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HB 5550

Financial institutions: other; consumer financial services act; revise internal references related to money transmission services. Amends sec. 10g of 1988 PA 161 (MCL 487.2060g). TIE BAR WITH: HB 5544'26

2025-2026 Regular Session Introduced by Brenda Carter and 5 co-sponsors

Michigan can suspend or prohibit individuals tied to money-transmitter licensees for fraud or money laundering, with expedited actions in emergencies.

REFERRED TO COMMITTEE ON FINANCE, INSURANCE, AND CONSUMER PROTECTION
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Bill Summary · HB 5550

Summary of HB 5550 (Michigan, 2025-2026)

  • Jurisdiction: Michigan
  • Subject: Amends the Consumer Financial Services Act to revise internal references related to money transmission services
  • Tie Bar: HB 5544 (Money Transmission Modernization Act)

Note: This summary focuses on the substantive provisions and potential impact of HB 5550 as drafted, in the context of the related money transmission reform package.

1) Purpose and intent

  • HB 5550 amends section 10g of the Consumer Financial Services Act to strengthen the state’s framework for prohibiting employment or control by individuals deemed to be involved in fraud or money laundering, and to streamline enforcement and due-process procedures.
  • The amendment formalizes criteria and procedures for suspending, prohibiting, or terminating employment or control relationships with licensees or registrants when fraud or money laundering is alleged or proven.
  • It ties into a broader package (HBs 5544–5550) aimed at modernizing money transmission regulation, consistent with multistate licensing and supervision efforts.

2) Key provisions and changes

  • Prohibition notices and hearings

    • The commissioner may issue a written notice of intention to prohibit a person from being employed by, acting as an agent of, or controlling a licensee, if fraud or money laundering is found.
    • The notice must state facts supporting the prohibition and normally set a hearing within 60 days; failure to appear is deemed consent to an order.
    • Following a hearing, the commissioner may issue a suspension or prohibition order.

  • Effective date and service

    • Orders are effective upon service and must be served on both the individual and the licensee where the individual is employed, etc.
    • Orders remain in effect unless stayed, modified, terminated, or set aside.

  • Duration and termination

    • An order can be terminated by the individual after 5 years, upon petition.

  • Imminent-threat authority

    • If the commissioner views an imminent financial risk to certain borrowers or money transmission customers, the commissioner can issue a suspension order immediately, with expedited review (hearing 5–20 days after notice, unless otherwise agreed).

  • Convictions and disciplinary actions

    • Convictions for fraud, money laundering, or related offenses can lead to suspension or prohibition orders.
    • Similarly, an order can be issued after a criminal conviction for fraud, dishonesty, etc., with termination possible after 5 years.

  • Communications and notification

    • The commissioner must mail copies of notices or orders to the relevant licensee.

  • Definitions (Section 10g(10))

    • Fraud: broad definition including actionable, actual, constructive, criminal fraud, etc.
    • Money laundering: conduct that conceals or disguises illicit income and makes it appear legitimate.

  • Effective date and conditional effectiveness

    • The act takes effect January 1, 2026, and only if HB 5544 becomes law.

3) Who/what is affected

  • Individuals:

    • Persons found or alleged to have engaged in fraud or money laundering, who may be prohibited from employment with a licensee, acting as an agent, or controlling a licensee.
    • Key individuals, control persons, and others subject to internal controls and licensing processes.

  • Licensees and registrants:

    • Michigan money transmission licensees and related financial entities governed by the Consumer Financial Services Act.
    • Employers, agents, and control persons affiliated with licensees.

  • Regulatory agency:

    • Michigan Department of Insurance and Financial Services (DIFS) as the enforcing authority, with authority to issue notices, hearings, orders, and to maintain records.

4) Procedural and timeline aspects

  • Hearings

    • Standard hearing within 60 days of the notice, with deemed consent if the party does not appear (subject to subsection 7 exceptions for imminent-threat actions).

  • Immediate suspensions

    • In cases of imminent threat, the commissioner may issue an immediate suspension, with a short hearing window (5–20 days after notice) unless the parties agree otherwise.

  • Duration

    • Ordinary orders remain in effect until stayed/modified/terminated; termination options exist after five years.

  • Service and notice

    • Notices and orders must be mailed to the licensee and affected individuals.

  • Tie-in with multistate licensing

    • The broader package (HBs 5544–5550) emphasizes alignment with the Nationwide Multistate Licensing System and Registry (NMLS) and multistate coordination.

  • Effective date condition

    • HB 5550’s amendment becomes effective only if HB 5544 is enacted into law (tie-bar condition).

5) Practical impact and considerations

  • Enhanced enforcement tools:

    • Michigan regulators would have clearer authority to suspend or prohibit individuals tied to licensees who are suspected or convicted of fraud or money laundering, including rapid action during imminent-threat scenarios.

  • Due process:

    • The package preserves hearing rights and formal notice requirements, while enabling expedited action in emergencies.

  • Compliance and reporting:

    • While HB 5550 itself focuses on prohibition orders, the accompanying bills (5544–5550) collectively expand licensing, reporting, and financial-resilience requirements for money transmitters (tangible net worth, bonds, permissible investments, audits, and multistate coordination).

  • Financial integrity:

    • The underlying intent is to bolster public confidence in Michigan’s money transmission market by ensuring that individuals in key positions meet stringent character and fitness standards and that licensees maintain robust risk controls.

If you’d like, I can provide a side-by-side comparison with existing law or a plain-language Q&A for stakeholders (licensees, applicants, and consumers).

Compiled from official sources — confirm details with the bill’s official record.

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