State Regulators Report: Money Services Firms Handled $1.2T In 2017

As noted by the Conference of State Bank Supervisors (CSBS), state regulators earlier this month released the inaugural Money Services Business Industry Report, which featured transaction data tied to 2017 and focused on licensed money transmission and payments.

From a high-level view, the industry handled $1.2 trillion last year – across money transmissions, payments instruments and check cashing, for example – and foreign transfers were 22 percent of money transmissions, tied to international wires. The average foreign transaction was $479. The report also noted that virtual currency exchange and transmission was 9.4 percent of the industry overall. In more granular data, the industry remains concentrated, with the 10 largest companies handling 74 percent of the $685 billion in money transmission activity. Stored value activity was $229 billion and check cashing represented $17 billion.

Regulators said upon the report’s debut earlier this month that data had been collected from the Nationwide Multistate Licensing System (NMLS), which is turn operated by CSBS.

In a written response interview with PYMNTS, Matthew Lambert, senior director and non-depository Counsel at CSBS, noted that “this report is new for 2017, so we won’t be able to speak to trends until the 2018 numbers are final next year.” Asked about granular insight into some of the data, especially in terms of virtual transactions, he said that virtual currency data is reported separately and doesn’t include domestic/foreign information.

The inaugural report leverages data that is collected from the NMLS and the MSB Call Report. Launched in April 2017, the MSB Call Report required licensees to file by mid-May.

Lambert stated that the MSB Call Report and Uniform Authorized Agent Report represent an ongoing effort by state regulators to unify reporting requirements. “Before the report, states had state-specific transactional and financial reporting requirements. With 18 states adopting the NMLS Call Report for 2017, those state-specific reports have been replaced with a single report, entered in a single system, to cover multiple state reporting requirements, significantly reducing burden.”

The report noted there were more than 2,000 money services businesses in NMLS that hold a total of 5,729 licenses. Of those, more than 1,600 entities were check cashing companies conducting business in an average of one state; more than 660 companies were selling money orders and conducting business in two states. Money services firms represented 218 companies in the NMLS, with an average number of eight states in which they did business in 2017.

GDPR Fines Loom

GDPR fines may be in the offing sooner rather than later, and there may even be temporary bans on companies should it be found that they have breached recently enacted data privacy laws across the EU. That timeframe came in a Reuters interview with European Data Protection Supervisor Giovanni Buttarelli.

Buttarelli said that in reference to what might materialize in the wake of the data privacy’s law taking effect in May, “I expect first GDPR fines for some cases by the end of the year. Not necessarily fines, but also decisions to admonish the controllers, to impose a preliminary ban, a temporary ban or to give them an ultimatum,” he told the newswire.

The statement comes in the wake of news over the past few months that complaints tied to GDPR violations, and requests for clarification on data privacy rules, have been on the rise. In France and Italy, such activity has gained 53 percent year on year since GDPR took effect in May.

Fines that do accrue can be 20 million euros or 4 percent of a company’s top line, whichever is higher, and can be imposed on any firm that operates in Europe’s EU member states, no matter where those companies may be located. The newswire noted that Buttarelli does not impose those fines, but does coordinate efforts of the agencies working throughout the EU.

The data privacy official did not elaborate on which companies may be fined, or when or for how much, as investigations continue. But he did say that a number of complaints – among them those lodged against Google, Instagram, WhatsApp and Facebook, filed by Max Schrems, a data privacy activist in Austria – mat not be among the cases that result in fines. Buttarelli said those cases are still in preliminary stages, and had been filed as soon as GDPR took effect.

In reference to the scope of some laws and companies covered by them, Buttarelli said that in terms of firms that deliver content over the internet (known as over the top), “I think there is a margin of maneuver for sustainable compromise, although there are points [that] cannot be negotiated. For instance, the scope of application of e-privacy to over-the-top, beyond the telcos, the tech giants,” he added.