ANNAPOLIS, Md. — A newly released legislative audit raises concern over how financial institutions chartered in Maryland obtain business licenses.
The Office of Financial Regulation is the state agency responsible for the process.
According to the audit, the office was renewing licenses of various institutions such as mortgage lenders, collections agencies, check cashing, and credit service businesses without proper review.
Auditors noted 20,224 business licenses were issued in fiscal year 2023 — 16,148 of which were renewal applications.
In order for a license to be renewed, the business is required to submit multiple pieces of documentation including fees, a statement of business volume, and proof of a surety bond.
During a random inspection of 20 renewal applications, auditors were only able to find two that didn't show proof of a surety bond.
Still the audit concluded "there was a lack of assurance that these applicants had the necessary qualifications for the license."
The agency had previously been subjected to an audit with similar results.
At that time, there were questions regarding how initial licenses were reviewed and issued.
The agency said that issue's since been addressed, but admitted renewal procedures need improvement.
"It developed and implemented a set of quality control policies and procedures to test the approval process for new business license applicants to ensure statutory compliance in response to the 2020 audit," the agency said in response to the audit. "Those changes did not extend to renewal applications. OFR will correct the omission and develop and implement appropriate policies and procedures to review renewal applications."
