Office Of Financial Regulation

Overview

The Maryland Office of Financial Regulation (OFR), established in 1910 and operating under the Maryland Department of Labor, is Maryland's primary consumer financial protection agency and financial services regulator. The Office functions as the Official Regulator responsible for oversight of money transmission licensing and regulation at the state level in Maryland.

The OFR's mission is to protect Marylanders through the operation of a modern financial regulatory system that promotes:

• Respect for consumers

• Safety and compliance

• Fair competition

• Responsible business innovation

• A strong state economy

The Office ensures that financial institutions and financial service providers are treating Maryland consumers fairly, operating in a fiscally sound manner, and following state laws and regulations. Key responsibilities include chartering Maryland financial institutions and licensing or registering businesses and individuals that provide financial services to Maryland consumers, as well as supervising these entities through examinations and investigations to ensure compliance with state laws and regulations.

Basic Identity

Classification

Inclusion Justification

What This Entity Oversees

Supervisory Framework

The OFR's Money Services and Consumer Credit Supervision Unit conducts ongoing supervision of licensed money transmitters through:

• Scheduled and unscheduled examinations to assess compliance with state and federal laws

• Risk-based examination cycles determined by the Commissioner's assessment of licensee risk profile

• Investigation of complaints and reported violations

Examination Scope

Examinations assess licensees for:

• Compliance with the Maryland Money Transmission Act and applicable federal laws

• Maintenance of required financial reserves (net worth and surety bond)

• Anti-money laundering (AML) compliance

• Know-Your-Customer (KYC) controls

• Transaction monitoring and suspicious activity reporting

• Authorized delegate oversight

• Consumer complaint handling and dispute resolution

• Cybersecurity and data protection measures

• Recordkeeping and reporting obligations

Record-Keeping Requirements

The Maryland Money Transmission Act requires licensees to maintain detailed records, including:

• All transactions involving the transmission of money or value

• Customer identification and due diligence information

• Authorized delegate agreements and oversight documentation

• Financial statements and reserve calculations

• Complaint logs and resolution documentation

• AML/KYC compliance documentation

Reporting Requirements

Licensees must submit:

• Annual financial statements (audited, prepared by a CPA)

• Quarterly net worth and surety bond certifications

• Annual compliance certifications

• Suspicious activity reports in accordance with federal regulations

• Reports of any material changes in ownership, control, or business operations

Consumer Safeguards

The Maryland Money Transmission Act includes consumer protection provisions requiring licensees to:

• Clearly disclose all fees, charges, and exchange rates to consumers

• Provide receipts for all transactions

• Establish and maintain procedures for handling consumer complaints

• Process refunds and dispute claims in a timely manner

• Protect consumer funds through surety bonds and capital requirements

• Maintain customer privacy and data security

Complaint Handling

Consumers may file complaints with the OFR regarding:

• Unauthorized or erroneous transactions

• Fee disputes

• Delayed or failed money transmissions

• Fraud or misrepresentation

• Denial of service or account closure

The OFR investigates complaints and has authority to take enforcement action against licensees who violate consumer protection requirements.

Money Services Advisory

The OFR provides educational information to consumers about:

• How to select a reputable money transmitter

• Understanding fees and charges

• Recognizing potential fraud schemes

• Filing complaints with the OFR

• Consumer rights under Maryland law

The Office maintains a website with consumer resources and industry contact information at https://labor.maryland.gov/finance/consumers/.

Regulatory Powers

Commissioner Authority

The Commissioner of Financial Regulation has statutory authority under the Maryland Money Transmission Act to:

Investigative Powers:

• Conduct examinations and investigations of licensees and unlicensed persons engaged in money transmission

• Subpoena documents and records

• Interview officers, employees, and agents

• Investigate complaints from consumers and other parties

Enforcement Actions:

• Issue cease-and-desist orders to entities violating the Money Transmission Act

• Deny, suspend, or revoke licenses for violations or failure to meet requirements

• Impose civil penalties and fines

• Require restitution to affected consumers

• Enter settlements and consent orders

Specialized Enforcement Unit

The OFR operates an Enforcement Unit that:

• Investigates fraud-related issues and complaints

• Conducts specialized investigations involving chartered, licensed, and unlicensed entities

• Works to uncover improper business practices or violations of law

• Coordinates with other state and federal agencies on multi-state violations

Violation Categories

Violations of the Maryland Money Transmission Act can include:

• Operating without a valid license

• Failure to maintain required net worth or surety bond

• Violation of AML/KYC requirements

• Misappropriation of customer funds

• False statements in license applications

• Failure to comply with examination requests

• Breach of consumer protection obligations

• Unauthorized change of control or significant business changes

Penalties

Civil and criminal penalties for violations include:

• Fines and monetary penalties

• License suspension or revocation

• Injunctive relief

• Criminal charges for fraud or willful violations

• Restitution orders

Regulatory Role and Function

Legal Foundation

Statutory Framework

The Maryland Office of Financial Regulation derives its authority to regulate money transmitters from the Maryland Money Transmission Act, codified in Maryland Code Annotated, Financial Institutions, Title 12, Subtitle 4 (Sections 12-401 to 12-431). This statute establishes a comprehensive licensing and regulatory framework for entities engaged in the business of money transmission within Maryland.

Definition of Money Transmission

Under Maryland law, "money transmission" means engaging in the business of:

• Selling or issuing payment instruments or prepaid access

• Receiving currency, funds, or other value that substitutes for currency

• Transferring currency, funds, or other value that substitutes for currency to another person or a location within or outside the United States by any means, including:

• Electronically

• Through the Internet

• Through mobile applications

• Through a network of persons

• Through an informal value transfer system

The statute also includes: bill payer services, accelerated mortgage payment services, and informal money transfer systems (such as hawala networks).

Regulatory Structure

The OFR operates under the broader jurisdiction of the Maryland Department of Labor. Within the OFR, the Money Services and Consumer Credit Supervision Unit is specifically responsible for:

• Supervision of licensed money transmitters

• Examination and investigation of licensed money transmitters

• Licensing and registration of money transmitters

• Oversight of check cashers, debt management companies, and other consumer credit businesses

The Commissioner of Financial Regulation is the chief regulatory officer with authority to issue licenses, conduct examinations, investigate violations, and enforce the Maryland Money Transmission Act.

Licensing and Authorization Relevance

License Requirement

A license is required for any person engaging in the business of money transmission in Maryland, unless the person is an authorized delegate authorized by a licensee to engage in the business of money transmission under the name of a licensee at any location other than the place of business specified in the license.

Licensing Application Process

Money transmitter license applications are submitted electronically through the Nationwide Multistate Licensing System (NMLS). The OFR participates in the Multistate Money Services Businesses Licensing Agreement Program (MMLA), which creates a more efficient money service business licensing process among state regulators and may be suitable for companies seeking licensure in multiple states.

Application Requirements

Applicants for a money transmitter license must include:

1. Proof of Financial Stability: An unconsolidated audited financial statement prepared by a certified public accountant (CPA) verifying net worth

2. Background Information: Complete disclosure of criminal, civil, and regulatory history

3. Ownership and Management Details: Information on all principals, officers, directors, and significant shareholders

4. Authorized Delegates: List of all authorized delegates, if applicable

5. Qualifying Individual Documentation: Resume and background verification for the qualifying individual with required money transmission experience

Background Check Requirements

All applicants for a money transmitter license must undergo a thorough background check, including:

• Criminal history assessment

• Financial examination

• Fingerprinting

• Other additional compliance items as required by the Commissioner

License Renewal

Licenses must be renewed through NMLS. Licensees are required to maintain compliance with all state and federal laws and regulations governing the business of money transmission.

Net Worth Requirement

Applicants for a Maryland money transmitter license must maintain a company net worth (assets minus liabilities) of at least $150,000, plus an additional $10,000 per branch location, to a maximum requirement of $500,000.

The net worth calculation is unconsolidated, meaning it is calculated on the applicant's own financial position without combining affiliated entities. Applicants must submit an unconsolidated audited financial statement prepared by a CPA verifying their net worth when submitting their license application and during ongoing compliance.

Surety Bond Requirement

Money transmitters must obtain and maintain a surety bond. The surety bond amount is determined as the greater of:

1. $150,000 (minimum floor); or

2. 100% of the applicant's average daily money transmission liability in the State calculated for the most recently completed quarter, up to a maximum of $2,000,000

Surety Bond Administration:

• Bonds are submitted electronically through NMLS

• Both the surety company and the money transmitter company representative must sign the bond

• The bond form requires a Power of Attorney

• Annual bond premiums typically range from 1% to 5% of the total bond amount (for example, a $150,000 bond could cost $1,500-$7,500 annually, depending on credit history and financial statements)

Qualifying Individual Requirements

All money transmitter applicants must employ at least one individual who has a minimum of three years of documented experience in the money transmission business. This individual must be identified as the "qualifying individual" on the license application and must submit a resume demonstrating the required experience.

Virtual Currency Kiosk Regulation

Maryland regulates virtual currency kiosks (cryptocurrency ATMs) under new rules finalized in recent years. As of January 1, 2026, virtual currency kiosk operators must:

• Register annually with the Commissioner of Financial Regulation through NMLS

• Pay a $2,000 annual operator registration fee

• Register each individual kiosk separately with a $200 fee per kiosk

Kiosk Operator Requirements

Virtual currency kiosk operators must:

• Submit kiosk-level annual reports through NMLS detailing:

• Transaction volumes

• Fraud notices and incidents

• Refund activity and amounts

• Fee revenue and structures

• Comply with AML/KYC requirements

• Implement consumer protection controls

• Maintain transaction records as required by law

Virtual Currency and Money Transmission

An administrator or exchanger that:

• Accepts and transmits a convertible virtual currency, or

• Buys or sells convertible virtual currency for any reason

is treated as a money transmitter under both Maryland and federal regulations. This means such entities must obtain a money transmitter license from the OFR.

Digital currency businesses such as Binance and Coinbase currently maintain Maryland money transmitter licenses to operate in the state.

Monetary Value Definition

Under the Maryland Money Transmission Act, "monetary value" means a medium of exchange, including:

• Virtual currencies (convertible or otherwise)

• Fiat currencies

• Any other value that substitutes for currency

This broad definition ensures that evolving payment technologies and digital assets are captured within the regulatory framework.

Fintech and Innovation

The OFR recognizes the importance of responsible business innovation while maintaining consumer protection standards. The regulatory framework:

• Allows for diverse payment technologies and service models

• Requires compliance with the same core standards (capital, AML/KYC, consumer protection) regardless of technology platform

• Provides licensing pathway for emerging payment service providers

• Accepts applications through NMLS, which streamlines multi-state operations

Requires verification from official sources The OFR has not issued specific guidance on stablecoins, CBDCs, or decentralized finance (DeFi) platforms; applicants should consult directly with the Commissioner regarding novel business models.

Payments and Money Movement Relevance

The Office Of Financial Regulation has the following relevance to payments and money movement in United States:

Payment Systems Governed or Overseen

The Office Of Financial Regulation 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

Multistate Licensing System (NMLS)

The Maryland OFR participates in the Nationwide Multistate Licensing System (NMLS), operated by the Conference of State Bank Supervisors (CSBS) and the American Association of Residential Mortgage Regulators (AARMR). This system allows:

• Unified filing and application across multiple states

• Centralized database of licensees and enforcement actions

• Standardized examination and reporting procedures

• Information sharing among state regulators

Multistate Money Services Businesses Licensing Agreement (MMLA)

The OFR is a participant in the Multistate Money Services Businesses Licensing Agreement Program (MMLA), which:

• Creates a more efficient money service business licensing process among state regulators

• Allows for streamlined applications and examinations for multi-state operators

• Facilitates regulatory coordination and information sharing

• Is suitable for companies seeking licensure in multiple states

Commissioner Antonio P. Salazar's election as Chair of the CSBS Board of Directors (May 2025) reflects Maryland's leadership in interstate banking and financial services regulation.

Multi-State Examination Coordination

The OFR participates in the Multi-State MSB Examination Taskforce (MMET), which coordinates examination activities across state regulators to avoid duplicative examinations and ensure consistent regulatory standards for money service businesses operating in multiple jurisdictions.

Information Sharing and Enforcement Coordination

The OFR coordinates with other state regulators and federal agencies, including:

• Federal Reserve System

• Federal Deposit Insurance Corporation (FDIC)

• Office of the Comptroller of the Currency (OCC)

• FinCEN (Financial Crimes Enforcement Network)

• State banking and securities regulators

This coordination enables the OFR to:

• Share examination findings and enforcement information

• Coordinate multi-state enforcement actions

• Investigate violations involving out-of-state entities

• Enforce consumer protection orders across state lines

Interstate Enforcement

The OFR has demonstrated enforcement capability in interstate contexts, as evidenced by its participation in major enforcement actions such as the $80 million enforcement action against Block, Inc. and Cash App for violations of the Bank Secrecy Act and anti-money laundering laws.

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Office Location and General Contact

Maryland Office of Financial Regulation

• Address: 100 S. Charles Street, Tower 1, Suite 5300, Baltimore, Maryland 21201

• Phone: 410-230-6100

• Email: [email protected]

• Website: https://labor.maryland.gov/finance/

Commissioner of Financial Regulation

Antonio P. Salazar, Commissioner

• Title: Commissioner of Financial Regulation

• Organization: Maryland Office of Financial Regulation, Maryland Department of Labor

• Notable Position: Chair, Conference of State Bank Supervisors (CSBS) Board of Directors (as of May 2025)

Money Transmitter Licensing

For NMLS Applications and Money Transmitter Licensing:

• Access NMLS at: https://www.nmlsconsumeraccess.org/

• Contact the OFR for regulatory guidance and inquiries

• Phone: 410-230-6100

• Email: [email protected]

Industry Resources

Money Transmitters Industry Page:

• https://labor.maryland.gov/finance/industry/moneytran.shtml

• Includes licensing requirements, forms, and industry advisories

Licensed Financial Service Providers Search:

• https://www.labor.maryland.gov/finance/industry/licsearch.shtml

• Search for licensed money transmitters and other financial service providers

Consumer Resources

Consumer Protection and Complaints:

• https://labor.maryland.gov/finance/consumers/

• File complaints about licensed money transmitters

• Access consumer education materials and alerts

• Contact: [email protected] or 410-230-6100

Regulatory Documents

Applicable Laws and Regulations:

• Maryland Money Transmission Act: Md. Code Ann., Financial Institutions §§ 12-401 et seq.

• Statutory text available at: https://law.justia.com/codes/maryland/financial-institutions/title-12/subtitle-4/

• COMAR (Code of Maryland Regulations) - Financial Regulation provisions

Industry Advisories and Guidance:

• https://www.labor.maryland.gov/finance/advisories/

• Regulatory updates, compliance guidance, and industry notices

Notes on Naming and Language