Square – the mobile payments company – was the subject of a cease and desist order from the Illinois Department of Financial & Professional Regulation.
The order means that the company has to stop “offering or providing money transmission services” in Illinois. The company also has to show documents, records and other statements for Illinois consumers, related to the transmission of money made to or from Illinois consumers, and independent reviews of Square’s anti-money laundering program. Also, Square is liable to the state for $1,000 a violation.
TechCrunch says the order relates to an Illinois law known as the Transmitters of Money Act.
“Transmitting money’ means the transmission of money by any means, including transmissions to or from locations within the United States or to and from locations outside of the United States by payment instrument, facsimile or electronic transfer, or otherwise, and includes bill payment services,” the order explained.
“No person may engage in this State in the business of selling or issuing payment instruments, transmitting money, or exchanging, for compensation, payment instruments or money of the United States government or a foreign government to or from money of another government without first obtaining a license under this Act.”
Therefore, it appears that Square needs a license to transmit payments in the state, TechCrunch said, but it is unlikely Illinois operations will be shut down for Square. Violations of the act represent a Class 3 felony under state law.
Meanwhile, Square said in a statement, “We’ve been in close contact with the Illinois Division of Financial Institutions for several months and are addressing their concerns.”
One blogger, Thomas Noyes, who is the former head of Citi global channels said, “I completely disagree with IL regulators.” He was believed to be the first person to report on the order – based on his tweets.
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