II. Statutes

A. Texas State Money Transmission License Provisions

Tex. Fin. Code §§ 151.301-.405 (along with other provisions in Chapter 151).

Tex. Fin. Code Ann. § 151.707. Administrative Penalty

(a) After notice and hearing, the commissioner may assess an administrative penalty against a person that:

• (1) has violated this chapter or a rule adopted or order issued under this chapter and has failed to correct the violation not later than the 30th day after the date the department sends written notice of the violation to the person;
• (2) if the person is a license holder, has engaged in conduct specified in Section 151.703;
• (3) has engaged in a pattern of violations; or
• (4) has demonstrated wilful disregard for the requirements of this chapter, the rules adopted under this chapter, or an order issued under this chapter.

(b) A violation corrected after a person receives written notice from the department of the violation may be considered for purposes of determining whether a person has engaged in a pattern of violations under Subsection (a)(3) or demonstrated wilful disregard under Subsection (a)(4).

(c) The amount of the penalty may not exceed $5,000 for each violation or, in the case of a continuing violation, $5,000 for each day that the violation continues. Each transaction in violation of this chapter and each day that a violation continues is a separate violation.

(d) In determining the amount of the penalty, the commissioner shall consider factors that include the seriousness of the violation, the person's compliance history, and the person's good faith in attempting to comply with this chapter, provided that if the person is found to have demonstrated wilful disregard under Subsection (a)(4), the trier of fact shall recommend that the commissioner impose the maximum administrative penalty permitted under Subsection (c).

(e) A hearing to assess an administrative penalty is considered a contested case hearing and is subject to Section 151.801.

(f) An order imposing an administrative penalty after notice and hearing becomes effective and is final for purposes of collection and appeal immediately on issuance.

(g) The commissioner may collect an administrative penalty assessed under this section:

(1) in the same manner that a money judgment is enforced in court; or

(2) if the penalty is imposed against a license holder or a license holder's authorized delegate, from the proceeds of the license holder's security in accordance with Section 151.308(e).

Tex. Fin. Code Ann. § 151.708. Criminal Penalty

(a) A person commits an offense if the person:

(1) intentionally makes a false statement, misrepresentation, or certification in a record or application filed with the department or required to be maintained under this chapter or a rule adopted or order issued under this chapter, or intentionally makes a false entry or omits a material entry in the record or application; or

(2) knowingly engages in an activity for which a license is required under Subchapter D [FN1] or F [FN2] without being licensed under this chapter.

(b) An offense under this section is a felony of the third degree.

(c) If the commissioner has reason to believe that a person has committed an offense under this section or any other state or federal law, the commissioner may file a criminal referral with the district attorney of Travis County or an appropriate prosecuting attorney of the county in which the offense is alleged to have been committed.

(d) Nothing in this section limits the power of the state to punish a person for an act that constitutes an offense under this or any other law.

B. Federal Statutes:

18 U.S.C.A. §1960. Prohibition of unlicensed money transmitting businesses – if the state requires a license, and the penalty is a misdemeanor or felony, and the defendant does not have a state license (even though he has a federal license), this statute makes it a violation of federal law. Violating this statute has a civil monetary penalty, or up to a 5 year prison sentence, or both. The Iranian prohibited transaction regulations have their own civil and criminal penalties, which are more serious (up to 20 years in prison, and/or $50,000/violation fine). Another interesting point is that this statute has gone through several mens rea modifications. At one point, it was a defense to prosecution if the defendant did not know or intentionally operate the unlicensed money transmitting business. Now, an unlicensed money transmitting business is defined to include anyone that operates an unlicensed business, even if they did not know that a license was required. But, if you look back at the liability provision in subparagraph (a), you have to knowingly operate an unlicensed money transmitting business in order to be prosecuted. This may have been a mistake on Congress’ part. In other words, it is no defense that you did not know of licensing requirements to qualify as an unlicensed business, but the liability provision seems to require knowing operation of the unlicensed money transmittal business.

(a) Whoever knowingly conducts, controls, manages, supervises, directs, or owns all or part of an unlicensed money transmitting business, shall be fined in accordance with this title or imprisoned not more than 5 years, or both.

(b) As used in this section--

(1) the term "unlicensed money transmitting business" means a money transmitting business which affects interstate or foreign commerce in any manner or degree and--

(A) is operated without an appropriate money transmitting license in a State where such operation is punishable as a misdemeanor or a felony under State law, whether or not the defendant knew that the operation was required to be licensed or that the operation was so punishable;

(B) fails to comply with the money transmitting business registration requirements under section 5330 of title 31, United States Code, or regulations prescribed under such section; or

(C) otherwise involves the transportation or transmission of funds that are known to the defendant to have been derived from a criminal offense or are intended to be used to be used to promote or support unlawful activity;

(2) the term "money transmitting" includes transferring funds on behalf of the public by any and all means including but not limited to transfers within this country or to locations abroad by wire, check, draft, facsimile, or courier; and

(3) the term "State" means any State of the United States, the District of Columbia, the Northern Mariana Islands, and any commonwealth, territory, or possession of the United States.

50 U.S.C.A. § 1705. Penalties – This is for a violation of the IEEPA or ITR

(a) A civil penalty of not to exceed $50,000 may be imposed on any person who violates, or attempts to violate, any license, order, or regulation issued under this chapter.

(b) Whoever willfully violates, or willfully attempts to violate, any license, order, or regulation issued under this chapter shall, upon conviction, be fined not more than $50,000, or, if a natural person, may be imprisoned for not more than twenty years, or both; and any officer, director, or agent of any corporation who knowingly participates in such violation may be punished by a like fine, imprisonment, or both.

III. Regulations

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