Last August, I alerted readers of this blog to the Department of Financial Protection & Innovation's determination to require all existing licensees under the California Financing Law to transition to the Nationwide Multistate Licensing System. The NMLS is used by many state and territorial agencies for non-depository financial institutions to apply for, amend, renew and surrender licenses. The NMLS is operated by a limited liability company that is wholly owned by the Conference of State Bank Supervisors.
In order to transition to the NMLS, licensees must create an account with the NMLS by submitting a company account request form and paying a $100 fee (California does not impose a transition fee). After the NMLS validates the account and user names and passwords are issued, the licensee must submit a company form (MU1) and individual forms (MU2) for each natural person required to be reported to the DFPI. Importantly, an individual submitting an MU2 is not required to submit a new set of fingerprints if he or she has previously submitted a set of fingerprints to the DFPI for a criminal background check. The licensee is also required to post an electronic surety bond. In order to submit an electronic bond, the licensee must grant authority to the bond issuer in the NMLS. The surety may then issue the bond. This sounds fairly straightforward but the appears less so in the is workflow diagram.
Many current licensees (and there are several thousand) have struggled with meeting the DFPI's year-end deadline. Fortunately, the DFPI recently announced that it has extended the deadline for CFL licensees to transition onto NMLS until March 15, 2022.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.