officer or key shareholder of the applicant;
(8) A copy of the applicant’s most recent audited financial statement, including balance sheet, statement of income or loss, statement of changes in shareholder equity, and statement of changes in financial position, and, if available, the applicant’s audited financial statements for the preceding two-year period. For an applicant that is a wholly owned subsidiary of another corporation, the applicant may submit either the parent corporation’s consolidated audited financial statements for the current year and for the preceding two-year period, or the parent corporation’s Form 10K reports filed with the United States Securities and Exchange Commission for the preceding three years in lieu of the applicant’s financial statements. For an applicant that is a wholly owned subsidiary of a corporation having its principal place of business outside the United States, similar documentation filed with the parent corporation’s regulator outside the United States may be submitted to satisfy the requirements of this subdivision; and
(9) A copy of all filings, if any, made by the applicant with the United States Securities and Exchange Commission, or with a similar regulator in a country other than the United States, within the preceding year.
Source: SL 2008, ch 253, § 13; SL 2019, ch 206, § 4.
51A-17-14. Noncorporate applicants–Additional requirements.
In addition to the requirements of § 51A-17-12, an applicant that is not a corporation shall provide:
(1) The name, business and residence address, personal financial statement, and employment history for the preceding five years, of each principal of the applicant and the name, business and residence address, and employment history for the preceding five years of any other person who will be in charge of the applicant’s activities to be licensed;
(2) The place and date of the applicant’s registration or qualification to do business in this state;
(3) The history of material litigation for the preceding five-year period for each individual having any ownership interest in the applicant and each person who exercises supervisory responsibility with respect to the applicant’s business activities;
(4) A complete set of fingerprints and a signed waiver authorizing the division to conduct a criminal history background check for each person having any ownership interest in the applicant and each person who exercises supervisory responsibility with respect to the applicant’s business activities; and
(5) A copy of the applicant’s audited financial statements, including balance sheet, statement of income or loss, and statement of changes in financial position, for the current year and, if available, for the preceding two-year period.
Source: SL 2008, ch 253, § 14; SL 2019, ch 206, § 5.
51A-17-15. Waiver of license application requirements.
The director may, for good cause shown, waive any requirement with respect to any license application or permit a license applicant to submit substituted information in its license application in lieu of the information required. The director may, if the circumstances dictate, require an applicant to provide additional information with respect to any license application.
Source: SL 2008, ch 253, § 15.
51A-17-16. Application fee .
Each application shall be accompanied by a nonrefundable application fee not to exceed five hundred dollars and a licensee fee not to exceed one thousand dollars. The license fee shall be refunded if the application is denied. The director shall establish the application and license fees by rules promulgated pursuant to chapter 1-26.
Source: SL 2008, ch 253, § 16.
51A-17-17. Applicant–Investigation by director.
Upon receiving a complete application, the director shall investigate the financial condition and responsibility, financial and business experience, character, and general fitness of the applicant. The director may conduct an on-site investigation of the applicant, the reasonable cost of which shall be paid by the applicant. If the director finds that the applicant’s business will be conducted honestly, fairly, and in a manner commanding the confidence and trust of the community and that the applicant has fulfilled the requirements imposed by this chapter and has paid the required license fee, the director shall issue a license to the applicant authorizing the applicant to engage in the licensed activities in this state until the license expires on the following January first. If these requirements have not been met, the director shall deny the application in writing setting forth the reasons for the denial.
Source: SL 2008, ch 253, § 17; SL 2020, ch 205, § 2.
51A-17-18. Denial of application–Request for hearing.
Any applicant aggrieved by a denial issued by the director under this chapter may, at any time within thirty days from the date of written notice of the denial, request a hearing pursuant to chapter 1-26. Any request for hearing shall be made in writing and postmarked within the thirty-day period if sent by way of United States postal mail or actually received by the division within the thirty-day period if sent by way of electronic mail or facsimile.
Source: SL 2008, ch 253, § 18.
51A-17-19. Annual report and renewal fee.
A licensee shall pay an annual renewal fee not to exceed one thousand dollars. The director shall establish the renewal fee by rules promulgated pursuant to chapter 1-26. The renewal fee shall be accompanied by a report, in a form prescribed by the director, which shall include:
(1) A copy of its most recent audited consolidated annual financial statement, including balance sheet, statement of income or loss, statement of changes in shareholder’s equity, and statement of changes in financial position, or, in the case of a licensee that is a wholly owned subsidiary of another corporation, the consolidated audited annual financial statement of the parent corporation may be filed in lieu of the licensee’s audited annual financial statement;
(2) The licensee shall provide the number of payment instruments sold by the licensee in the state, the dollar amount of those instruments, and the dollar amount of those instruments currently outstanding, for the calendar year or fiscal year immediately preceding the renewal period, or as much of this information as is available at the time of filing the renewal application;
(3) Any material changes to any of the information submitted by the licensee on its original application which have not previously been reported to the director on any other report required to be filed under this chapter;
(4) A list of the licensee’s permissible investments; and
(5) A list of the locations, if any, within this state at which business regulated by this chapter is being conducted by either the licensee or its authorized delegates.
Source: SL 2008, ch 253, § 19.
51A-17-20. Time for filing renewal application, report, and fee.
Any application for renewal of a license in accordance with this chapter shall be filed with the director by December first and shall be accompanied by a fee and report as required under § 51A-17-19. Any application for renewal filed with the director after December first and before January first of the next calendar year is subject to the renewal fee and a late fee equal to twenty-five percent of the renewal fee. The director may not issue a license for any application for renewal filed after December thirty-first unless an application is filed in accordance with § 51A-17-12.
Source: SL 2008, ch 253, § 20; SL 2015, ch 241, § 2; SL 2019, ch 206, § 6.
51A-17-21. Limit of licensee’s liability.
A licensee’s responsibility to any person for a money transmission conducted on that person’s behalf by the licensee or the licensee’s authorized delegate is limited to the amount of money transmitted or the face amount of the payment instrument or stored value purchased.
Source: SL 2008, ch 253, § 21.
51A-17-22. Amendment or notice of certain events required.
Within fifteen business days of the occurrence of any one of the events listed in this section, a licensee shall electronically file an amendment or an advance change notice through the nationwide mortgage licensing system and registry describing the event and its expected impact on the licensee’s activities in the state. The events include:
(1) Any material changes in information provided in a licensee’s application or renewal report;
(2) The filing for bankruptcy or reorganization by the licensee;
(3) The institution of revocation or suspension proceedings against the licensee by any state or governmental authority with regard to the licensees’ money transmission activities;
(4) Any felony indictment of the licensee or any of its key officers or directors related to money transmission activities; and
(5) Any felony conviction of the licensee or any of its key officers or directors related to money transmission activities.
Source: SL 2008, ch 253, § 22; SL 2022, ch 178, § 6.
51A-17-23. Notice of proposed change of control–Investigation–Approval of change.
A licensee shall electronically file an advance change notice through the nationwide mortgage licensing system and registry of a proposed change of control within fifteen days after learning of the proposed change of control and request approval of the acquisition. After review of a request for approval, the director may require the licensee to provide additional information concerning the proposed persons in control of the licensee. The additional information is limited to the same types required of the licensee or persons in control of the licensee as part of its original license or renewal application. The director shall approve a request for change of control if, after investigation, the director determines that the person or group of persons requesting approval has the competence, experience, character, and general fitness to operate the licensee or person in control of the licensee in a lawful and proper manner and that the interests of the public will not be jeopardized by the change of control.
Source: SL 2008, ch 253, § 23; SL 2022, ch 178, § 7.
51A-17-24. Persons exempt from change of control requirements–Notice.
The following persons are exempt from the requirements of § 51A-17-23, but the licensee shall notify the director of any such change of control:
(1) A person that acts as a proxy for the sole purpose of voting at a designated meeting of the security holders or holders of voting interests of a licensee or person in control of a licensee;
(2) A person that acquires control of a licensee by devise or descent;
(3) A person that acquires control as a personal representative, custodian, guardian, conservator, or trustee, or as an officer appointed by a court of competent jurisdiction or by operation of law; and
(4) A person that the director by rule or order exempts in the public interest.
Source: SL 2008, ch 253, § 24.
51A-17-25. Public offering of securities exempt from change of control requirements.
Section 51A-17-23 does not apply to public offerings of securities.
Source: SL 2008, ch 253, § 25.
51A-17-26. Request for determination on change of control from director.
Before filing a request for approval to acquire control, a person may request in writing a determination from the director as to whether the person would be considered a person in control of a licensee upon consummation of a proposed transaction. If the director determines that the person would not be a person in control of a licensee, the director shall enter an order to that effect and the proposed person and transaction is not subject to the requirements of § 51A-17-23.
Source: SL 2008, ch 253, § 26.
51A-17-27. Examination or investigation–Acceptance of report by other examining agencies or federal government.
The director may conduct an examination or investigation of a licensee or authorized delegate or otherwise take independent action authorized by this chapter, rule adopted under this chapter and promulgated pursuant to chapter 1-26, or order issued under this chapter that is reasonably necessary to administer and enforce this chapter, rules adopted under this chapter and promulgated pursuant to chapter 1-26, and other applicable law. The director may:
(1) Conduct an examination either on-site or off-site;
(2) Conduct an examination in conjunction with an examination conducted by representatives of another state agency, an agency of another state, or the federal government;
(3) Accept the examination report of another state agency, agency of another state, or the federal government, or a report prepared by an independent accounting firm. A report accepted under this subdivision is considered an official report of the director; and
(4) Summon and examine, under oath, a key individual, employee of a licensee, or authorized delegate and require the individual, employee, or delegate to produce records regarding any matter related to the condition and business of the licensee or authorized delegate.
A licensee or authorized delegate shall provide, and the director must have full and complete access to, all records the director may reasonably require to conduct a complete examination. The records must be provided at the location and in the format specified by the director. The director may utilize multistate record production standards and examination procedures when the standards will reasonably achieve the requirements of this section.
Unless otherwise directed by the director, a licensee shall pay all costs reasonably incurred in connection with an examination of the licensee or the licensee’s authorized delegates.
Source: SL 2008, ch 253, § 27; SL 2022, ch 178, § 8.
51A-17-28. Request for financial data or examination upon reasonable basis to believe licensee in noncompliance.
The director may request financial data from a licensee in addition to that required under § 51A-17-19, or conduct an examination of any authorized delegate or location of a licensee within this state without prior notice to the authorized delegate or licensee only if the director has a reasonable basis to believe that the licensee or authorized delegate is in noncompliance with this chapter. If the director examines an authorized delegate’s operations, the authorized delegate shall pay all reasonably incurred costs of such examination. If the director examines a licensee’s location within the state, the licensee shall pay all reasonably incurred costs of such examination.
Source: SL 2008, ch 253, § 28; SL 2022, ch 178, § 9.
51A-17-29. Records required and open to inspection.
Each licensee shall make, keep, and preserve the following books, accounts, and other records for a period of three years and which shall be open to inspection by the director:
(1) A record or records of each payment instrument and stored value sold;
(2) A general ledger, which general ledger shall be posted at least monthly, containing all assets, liabilities, capital, income, and expense accounts;
(3) Bank statements and bank reconciliation records;
(4) Records of outstanding payment instruments and stored value;
(5) Records of each payment instrument and stored value paid within the three-year period;
(6) A list of the names and addresses of all of the licensee’s authorized delegates; and
(7) Any other records the director reasonably requires by rule promulgated pursuant to chapter 1-26.
Maintenance of such documents as are required by this section in a photographic, electronic, or other similar form constitutes compliance with this section. Records may be maintained at a location other than within this state if they are made accessible to the director on seven business days written notice.
Source: SL 2008, ch 253, § 29.
51A-17-30. Confidentiality of information–Exception.
All information or reports obtained by the director from an applicant, licensee, or authorized delegate, whether obtained through reports, applications, examination, audits, investigation, or otherwise, including all information contained in or related to examination, investigation, operating, or condition reports prepared by, on behalf of, or for the use of the director, or financial statements, balance sheets, or authorized delegate information, are confidential. However, the director may disclose confidential information to officials and examiners of other state or federal regulatory authorities or to appropriate prosecuting attorneys.
This section does not prohibit the director from disclosing to the public a list of persons licensed under this chapter or the aggregated financial data on those licensees.
Source: SL 2008, ch 253, § 30.
51A-17-31. Authorized delegate–Written contract required–Contents.
Any licensee desiring to conduct licensed activities through an authorized delegate shall authorize each delegate to operate pursuant to an express written contract. Any such contract entered into after July 1, 2008, shall provide the following:
(1) That the licensee appoints the person as its delegate with authority to engage in money transmission on behalf of the licensee;
(2) That neither a licensee nor an authorized delegate may authorize subdelegates without the written consent of the director; and
(3) That licensees are subject to supervision and regulation by the director.
Source: SL 2008, ch 253, § 31.
51A-17-32. Standards of conduct of authorized delegate.
An authorized delegate shall adhere to the following standards of conduct:
(1) No authorized delegate may make any fraudulent or false statement or misrepresentation to a licensee or to the director;
(2) All money transmission or sale or issuance of payment instrument activities conducted by an authorized delegate shall be strictly in accordance with the licensee’s written procedures provided to the authorized delegate;
(3) An authorized delegate shall remit all money owing to the licensee in accordance with the terms of the contract between the licensee and the authorized delegate. The failure of an authorized delegate to remit all money owing to a licensee within the time presented shall result in liability of the authorized delegate to the licensee for the licensee’s actual damages. The director may establish, by rules promulgated pursuant to chapter 1-26, the maximum remittance time;
(4) An authorized delegate is deemed to consent to the director’s inspection, with or without prior notice to the licensee or authorized delegate, of the books and records of authorized delegates of the licensee if the director has a reasonable basis to believe that the licensee or authorized delegate is in noncompliance with this chapter; and
(5) An authorized delegate is under a duty to act only as authorized under the contract with the licensee. An authorized delegate who exceeds the authority grant under the contract is subject to cancellation of the contract and further disciplinary action by the director.
Source: SL 2008, ch 253, § 32.
51A-17-33. Funds received by authorized delegate constitute trust funds.
Any funds, less fees, received by an authorized delegate of a licensee from the sale or delivery of a payment instrument issued by a licensee or received by an authorized delegate for transmission shall, from the time such funds are received by such authorized delegate until such time when the funds or an equivalent amount are remitted by the authorized delegate to the licensee, constitute trust funds owned by and belonging to the licensee. If an authorized delegate commingles any such funds with any other funds or property owned or controlled by the authorized delegate, any commingled proceeds and other property shall be impressed with a trust in favor of the licensee in an amount equal to the amount of the proceeds due the licensee.
Source: SL 2008, ch 253, § 33.
51A-17-34. Report of theft or loss.
An authorized delegate shall report to the licensee the theft or loss of payment instruments and stored value within twenty-four hours from the time the authorized delegate knew or should have known of such theft or loss.
Source: SL 2008, ch 253, § 34.
51A-17-35. Suspension or revocation of license.
The director may suspend or revoke a licensee’s license if the director finds that:
(1) Any fact or condition exists that, if it had existed at the time when the licensee applied for its license, would have been grounds for denying such application;
(2) The licensee’s net worth becomes inadequate and the licensee, after ten days written notice from the director, fails to take such steps as the director deems necessary to remedy such deficiency;
(3) The licensee violates any material provision of this chapter or any rule or order promulgated by the director under authority of this chapter;
(4) The licensee is convicted of a violation of a state or federal anti-money laundering statute or is subject to an enforcement action for a violation of a state or federal anti-money laundering statute;
(5) The licensee is conducting its business in an unsafe or unsound manner;
(6) The licensee is insolvent;
(7) The licensee has suspended payment of its obligations, has made an assignment for the benefit of its creditors, or has admitted in writing its inability to pay its debts as they become due;
(8) The licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under any bankruptcy;
(9) The licensee refuses to permit the director to make any examination authorized by this chapter;
(10) The licensee fails to make any report required by this chapter; or
(11) The competence, experience, character, or general fitness of the licensee indicates that it is not in the public interest to permit the licensee to conduct its business.
Source: SL 2008, ch 253, § 35.
51A-17-36. Suspension or revocation of authorized delegate designation.
The director may issue an order suspending or revoking the designation of an authorized delegate, if the director finds that:
(1) The authorized delegate violated this chapter or a rule adopted or an order issued under this chapter;
(2) The authorized delegate did not cooperate with an examination or investigation by the director;
(3) The authorized delegate engages in fraud, intentional misrepresentation, or gross negligence;
(4) The authorized delegate is convicted of a violation of a state or federal anti-money laundering statute or is subject to an enforcement action for a violation of a state or federal anti-money laundering statute;
(5) The competence, experience, character, or general fitness of the authorized delegate or a person in control of the authorized delegate indicates that it is not in the public interest to permit the authorized delegate to provide money services; or
(6) The authorized delegate is engaging in an unsafe or unsound practice. In determining whether an authorized delegate is engaging in an unsafe or unsound practice, the director may consider the size and condition of the authorized delegate’s provision of money services, the magnitude of the loss, the gravity of the violation of this chapter, and the previous conduct of the authorized delegate.
An authorized delegate may apply for relief from a suspension or revocation of designation as an authorized delegate pursuant to chapter 1-26.
Source: SL 2008, ch 253, § 36.
51A-17-37. Cease and desist order.
If the director determines that a violation of this chapter or of a rule adopted or an order issued pursuant to this chapter by a licensee or authorized delegate is likely to cause immediate and irreparable harm to the licensee, its customers, or the public as a result of the violation, or cause insolvency or significant dissipation of assets of the licensee, the director may issue an order requiring the licensee or authorized delegate to cease and desist from the violation. The director may issue an order against a licensee to cease and desist from providing money transmission services through an authorized delegate that is the subject of a separate order pursuant to § 51A-17-36. The order becomes effective upon service of it upon the licensee or authorized delegate. An order to cease and desist remains effective and enforceable pending the completion of an administrative proceeding pursuant to chapter 1-26. However, a licensee or an authorized delegate that is served with an order to cease and desist may petition the circuit court for a judicial order setting aside, limiting, or suspending the enforcement, operation, or effectiveness of the order pending the completion of an administrative proceeding pursuant to chapter 1-26.
Source: SL 2008, ch 253, § 37.
51A-17-38. Administrative proceeding following cease and desist order.
The director shall commence an administrative proceeding pursuant to chapter 1-26 within twenty days after issuing an order to cease and desist. The director may apply to the circuit court for an appropriate order to protect the public interest.
Source: SL 2008, ch 253, § 38.
51A-17-39. Consent order.
The director may enter into a consent order at any time with a person to resolve a matter arising under this chapter. A consent order shall be signed by the person to whom it is issued or by the person’s authorized representative, and shall indicate agreement with the terms contained in the order. A consent order may provide that it does not constitute an admission by a person that this chapter or a rule adopted or an order issued under this chapter has been violated.
Source: SL 2008, ch 253, § 39.
51A-17-40. Fine for violation of chapter or rule.
The director may assess a fine against a person that violates this chapter or a rule adopted or an order issued under this chapter in an amount not to exceed five hundred dollars per day for each day the violation is outstanding, plus the state’s costs and expenses for the investigation and prosecution of the matter, including reasonable attorney’s fees.
Source: SL 2008, ch 253, § 40.
51A-17-41. Intentional misrepresentations or omissions in records–Engaging in activity without required license–Felony.
Any person that intentionally makes a false statement, misrepresentation, or false certification in a record filed or required to be maintained under this chapter or that intentionally makes a false entry or omits a material entry in such a record is guilty of a Class 6 felony. Any person that knowingly engages in any activity for which a license is required under this chapter without being licensed under this chapter is guilty of a Class 6 felony.
Source: SL 2008, ch 253, § 41.
51A-17-42. Order to show cause–Temporary restraining order–Cease and desist order–Administrative proceeding–Judicial review.
If the director has reason to believe that a person has violated or is violating § 51A-17-4, the director may issue an order to show cause why an order to cease and desist should not issue requiring that the person cease and desist from the violation of § 51A-17-4. In an emergency, the director may petition the circuit court for the issuance of a temporary restraining order. An order to cease and desist becomes effective upon service of it upon the person. An order to cease and desist remains effective and enforceable pending the completion of an administrative proceeding pursuant to chapter 1-26. A person that is served with an order to cease and desist for violating § 51A-17-4 may petition the circuit court for a judicial order setting aside, limiting, or suspending the enforcement, operation, or effectiveness of the order pending the completion of an administrative proceeding pursuant to chapter 1-26. The director shall commence an administrative proceeding within twenty days after issuing an order to cease and desist.
Source: SL 2008, ch 253, § 42.
51A-17-43. Jurisdiction of the courts.
Any person who engages in business activity regulated by this chapter is deemed to have consented to the jurisdiction of the courts of South Dakota for all actions arising under this chapter.
Source: SL 2008, ch 253, § 43.
51A-17-44. Repealed by SL 2012, ch 252, § 27.
51A-17-45. Licenses not assignable.
No license granted pursuant to this chapter is assignable.
Source: SL 2008, ch 253, § 45.
51A-17-46. Funds to be deposited with state treasurer and credited to banking special revenue fund.
Any money coming into the custody of the division pursuant to this chapter shall be deposited with the state treasurer. The state treasurer shall credit the money to the banking special revenue fund. Any expenditure of money out of the fund may only be made by appropriation by the Legislature through either the General Appropriation Act or a special appropriation bill. The director shall approve vouchers and the state auditor shall draw warrants to pay expenditures authorized by this chapter.
Source: SL 2008, ch 253, § 46.
51A-17-47. Promulgation of rules.
The director may promulgate rules pursuant to chapter 1-26 to establish the process for conducting background investigations, for the conduct of examinations, the reporting of information required by this chapter, and the process for the suspension or revocation of a license issued by the division.
Source: SL 2008, ch 253, § 47.
51A-17-48. Use of nationwide mortgage licensing system and registry as information channeling agent.
The director may use the nationwide mortgage licensing system and registry as a channeling agent for requesting information from and distributing information to the United States Department of Justice and any other state and federal regulatory official or agency with money transmission industry oversight authority as deemed necessary by the director to carry out the responsibilities of this chapter.
Source: SL 2015, ch 241, § 4; SL 2019, ch 206, § 7.
51A-17-49. Collection and maintenance of records and processing of fees.
The director may establish a relationship or enter into a contract with the nationwide mortgage licensing system and registry or an entity designated by the nationwide mortgage licensing system and registry to collect and maintain records and process transaction fees or other fees related to any licensee or person subject to the provisions of this chapter.
Source: SL 2015, ch 241, § 5.
51A-17-50. Confidentiality of information provided to nationwide mortgage licensing system and registry.
The following provisions apply to the sharing of information collected and retained by the director during the administration of this chapter:
(1) The provisions of § 51A-17-30 regarding privacy or confidentiality apply to any information or material provided to the nationwide mortgage licensing system and registry, and any privilege arising under federal or state law, including any rule of a federal or state court, with respect to the information or material, continue to apply to the information or material after the information or material has been disclosed to the nationwide mortgage licensing system and registry. The information and material may be shared with a state or federal regulatory official who has money transmission industry oversight authority without the loss of privilege or the loss of confidentiality protections by federal law or § 51A-17-30; and
(2) No information or material that is subject to privilege or confidentiality pursuant to this section is subject to:
(a) Disclosure under any federal or state law governing the disclosure to the public of information held by an officer or an agency of the federal government or the respective state; or
(b) Subpoena or discovery, or admission into evidence, in any private civil action or administrative process, unless with respect to any privilege held by the nationwide mortgage licensing system and registry regarding the information or material is waived, in whole or in part, by the person to whom the information or material pertains.
This section does not apply to the information or material relating to the employment history of, and publicly adjudicated disciplinary and enforcement actions against, money transmitters that is included in the nationwide mortgage licensing system and registry for access by the public.
Source: SL 2015, ch 241, § 6.
51A-17-51. Multistate supervisory processes participation.
The director may participate in multistate supervisory processes established between states and coordinated through the Conference of State Bank Supervisors, Money Transmitter Regulators Association, and affiliates and successors thereof for all licensees in this state and other states. As a participant in multistate supervision, the director may:
(1) Cooperate, coordinate, and share information with other states and federal regulators pursuant to § 51A-17-30;
(2) Enter into written cooperation, coordination, or information-sharing contracts or agreements with organizations comprised of state or federal governmental agencies; and
(3) Cooperate, coordinate, and share information with organizations comprised of state or federal governmental agencies, provided that the organizations agree in writing to maintain the confidentiality and security of the shared information pursuant to § 51A-17-30.
The director may not waive, and nothing in this section constitutes a waiver of, the director’s authority to conduct an examination, investigation, or otherwise take independent action authorized by this chapter, rule adopted under this chapter, or order issued under this chapter to enforce compliance with applicable state or federal law. A joint examination or investigation, or acceptance of an examination or investigation report, does not constitute a waiver of an examination assessment provided for in this chapter.