Banking and Finance Law Daily CSBS requests input on proposed standardized NMLS approach
Friday, April 16, 2021

CSBS requests input on proposed standardized NMLS approach

By Colleen M. Svelnis, J.D.

The proposed requirements would drive a standardized approach to the licensing process in the modernized NMLS.

The Conference of State Bank Supervisors (CSBS) has issued a proposal to include requirements for the licensing process intended to create a standardized approach for the modernized Nationwide Multistate Licensing System (NMLS). CSBS has requested input from NMLS industry users on a proposal that hopes to automate and strengthen common standards across state lines by implementing the CSBS model law.

CSBS President and CEO John W. Ryan said in a statement that "Establishing a standardized licensing approach based on uniform requirements across all state nonbank financial regulatory agencies is an essential step towards building a modernized NMLS—one of CSBS’s Networked Supervision priorities. The new NMLS will be more automated, data driven, and more user friendly for applicants, licensees and regulators." CSBS invites comments and feedback on the Networked Licensing Model, Licensing Requirements Framework, and the Core Requirements Proposal. Public comments will be accepted until May 31, 2021. All comments will be reviewed by the NMLS Modernization Steering Committee. The Steering Committee will consult with NMLS Policy Committee during the comment evaluation period. A final recommendation, based on comments received, will be sent by the NMLS Modernization Steering Committee and to the NMLS Policy Committee for evaluation and approval/rejection.

Currently NMLS is used to manage licensing for the mortgage, debt and consumer finance industries. Both state and federal use of NMLS for mortgage loan originators was mandated by the SAFE Act following the 2008 financial crisis. CSBS is looking to develop a system that would anticipate and accommodate the evolving needs of the state system of financial regulation. According to the proposal, the goal is to build a new system to: streamline the license application process; create an optimized user experience; empower state authority through data-driven solutions; and promote efficient operations and networked supervision among regulators.

The proposal includes the following:

  • a three-part licensing framework that distinguishes requirements as core, business-specific and license-specific, with the goal of creating uniform license requirements and reducing variations among state agencies as much as possible;
  • a listing and description of each core requirement as it applies to companies and individual licensees; and
  • an overview of the identity verification process users will complete when creating an account in the new NMLS.

Companies: Conference of State Bank Supervisors

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