| Date: | 11/19/2024 |
|---|---|
| Organization: | Division of Banks |
| Location: | Boston, Massachusetts |
November 19, 2024
Ashley Donohue
Associate General Counsel
Chief Compliance Officer
PrimePay, LLC
1487 Dunwoody Dr.
West Chester, PA 19380
Dear Ms. Donohue:
This letter is in response to your correspondence dated September 16, 2024 on behalf of PrimePay, LLC (PrimePay) in which you request an advisory opinion that the described activities of PrimePay do not require a foreign money transmission license pursuant to M.G.L. c. 169 or a check seller license under M.G.L. c. 167F, § 4.
PrimePay is headquartered in, and maintains central operations, in West Chester, Pennsylvania, and operates throughout the United States. PrimePay is a registered money services business (MSB) with FinCEN and is a Delaware limited liability company. According to your submissions, PrimePay provides a comprehensive suite of payroll, human capital management (HCM), employee benefits administration, and compliance solutions for small to medium-sized businesses. As part of its operations, PrimePay provides three specific services to its business clients (Clients) which are the subject of its request to the Division. The three services are its Payroll Tax Services, PrimeChecks Service, and COBRA Administration Premium Payment Service, each of which is described in your correspondence, and detailed below:
- Payroll Tax Services
As part of its PrimePay Payroll Tax Services, PrimePay electronically collects payroll taxes from its Clients’ bank accounts, and deposits these funds in a PrimePay, LLC account held for the benefit of its Clients. PrimePay then remits the payroll taxes to the appropriate taxing authorities when due. Its Payroll Tax Services offering also include the filing of applicable tax returns. As noted below, these funds are not transmitted outside of the United States or its territories.
- PrimeChecks Service
As described in your submission, PrimeChecks is a service in which Clients’ employees receive their net payroll by live hard-copy checks drawn on a bank account owned by PrimePay. As part of this service, PrimePay electronically collects net payroll amounts from the bank accounts of its Clients, typically one or two days prior to the payroll date. PrimePay then deposits these amounts in a PrimePay, LLC bank account held for the benefit of its Clients, and sends physical checks issued from its bank to the Clients, dated as of the scheduled payday, for the Clients’ employees.
- COBRA Administrative Premium Payments
According to your letter, this service involves PrimePay’s collection of benefit premiums from qualified beneficiaries who have elected COBRA coverage and PrimePay’s corresponding disbursement of these funds either directly to its Client or to the Client’s insurance carriers. More specifically, your submission notes that qualified beneficiaries make payments to PrimePay by physical check, credit or debit card, or ACH. Through the use of a third party payment processor, these qualified beneficiary payments settle first into the third-party payment processor’s bank account, and then are subsequently deposited into a PrimePay affiliate account for the benefit of its Clients. Lastly, the funds are then remitted by PrimePay to either the applicable insurance carrier or the Client. As noted below, none of these COBRA payments are transmitted outside of the United States or its territories.
As noted, your correspondence confirms that PrimePay does not transmit funds outside of the United States and its territories. All of the accounts at which PrimePay holds funds on behalf of its Clients are located within the United States. Further, your submission affirms that the third-party service provider utilized for ACH transfers is located in the United States and does not transmit funds internationally. Lastly, as part of its onboarding process for its Clients, all potential clients are required to fulfill PrimePay’s anti-money laundering (AML) procedures. In addition, you have confirmed that PrimePay contracts solely with business customers in providing its payroll and related services. For the PrimeChecks Service, specifically, the Client employer would work with a PrimePay representative if there were ever to be an issue with any of the checks; PrimePay would not be in contact with any individual employee of the Client.
Massachusetts General Laws chapter 169 requires that all persons who engage or are financially interested in the business of receiving deposits of money for the purpose of transmitting the same or equivalents thereof to foreign countries obtain a foreign transmittal agency license from the Division. As confirmed by your correspondence, none of the three services described involve the transfer of money to foreign countries. Accordingly, based on the facts presented, PrimePay is not required to be licensed as a foreign transmittal agency by the Division for the activities described. Please note, however, that legislation has been filed that would overhaul the licensing and regulation of money transmission and would include domestic money transmission within the licensure requirement. PrimePay should ensure that it stays abreast of any legislative changes in this area.
As provided in Massachusetts General Laws chapter 167F and 209 CMR 45.00 et seq, a person or entity engaged in the business of selling, issuing, or registering checks or money orders is required to obtain a license from the Division. As detailed in your correspondence, PrimePay’s PrimeChecks Service consists of PrimePay receiving funds from its Clients and providing checks drawn on PrimePay’s account payable to its Clients’ employees. While the PrimeChecks Service is part of several HR-related services provided to its Clients, PrimePay is nonetheless engaged in the issuance of checks as part of its business operations. See Opinion 06-085. Based upon the broad language of the statute and the absence of any exemptions, it is the position of the Division that PrimePay is required to obtain a license pursuant to M.G.L. c. 167F, § 4 for its PrimeChecks Service.
The conclusions reached in this letter are based solely on the facts presented. Fact patterns which vary from those stated above may result in a different position statement by the Division.
Sincerely,
Barbara Keefe
Deputy Commissioner of Banks and General Counsel
O24003