Massachusetts Division of Banks

Overview

The Massachusetts Division of Banks (DOB) is the official state regulator responsible for licensing and supervising money transmitters operating in Massachusetts. Historically, the Division regulated only foreign money transmitters under Mass. Gen. Laws c.169 (Foreign Transmittal Agency Law). On January 1, 2025, this regulatory regime was fundamentally expanded through the enactment of Chapter 169B (Money Transmission Act), which modernizes the licensing framework to encompass both domestic and international money transmission services, including payment apps, stored value services, and remittance providers.

The Division operates under the Office of Consumer Affairs and Business Regulation and is led by Commissioner Mary Gallagher. The Division's mission includes protecting Massachusetts consumers engaged in money transmission while establishing a transparent, predictable regulatory environment for compliant providers.

Key Timeline:

• January 1, 2025: Governor Healey signs An Act Relative to the Regulation of Money Transmission by the Division of Banks (H.4840)
• July 1, 2025: DOB begins accepting money transmitter license applications through the Nationwide Multistate Licensing System (NMLS)
• January 1, 2026: First money transmitter licenses issued under Chapter 169B framework
• October 24, 2025: DOB finalizes comprehensive regulatory amendments
• November 7, 2025: Final regulations take effect

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

Examination Authority

The Commissioner is authorized to conduct examinations and investigations of licensees and authorized delegates as reasonably necessary to administer and enforce Chapter 169B, related rules, and applicable federal law (Bank Secrecy Act, USA PATRIOT Act).

Scope of Examination:

• Financial condition and solvency
• Compliance with licensing requirements and regulations
• Anti-money laundering and sanctions screening
• Customer fund safeguarding
• Transaction reporting and recordkeeping
• Advertising and disclosure practices
• Authorized delegate oversight

Examination Costs

Licensees bear all reasonable costs incurred in connection with examinations of the licensee and its authorized delegates.

Multistate Coordination

To minimize regulatory burden and promote efficiency, the Commissioner is authorized to participate in multistate supervisory processes established through:

• Conference of State Bank Supervisors (CSBS)
• Money Transmitter Regulators Association (MTRA)
• Related coordinating bodies

This coordination enables examination coordination, information sharing, and alignment of supervisory standards across jurisdictions where the licensee operates.

Disclosure Requirements

Money transmitters must provide consumers with:

• Clear disclosure of fees and exchange rates
• Written receipt for each transaction
• Transaction details including recipient identification
• Estimated delivery timeframe
• Refund policies and procedures

Fund Safeguarding

Licensees must maintain consumer funds separately from operating capital and company funds. Permitted investment categories are restricted to ensure ready access and safety.

Transaction Handling

Domestic Transactions:

• Funds must be delivered in accordance with the agreement between licensee and sender
• Licensee must comply with delivery timeframes specified in the transaction agreement

International Remittances (Legacy Requirement):

• Consumer remittances must be forwarded to the recipient within seven (7) days of acceptance (this was a requirement under the repealed c.169; status under Chapter 169B Requires verification from official sources)
• Receipt must be furnished to consumer as proof of payment

Refund Rights

• Licensee must process refund requests within 10 days of receipt
• Refunds must be returned to the original payment method or through other mutually agreed means

Complaint Resolution

Consumers may file complaints with the Division of Banks through the official website: https://www.mass.gov/how-to/file-a-complaint-with-the-division-of-banks

The DOB investigates complaints and pursues enforcement where violations are substantiated.

Regulatory Powers

Administrative Enforcement

The Commissioner holds broad enforcement authority to:

• Issue cease-and-desist orders
• Impose civil penalties and fines
• Revoke or suspend licenses
• Impose conditions or restrictions on licenses
• Require remedial actions
• Compel restitution to harmed consumers

Investigative Powers

• Subpoena authority to compel production of books, records, and documents
• Power to examine licensees, authorized delegates, and related persons
• Authority to obtain testimony under oath
• Access to bank accounts and financial records (with appropriate process)

Multistate Enforcement

Recent enforcement actions demonstrate the DOB's willingness to lead multistate enforcement consortiums. In 2024, the DOB led an 80-state enforcement action against Block, Inc. (Cash App) resulting in $80 million in consumer relief and regulatory fines.

Penalties and Remedies

• Civil Penalties: Statutory violations subject to fines (amounts Requires verification from official sources)
• Consumer Restitution: Mandatory repayment to harmed consumers
• License Revocation: Severe enforcement response for serious violations
• Consent Orders: Negotiated compliance agreements with conditions and monitoring requirements

Regulatory Role and Function

Legal Foundation

The Division of Banks derives its authority from two primary statutes:

Mass. Gen. Laws c.169B (Money Transmission Act)

Massachusetts' current money transmission law, established through H.4840 (Chapter 312 of the Acts of 2024), creates a unified licensing and supervisory regime for all money transmitters. Chapter 169B is based on the Model Money Transmission Modernization Act (MMTMA) but does not adopt the Model Act's virtual currency provisions.

Scope: Chapter 169B defines "money transmission" to include:

• Receiving deposits of money from persons in Massachusetts for transmission to other persons or locations
• Engaging in selling or issuing payment instruments (including checks, money orders, and stored value products)
• Providing domestic money transfer services
• Foreign remittance services

Mass. Gen. Laws c.169 (Foreign Transmittal Agency Law) — Repealed

The prior regulatory regime, which applied only to foreign money transmitters, has been repealed and replaced by Chapter 169B. This historical statute governed entities receiving deposits for transmission to foreign countries.

Regulatory Authority Grant

Mass. Gen. Laws c.169B § 2 grants the Commissioner of Banks broad authority to:

• License and regulate money transmitters
• Adopt rules and regulations implementing the chapter
• Conduct examinations and investigations
• Enforce compliance with state and federal laws (including the Bank Secrecy Act and USA PATRIOT Act)
• Recover costs of administration through proportionate fees and assessments

Licensing and Authorization Relevance

License Requirement

Any person or entity engaged in money transmission within Massachusetts must obtain a money transmitter license from the Division of Banks. This includes:

• Domestic money transmitters (newly regulated as of 2025)
• Foreign money transmitters/remittance providers
• Payment app operators (e.g., Venmo, PayPal, Square Cash)
• Stored value providers and payment instrument issuers
• Digital wallet operators and similar services

Exception: Authorized delegates (persons designated by a licensee to engage in money transmission on behalf of the licensee) do not require separate licensing.

Application Process

1. NMLS Filing: Applications are submitted through the Nationwide Multistate Licensing System (NMLS), which serves as the standardized portal for state money transmitter licensing.
2. Timing: DOB began accepting applications on July 1, 2025; no licenses are issued prior to January 1, 2026.
3. Supporting Documentation: Background checks, financial records, and corporate compliance documents must be submitted with the NMLS application.

Applicable Statute

Primary licensing authority: Mass. Gen. Laws c.169B §§ 1–15

Surety Bond

Amount: Licensees must maintain a surety bond in the greater of:

• $100,000 minimum, OR
• 100% of the licensee's average daily money transmission liability over the most recent three-month period
• Capped at $500,000

The bond must be maintained continuously and renewed as necessary to reflect changes in transmission liability.

Purpose: Protects consumers against loss of funds due to licensee failure, fraud, or insolvency.

Tangible Net Worth

Mass. Gen. Laws c.169B § 9 establishes requirements for "financial and security terms." Requires verification from official sources Specific net worth thresholds are defined in statute but have not been publicly disclosed in DOB guidance materials. Applicants must demonstrate compliance with statutory net worth requirements as part of the license application.

Permissible Investments

Licensees must maintain permissible investments equal to the market value of all outstanding money transmission obligations. Permissible investments include:

• Cash
• Certificates of deposit
• Bonds (government and investment-grade corporate)
• Money market funds
• Other liquid, low-risk instruments

Investments are subject to restrictions on concentration, credit quality, and maturity to ensure safety and liquidity.

Financial Reporting

Annual Requirements:

• Audited financial statements must be filed within 90 days of the licensee's fiscal year-end
• Statements must be prepared in accordance with U.S. GAAP by an independent CPA

Quarterly Requirements:

• Call reports detailing financial condition, transaction volumes, and compliance status
• Customer funds held in trust
• Permissible investments composition

Event-Driven Reporting:

• Prompt notice of material ownership changes
• Disclosure of any enforcement actions or regulatory changes
• Notification of suspension or revocation of licenses in other jurisdictions

Current Regulatory Approach

Massachusetts' Chapter 169B explicitly does not adopt the Model Money Transmission Modernization Act's provisions regarding virtual currency. This creates a bifurcated regulatory framework:

• Fiat Money Transmission: Fully regulated under Chapter 169B; license required
• Virtual Currency: Not expressly regulated under Chapter 169B Requires verification from official sources; prior guidance from DOB opinions applies

Historical Position

The Division of Banks has issued several opinions regarding virtual currency:

• 2014 Opinion 14-004: Bitcoin ATMs/kiosks exempt from branch network regulations; cryptocurrency activities not regulated as foreign currency transmission
• 2023 Opinion (June 28): Over-the-counter cryptocurrency trading services may require money transmitter licensing under certain factual circumstances (transaction-by-transaction analysis required)
• 18-003: Addresses scope of foreign currency transmission and potential applicability to digital assets

Current Status

The Division has published "Selected Opinions of the Division of Banks related to consumer virtual currency" indicating active monitoring of the space, though comprehensive fintech-specific regulations remain limited.

Requires verification from official sources The Division's final regulatory amendments (effective November 7, 2025) may contain additional guidance on virtual currency and digital asset handling by regulated entities.

Fintech Licensing

The expansion of Chapter 169B to cover domestic payments means that modern fintech payment platforms (payment apps, digital wallets, embedded finance providers) now fall within the Division's regulatory purview if they engage in money transmission as defined by statute.

Payments and Money Movement Relevance

The Division Of Banks has the following relevance to payments and money movement in United States:

Payment Systems Governed or Overseen

The Division Of Banks does not directly operate payment systems. Its payment-related role includes:

Money transmitters, payment processors, and fintech companies operating in this jurisdiction require licensing or registration with this entity.

Relationship to Other Regulators

NMLS Platform

All money transmitter licensing is conducted through the Nationwide Multistate Licensing System, enabling:

• Unified application portal across 52 jurisdictions
• Synchronized background checks and vetting
• Coordinated regulatory filing
• Multistate license administration

Multistate Supervisory Process

The Commissioner participates in coordinated multistate supervision through established networks:

• Conference of State Bank Supervisors (CSBS): Industry leadership coordination
• Money Transmitter Regulators Association (MTRA): Regulatory standardization and information sharing
• Regional/sector working groups: Focused examination and compliance initiatives

Reciprocal Recognition

While Massachusetts does not automatically recognize money transmitter licenses from other states, the NMLS platform and multistate coordination enable:

• Streamlined application procedures for entities licensed in other jurisdictions
• Information sharing to expedite examination cycles
• Coordinated enforcement against multi-state violators

Interstate Lending

Not applicable to money transmission regulation (though the Division also regulates mortgage lending and consumer finance, which have interstate components).

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

General Contact

Massachusetts Division of Banks

1000 Washington Street, 10th Floor

Boston, MA 02118-6400

Phone: (617) 956-1500

Toll-Free: (800) 495-BANK (2265)

Fax: (617) 956-1599

Hours: Monday–Friday, 9:00 AM–4:00 PM EST

Note: The Division does not provide in-person services at its office. All inquiries must be conducted by phone or through online portals.

Web Resources

• Main Division Page: https://www.mass.gov/orgs/division-of-banks
• Money Transmitter License Application: https://www.mass.gov/how-to/apply-for-a-money-transmitter-license
• Chapter 169B Statute: https://malegislature.gov/Laws/GeneralLaws/PartI/TitleXXII/Chapter169B
• FAQ on Chapter 312/169B: https://www.mass.gov/doc/faqs-for-chapter-312-of-the-acts-of-2024-money-transmission-0/download
• Selected Opinions (Foreign Transmittal Agencies): https://www.mass.gov/info-details/selected-opinions-of-the-division-of-banks-related-to-foreign-transmittal-agencies
• Selected Opinions (Virtual Currency): https://www.mass.gov/info-details/selected-opinions-of-the-division-of-banks-related-to-consumer-virtual-currency
• File a Complaint: https://www.mass.gov/how-to/file-a-complaint-with-the-division-of-banks
• Find a Licensee: https://services.oca.state.ma.us/LicenseeLookup/licenseelist.asp

Leadership

Mary Gallagher, Commissioner of Banks

• Appointed: 2019
• Prior role: Chief Operating Officer, Division of Banks
• Background: Operations oversight, budget, HR, IT, security, facilities, vendor management

Requires verification from official sources Direct contact information for Commissioner's office not publicly listed; inquiries should be made through main Division phone line or website.

Departmental Resources

• Licensing and Regulation Unit: Manages all money transmitter and other financial service licensing
• Examination Unit: Conducts routine and targeted examinations
• Enforcement Unit: Investigates violations and pursues administrative remedies
• Compliance and Policy Group: Develops guidance, interpretations, and regulatory amendments

Notes on Naming and Language