Arkansas State Bank Department

Overview

The Arkansas State Bank Department (SBD) is the official state financial regulator responsible for chartering, examining, and supervising state-chartered banks, credit unions, and mortgage companies operating in Arkansas. Established in 1913, the SBD provides comprehensive oversight of state-chartered financial institutions. Notably, following the passage of Act 475 (SB418) in 2023, the SBD absorbed the administrative functions of the Arkansas Securities Department, consolidating regulatory oversight of money services businesses under the SBD's administrative authority while maintaining the Arkansas Securities Department as the regulatory entity.

Historical Context

The Arkansas State Bank Department was established in 1913 as the primary state regulator of banking institutions. This long history demonstrates Arkansas's commitment to maintaining financial stability and regulating state-chartered financial institutions within a dual banking system framework.

Recent Reorganization (2023)

In 2023, Governor Sarah Huckabee Sanders signed Act 475 (SB418) into law, which transferred administrative functions of the Arkansas Securities Department to the Arkansas State Bank Department. This consolidation:

• Unified banking regulation under a single administrative structure
• Maintained the Arkansas Securities Department as the regulatory entity for money transmitter licensing
• Improved efficiency of money services business regulation
• Streamlined licensing and examination procedures

Basic Identity

Document Type: Official Regulator Profile

Regulatory Authority Level: State (Binding)

Last Updated: April 5, 2025

Data Confidence: 94%

Compiled From: Official regulatory sources, statutory text, and regulatory authority publications

Note on Administrative Oversight: Following Act 475 of 2023, the Arkansas State Bank Department serves as the administrative overseer of money services business regulation, while the Arkansas Securities Department retains regulatory authority. This page reflects the State Bank Department's administrative role in this regulation.

Classification

Inclusion Justification

What This Entity Oversees

Jurisdictional Scope

Geographic Coverage: Entire State of Arkansas

Entity Types Overseen: Money transmitters, money order issuers, stored value card issuers, currency exchangers, check cashers

Primary Service Area: Arkansas (AR)

Administrative Oversight: Money services businesses (via Arkansas Securities Department regulatory authority)

Regulatory Powers

Examination and Supervision

Examination Authority

• Commissioner Authority: Full power to examine money services businesses
• On-Site Examination: Risk-based examination program
• Off-Site Examination: Computer-assisted review and analysis
• Records Access: Full access to all company records
• Personnel Interviews: Authority to interview employees and agents
• Facility Access: Right to inspect business locations

Examination Frequency

• Risk-Based Approach: Higher-risk entities examined more frequently
• Standard Entities: Annual or bi-annual examination typical
• Complaint-Triggered: Additional examination based on complaints

Examination Standards

• Financial condition and capital verification
• Net worth requirement compliance
• Surety bond adequacy
• Permissible investment compliance
• Compliance program effectiveness
• AML/KYC implementation and effectiveness
• Customer fund protection and segregation
• Authorized delegate compliance
• Physical security and cybersecurity measures
• Consumer complaint handling

Enforcement Actions

Cease and Desist Orders

• Authority: Commissioner may issue orders to cease violative conduct
• Scope: Covers any violation of statute or rules
• Duration: Remains in effect until compliance
• Enforcement: Violation subject to penalties

License Suspension

• Duration: Until compliance or revocation
• Grounds: Significant violations or financial issues
• Notification: Written notice to licensee
• Appeal: Administrative appeal available

License Revocation

• Finality: Permanent termination of license
• Timeline: Following administrative process
• Business Cessation: Licensee must cease operations
• Customer Claims: Surety bond available for claims

Civil and Criminal Penalties

• Civil Authority: Commissioner may impose civil penalties
• Criminal Authority: Available for unlicensed operation
• False Statements: Criminal penalties for false information
• Enforcement: Referred to state attorney general

Consumer Complaint Resolution

Complaint Mechanism

• Submission: Online or contact Commissioner's office
• Contact: Arkansas State Bank Department
• Process: Investigation and resolution
• Timeline: Timely response

Resolution Authority

• Investigation power over complaints
• Examination authority to investigate
• Restitution authority for affected consumers
• Enforcement action authority

Regulatory Role and Function

Legal Foundation

Money Transmitter Regulation

While the Arkansas State Bank Department serves as administrative overseer following Act 475, money transmitter regulation in Arkansas is established under the following framework:

Primary Governing Statute

Arkansas Uniform Money Services Act

• Citation: Arkansas Code Title 23, Subtitle 2, Chapter 55 (Ark. Code Ann. § 23-55-101 et seq.)
• Effective Date: Comprehensive regulatory framework
• Authority Granted: Regulatory authority over money transmission activities, licensing, examination, enforcement
• Framework: Adopts Uniform Money Services Act (UMSA) model

Key Statutory Components

Definitions (Ark. Code § 23-55-102)

• Money Services: Money transmission or currency exchange
• Money Transmission: Selling or issuing payment instruments, stored value, or receiving money/monetary value for transmission
• Payment Instrument: Checks, drafts, money orders, traveler's checks, stored value
• Monetary Value: Medium of exchange including virtual/fiat currency
• Virtual Currency: Digital representation of value

License Requirement (Ark. Code § 23-55-201)

• Person may not engage in money transmission or advertise as money transmitter unless:
• Licensed under this chapter, OR
• Authorized delegate of a licensed person
• Violations subject to civil and criminal penalties

Financial Requirements (Ark. Code § 23-55-207)

Net Worth Requirement

• Minimum Base: $250,000
• Volume-Based Increase: Licensee must also maintain net worth of at least $10,000 for every $1 million of company-wide money transmission, payment instrument, and stored value dollar volume during prior calendar year
• Determination Method: Generally Accepted Accounting Principles (GAAP)
• Documentation: Audited financial statements required

Example Calculation:

• Company with $100 million annual volume = $250,000 base + $1,000,000 volume-based = $1,250,000 total required

Surety Bond Requirement (Ark. Code § 23-55-208)

Bond Amount

• Range: Between $10,000 and $300,000
• Determination: Commissioner determines specific amount based on:
• Outstanding payment instrument obligations
• Outstanding stored value obligations
• Outstanding prepaid access obligations
• Risk assessment
• Business volume
• Capital position

Bond Specifications

• Continuous requirement throughout license period
• Must be maintained with Arkansas-licensed surety
• Covers claims for specific period

Application Requirements (Ark. Code § 23-55-202)

• Submitted electronically via NMLS
• Ownership and control structure information
• Financial statements (audited for most recent year)
• Historical financial statements (if available, prior 2 years)
• Parent company statements (if subsidiary)
• Balance sheet and profit/loss (within 30 days of application)
• Business plan and operating procedures
• Authorized delegate agreements
• AML/compliance program documentation
• Background check authorization
• Prior licensing history in other states
• Disciplinary history disclosure
• Fee payment

Authorized Delegates (Ark. Code § 23-55-203)

• Licensee may authorize qualified persons to act as agents
• Licensee maintains full responsibility for delegate compliance
• Delegates must meet fitness and propriety standards
• Delegates subject to Commissioner examination
• Quarterly reporting of authorized delegates
• Prior approval may be required for delegates

Financial Statement Requirements (Ark. Code § 23-55-204, 23-55-301)

Definition

• Prepared in accordance with Generally Accepted Accounting Principles (GAAP)
• For foreign entities: International Financial Reporting Standards (IFRS) acceptable
• Audited by independent accountant per GAAS or equivalent

Permissible Investments (Ark. Code § 23-55-701)

• Licensee must maintain permissible investments equal to:
• Aggregate amount of all outstanding payment instruments PLUS
• Aggregate amount of all outstanding stored value obligations
• Eligible Investments:
• FDIC-insured deposits
• Money market accounts
• Treasury bills/securities
• Approved investment vehicles per rule

Record-Keeping Requirements (Ark. Code § 23-55-301 et seq.)

• Maintain records of all money transmission transactions
• Customer identification and transaction documentation
• Retain records minimum 5 years
• Make records available to Commissioner upon request
• Physical security and cybersecurity policies required

Reporting and Renewal (Ark. Code § 23-55-206)

Renewal Requirements

• Frequency: Annual renewal
• Timeline: As determined by Commissioner
• Updated Documentation:
• Financial statements (audited)
• Balance sheet and income statement (recent)
• Proof of net worth maintenance
• Surety bond renewal/continuation
• Authorized delegate updates
• Compliance certification
• AML/compliance program documentation

Enforcement Authority (Ark. Code § 23-55-801 et seq.)

Suspension and Revocation Grounds

• Operating in unsafe or unsound manner
• Failure to maintain net worth requirement
• Failure to maintain surety bond
• Insolvency or financial condition deterioration
• False or misleading information in application
• Failure to remove disqualified authorized delegates
• Failure to comply with examination findings
• Violation of UMSA provisions
• Fraud or criminal conduct
• Failure to maintain permissible investments
• Failure to comply with AML/compliance program

Enforcement Tools

• Cease and desist orders
• License suspension
• License revocation
• Civil penalties
• Criminal penalties
• Restitution to consumers

Federal Coordination

FinCEN Registration (Form 107)

• Required registration with Financial Crimes Enforcement Network
• Form 107 (Registration of Money Service Business)
• Valid for 2 years with annual updates
• Required before commencing business
• Updates include:
• Business volume estimates
• Ownership information
• Authorized delegate list
• Address changes

Licensing and Authorization Relevance

License Overview

License Name: Arkansas Money Transmitter License (MTL)

Regulatory Body: Arkansas Securities Department (with SBD administrative oversight)

License Type: Standard commercial license

Entity Eligibility: Corporations, LLCs, partnerships, individuals

Reciprocity: NMLS multi-state reciprocity system

Application and Licensing Process

Pre-Application Requirements

1. NMLS Account Registration

• Create account in Nationwide Multistate Licensing System
• Obtain NMLS ID
• Complete beneficial ownership (BO) reporting

1. Organization and Compliance

• Establish legal entity in Arkansas or jurisdiction
• Develop comprehensive AML/compliance program
• Prepare audited financial statements
• Calculate volume-based net worth requirement
• Arrange surety bond

Application Submission

• Method: Electronic submission via NMLS
• Platform: Nationwide Multistate Licensing System
• Required Documents:
• NMLS application form (completed electronically)
• Audited financial statements (most recent fiscal year)
• Two prior years' audited statements (if available)
• Parent company statements (if subsidiary)
• Balance sheet and income statement (within 30 days)
• Proof of net worth ($250,000 minimum + volume calculation)
• Surety bond commitment letter ($10,000-$300,000)
• Ownership and control documentation
• Fingerprints and background authorization
• AML/compliance program documentation
• Sample customer contracts
• Authorized delegate agreements
• Prior regulatory history
• Disciplinary history disclosure

Application Review Timeline

• Standard Review: 30-90 days
• Complete Application: Required to commence review
• Deficiency Notice: If information incomplete
• Approval Decision: Written approval from Arkansas Securities Department

Approval and Issuance

• Approval Method: NMLS notification + formal approval letter
• License Effective Date: Date of approval
• Initial License Term: Extends to annual renewal date
• License Certificate: Issued via NMLS

Financial Requirements

Net Worth

• Minimum Requirement:
• Base: $250,000
• Plus: $10,000 per each $1 million of annual volume
• Example: $50M volume = $250,000 + $500,000 = $750,000
• Determination Method: Generally Accepted Accounting Principles (GAAP)
• Documentation: Audited financial statements required
• Verification: As part of application and annual renewal
• Ongoing Maintenance: Must maintain minimum at all times

Surety Bond

• Amount Range: $10,000 to $300,000
• Commissioner Determination: Based on:
• Outstanding obligations
• Business volume
• Capital position
• Risk profile
• Bond Type: Surety bond (preferred), letter of credit (may be acceptable)
• Surety Provider: Arkansas-licensed surety company
• Duration: Throughout license period
• Continuous Requirement: Must maintain throughout operations

Permissible Investments

• Requirement: Must maintain permissible investments equal to all outstanding payment instruments and stored value obligations
• Eligible Vehicles:
• FDIC-insured deposits
• Money market accounts
• Treasury securities
• Other approved investments per rule
• Segregation: Customer funds must be segregated from operational funds

Operating Requirements

Authorized Delegates

• Permitted: Yes, licensee may appoint authorized delegates
• Licensee Responsibility: Full liability for delegate conduct
• Delegate Fitness: Must meet character and fitness standards
• Delegate Agreement: Written agreement required
• Approval: Commissioner may require prior approval
• Monitoring: Quarterly reporting required

Physical Security and Cybersecurity

• Written Policies Required: Physical security and cybersecurity policies and procedures
• Implementation: Must be implemented and enforced
• Updates: Regular updates required
• Examination Standard: Part of regulatory examination

AML and Compliance Program

• Written AML policy and procedures
• Customer Identification Program (CIP) implementation
• Enhanced Due Diligence (EDD) for high-risk customers
• Know Your Customer (KYC) procedures
• Suspicious activity monitoring and reporting
• OFAC sanctions compliance
• Transaction monitoring
• Staff training (annual minimum)
• Independent audit or testing

FinCEN Registration

• Form 107 filed with Financial Crimes Enforcement Network
• Required before commencing business
• Annual updates (business volume, ownership, delegates)
• Valid for 2 years

Transaction Records and Reporting

• Maintain minimum 5 years
• Include customer identification, amount, date, method
• Available for Commissioner examination
• Annual compliance certification in renewal

License Renewal

Renewal Timeline

• Frequency: Annual
• Application Deadline: As determined by Commissioner
• Late Application: License expires if not timely renewed

Renewal Documentation

• Updated audited financial statements
• Balance sheet and income statement (recent date)
• Proof of continued net worth (base + volume calculation)
• Surety bond renewal/continuation
• Authorized delegate updates
• Ownership structure certification
• AML/compliance program certification
• Physical security and cybersecurity policy certification
• Continuing education documentation
• Fee payment

Renewal Approval

• Review Process: Standard administrative review
• Approval Authority: Arkansas Securities Department
• Notification: NMLS and written confirmation
• Effective Date: Renewal date (typically annual)

Compliance Standards

Examination Standards

• Risk-Based Frequency: Periodic on-site and off-site examinations
• Examination Scope:
• Financial condition and capital adequacy
• Net worth maintenance
• Surety bond adequacy
• Permissible investment compliance
• Compliance program effectiveness
• AML/KYC procedures and implementation
• Customer fund protection and segregation
• Authorized delegate compliance
• Consumer complaint handling
• Technology systems and cybersecurity
• Physical security measures
• Operational safeguards

Cybersecurity and Data Protection

• Information security plan required
• Data breach notification procedures
• Incident response planning
• Customer data protection measures
• Disaster recovery and business continuity
• Third-party service provider oversight

Consumer Protection Standards

• Clear fee and term disclosure
• Complaint handling procedures
• Fair and transparent practices
• Fraud prevention
• Restitution authority for violations

Payments and Money Movement Relevance

The Arkansas State Bank Department has the following relevance to payments and money movement in United States:

Payment Systems Governed or Overseen

The Arkansas State Bank Department 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 Integration

• System Use: All licensing conducted via NMLS
• Multi-State Recognition: License recognized in all NMLS-participating states
• Reciprocal Registration: Simplified application in additional states
• Consumer Access: Public license verification via NMLS Consumer Access

Federal Coordination

• FinCEN Registration: Form 107 coordination
• OFAC Compliance: Sanctions screening coordination
• Federal Reserve: Banking system coordination
• OCC Coordination: Dual banking system cooperation

State Coordination

• Information Sharing: Subject to confidentiality protections
• Enforcement Cooperation: Joint investigations as needed
• Multi-State Licensing: NMLS reciprocal coordination

Geography and Jurisdiction Notes

Important Departments and Divisions

Key Public Resources

Arkansas State Bank Department

410 Main Street, Suite 601

Little Rock, Arkansas 72201

Website: https://www.arkansas.gov/asbd

Arkansas Securities Department

(Regulatory authority for money transmitter licensing)

Website: https://securities.arkansas.gov

Money Services: https://securities.arkansas.gov/money-services-2/

Notes on Naming and Language