Massachusetts Amends State Money Transmission Law to Apply to Domestic Transactions and Stored Value

On January 1, 2025, Massachusetts Gov. Maura Healey approved House Bill No. 4840, which repeals and replaces Massachusetts’ money transmission law with a revised law (MTL Law), which is based in part on the model Money Transmission Modernization Act that was developed by the Conference of State Bank Supervisors (Model Act). Under the prior law, only entities engaged in transmitting money internationally were required to obtain a license in Massachusetts. The new MTL Law now requires persons engaged in transmitting money domestically or internationally to obtain a license in Massachusetts. It also applies to stored value. The new MTL Law better aligns Massachusetts with other states. The operative provisions of the MTL Law become effective on October 1, 2025.

Scope of the License Requirement

The MTL Law applies to entities engaged in “money transmission,” which is defined to include selling or issuing payment instruments to a person in Massachusetts; selling or issuing stored value to a person in Massachusetts; or receiving money for transmission from a person located in Massachusetts. Under the prior law, the sale or issuance of stored value was not included in the definition of money transmission. In addition, the MTL Law preserves the prior law’s exemption for business transactions, such that the MTL Law similarly applies only to transactions for personal, family, or household purposes.

The MTL Law grants typical licensing exemptions, including exemptions for entities acting as an agent of a payee; entities processing payments as an intermediary between a licensed or exempt entity and a sender; government entities; federally insured depository financial institutions and certain other banking entities; registered broker-dealers; and service providers to exempt banks. The Massachusetts Commissioner of Banks has authority to provide additional exemptions by order or regulation if the Commissioner determines that the exemption is in the public interest and that regulation of the exempt person would not be necessary under the MTL Law.

The MTL Law does not include the virtual currency-related portions of the Model Act. Although the Massachusetts Division of Banks (MDOB) issued a series of interpretive letters regarding the regulation of virtual currency as money transmission in the past, these letters were based on the prior version of money transmission law. It is unclear how the new MTL Law will be interpreted by the MDOB with respect to virtual-currency transactions. 

Ongoing Compliance Requirements

The MTL Law contains a number of typical ongoing compliance requirements, including:

• Change in control: Licensees must provide prior notice of a change in control. 
• Other reports and notice requirements: Licensees must submit annual and quarterly financial reports; notice of changes in application information; information related to authorized delegates; quarterly reports regarding transactions; notice of criminal convictions of any officers or delegates; notice of proceedings against the licensee; and notice of proceedings to suspend a licensee’s license in another state.
• Transaction requirements: Licensees must deliver funds in accordance with the terms of the agreement between the licensee and the sender. Licensees must generally provide refunds within 10 days of receipt of a request for a refund and must provide a receipt to the sender for each transaction. Receipts must comply with the specifications in the MTL Law.
• Surety bond: Licensees must maintain a surety bond, the required value of which is based on the licensee’s average daily money transmission liability in Massachusetts. 
• Permissible investments: Licensees must maintain permissible investments equal to the market value of all the licensee’s outstanding money transmission obligations. The MTL Law specifies that permissible investments include investments such as cash, certificates of deposit, bonds, and money market funds, in each case subject to certain restrictions.  

Compliance Dates 

The MTL Law became effective upon signing; however, compliance with its licensing and the other substantive requirements is not required until October 1, 2025.

A provider that is newly subject to the MTL Law’s licensing requirements must file a license application by July 1, 2025, to continue providing services in Massachusetts. Licensees that are already licensed under the prior money transmission law do not need to take action until they renew their license. Upon renewal, their license will be renewed under the new MTL Law instead of the prior law. 

While the new MTL Law will require some providers to obtain a license for the first time in Massachusetts, many providers who also operate outside of Massachusetts should already be familiar with similar licensing and compliance requirements imposed by other states that have based their money transmission laws on the Model Act. 

Please reach out to any of the authors to discuss how this new law could affect your business or the application process.

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