Key takeaways
- Section III of the NMLS MSB Call Report is the company-level permissible investments report, filed each quarter by licensees whose activities carry a permissible investment requirement.
- It is due 45 days after the end of each calendar quarter, and filed reports can be amended for up to 24 months.
- Table 1 lists assets from PI10 to PI115, Table 2 gives outstanding and average daily transmission liability, and Table 3 covers virtual currency.
- The PI105 subtotal does not apply state caps, so each licensee must test its own figures against every state's limits.
- Texas licensees also keep a separate Texas permissible investment report on file, due on the same 45-day timetable.
What are the key facts on Section III?
Section III is where state regulators see whether a licensee's permissible investments cover what it owes customers.
| Item | Position |
|---|---|
| Report | NMLS MSB Call Report, Section III Permissible Investments |
| Regulators | State regulators that have adopted the MSB Call Report, through NMLS |
| Applies to | Licensees in money transmission, payment instruments, stored value, virtual currency and similar activities |
| Deadline | 45 days after the end of each calendar quarter |
| Level | Company level, not state by state |
| Last checked | October 11, 2026, against state statutes, the CSBS enactment list and NMLS |
Who files Section III, and when?
Licensees whose activities are subject to permissible investment requirements file it every quarter.
NMLS states that Sections I, II(a), II(b) and III are due 45 days after the end of each calendar quarter, and that Section III applies only to licensees in money transmission, payment instruments, stored value, virtual currency and other relevant businesses. The report is filed once for the company, so a licensee in 40 states files one Section III, not 40. Licensees may revise a submitted quarterly report for up to 24 months. NMLS describes the report's purpose as giving regulators timely, comprehensive and uniform information on financial condition, transactional activity and compliance with state permissible investment requirements, in place of separate state reports. Our overview of the whole MSB Call Report covers the other sections.
What does Table 1 ask for?
Table 1 lists the licensee's assets by category, building to an unrestricted total.
| Line | Name | What goes in it |
|---|---|---|
| PI10 | Deposits in Domestic Banks | Cash, time, savings and demand deposits, CDs or senior debt at US federally insured institutions |
| PI20 and PI21 | Deposits in All Foreign Banks; in Stipulated Foreign Banks | All foreign bank balances, then the subset with an eligible rating, FATCA registration and no OFAC or FATF high-risk exposure |
| PI30 to PI32 | Cash on hand and in transit; card-funded receivables; AAA money market funds | Cash equivalents, card-funded transmissions owed by a bank, and AAA funds |
| PI40 | Total Cash on Hand and in Bank | PI10 + PI20 + PI30 + PI31 + PI32 |
| PI50 | Irrevocable Letter of Credit | Unconditional letters of credit from a federally insured institution |
| PI60 | Due from agents | Amounts due from receiving and paying agents, net of doubtful accounts, including prefunding to paying agents |
| PI61 to PI63 | Due from authorized delegates | Receivables under seven days old (PI61), the amount over the 10% limit (PI62) and the allowable amount, PI61 minus PI62 (PI63) |
| PI70 to PI76 | Investments rated A and above | Short-term investments, commercial paper, tri-party repos, money market funds rated below AAA, government-only mutual funds, and rated bills, notes and bonds |
| PI80 | Rated BBB and lower or non-rated | Investments below A or without a rating |
| PI90 | US Treasury and agency securities | US government, agency and fully guaranteed obligations, and state obligations |
| PI100 | Other Investments | Anything else; an explanatory note is expected above 20% of PI105 |
| PI105 | Subtotal | PI40 + PI50 + PI60 + PI70 + PI80 + PI90 + PI100, without state caps |
| PI110 and PI115 | Pledged or restricted; unrestricted total | Amounts pledged or restricted, and PI105 less PI110 |
What do Tables 2 and 3 ask for?
Table 2 gives the liabilities the assets must cover, and Table 3 adds virtual currency.
PI120 is total outstanding transmission liability: money received for transmission and not yet paid to beneficiaries. PI130 is the average daily transmission liability for the quarter; our guide to average daily money transmission liability explains the calculation. Virtual currency licensees complete PI140 to PI180: virtual currency held for customers, virtual currency held for the licensee's own account, other virtual currency investments, total coverage and outstanding virtual currency liability. NMLS instructs that each is valued in US dollars using a generally accepted quoted price in an active market, preferably a blended index.
Why does PI105 not show compliance?
Because NMLS states that the PI105 subtotal does not reflect state-imposed caps.
Regulators select categories in the NMLS Data Analytics Module and calculate their share of the whole against their own limits. A licensee therefore needs its own calculation, outside the form, that applies each state's caps: in MTMA states, delegate receivables up to 50% with 10% per delegate, rated categories up to 20% each and 50% combined, and foreign deposits up to 10%. Uniform Act states such as Michigan cap delegate receivables at 20%. Our state-by-state table of permissible investments lists the rule in each jurisdiction.
Texas adds a step. A Texas Department of Banking memo of November 13, 2023 told licensees to keep completing both the MSB Call Report and the Texas permissible investment report, due within 45 days after each quarter end, and to keep it on file for examiners rather than submit it unless asked.
What does a completed Section III look like?
The example uses one quarter-end position for a licensee with $100.00 million of outstanding transmission liability.
| Line | Amount ($m) | Note |
|---|---|---|
| PI10 | 45.00 | Operating and customer accounts at US insured banks |
| PI20 / PI21 | 4.00 / 4.00 | One foreign bank that meets every stipulated condition |
| PI40 | 49.00 | PI10 + PI20; no PI30 to PI32 balances |
| PI60 | 18.00 | Agent and delegate receivables, net of allowances |
| PI61 / PI62 / PI63 | 18.00 / 1.44 / 16.56 | Delegate A owes $12.00m; the excess over 10% of eligible investments is shown in PI62 |
| PI72 and PI76 | 12.00 and 8.00 | Commercial paper rated A-1; corporate bonds rated A |
| PI70 | 20.00 | Sum of PI71 to PI76 |
| PI90 | 20.00 | US Treasury bills |
| PI105 / PI110 / PI115 | 107.00 / 0.00 / 107.00 | Subtotal before state caps; nothing pledged |
| PI120 | 100.00 | Outstanding transmission liability at quarter end |
| PI130 | 96.40 | Average of 92 daily end-of-day balances |
PI130 is below PI120 because balances built up during the quarter: the quarter-end figure is higher than the daily average. PI115 shows $107.00 million against $100.00 million of liability, but the licensee's own MTMA calculation counts only $105.56 million, because Delegate A's receivable is capped at 10% of eligible investments. The method for PI62 should be confirmed with the licensee's states. Coverage after caps is 105.6%, and the working paper for that calculation should be kept with the filing.
Where should each figure come from?
Each line should trace to a record the licensee already keeps, so an examiner can rebuild it.
| Lines | Source record |
|---|---|
| PI10, PI20, PI21 | Bank statements and confirmations at quarter end, with the rating and FATCA evidence for each foreign bank |
| PI30 to PI32 | Cash logs, card settlement reports and fund statements |
| PI60 to PI63 | Agent and delegate settlement ledgers, aged by day, with a balance per delegate |
| PI70 to PI90 | Custody statements at market value, with the rating of each holding |
| PI110 | Pledge agreements, collateral schedules and restricted account terms |
| PI120 | The reconciled customer obligations ledger at quarter end |
| PI130 | The daily end-of-day obligation history for every day in the quarter |
| PI140 to PI180 | Wallet and custody records, priced from an active-market index at the same cut-off |
Timing matters as much as the source. Bank balances, custody statements and the obligations ledger should all be taken at the same quarter-end cut-off. A liability figure taken at midnight compared with bank balances taken at the close of business can show a gap that does not exist, or hide one that does.
How does Section III connect to the rest of the report?
Regulators compare Section III with Section I financial condition and Section II transaction data for the same quarter.
Cash and investments in Section III should be consistent with the balance sheet in Section I. Outstanding transmission liability should move in line with the volumes reported by state in Section II(b). A licensee whose transaction volume doubles while PI120 stays flat will be asked why. Because the report is shared through NMLS with every adopting state, an inconsistency is seen by all of them at once.
What are the common errors?
Most errors come from preparing the section separately from the reconciled daily records.
- Reporting investments at cost rather than market value.
- Including pledged or restricted balances without completing PI110.
- Counting delegate receivables older than seven days in PI61.
- Calculating PI130 from month-end balances instead of daily ones.
- Leaving PI100 above 20% of PI105 without an explanatory note.
- Pricing virtual currency from a single exchange rather than an active-market price.
- Liability figures that differ from the customer ledger used for reconciliation.
What should be checked before filing?
A short review catches most problems before regulators do.
- Agree PI10, PI20 and PI90 to bank and custody statements at quarter end.
- Agree PI120 to the reconciled customer obligations ledger.
- Rebuild PI130 from the daily obligation history for the whole quarter.
- Test the figures against every licensing state's caps and keep the working paper.
- Complete Table 3 if the licensee holds virtual currency for customers.
- Confirm the totals agree with Section I financial condition figures for the same date.
- File within 45 days of quarter end, and amend promptly if an error is found later.
How does Safeheld help?
Safeheld reconciles bank, custody and ledger records for each entity and currency every day and produces a prepared report pack for the NMLS MSB Call Report, which the licensee reviews and completes.
The daily history behind PI120 and PI130 is kept with every break and its resolution. See regulatory evidence and tangible net worth under the MTMA.
Frequently asked questions
What is Section III of the MSB Call Report?
The permissible investments report: a company-level schedule of the licensee's assets by category, its outstanding and average daily transmission liability and, for virtual currency licensees, its virtual currency holdings and liability.
When is the MSB Call Report permissible investments section due?
45 days after the end of each calendar quarter, with Sections I, II(a) and II(b).
Does PI105 show whether a licensee complies?
No. NMLS states that PI105 does not reflect state-imposed caps, so each licensee must apply its states' limits in its own calculation.
What goes in PI62?
The amount due from authorized delegates in excess of the 10% limit, which is removed to give the allowable amount in PI63.
How is virtual currency valued in Section III?
In US dollars, using a generally accepted quoted price in an active market, preferably a blended index.
Can a filed Section III be corrected?
Yes. NMLS lets licensees revise a submitted quarterly report for up to 24 months after submission.
Is Section III filed for each state?
No. Section III is reported at company level, once per quarter, even for a licensee in many states. Transaction activity by state is reported separately in Section II(b), and each state applies its own permissible investment rules to the company-level figures.
Do Texas licensees file anything extra?
Yes. The Texas Department of Banking requires a Texas permissible investment report, due within 45 days of quarter end and kept on file for examiners unless requested.
References
- NMLS, MSB Call Report Section III: Permissible Investments
- NMLS, MSB Call Report reporting frequency
- NMLS, MSB Call Report overview and definitions
- Texas Department of Banking, memo on permissible investment reporting (November 13, 2023, PDF)
- CSBS, MTMA state enactments (October 8, 2026, PDF)
About Safeheld
Safeheld is reconciliation and regulatory financial control software for regulated firms that hold client money. For US money transmitters it reconciles obligations and assets every day and prepares the permissible investment figures for Section III of the NMLS MSB Call Report, which the licensee reviews and completes. To discuss your money transmission operations, contact us at safeheld.com/contact.
This article is general information on US money transmission rules and is not legal or regulatory advice.