ColoradoHB25-12012025 Regular SessionHouseWALLET

Model Money Transmission Modernization Act

Sponsored By: Bob Marshall (Democratic), Larry Liston (Republican), Nick Hinrichsen (Democratic)

Signed by Governor

Financial Services & Commerce

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Bill Overview

Analyzed Economic Effects

20 provisions identified: 8 benefits, 1 costs, 11 mixed.

Refund rights for money transfer customers

Providers must send money as agreed, but can hold it when they reasonably suspect fraud or unlawful activity. They must explain delays when asked, unless disclosure is legally barred. For covered transfers, providers must refund all money received within 10 days after a written request that identifies the sender and transaction. Refund exceptions include money forwarded or committed to the recipient within 10 days and unfinished transfers reasonably suspected of involving crime. Money scheduled for later delivery remains refundable before forwarding; federal remittance transfers and payments under written merchant agreements are excluded.

Clearer receipts for money transfer customers

Covered household transfers require receipts listing the sender, recipient, date, transaction number, provider contact details, licensing number, amount, fees, and taxes. Receipts must use English and any other language mainly used to advertise, solicit, or arrange the transfer. Electronic receipts must be savable; in-person customers must request or accept electronic delivery. These receipt rules exclude federal remittance transfers, non-household transactions, payroll processing, and payments under written merchant agreements. Providers must also post the Division of Banking’s name, phone number, and complaint notice on their website or app.

Employers remain responsible for unpaid payroll

An employer’s payroll agent is outside money transmission rules when a written agreement directs it to handle payroll. The employer must tell workers and other payees that the agent acts for the employer. If the agent fails to send the money, the employer still owes the workers and other payees.

Pay statements required for covered workers

Licensed money transfer providers that process payroll must report payroll obligations to clients before taking money from an account. They must also make pay stubs or equivalent statements available to workers. The worker-statement duty does not apply when the client names the intended recipients and takes responsibility for those disclosures.

Regulators can stop unsafe transfer providers

The Banking Board can suspend or revoke provider licenses and agent designations for listed violations, fraud, unfitness, insolvency, or unsafe practices. Agent money-laundering violations support action against providers only with provider willful misconduct or deliberate disregard; agents can seek relief under Board procedures. Emergency stop orders take effect when served and expire within 10 days unless the Board starts an administrative case. The Board can pursue stop orders against suspected unlicensed operators and seek emergency court orders without advance notice. It can assess daily civil penalties and recover state investigation and legal costs, including reasonable attorney fees.

Customer funds get investment backing

Providers must hold approved investments worth at least as much as all outstanding money transfer obligations. The Banking Board can restrict risky investments or approve additional liquid, high-quality investments. In listed bankruptcy, insolvency, or similar events, these assets enter a trust for customers and are generally protected from seizure. Foreign-bank cash can count for no more than 10% of approved investments. It counts only with a satisfactory provider examination rating and a bank meeting the law’s credit-rating, registration, sanctions, and location requirements.

Financial safeguards back money transfer providers

Providers must maintain tangible net worth of at least $100,000 or the asset-based total, whichever is higher. That total adds 3% of the first $100 million, 2% from $100 million to $1 billion, and 0.5% above $1 billion. The Banking Board can grant full or partial net-worth exemptions for good cause. Providers also need a bond or Board-approved deposit: the greater of $250,000 or 100% of average daily Colorado transfer liability over the latest three months, capped at $1 million. A $1 million bond removes that calculation duty; providers must keep meeting financial requirements or face license suspension or revocation.

Experienced transfer company buyers get shortcuts

Previously approved money transmitters or controllers can use a joint notice with the licensee instead of the usual ownership application. They must attest to no license suspension or revocation involving themselves or companies they controlled during the past five years. Applicable management and compliance ratings must be satisfactory, and the businesses must be projected to meet financial requirements after acquisition. The deal cannot cause material business-plan changes. The notice is approved unless the Board rejects it within 30 days after finding it complete.

Transfer providers face regular financial reporting

Providers must file quarterly financial, transaction, investment, and delegate reports within 45 days; applicable destination-country data appears only in fourth-quarter reports. Annual audited financial statements are due within 90 days of fiscal year-end and must meet U.S. accounting and Board standards. The Board can extend financial-report deadlines by rule; key-leader appointments must be reported within 15 days. Listed insolvency, business-ending, and license proceedings require notice within one business day of reason to know; listed felony charges or convictions require three business days. Providers must retain records for at least three years and make out-of-state records accessible on 10 business days’ notice.

Money transfer rules end in 2030

Colorado’s money transfer law is scheduled for repeal on September 1, 2030. The law requires a review before that date. The scheduled repeal ends both the article’s requirements for providers and its customer protections.

Payment agents gain exemptions with safeguards

Specified government bodies, benefit-transfer contractors, regulated financial firms, payment processors, and supervised employees are exempt from money transmission rules. A seller’s collection agent qualifies through written authorization and public notice; payment to that agent clears the payer’s debt without remittance-loss risk. Qualifying intermediaries must identify the licensed or exempt provider responsible for payment; agents of exempt financial institutions need written agreements assigning that institution responsibility and loss risk. The Banking Board can add exemptions when regulation is unnecessary and the exemption serves the public interest. It can also require records proving that a claimed exemption applies.

Payment providers face licensing background checks

Money transmission covers payment instruments, stored value, incoming transfer funds, and payroll processing; online services or network access alone are excluded. In-person transfers use the Colorado location; electronic and phone transfers use location records. Applicants must provide business, financial, ownership, and licensing records, though the Board can waive items or accept substitutes. Controlling people and key leaders must provide personal histories and fingerprints; living abroad anytime in the past 10 years requires an investigative report. People currently abroad for the full past 10 years need no fingerprints; an arrest without a recorded outcome requires a paid court-record check.

Shared licensing rules for transfer providers

The Banking Board can join shared state licensing processes consistent with Colorado’s money transfer law. It can use the nationwide licensing system for applications, background checks, reports, fees, and examinations. It can waive, change, or add requirements when reasonably needed to participate in that system. When Colorado’s authority depends on federal law and state rules conflict with it, federal law controls. The Board can issue guidance explaining those conflicts and how to comply.

Some transfer company takeovers skip approval

Some acquisitions of control over money transfer licensees do not need prior Banking Board approval. Exemptions cover specified proxies, inheritances, fiduciaries, court-appointed officers, public securities offerings, and internal reorganizations without an ultimate control change. They also cover specified already-exempt entities and people the Board exempts in the public interest. For the exemption categories subject to notice, the new controller and licensee must notify the Board within 15 days after acquisition.

State oversight expands for money transfers

The Colorado Banking Board gains Banking Code enforcement powers over money transfer violations. It can examine or investigate licensees and authorized agents, require records and testimony, and set record formats and delivery locations. Licensees pay reasonable examination costs unless the Board directs otherwise. The Board can join multistate supervision and must coordinate and share information under written confidentiality and security agreements. Multistate examinations do not remove examination charges.

Stricter rules for money transfer providers

Providers need a Colorado license to offer or advertise money transfers unless exempt. Authorized agents can operate under a licensee’s written contract, within its limits, but cannot use subagents. Anyone transferring money for an unlicensed, nonexempt provider faces licensee duties and shares full legal liability with that provider. Intentional false statements, false entries, or material omissions in required records are class 2 misdemeanors. Knowingly operating without a required license is also a class 2 misdemeanor, whether compensation exceeds $500 or not in 30 days.

Transfer agents face contracts and safeguards

Before using authorized agents, providers need updated written policies, signed contracts, and risk-based background investigations. Contracts must cover legal compliance, recordkeeping, money handling, remittance, and regulatory examinations. Agents hold transfer money minus fees in trust for the provider; mixing funds extends the trust to that amount of mixed assets. Providers and agents must file required anti-money-laundering reports; a timely, accurate, complete federal filing satisfies the state reporting rule. Agents must stop immediately when the provider’s license is suspended, revoked, surrendered, or expired; the provider must document agent notification within five business days.

Transfer company buyers face ownership review

Control includes 25% voting ownership, power to appoint most specified managers, or controlling influence; specified family and household holdings are combined. A 10% voting stake creates presumed control, but a qualifying passive investor can rebut it. Buyers generally need advance written Board approval and a nonrefundable fee; becoming a key leader through ordinary business is excluded. The Board reviews fitness and public interest and must decide complete applications within 60 days. Denial reasons are due within 30 days, appeals within 30 days after receipt; buyers can first request a ruling that no control acquisition occurs, avoiding the application.

Transfer providers pay annual licensing fees

Applicants pay a nonrefundable Board-set fee; the Board can charge fair, proportionate fees for applications, examinations, and investigations. After reviewing finances, experience, character, and fitness, the Board must license qualified applicants; licenses cannot be transferred. First licenses end December 31, except those issued November 1–December 31 last through December 31 of the next year. Annual renewal requires a Board-set fee paid no more than 60 days before expiration and a report of previously unreported material changes. The Board can extend renewal dates for good cause; the law states no specific fee amounts.

Transfer records balance privacy and disclosure

Specified application, financial, and examination records are confidential and generally outside Colorado’s public-records disclosure requirements. The Board can share records with qualifying agencies under confidentiality safeguards or release information reasonably needed to protect the public. Specified provider and agent details, nonconfidential final orders, and administrative fines remain public. Public bond records must hide confidential details, including prices and fees.

Sponsors & Cosponsors

Cosponsors

Jamie Jackson
Democratic • House

Roll Call Votes

All Roll Calls

Yes: 118 • No: 1

Senate vote • 3/24/2025

Third reading: Bill

Yes: 33 • No: 0

Senate vote • 3/18/2025

Refer House Bill 25-1201 to the Committee of the Whole and with a recommendation that it be placed on the consent calendar.

Yes: 9 • No: 0

House vote • 3/7/2025