Department of Regulatory Agencies Division of Banking MONEY TRANSMITTERS 3 CCR 701-7 [Editor’s Notes follow the text of the rules at the end of this CCR Document.] MO0.5 Definitions 1. “Control” is set forth in Section 11-110-201(8)(a)(I)-(III), C.R.S. 2. “Federally Insured Depository Financial Institution” is set forth in Section 11-110- 201(12), C.R.S.

3. “NMLS” is set forth in Section 11-110-201(23), C.R.S. https://nationwidelicensingsystem.org.

4. “Parent,” when used with respect to a specified person, other than a natural person, is defined as any person, other than a natural person, which controls such specified person, directly or indirectly, through one or more intermediaries. 5. “Permissible Investment” is set forth in Section 11-110-1004, C.R.S. 6. “Person” is set forth in Section 11-110-201(28), C.R.S. 7. “Record” is the original of any record of licensee or agent that includes the data or other information comprising a record stored or transmitted in or by means of any electronic, computerized, mechanized, or other information storage or retrieval or transmission system or device that can upon request generate, regenerate, or transmit the precise data or other information comprising the record; and an original also includes the visible data or other information so generated, regenerated, or transmitted if it is legible or can be made legible by enlargement or other process. The record(s) required to be maintained may be maintained at any location, provided the licensee notifies the Division of Banking (Division) in writing of the location of its records prior to each scheduled examination.

8. “Stored Value” is set forth in Section 11-110-201(30)(a), C.R.S. MO1 Surety Bond [Section 11-110-1002, C.R.S.] A. The Banking Board may, following notice to the licensee and an opportunity for hearing before the Banking Board, and upon the determination that customers of 1 CODE OF COLORADO REGULATIONS 3 CCR 701-7 Division of Banking the licensee are at undue risk, order the licensee to increase the bond amount up to one million dollars based on the following factors:

1. The nature and volume of the business and proposed business of the licensee in Colorado;

2. The amount, nature, quality, and liquidity of the assets of the licensee; 3. The amount and nature of the liabilities (including contingent liabilities) of the licensee;

4. The nature and sufficiency of the licensee's cash flow; 5. The licensee's net worth;

6. The history of, and prospects for, the licensee to earn and retain income; 7. The quality of the operations of the licensee;

8. The quality of the management of the licensee;

9. The nature and quality of the controlling person or persons of the licensee; and 10. Such other factors as are, in the opinion of the Banking Board, relevant. B. Generally accepted accounting principles shall be used, where applicable, by the Banking Board in connection with its consideration of such factors. MO2 Permissible Investments [Section 11-110-1003 and 1004, C.R.S.] A. Ownership of Permissible Investments 1. A licensee shall be deemed to own a Permissible Investment only if: a. The licensee owns the Permissible Investment solely and exclusively in its own right, both of record and beneficially, b. The Permissible Investment is not subject to any pledge, lien, or security interest, and c. The licensee can freely negotiate, assign, or otherwise transfer the Permissible Investment.

2. A licensee shall not be deemed to be able freely to transfer a Permissible Investment that consists of a deposit in a financial institution unless such licensee is able freely to withdraw such deposit. However, if the deposit is a savings or time deposit, as the case may be, the licensee shall not, on 2 CODE OF COLORADO REGULATIONS 3 CCR 701-7 Division of Banking account of such restrictions, be deemed unable freely to withdraw the deposit.

3. A licensee shall not be deemed to be able freely to negotiate, assign, or otherwise transfer a Permissible Investment if any other transfer of such Permissible Investment would constitute a breach or event of default by such licensee or by any affiliate of the licensee under a contract, obligation, note, or other security issued by the licensee or by any affiliate of the licensee. For example, a licensee shall not be deemed to be able freely to negotiate, assign, or otherwise transfer a Permissible Investment that consists of a deposit in a bank if such licensee's failure to maintain such deposit would constitute a breach of any provision for compensating balances set forth in a loan contract between such bank and the licensee or a parent of the licensee.

B. Accounts Held for the Benefit of the Licensee’s Customers Customer funds held in for the benefit of accounts are allowed as Permissible Investments so long as all of the following apply: the bank account is in the licensee’s name and Employer Identification Number; records that identify the beneficial owners of those funds are maintained; and records that identify the balance attributable to each beneficial owner are maintained. MO3 NMLS Records and Quarterly Reports [Section 11-110-701 and 11-110-703, C.R.S.] A. Quarterly NMLS Money Service Business Call Reports (MSBCRs) All licensees must submit, using the NMLS portal, the NMLS MSBCR on a calendar quarterly basis, with all sections completed accurately. Failure to properly submit a NMLS MSBCR in a timely manner as outlined in 11-110- 701(1), C.R.S. , may result in a Late Filing Fee as set forth in the Division’s Fee Schedule.

B. Quarterly NMLS Authorized Agent Report All licensees must submit, using the NMLS portal, the Authorized Agent Roster Report on a quarterly basis, as outlined in 11-110-703, C.R.S. C. The filing or commencement of an administrative or legal action by a regulatory agency or licensing authority in a state, territory, or country in which the licensee engages in business or is licensed, must be uploaded to the NMLS within 15 business days after the licensee has reason to know of the occurrence. 3 CODE OF COLORADO REGULATIONS 3 CCR 701-7 Division of Banking MO4 [Repealed eff. 08/06/2025] MO5 Change of Control [Section 11-110-601, C.R.S.] A. An applicant which is a publicly traded corporation or a direct or indirect subsidiary of a publicly traded corporation shall provide the Commissioner with written notice within 15 days after knowledge of a change in control as that term is defined in 11-110-601 C.R.S.

B. An applicant which is not a publicly traded corporation shall provide through the NMLS portal or other acceptable means all the required information, which at a minimum includes:

a. A detailed description of the proposed transaction.

b. The information required by 11-110-504 for new key individuals as that term is defined in 11-110-601 C.R.S.

c. The information required by 11-110-503(1)(a) to (1)(d) and 11-110- 503(2)(f) to (2)(i) for a new applicant.

d. Any other information the Banking Board deems relevant, but not more than required of the licensee or key individuals of the licensee as part of its original license application.

C. The Banking Board may disapprove any person who has a history of material litigation, criminal convictions, or pleas of nolo contendere. MO6 [Repealed eff. 01/15/2026] MO7 Customer Notice [Section 11-110-904, C.R.S.] A. Every licensee shall post and maintain at its establishment and at each agent location, or other facility located in Colorado where exchange is sold or issued, or the business of money transmission is conducted, a notice furnished by the Commissioner that provides consumer information concerning the Act and how to file a consumer complaint with the Division. Such notice must be posted conspicuously in an easily accessible and well-lighted area that is available to the consumer.

B. 1. If the exchange transaction is conducted through an electronic text medium, the licensee shall communicate the text of the customer notice to the consumer's electronic address, make the disclosure available at another location such as an internet web site, or provide the information in conjunction with other disclosures.

2. Notice is not required if the exchange transaction is conducted orally by telephone.

4 CODE OF COLORADO REGULATIONS 3 CCR 701-7 Division of Banking MO8 [Repealed eff. 01/15/2026] MO9 Calculating Tangible Net Worth, Parent Companies, and Audit Standards [Sections 11-102-104; 11-110-401, C.R.S.] A. Calculating Tangible Net Worth 1. When calculating the tangible net worth of a licensee, the Commissioner has the authority to disallow any assets that the Commissioner disqualifies due to the asset being:

a. Unsecured or inadequately secured;

b. Uncollectible or delinquent;

c. Owed by an entity that lacks sufficient independent financial resources; or d. Otherwise, pose undue risk to the financial soundness of the licensee.

B. Parent Company Review 1. The Commissioner may examine the financial condition and operations of any parent company and/or affiliate of a licensee to the extent necessary to assess risk to the licensee. This includes, but is not limited to, review of financial statements, capital structure, sources of funding, and dependency on the licensee for revenue or solvency.

C. CPA and Audit Review Authority 1. The Commissioner may require submission of all audited financial statements prepared by a certified public accountant (CPA) and may review the qualifications and audit practices of the CPA. The Commissioner may reject any audit or financial report that, in its determination:

a. Does not comply with generally accepted accounting principles; b. Is materially deficient in disclosures or methodology; or c. Was prepared by a CPA or firm lacking independence, qualification, or professional standing.

D. Compliance and Enforcement 1. If the Commissioner determines that any assets, audit materials, or financial conditions of a licensee, parent company, and/or affiliate materially impair the licensee’s financial condition, or if any required 5 CODE OF COLORADO REGULATIONS 3 CCR 701-7 Division of Banking records are withheld or are deemed unreliable or deficient, the Commissioner may take enforcement action, including but not limited to: a. Licensee to increase its net worth;

b. Restricting transactions with parent company and/or affiliates; c. Mandating corrective action as a condition of continued licensure; d. Requiring the licensee to obtain a new audit or financial review by an independent, qualified CPA;

e. Any other actions authorized under law E. Failure to comply with Commissioner requests or to remediate deficiencies identified may result in administrative or civil enforcement action pursuant to Article 110 of Title 11, C.R.S.

6 CODE OF COLORADO REGULATIONS 3 CCR 701-7 Division of Banking Editor’s Notes History Rules MO3, MO8 emer. rules eff. 07/01/2010.

Rule MO8 emer. rule eff. 09/01/2010.

Rule MO3 eff. 10/15/2010.

Rule MO8 eff. 12/15/2010.

Rules MO2 E, MO3 A emer. rules eff. 04/02/2020; expired 07/29/2020. Rule MO2 E eff. 04/14/2022.

Entire rule eff. 10/15/2022.

Rule MO3 C eff. 04/14/2025.

Rule MO0.5 emer. rule eff. 08/06/2025.

Rule MO1 emer. rule eff. 08/06/2025.

Rule MO2 emer. rule eff. 08/06/2025.

Rule MO3 emer. rule eff. 08/06/2025.

Rule MO4 repealed emer. rule eff. 08/06/2025.

Rule MO5 emer. rule eff. 08/06/2025.

Entire rule emer. rule eff 01/15/2026.

Entire rule eff. 03/17/2026.

Rule MO9 eff. 06/14/2026.

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