2023 Indiana Code › Title 28. Financial Institutions › Article 8. Financial Services › Chapter 4.1. Money Transmission Modernization Act › 28-8-4.1-1004. Enumeration of Permissible Investments; Letter of Credit Naming Department as Beneficiary; Enumeration of Permissible Investments Subject to Limitations

Effective 1-1-2024.
Sec. 1004. (a) The following investments are permissible under section 1003 of this chapter:
(1) Cash (including demand deposits, savings deposits, and funds in such accounts held, for the benefit of the licensee's customers, in a federally insured depository financial institution) and cash equivalents, including Automated Clearing House (ACH) items in transit to the licensee and ACH items or international wires in transit to a payee, cash in transit via armored car, cash in smart safes, cash at licensee owned locations, debit card or credit card funded transmission receivables owed by any bank, or money market mutual funds rated "AAA" by S&P Global, or the equivalent from any eligible rating service.
(2) Certificates of deposit or senior debt obligations of an insured depository institution (as defined in Section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813) or as defined under the federal Credit Union Act (12 U.S.C. 1781)).
(3) An obligation of the United States (or of a commission, agency, or instrumentality of the United States), an obligation that is guaranteed fully as to principal and interest by the United States, or an obligation of a state (or of a governmental subdivision, agency, or instrumentality of a state).
(4) The full drawable amount of an irrevocable standby letter of credit that names the department as the stated beneficiary and that stipulates that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds, up to the letter of credit amount, subject to the following:
(A) The letter of credit must:
(i) be issued by a person that is a federally insured depository financial institution, a foreign bank authorized under federal law to maintain a federal agency or federal branch office in a state or states, or a foreign bank authorized under state law to maintain a branch in a state, and that bears an eligible rating or whose parent company bears an eligible rating, and that is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks, credit unions, and trust companies;
(ii) be irrevocable and unconditional and indicate that it is not subject to any condition or qualifications outside of the letter of credit;
(iii) not contain reference to any other agreements, documents, or entities, or otherwise provide for any security interest in the licensee; and
(iv) contain an issue date and expiration date, and expressly provide for automatic extension, without a written amendment, for an additional period of one (1) year from the current or each future expiration date, unless the issuer of the letter of credit notifies the director in writing by certified or registered mail or courier mail or other receipted means, at least sixty (60) days before any expiration date, that the irrevocable letter of credit will not be extended.
(B) In the event of any notice of expiration or nonextension of a letter of credit described in clause (A)(iv), the licensee must demonstrate to the satisfaction of the department, at least fifteen (15) days before the expiration, that the licensee maintains and will maintain permissible investments in accordance with this subsection upon the expiration of the letter of credit. If the licensee is not able to do so, the department may draw on the letter of credit in an amount up to the amount necessary to meet the licensee's requirements to maintain permissible investments in accordance with this subsection. Any such draw shall be offset against the licensee's outstanding money transmission obligations. The drawn funds shall be held in trust by the department or the department's designated agent, to the extent authorized by law, as agent for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations.
(C) The letter of credit must provide that the issuer of the letter of credit will honor, at sight, the beneficiary's presentation, to the issuer, of the original letter of credit, including any amendments. The presentation under this clause must be made not later than the expiration date of the letter of credit and must be accompanied by a written statement from the beneficiary stating that any of the following events has occurred, as applicable:
(i) The filing of a petition by or against the licensee under the federal Bankruptcy Code (11 U.S.C. 101-110) for bankruptcy or reorganization.
(ii) The filing of a petition by or against the licensee for receivership, or the commencement of any other judicial or administrative proceeding for its dissolution or reorganization.
(iii) The seizure of assets of the licensee by a state pursuant to an emergency order issued in accordance with applicable law, on the basis of an action, violation, or condition that has caused or is likely to cause the insolvency of the licensee.
(iv) The beneficiary has received notice of expiration or nonextension of a letter of credit, and the licensee failed to demonstrate to the satisfaction of the beneficiary that the licensee will maintain permissible investments in accordance with this subsection upon the expiration or nonextension of the letter of credit.
The letter of credit must stipulate that the beneficiary may obtain funds, up to the letter of credit amount, within seven (7) days of presentment of the original letter of credit, including any amendments, and the statement under this clause.
(D) The director may designate an agent to serve on the department's behalf as beneficiary to a letter of credit so long as the agent and letter of credit meet requirements established by the department. The director's agent may serve as agent for multiple licensing authorities for a single irrevocable letter of credit if the proceeds of the drawable amount for the purposes of this subdivision are assigned to the department.
(E) The department may participate in multistate processes designed to facilitate the issuance and administration of letters of credit, including services provided by the NMLS and the State Regulatory Registry, LLC.
(5) The amount of the surety bond required under section 1002 of this chapter that exceeds the licensee's average daily money transmission liability in Indiana.
(b) Unless permitted by the department by rule or by order to exceed the limit as set forth in this subsection, the following investments are permissible under this section to the extent specified:
(1) Receivables that are payable to a licensee from its authorized delegates in the ordinary course of business that are less than seven (7) days of age, are permissible in an amount not to exceed fifty percent (50%) of the aggregate value of the licensee's total permissible investments.
(2) Of the receivables permissible under subdivision (1), receivables that are payable to a licensee from a single authorized delegate in the ordinary course of business may not exceed ten percent (10%) of the aggregate value of the licensee's total permissible investments.
(3) The following investments are permissible up to twenty percent (20%) per category, and combined up to fifty percent (50%), of the aggregate value of the licensee's total permissible investments:
(A) A short term (up to six (6) months) investment bearing an eligible rating.
(B) Commercial paper bearing an eligible rating.
(C) A bill, note, bond, or debenture bearing an eligible rating.
(D) A United States tri party repurchase agreement collateralized at least one hundred percent (100%) with:
(i) United States government or agency securities;
(ii) municipal bonds; or
(iii) other securities bearing an eligible rating.
(E) Money market mutual funds rated less than "AAA" and at least "A-" by S&P Global, or the equivalent from any other eligible rating service.
(F) A mutual fund or other investment fund composed solely and exclusively of one (1) or more permissible investments listed in subsection (a)(1) through (a)(3).
(4) Cash (including demand deposits, savings deposits, and funds in such accounts held for the benefit of the licensee's customers) at foreign depository institutions are permissible up to ten percent (10%) of the aggregate value of the licensee's total permissible investments if the licensee has received a satisfactory rating in its most recent examination and the foreign depository institution:
(A) has an eligible rating;
(B) is registered under the Foreign Account Tax Compliance Act;
(C) is not located in any country subject to sanctions from the federal Office of Foreign Assets Control; and
(D) is not located in a high risk or noncooperative jurisdiction as designated by the Financial Action Task Force.
As added by P.L.198-2023, SEC.4.