Purpose

The bill adds protections around money transfers by money transmitters in Minnesota. It creates a mandatory one-hour hold on funds when requested by the sender, during which the sender can cancel at no cost. It also clarifies when licensees must forward funds and how they must respond if funds aren’t forwarded, while allowing exceptions for fraud concerns or potential illegal activity. The changes modify Minnesota Statutes 2024 section 53B.54 (Timely Transmission).

Main Provisions

• One-hour hold on transmission funds:
  • If the sender requests it, the licensee must place a one-hour hold on money received for transmission.
  • The hold starts when the licensee receives the money from the sender.
  • During the hold, the sender may cancel the transmission at no cost.
• Forwarding of funds (timely transmission):
  • After the hold, the licensee must forward all money received for transmission in accordance with the agreement between the licensee and the sender.
  • This applies unless the hold requirement applies or there is a reasonable belief that the sender may be a victim of fraud or that a crime or violation of law, rule, or regulation has occurred or may occur.
• Responses to inquiries about non-forwarding:
  • If a licensee fails to forward money as required, they must respond to the sender’s inquiries with the reason for the failure.
  • This response is required unless providing it would violate state or federal law, rule, or regulation.
• Fraud and legal-risk exceptions:
  • The licensee may withhold forwarding money if there is a reasonable belief that the sender is a victim of fraud or that a crime or violation may occur.
• Compliance with law:
  • All actions must be consistent with applicable state and federal laws, rules, and regulations.

Changes to the Law

• Adds a formal one-hour hold and no-cost cancellation right for money transmitted by money transmitters.
• Specifies when money must be forwarded and under what conditions it can be withheld (fraud risk or potential illegal activity).
• Establishes a requirement for licensees to explain non-forwarding to senders unless prohibited by law.
• Amends Minnesota Statutes 2024 section 53B.54 to implement these provisions.

Practical Effects and Considerations

• For money transmitters:
  • Must implement processes to place a one-hour hold, track hold times, and handle no-cost cancellations.
  • Must manage forwarding of funds under the terms of the sender-licensee agreement and document reasons if funds are not forwarded.
  • Must assess and document fraud risk or legal risk when deciding to withhold forwarding.
  • Must respond to sender inquiries about non-forwarding in a timely, lawful manner.
• For senders:
  • Gain a guaranteed window to cancel a money transmission at no cost within one hour of the transfer.
  • Have a defined channel for inquiries if a payment is not forwarded and a reason is provided.
• Compliance and risk management:
  • Licensees must balance customer rights with anti-fraud safeguards and applicable laws, rules, and regulations.

Relevant Terms money transmitters; licensee; sender; one-hour hold; hold; cancellation; cancel at no cost; money transmission; forward; forward money; agreement; fraud; victim of fraud; crime; violation of law; rule; regulation; reasonable belief; reasonable basis; inquiry; reason for the failure; timely transmission; Minnesota Statutes 2024 section 53B.54; state or federal law.