PROHIBITION OF CENTRAL BANK DIGITAL CURRENCY

(SECTION 34.700)

The act prohibits public entities from accepting payments using any central bank digital currency. Furthermore, public entities are prohibited from participating in any test of central bank digital currency by any Federal Reserve branch. A central bank digital currency is defined as a digital currency, a digital medium of exchange, or a digital monetary unit of account issued by the United States Federal Reserve System, a federal agency, a foreign government, a foreign central bank, or a foreign reserve system, that is made directly available to a consumer by such entities. The term includes a digital currency, a digital medium of exchange, or a digital monetary unit of account issued by the United States Federal Reserve System, a federal agency, a foreign government, a foreign central bank, or a foreign reserve system, that is processed or validated directly by such entities.

This provision is identical to a provision in SB 826 (2024).

MONEY TRANSMISSION MODERNIZATION ACT OF 2024

(Chapter 361)

This act repeals the Sale of Checks Law and creates in its stead the "Money Transmission Modernization Act of 2024". The act regulates money transmission, defined as any of the following:

• Selling or issuing payment instruments to a person located in Missouri;

• Selling or issuing stored value to a person located in Missouri;

• Receiving money for transmission from a person located in Missouri; or

• Payroll processing services.

Money transmission does not include the provision solely of online or telecommunications services or network access.

The Director of the Division of Finance within the Department of Commerce and Insurance is responsible for administering this act.

Licensure of Money Transmitters

The act prohibits any person from engaging in the business of money transmission or advertising, soliciting, or holding itself out as providing money transmission unless the person has been licensed pursuant to this act. Licenses last for no more than one calendar year and are not transferable or assignable. Applications must be on forms required by the Director and shall be accompanied by an application fee, as determined by the Director.

Additionally, certain individuals in control of a licensee, seeking to control a licensee, and any key individual, as that term is defined in the act, are required to furnish background materials to the Director, including fingerprints, criminal background checks, and employment history, among other things listed in the act.

The Director is permitted to implement the licensure process in such a way as to make it consistent with other states and nationwide protocols, to the extent consistent with this act. The Director is additionally permitted to collaborate with the Nationwide Multistate Licensing System and Registry developed by the Conference of State Bank Supervisors (NMLS) as provided in the act.

Confidentiality of Information

The act provides that all information provided to the Director is considered confidential except basic identifying information of the licensee as detailed in the act. Exceptions are included with respect to disclosures to certain government agencies.

Acquisition of Control

Any person, or group of persons acting in concert, seeking to acquire control of a licensee shall obtain the written approval of the Director prior to acquiring control. An application must be submitted in a form prescribed by the Director along with a fee, as determined by the Director.

Reporting and Records

Each licensee is required to submit to the Director the following reports:

• A report of condition each calendar quarter;

• An audited financial statement prepared by an independent certified public accountant at the end of the fiscal year; and

• A report of authorized delegates at the end of each calendar quarter.

A licensee shall file a report with the Director within one business day if the licensee has reason to know of:

• The filing of a petition by or against the licensee under the federal United States Bankruptcy Code;

• The filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors; or

• The commencement of a proceeding to revoke or suspend its license in a state or country in which the licensee engages in business or is licensed.

A licensee shall file a report with the Director within three business days if the licensee has reason to know of:

• A conviction of the licensee or of a key individual or person in control of the licensee for a felony; or

• A conviction of an authorized delegate for a felony.

A licensee shall maintain the following records, for determining its compliance with this act for at least three years:

• A record of each outstanding money transmission obligation sold;

• A general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts;

• Bank statements and bank reconciliation records;

• Records of outstanding money transmission obligations;

• Records of each outstanding money transmission obligation paid within the three-year period;

• A list of the last known names and addresses of all of the licensee's authorized delegates; and

• Any other records the director reasonably requires by rule.

Prudential Standards

Licensees are required to maintain at all times a tangible net worth more than $100,000, or 3% of total assets for the first $100,000,000, 2% of additional assets between $100,000,000 and $1 billion, and 0.5% of additional assets over $1 billion. Additionally, licensees shall maintain security consisting of a surety bond in an amount based on the licensee's average daily money transmission liability and tangible net worth.

The act establishes requirements for permissible investments of a licensee.

Administrative, Criminal, and Civil Enforcement Mechanisms

The act allows the Director to suspend or revoke licenses and designations of authorized delegates under circumstances and using procedures as described in the act. The Director is also permitted to issue cease and desist orders and enter into consent decrees for the resolution of matters arising under this act.

The act creates the following criminal penalties associated with money transmission:

• A person that intentionally makes a false statement, misrepresentation, or false certification in a record filed or required to be maintained pursuant to this act or that intentionally makes a false entry or omits a material entry in such a record is guilty of a class E felony;

• A person that knowingly engages in an activity for which a license is required pursuant to this act without being licensed and who receives more than $500 in compensation within a 30-day period from this activity is guilty of a class E felony;

• A person that knowingly engages in an activity for which a license is required pursuant to this act without being licensed and who receives no more than $500 in compensation within a 30-day period from this activity is guilty of a Class A misdemeanor.

The Director is also permitted to assess civil penalties not to exceed $1,000 per day for each violation of this act.

These provisions are substantially similar to SB 737 (2024), SB 633 (2023), and HB 1340 (2023).

SELF-SERVICE STORAGE INSURANCE PRODUCERS

(Section 379.1640)

The act increases the maximum insurance coverage that may be offered by limited lines self-service storage insurance producers and their associates from $5,000 to $15,000.

UNIFORM COMMERCIAL CODE

(CHAPTER 400)

The act also makes modifications to the Uniform Commercial Code (UCC) based on amendments from the Uniform Law Commission.

DEFINITION MODIFICATIONS

(SECTION 400.1-201)

Various definitions are modified and inserted, specifically, the definitions for "conspicuous", "delivery", "holder", "money", "person", "send", and "sign". New definitions are created for the terms "central bank digital currency" and "electronic".

Additionally, all references to "writing" or "writings" in the UCC are changed to "record" or "records".

SALES AND LEASES

(SECTIONS 400.2-102 - 400.2A-208)

The act makes hybrid transactions subject to the UCC under certain circumstances as outlined in the act. Specifically, if the aspects relating to the sale of goods predominate in the sale, the UCC applies to the transaction, provided that it does not preclude the application of other law as applicable, in the case of aspects of the transaction that do not relate to the sale of goods. If the aspects of the transaction that relate to the sale of goods do not predominate, the UCC only applies to those aspects of the transaction that relate to the sale of goods.

A hybrid transaction is defined as a single transaction involving a sale of goods and 1) the provision of services; 2) a lease of other goods; or 3) a sale, lease, or license of property other than goods.

NEGOTIABLE INSTRUMENTS AND BANK DEPOSITS

(SECTIONS 400.3-104 - 400.4A-305)

The act makes various changes to definitions applicable to articles of the UCC relating to negotiable instruments and bank deposits.

LETTERS OF CREDIT

(SECTION 400.5-116)

Current law provides that for the purpose of jurisdiction, choice of law and recognition of interbranch letters of credit, the branches of a bank are considered separate juridical entities and a bank is located at the place where its relevant branch is located. This act provides that a branch of a bank is considered to be the address indicated in the branch's undertaking. If more than one address is indicated, the branch is considered to be located at the address from which the undertaking was issued.

CONTROL OF DOCUMENTS OF TITLE

(SECTIONS 400.7-102 - 400.7-106)

Current law provides that a person has control of an electronic document of title if a system employed for evidencing the transfer of interests in the electronic document reliably establishes that person as the person to which the electronic document was issued or transferred.

This act provides that a system satisfies this current provision, and a person has control of the electronic document of title, if an authoritative electronic copy of the document, a record attached to or logically associated with the electronic copy, or a system in which the electronic copy is recorded:

· Enables the person readily to identify each electronic copy as either an authoritative copy or a nonauthoritative copy;

· Enables the person readily to identify itself in any way, including by name, identifying number, cryptographic key, office, or account number, as the person to which each authoritative electronic copy was issued or transferred; and

· Gives the person exclusive power, as described in the act, to: 1) prevent others from adding or changing the person to which each authoritative electronic copy has been issued or transferred; and 2) transfer control of each authoritative electronic copy.

Provisions are also created establishing when a person has control of an electronic document of title on behalf of another person.

INVESTMENT SECURITIES

(SECTIONS 400.8-102 - 400.8-803)

The act specifies that, for purposes of security entitlements, a purchaser has control of a security entitlement if another person other than a transferor to the purchaser 1) has control of the security entitlement and acknowledges that it has control on behalf of the purchaser; or 2) obtains control of the security entitlement after having acknowledged that it will obtain control of the security entitlement on behalf of the purchaser.

SECURED TRANSACTIONS

(SECTIONS 400.9-102 - 400.9-628)

Various definitions are modified and created with respect to the UCC article governing secured transactions. Specifically, the term "authenticate" is replaced with the term "sign" throughout the article. Additionally, new definitions are created for the terms "assignee", "assignor", "chattel paper", "controllable account", "controllable payment intangible", "electronic money", and "money".

The act includes provisions relating to security interests in controllable electronic records and in the rights to payment that are embedded in the controllable electronic records, controllable accounts, and controllable payment intangibles. Perfection, meaning the enforceability against third parties of security interests in an asset, may be achieved by a secured party obtaining control of the asset or filing a financing statement in the appropriate jurisdiction’s filing office. A security interest perfected by control has priority over a security interest perfected by filing.

The act redefines "chattel paper" as the right to payment of a monetary obligation that is secured by a security interest in specific goods or owed under a lease of specific goods, if the right to payment and interest in the goods are evidenced by a record. The act addresses matters relating to hybrid transactions, and provides an amended definition of "control" of an authoritative electronic copy of a record evidencing chattel paper. A security interest in chattel paper may be perfected by taking possession of the authoritative tangible copies, and obtaining control of the electronic authoritative copies, if any.

The act provides that perfection of a security interest in electronic money, a subset of money, as original collateral must be by control, not filing. The act modifies the definition of "money" by excluding deposit accounts and money in an electronic form that cannot be subjected to control. The act modifies the "take-free" rules for transferees of both electronic money and tangible money and transferees of funds from deposit accounts.

Provisions are modified relating to control of deposit accounts, control of an authoritative electronic copy of record evidencing chattel paper, and control of electronic money.

The act modifies the form and instructions for providing notification of disposition of collateral for a consumer-goods transaction and for a non consumer-goods transaction.

CONTROLLABLE ELECTRONIC RECORDS

(SECTIONS 400.12-101 - 400.12-107)

A new article is created in the UCC called the Uniform Commercial Code-Controllable Electronic Records. A "controllable electronic record" is defined as a record stored in an electronic medium that can be subjected to control.

If there is a conflict between the sections governing the controllable electronic records and the sections governing secured transactions, the latter controls. The article applies to controllable accounts and controllable payment intangibles in the same manner that they apply to controllable electronic records.

Except as otherwise provided by law, the resolution of questions concerning the transfer of rights in a controllable electronic record, such as the acts that must be taken to effectuate a transfer of rights and the scope of the rights that a transferee acquires, is determined by law other than this article.

The act creates provisions governing when a person has control of and exclusive power over a controllable electronic record and the manner in which account debtors may discharge its obligations with respect to a controllable account or controllable payment intangible.

The act provides that the local law of a controllable electronic record's jurisdiction governs a matter that is covered by this article. If the choice of law refers to a jurisdiction that has adopted this article, those matters would include the interpretation and application of these sections, including its definitions. The act designates the District of Columbia as the location of a debtor that otherwise would be located in a jurisdiction whose law does not provide for a generally applicable system of public notice, such as filing or registration, for nonpossessory security interests.

TRANSITIONAL PROVISIONS

(SECTIONS 400.199-101 - 400.199-401)

This act takes effect August 28, 2024, provided that provisions are created allowing for a transition period during which the lender’s priority established on the effective date of this act will be maintained. A uniform adjustment date of July 1, 2025 is included, at which time several material provisions will take effect, particularly new priority rules that would override established priorities prior to the effective date of this act.

The provisions of this act relating to the UCC are substantially similar to HB 1165 (2023).

NOTICE OF SALE

(Section 415.415)

The act modifies the requirements of notice for sale by an operator of a self-service storage facility for the sale of personal property of an occupant in default. In addition to advertising in the classified section of a newspaper prior to sale, the operator may also and instead advertise in any other commercially reasonable manner. The advertisement is commercially reasonable if at least three independent bidders attend the sale.

CONSUMER FINANCIAL DISCLOSURE LAW

(Section 427.300)

This act creates the "Commercial Financing Disclosure Law". Under this act, any person who consummates more than 5 commercial financing transactions, as defined in the act, to a business located in this state in a calendar year is required to make certain disclosures to the business with regard to the transaction. Specifically, the provider is required to disclose the following:

• The total amount of funds provided to the business under the terms of the commercial financing transaction;

• The total amount of funds disbursed to the business under the terms of the commercial financing transaction, if less than the total amount of funds provided, as a result of any fees deducted or withheld at disbursement and any amount paid to a third party on behalf of the business;

• The total amount to be paid to the provider pursuant to the commercial financing transaction agreement;

• The total dollar cost of the commercial financing transaction under the terms of the agreement, derived by subtracting the total amount of funds provided from the total of payments;

• The manner, frequency and amount of each payment; and

• A statement of whether there are any costs or discounts associated with prepayment of the commercial financing transaction including a reference to the paragraph in the agreement that creates the contractual rights of the parties related to prepayment.

The act requires registration with the Division of Finance prior to engaging in business as a broker for commercial financing. Specifically, the act requires filing a registration form, submitting a fee of $100, and obtaining a surety bond in the amount of $10,000. A registration renewal is required every year, not later than January 31st.

Violations of this act are punishable by a fine of $500 per incident, not to exceed $20,000 for all aggregated violations. Any person who violates any provision of this act after receiving written notice of a prior violation from the Attorney General shall be punishable by a fine of $1,000 per incident, not to exceed $50,000 for all aggregated violations arising from the use of the transaction documentation or materials found to be in violation of this act.

Violation of any provision of this act does not affect the enforceability or validity of the underlying agreement.

This act does not create a private cause of action against any person or entity based upon noncompliance with this act.

The Attorney General is given exclusive authority to enforce the provisions of this act.

This act contains various exemptions.

The registration and disclosure requirements of this act take effect either (1) 6 months after the Division of Finance finalizes promulgating rules, if the Division intends to promulgate rules; or (2) February 28, 2025, if the Division does not intend to promulgate rules.

These provisions are substantially similar to SB 753 (2024), provisions in HCS/SCS/SB 187 (2023), SCS/HB 585 (2023), a provision in the perfected HCS/HB 809 (2023), HCS/HB 584 (2023), SCS/SB 963 (2022), a provision in SCS/HB 2571 (2022), and HB 2706 (2022).

SCOTT SVAGERA