Explanation of Terms

An account is the vehicle through which a user accesses their record in the System.

The entity applying or amending information on this form. The only instance in which the applicant is an individual is in the case of a sole proprietorship or applying for licensure view the Individual Licensing Form (MU4).

A financial statement that has been audited and represents all components of a financial statement including: balance sheet, cash flow statement, and income statement.

An entity designated by a licensee to provide money services on behalf of the licensee. This may include company owned branch locations. This relationship is often formalized through an agreement/contract between the licensee and agent.

A generic, non-legal definition of a financial services activity that reasonably describes the activity. No activity can be covered by more than one definition.

Being accused of a crime in a formal complaint, information, or indictment (or equivalent formal charge).

Any business activity primarily engaged in for purposes other than personal, family or household.

Audited financial statements of a group (parent and all its subsidiaries) presented as those of a single entity.

Audited or unaudited financial statements for a subsidiary as included in the parent company’s consolidated financial statement.

The power, directly or indirectly, to direct the management or policies of a company, whether through ownership of securities, by contract, or otherwise. Any person that

• (i) is a general partner or executive officer, including Chief Executive Officer, Chief Financial Officer, Chief Operations Officer, Chief Legal Officer, Chief Credit Officer, Chief Compliance Officer, director, and individuals occupying similar positions or performing similar functions;
• (ii) directly or indirectly has the right to vote 10% or more of a class of a voting security or has the power to sell or direct the sale of 10% or more of a class of voting securities;
• (iii) in the case of an LLC, Managing Member; or
• (iv) in the case of a partnership, has the right to receive upon dissolution, or has contributed, 10% or more of the capital, is presumed to control that company.

A partnership, corporation, trust, LLC, or other organization that directly or indirectly controls, or is controlled by, the applicant.

This includes companies that are “up or down the ownership ladder.” In effect, this requires applicants to only disclose for relationships that go up (parent and grandparent) or those that go down (subsidiary) but not for those relationships that go sideways (brother and sister).

An applicant or licensee must disclose for companies that “go up” the ownership “ladder” until reaching the last individual owner, a publicly-traded entity, or a bank or bank holding company regulated by a Federal banking regulator, such as the Federal Reserve, the Office of the Comptroller of the Currency (OCC), the Consumer Financial Protection Bureau (CFPB) the Federal Deposit Insurance Company (FDIC), or the National Credit Union Association (NCUA). No barrier going down the “ladder.”

An individual (natural person) named that directly or indirectly exercises control over the applicant(see definition of control)

• An individual account associated with a record that has not been accessed by the individual user within 425 days.
• A company account administrator or organization user account that has not been accessed for 425 days
• An institution account administrator account that has not been accessed for 90 days
• An institution organizational user account where the user has CHRI access that has not been accessed for 90 days
• An institution organizational user account where the user has no CHRI access that has not been accessed for 425 days
  • If a user account is disabled, the System will prompt the user to provide identifying information before access to the account is granted.
  • Company accounts can be disabled if the company has not logged in to the account for 120 days or if fraud or suspicious activity on the account is detected.

Company accounts do not go dormant.

An individual account associated with a record that contains no data such as testing and education results, regulatory actions or submitted licensure applications on the record.

Includes being subject to a mandatory injunction, prohibitory injunction, preliminary injunction, or a temporary restraining order.

A company, branch, or an individual with a record in the system.

For states that do not differentiate between a felony and a misdemeanor, a felony is an offense punishable by a sentence of at least one year imprisonment and/or a fine of at least $1,000.The term also includes a general court martial. If your state already differentiates, use your state’s definition and label.

An individual on probation would still be required to disclose. Consult state licensing requirements to determine whether an individual on probation for a felony is eligible for licensure in your state.

The process by which a company or individual completes and submits the appropriate form—such as the Company form (MU1), Individual form (MU2 or MU4), or Branch form (MU3)—to apply for, transition, or surrender a license, or to update information in their record. The term may also encompass the submission of financial statements or call reports within the System.

Pertaining to securities, commodities, banking, insurance, consumer lending, consumer financial product(s) or service(s), money services businesses, consumer debt management or real estate (including, but not limited to; acting as or being associated with a bank or savings association, credit union, Farm Credit System institution, mortgage lender, mortgage broker, real estate salesperson or agent, appraiser, closing agent, title company, escrow agent) payday lender, money transmitter, check casher, pawnbroker, collection agent, debt management company or title lender.

The generic reference to a financial statement, either audited or unaudited. The financial statement may contain one or more component: balance sheet, cash- flow statement, statement of income, etc.

The type of financial statement required by a state regarding one of the following designations (shown in highest to lowest ranking stringency as they appear in the system):

• Audited
• Unaudited (reviewed)
• Unaudited (compiled)
• Unaudited

The period end date that corresponds to the Financial Statement Filing. This date should correspond to the classification of the financial statement and the Fiscal Year End of the Company.

Represents the period to which the Financial Statement Filing pertains relative to the Fiscal Year (e.g. annual, quarterly or year-to-date). The Period Type qualifies the Financial Statement Filing in conjunction with the Fiscal Year.

Any 12-month period a company uses for accounting purposes.

The last day of a 12-month accounting period.

Includes (1) a financial services authority of a foreign country; (2) other governmental body empowered by a foreign government to administer or enforce its laws relating to the regulation of financial services or financial services related activities; and (3) a foreign membership organization, a function of which is to regulate the participation of its members in financial services activities listed above.

“Settlement” often falls under the “included” category like consent decrees and final actions. However,in jurisdictions that use “settlement” to be synonymous with “agreement” such settlements would fall under the “not included” batch with other agreements. One possibility that may be relevant in determining where a “settlement” fits in your jurisdiction is to the determination of whether it is a public record or not. In this analysis, if it is a public record then it should be included and if it is not a public record, it should not be included.

In connection with the Disclosure Questions, the term involved means, doing an act or omission or aiding, abetting, counseling, commanding, inducing, conspiring with, or failing to reasonably supervise another in doing an act or omission.

A state, the District of Columbia, the Commonwealth of Puerto Rico, or any subdivision or regulatory body thereof.

Numeric values of Assets, Liabilities, and Owners’ Equity to be entered into the system by the company in conjunction with submitting a Financial Statement filing that is classified as an Annual / Initial statement.

Created by a regulator to denote a deficiency in a filing or a jurisdictional requirement. A license item may be generated by the System to enforce System-set requirements.

For states that do not differentiate between a felony and a misdemeanor, a misdemeanor is an offense punishable by a sentence of less than one year imprisonment and/or a fine of less than $1,000. The term also includes a special court martial. If your state already differentiates, use your state’s definition and label. (Also see felony.)

Company Form (MU1) Disclosure question (B)(1) is limited to “a misdemeanor involving: financial services or financial services related or any fraud, false statements or omissions, theft or any wrongful taking of property, bribery, perjury, forgery, counterfeiting, extortion, or a conspiracy to commit any of these offenses

For purposes of disclosure questions in NMLS omit irrelevant misdemeanors, including, but not limited to, traffic violations, non-fraud related violations, etc.

The amount by which assets exceed liabilities calculated according to Generally Accepted Accounting Principles (GAAP).

A written directive issued pursuant to statutory authority and procedures, including orders of denial, suspension, or revocation; does not include special stipulations, undertakings or agreements relating to payments, limitations on activity, or other restrictions unless they are included in an order.

Orders include temporary and permanent Cease and Desist Orders.

Orders that must be disclosed are limited in Disclosure Question (C)(4) to orders directed to applicant or control affiliate. See definitions of control affiliate to understand the extent of required disclosures in this regard.

An individual, partnership, corporation, trust, LLC or other organization.

Includes a formal administrative or civil action initiated by a governmental agency, self-regulatory organization, or a foreign financial regulatory authority; a felony criminal indictment or information (or equivalent formal charge); or a misdemeanor criminal information (or equivalent formal charge). The term does not include other civil litigation, investigations, or arrests or similar charges affected in the absence of a formal criminal indictment or information (or equivalent formal charge).

A person that must meet certain requirements and is responsible for the actions of the company. Different terms are used in different states, such as Qualified Person in Charge or Managing Principal. The individual may be the branch manager in some cases if they meet the state’s requirements.

Each company, branch and individual have a unique record in the System. A record is completed by submitting the information shown on the Company Form (MU1), Individual Form (MU2), Branch Form (MU3), or Individual Licensing Form (MU4), and any accompanying documents. A record may include supervisory information, including documents or other items collected during an examination, investigation or consumer complaint handling.

A company’s indication that the individual being employed by the company or having a contract to work for the company. It represents the relationship between the company and the individual and does not require approval by any regulator.

The submission of a license request by an existing licensee, whose license is being managed outside NMLS, is being transferred to NMLS by the state regulator.

The same as defined in the federal Real Estate Settlement Procedures Act (RESPA) 12 U.S.C Sec. 2601 et seq., Regulation X, 24 C.F.R Part 3500 et seq including:

• Title searches
• Title examinations
• The provision of title certificates
• Title insurance
• Services rendered by an attorney
• Preparation of documents
• Property surveys
• The rendering of credit reports or appraisals
• Pest and fungus inspections
  • Services rendered by a real estate agent or broker
  • The origination of a federally related mortgage loan (including, but not limited to, the taking of loan applications, loan processing, and the underwriting and funding of loans)
  • The handling of the processing and closing or settlement.

A company’s indication that the individual will conduct business under a specific license / registration for the company. Only a company user may request sponsorship of the individual’s license(s) and the company must already have an established relationship with the individual in the system. License sponsorship must be approved by the regulator.

A fiduciary arrangement whereby funds or assets are held for the benefit of another party.

One or more components of a financial statement (balance sheet, cash flow statement, income statement) that has not been audited.

An unaudited financial statement for which the financial data has been assembled by a CPA or equivalent but not reviewed for accuracy.

An unaudited financial statement for which the financial data has been reviewed for accuracy by a CPA or equivalent.

A filing that is in a pending status because an individual or company user has not submitted the application or new information to a state agency through the System.