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Exemption from Money Transmitter Licensure for Certain Payroll Processors

June 29, 2026

During its 2026 session, Maryland’s General Assembly passed House Bill 118. The bill was signed into law by Governor Wes Moore and takes effect October 1, 2026.

The new law excludes payroll processors from the definition of money transmitter under Md. Code Ann., Financial Institutions Article §12-401, if certain conditions are met. Specifically:

  • There must be a written agreement directing the payroll processor to provide services on behalf of the employer;
  • The employer holds the processor out to employees as providing payroll services on the employer’s behalf; and
  • The employer’s obligation to pay employees is not extinguished if the processor fails to deliver funds to employees.

If the above conditions are met, and the processor does not provide any other type of money transmission service, the processor need not hold a Maryland money transmitter license. Processors who are currently licensed as money transmitters but will be exempt as of October 1 may surrender the license on or after October 1 or may simply allow the license to expire on December 31, 2026.

Contact

For any questions regarding this advisory, please contact Assistant Commissioner Clifford Charland, by phone at 410-230-6167 or by email at [email protected].