# OCC Interpretive Letter No. 1167: Letter concludes that subject to the limits established by 12 U.S.C. § 92a and 12 C.F.R. part 9, a national bank may exercise fiduciary powers in any state without obtaining a state money transmitter license (05/20/2020)

> Federal · Agency guidance · In force

URL: https://www.frixlaw.com/law-library/statutes/OCC_INT1167

## Section

- **Citation:** OCC Interpretive Letter No. 1167
- **Heading:** Letter concludes that subject to the limits established by 12 U.S.C. § 92a and 12 C.F.R. part 9, a national bank may exercise fiduciary powers in any state without obtaining a state money transmitter license (05/20/2020)
- **Jurisdiction:** Federal
- **Kind:** Agency guidance
- **Status:** In force
- **Text as of:** August 14, 2026
- **Source:** Compiled text
- **Location:** OCC Interpretive Letters / Letter concludes that subject to the limits established by 12 U.S.C. § 92a and 12 C.F.R. part 9, a national bank may exercise fiduciary powers in any state without obtaining a state money transmitter license (05/20/2020)

## Text

May 20, 2020 Interpretive Letter #1167
June 2020
Jeffrey L. Hare
DLA Piper LLP (US)
500 Eighth Street, NW
Washington, DC 20004
Subject: Fiduciary Powers of ADP Trust Company, National Association, and State Money
Transmitter Licensing Requirements
Dear Mr. Hare:
I am writing in response to your letter dated April 15, 2020 (Request Letter), on behalf of ADP
Trust Company, National Association (Bank). Your Request Letter asked for confirmation that
(1) the Bank may conduct federally authorized fiduciary activities in any state under authority of
the National Bank Act (NBA), notwithstanding the fact that certain aspects of these activities
may constitute regulated money transmission under state money transmitter laws and the Bank is
not licensed as a money transmitter; (2) state money transmitter licensing requirements are
preempted in their application to the Bank; and (3) the Bank is not required to satisfy any
specific exemptions included within a state’s money transmitter law.

As discussed below, the Bank’s fiduciary powers derive from and are governed by the NBA and
the Office of the Comptroller of the Currency’s (OCC) regulations. Accordingly, the OCC
concludes that (1) the Bank may conduct federally authorized fiduciary activities in any state,
even if aspects of its activities fall within the state’s definition of money transmission and the
Bank is not licensed by the state as a money transmitter; (2) any state law purporting to impose
licensing requirements on the Bank’s exercise of its fiduciary powers is preempted; and (3) the
Bank does not need to satisfy a state licensing exemption to conduct its activities. Therefore,
subject to the limits established by 12 U.S.C. § 92a and 12 C.F.R. part 9, the Bank may exercise
fiduciary powers in any state without obtaining a state money transmitter license.
I.
Background
Automatic Data Processing, Inc
the Bank’s exercise of its fiduciary powers is preempted; and (3) the
Bank does not need to satisfy a state licensing exemption to conduct its activities. Therefore,
subject to the limits established by 12 U.S.C. § 92a and 12 C.F.R. part 9, the Bank may exercise
fiduciary powers in any state without obtaining a state money transmitter license.
I.
Background
Automatic Data Processing, Inc. (Company) provides a variety of human capital management
services to client companies, including impounding client funds and subsequently transferring
the funds to satisfy clients’ compensation, tax, and related payment obligations. Prior to the
Company’s restructuring of certain operations, ADP Payroll Services, Inc. (Subsidiary), a wholly
owned Company subsidiary licensed to engage in money transmission in several states,
undertook activities associated with impoundment and distribution of the Company’s clients’
funds.

2
In 2017, the Company decided to use a structure involving a trust to conduct the impoundment
and distribution of the Company’s clients’ funds. According to the Request Letter, this new trust
structure was designed to allow the Company to offer clients the protection associated with
maintaining their funds in a trust with a federally regulated trustee, to carry out the impoundment
and distribution of client funds under a more rational and efficient regulatory framework, and to
strengthen protection of impounded client funds from creditors of the Company and its clients.
To implement this restructuring, the Company formed ADP Client Trust (Client Trust) under
Delaware law and appointed a third-party federal savings association as trustee. The Company
transferred ownership of its Subsidiary’s accounts holding client funds to the Client Trust in
February 2018, at which time the Subsidiary ceased money transmission activities
ors of the Company and its clients.
To implement this restructuring, the Company formed ADP Client Trust (Client Trust) under
Delaware law and appointed a third-party federal savings association as trustee. The Company
transferred ownership of its Subsidiary’s accounts holding client funds to the Client Trust in
February 2018, at which time the Subsidiary ceased money transmission activities.

Subsequently, the Company decided to form a national bank as a wholly owned subsidiary to
serve as trustee for the Client Trust and, on September 25, 2018, applied to the OCC to charter
the Bank as an uninsured national trust bank. Pursuant to 12 U.S.C. §§ 21-27 and 92a, the OCC
approved the application.1 After the Bank began operations in September 2019, it replaced the
third-party federal savings association as the trustee for the Client Trust. As described in your
Request Letter, in this capacity, the Bank
• receives and holds title to client funds as trust property of the Client Trust;
• manages the Client Trust, including by directing the distribution of trust property to
satisfy obligations of the Company’s clients;
• invests certain trust property according to the investment guidelines and terms of the trust
agreement;
• commits to exercise good faith in the performance of its duties and to act in the best
interest of the Client Trust; and
• commits to satisfy the primary objectives of safety of principal, liquidity, and
diversification in its performance on behalf of the Client Trust.
The Subsidiary has surrendered or is in the process of surrendering its money transmitter
licenses. However, you have informed us that certain states are asserting the Bank must obtain a
money transmitter license to carry out the activities the Subsidiary previously carried out. The
states argue that the Bank may only avoid the licensing requirements if it satisfies a state law
exemption to the licensing requirement
dered or is in the process of surrendering its money transmitter
licenses. However, you have informed us that certain states are asserting the Bank must obtain a
money transmitter license to carry out the activities the Subsidiary previously carried out. The
states argue that the Bank may only avoid the licensing requirements if it satisfies a state law
exemption to the licensing requirement. According to the Request Letter, while some state
money transmitter laws exempt banks and financial institutions generally,2 other state law
exemptions are narrower and would not apply to the Bank.3

1 OCC Conditional Approval 1210 (Feb. 8, 2019) (preliminary conditional approval); OCC Conditional Approval
1227 (Aug. 19, 2019) (final conditional approval).
2 See, e.g., Md. Code, Financial Institutions § 12-402(a) (exempting state- and federally chartered banks, credit
unions, and savings and loan associations).
3 See, e.g., Conn. Gen. Stat. § 36a-609 (generally exempting “[a]ny federally insured federal bank, out-of-state bank,
Connecticut bank, Connecticut credit union, federal credit union or out-of-state credit union”); Tex. Fin. Code §

3
II.
Legal Analysis

A. Fiduciary Powers of National Banks
National banks’ fiduciary powers derive from and are governed by the NBA and OCC
regulations, specifically 12 U.S.C. § 92a and 12 C.F.R. part 9.4 Twelve U.S.C. § 92a(a)
provides:
The Comptroller of the Currency shall be authorized and empowered to grant by
special permit to national banks applying therefor, when not in contravention of
State or local law, the right to act as trustee, executor, administrator, registrar of
stocks and bonds, guardian of estates, assignee, receiver, or in any other fiduciary
capacity in which State banks, trust companies, or other corporations which come
into competition with national banks are permitted to act under the laws of the
State in which the national bank is located
n contravention of
State or local law, the right to act as trustee, executor, administrator, registrar of
stocks and bonds, guardian of estates, assignee, receiver, or in any other fiduciary
capacity in which State banks, trust companies, or other corporations which come
into competition with national banks are permitted to act under the laws of the
State in which the national bank is located.
Therefore, with prior OCC approval,5 12 U.S.C. § 92a authorizes national banks to act in
the listed fiduciary capacities and any other fiduciary capacity permitted for state
institutions when acting in the capacity is not in contravention of state law. It is not in
contravention of state law for national banks to act in a fiduciary capacity if the state
permits its own institutions to act in the capacity.6 While the fiduciary capacities
available to a national bank are determined by reference to state law,7 12 U.S.C. § 92a
imposes no geographic limits on where a national bank with fiduciary powers may act in
a fiduciary capacity. Accordingly, OCC regulations expressly permit a national bank
authorized to act in a fiduciary capacity to do so in any state.8

In addition, 12 U.S.C. § 92a does not limit where a national bank may market its
fiduciary activities, where its fiduciary customers may be located, or where the property
being administered may be located. Consistent with this, the OCC’s regulations provide
that a national bank may (1) act as a fiduciary in one state and market its fiduciary
services to, and serve customers in, another state; (2) act as a fiduciary for relationships

151.003(3), (9-a) (exempting “federally insured financial institution[s] . . . organized under the laws of this state,
another state, or the United States” and “trust compan[ies] . . . organized under the laws of this state”).
4 OCC Interpretive Letter 973 (Aug
serve customers in, another state; (2) act as a fiduciary for relationships

151.003(3), (9-a) (exempting “federally insured financial institution[s] . . . organized under the laws of this state,
another state, or the United States” and “trust compan[ies] . . . organized under the laws of this state”).
4 OCC Interpretive Letter 973 (Aug. 12, 2003) (confirming that federal law is the source of a national bank’s
fiduciary powers and authority); OCC Interpretive Letter 1106 (Oct. 10, 2008) (same).
5 12 C.F.R. § 5.26 (licensing requirements for the exercise of fiduciary powers by national banks).
6 12 U.S.C. § 92a(b).
7 The state referred to in 12 U.S.C. § 92a is the state in which the bank acts in a fiduciary capacity for each fiduciary
relationship, as determined by the test established in OCC regulations. 12 C.F.R. § 9.7(d).
8 12 C.F.R. § 9.7(a).

4
that include property located in other states; and (3) establish trust offices and trust
representative offices in any state.9

When the OCC approved the application to charter the Bank, it also granted the Bank the
authority to exercise fiduciary powers.10 With respect to its relationship to the Client
Trust, the Bank acts in the fiduciary capacity of trustee in the state of Delaware.
Delaware permits state trust companies to act as trustees.11 Therefore, 12 U.S.C. § 92a
authorizes the Bank to act as a trustee of the Client Trust. Consistent with OCC
regulations, the Bank may engage nationwide in activities related to its role as trustee of
the Client Trust.
B
elationship to the Client
Trust, the Bank acts in the fiduciary capacity of trustee in the state of Delaware.
Delaware permits state trust companies to act as trustees.11 Therefore, 12 U.S.C. § 92a
authorizes the Bank to act as a trustee of the Client Trust. Consistent with OCC
regulations, the Bank may engage nationwide in activities related to its role as trustee of
the Client Trust.
B. State Money Transmitter Licensing Requirements
“[W]here Congress has not expressly conditioned the grant of ‘power’ upon a grant of state
permission,” typically “no such condition applies,” unless the federal statute includes language
indicating a congressional intent to include such a condition.12 Consistent with this principle,
OCC regulations clarify the applicability of state law to a national bank’s exercise of fiduciary
powers.13 Other than the state laws made applicable by 12 U.S.C. § 92a14 and relevant
substantive state laws that govern the fiduciary relationship,15 state laws “limiting or establishing
preconditions on the exercise of fiduciary powers are not applicable.”16 This includes state
licensing requirements.17 Those laws conflict with federal law and are preempted.

9 12 C.F.R. § 9.7(b)-(c).
10 See OCC Conditional Approval 1210; OCC Conditional Approval 1227.
11 Del. Code tit. 5, § 765.
12 Barnett Bank of Marion Cty., N.A. v. Nelson, 517 U.S. 25, 34 (1996).
13 12 C.F.R. § 9.7.
14 Twelve U.S.C. § 92a expressly makes certain state laws applicable. See, e.g., 12 U.S.C. § 92a(f). As noted
above, these laws are the laws of the state where the national bank acts in a fiduciary capacity for the fiduciary
relationship. With respect to the Bank’s relationship with the Client Trust, that state is Delaware.
15 This includes, for example, the standard of care. The parties may select the state whose laws govern the trust
instrument, or this may be determined by a choice-of-law analysis
above, these laws are the laws of the state where the national bank acts in a fiduciary capacity for the fiduciary
relationship. With respect to the Bank’s relationship with the Client Trust, that state is Delaware.
15 This includes, for example, the standard of care. The parties may select the state whose laws govern the trust
instrument, or this may be determined by a choice-of-law analysis. Fiduciary Activities of National Banks, 66 Fed.
Reg. 34,792, 34,796 (July 2, 2001) (“Section 9.7(e) does not affect the applicability of state substantive laws that
govern the fiduciary relationship, such as the standard of care to be exercised by the fiduciary . . . . A grantor is free
to designate which state laws apply . . . or to have the applicable law determined by choice-of-law rules.”). Here
again, in the case of the Bank’s relationship with the Client Trust, that state is Delaware.
16 12 C.F.R. § 9.7(e)(2).
17 Fiduciary Activities of National Banks, 66 Fed. Reg. at 34,795-96 (“Such restrictions and preconditions include,
but are not limited to, state licensing requirements.”) (citing OCC Interpretive Letter 866 (Oct. 8, 1999) and OCC
Interpretive Letter 872 (Oct. 28, 1999)).

5
As provided in the OCC’s regulations, the Bank is not required to obtain a state money
transmitter license to engage in the activities described in the Request Letter. A state’s claim
that the Bank’s activities constitute money transmission does not alter the analysis. While the
receipt and subsequent disbursement of client funds to satisfy client obligations may in some
contexts be regulated as money transmission, the Bank clearly engages in these activities in
fulfillment of its role as trustee of the Client Trust, which is consistent with the authority granted
to trustees by Delaware law.18 Thus, the Bank’s activities are well within the scope of its
federally authorized fiduciary powers. Other than the Delaware law governing the trust and
other laws made applicable pursuant to 12 U.S.C
ransmission, the Bank clearly engages in these activities in
fulfillment of its role as trustee of the Client Trust, which is consistent with the authority granted
to trustees by Delaware law.18 Thus, the Bank’s activities are well within the scope of its
federally authorized fiduciary powers. Other than the Delaware law governing the trust and
other laws made applicable pursuant to 12 U.S.C. § 92a, any state precondition or limitation on
the exercise of those powers is preempted. Because licensing requirements are preempted as
impermissible limitations or preconditions on a national bank’s exercise of fiduciary powers, the
Bank is not required to obtain a money transmitter state license or to satisfy a state law
exemption to the licensing requirement.
III.
Conclusion
Based on the foregoing analysis, we conclude that (1) a national bank may conduct federally
authorized fiduciary activities in any state, even if aspects of its activities fall within the state’s
definition of money transmission and the bank is not licensed by the state as a money transmitter;
(2) state laws purporting to impose licensing requirements on a national bank’s exercise of
fiduciary powers are preempted; and (3) satisfaction of an exemption from those requirements is
not required. Therefore, subject to the limits established by 12 U.S.C. § 92a and 12 C.F.R. part
9, the Bank may exercise fiduciary powers in any state without obtaining a state money
transmitter license. This conclusion is based on the facts and circumstances as represented in the
Request Letter. Different facts and circumstances or consideration of different laws and
regulations could result in a different conclusion.

I trust this is responsive to your inquiry.

Sincerely,

/s/

Jonathan V
exercise fiduciary powers in any state without obtaining a state money
transmitter license. This conclusion is based on the facts and circumstances as represented in the
Request Letter. Different facts and circumstances or consideration of different laws and
regulations could result in a different conclusion.

I trust this is responsive to your inquiry.

Sincerely,

/s/

Jonathan V. Gould
Senior Deputy Comptroller & Chief Counsel

18 In Delaware, a trustee may exercise the powers conferred by the terms of the trust and, except as limited by those
terms, powers conferred by Delaware law. See Del. Code tit. 12, § 3324; see also Restatement (Third) of Trusts § 3
cmt. d (2003) (“A trustee holds the trust property for the benefit of a person or persons.”).

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Source: Frix Law Library, https://www.frixlaw.com/law-library/statutes/OCC_INT1167. Check the current official text before relying on it. Not legal advice.