Senators Lankford, Feinstein Introduce Bill to Make Financial Service Provider Licensing More Efficient

“I am proud to sponsor this commonsense bipartisan fix that will leverage existing resources to help state regulators expedite background checks for financial services providers,” said Lankford. “By providing the FBI the explicit authority to process criminal background checks for more financial services providers through the Nationwide Mortgage Licensing System, potential employees in some state-regulated industries will be able to get to work quicker, which will create efficiencies that reduce the regulatory burdens for both licensees and state regulators.”

“Ensuring financial service providers are subject to oversight and background checks is a vital role each state plays, but the process can be made much more efficient,” said Feinstein. “This bill would reduce the duplicative background check requests going to the FBI for the same person and is an all-around commonsense fix.”

In addition to Feinstein and Lankford, the legislation is cosponsored by Senators Patrick Leahy (D-VT), Tom Cotton (R-AR), Jeff Merkley (D-OR), Mike Crapo (R-ID), and Shelley Moore Capito (R-WV).

In 2008, President George Bush signed into law the SAFE Mortgage Licensing Act, a bill authored by Senator Feinstein that created the Nationwide Mortgage Licensing System (NMLS), a central entity that all states can utilize to license mortgage loan originators.

Today, states have expanded the use of NMLS to licensing additional financial service providers. However, the FBI is only authorized to process background checks through the NMLS platform for mortgage loan originators. The State Licensing Efficiency Act of 2015 clarifies that the FBI is authorized to process criminal background checks for other financial service providers.

With this change, financial service providers could request only one federal background check through NMLS, instead of for each state where they seek a license, as required by current law.