BILL NUMBER: AB 2789 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 10, 2010
AMENDED IN ASSEMBLY APRIL 12, 2010
INTRODUCED BY Committee on Banking and Finance (Eng (Chair), Evans,
Fong, Fuentes, Mendoza, Nava, Ruskin, and Torres)
MARCH 9, 2010
An act to repeal and add Chapter 14 (commencing with Section 1800)
of, and to repeal Chapter 14A (commencing with Section 1851) of,
Division 1 of, and to repeal Division 16 (commencing with Section
33000) of, the Financial Code, relating to money transmission.
LEGISLATIVE COUNSEL'S DIGEST
AB 2789, as amended, Committee on Banking and Finance. Money
transmission.
Existing law provides for the regulation and licensure by the
Commissioner of Financial Institutions of money transmitters, issuers
of travelers checks, and sellers of payment instruments.
This bill would repeal those provisions and enact the Money
Transmission Act, which would provide for the regulation and
licensure by the commissioner of persons in the business of money
transmission, defined to mean the selling or issuing of payment
instruments or stored value and the receiving of money for
transmission. The bill would prohibit a person from engaging in the
business of money transmission in California or advertising,
soliciting, or holding itself out as providing money transmission
unless licensed by the commissioner or exempt from licensure
. The bill would provide that only a corporation or
limited liability company may be licensed to engage in the
business of money transmission. The bill would require specified
information to be included in an application for a license. The bill
would authorize the commissioner to conduct an examination of an
applicant, at the applicant's expense, and would require the
commissioner to approve an application for a license if the
commissioner makes specified findings, including that the applicant
has adequate net worth tangible s
hareholders' equity, as defined, and is competent to engage in
the business of receiving money for
transmission. The bill would require licensees to file
audit reports with the commissioner
audit reports within 90 days after the end of each fiscal year
and other specified reports each calendar quarter . The
bill would impose various fees and would require the commissioner to
levy assessments on licensees for the purposes of administering these
provisions regulating money transmission. The bill would establish
requirements in order for a licensee to appoint an agent to conduct
money transmission on behalf of the licensee. The bill would require
a licensee to maintain specified eligible
securities , as defined, meeting specified
requirements. The bill would authorize the commissioner to issue an
order requiring the licensee to maintain and obtain specified
securities if the commissioner finds that the financial condition of
a licensee is unstable, as specified . The bill would require a
licensee to provide specified notices and disclosures to customers,
including a notice relative to a customer's right to a refund,
disclosures relating to rates of exchange, a notice indicating that
payment instruments are not insured, and a notice providing
information on making complaints to the commissioner against a
licensee. The bill would require licensees to maintain certain
financial records for a 3-year period. The bill would authorize the
commissioner to examine the business and office of a licensee
and to suspend or revoke a license if the commissioner finds
that a licensee or agent of a licensee has, among other things,
violated the provisions of the act or engaged in fraud or unsound
practices and would authorize the commissioner to assess specified
civil penalties against a person that violates these provisions. The
bill would also make it a crime for a person to engage in the
business of money transmission without a license or an exemption
from licensure or for a person to intentionally make a false
statement, misrepresentation, or false certification in a record
filed or required to be maintained under these provisions. By
establishing new crimes, this bill would impose a state-mandated
local program.
The California Constitution requires the state to reimburse local
agencies and school districts for certain costs mandated by the
state. Statutory provisions establish procedures for making that
reimbursement.
This bill would provide that no reimbursement is required by this
act for a specified reason.
Vote: majority. Appropriation: no. Fiscal committee: yes.
State-mandated local program: yes.
THE PEOPLE OF THE STATE OF CALIFORNIA DO ENACT AS FOLLOWS:
SECTION 1. Chapter 14 (commencing with Section 1800) of Division 1
of the Financial Code is repealed.
SEC. 2. Chapter 14 (commencing with Section 1800) is added to
Division 1 of the Financial Code, to read:
CHAPTER 14. MONEY TRANSMISSION ACT
Article 1. General Provisions
1800. This chapter shall be known and may be cited as the Money
Transmission Act.
1801. The Legislature finds and declares all of the following:
(a) Money transmission businesses conduct a significant amount of
business in this state and technological advances are occurring in
the provision of money transmission services.
(b) Persons who use money transmission businesses in this state
use those businesses for, among other purposes, paying for the
necessities of life and transmitting money to family members.
(c) The failure of money transmission businesses to fulfill their
obligations would cause loss to consumers, disrupt the payments
mechanism in this state, undermine public confidence in financial
institutions doing business in this state, and adversely affect the
health, safety, and general welfare of persons in this state.
(d) To protect the interests of consumers of money transmission
businesses in this state, to maintain public confidence in financial
institutions doing business in this state, and to preserve the
health, safety, and general welfare of the people of this state, it
is necessary to regulate money transmission businesses in this state.
1802. It is the intent of the Legislature that the provisions of
this act accomplish all of the following:
(a) Protect the interests of persons in this state who use money
transmission services.
(b) Provide for the safe and sound conduct of the business of
licensees.
(c) Maintain public confidence in licensees.
1803. For purposes of this chapter, the following definitions
shall apply:
(a) "Affiliate," when used with respect to a specified person,
means any person controlling, controlled by, or under common control
with, that specified person, directly or indirectly through one or
more intermediaries. For purposes of subdivision (r)
subdivisions (q) and (v) , a specified person is
affiliated with another person if that person controls, is
controlled by, or under common control through the ownership directly
or indirectly of shares or equity securities possessing more than 50
percent of the voting power of that specified person.
(b) "Agent" means a person that provides money transmission in
California on behalf of the licensee, provided that the licensee
becomes liable for the money transmission from the time money or
monetary value is received by that person. However, "agent" does not
include any officer or employee of the licensee when acting as such
at an office of a licensee.
(c) "Applicant" means a person that files an application for a
license or for acquisition of control of a licensee under this
chapter.
(d) "Average daily outstanding" means the amount of outstanding
money transmission obligations in California at the end of each day
in a given period of time, added together, and divided by the total
number of days in that period of time.
(e) "Branch office" means any office in this state of a licensee
or agent at which the licensee receives money or monetary value to
provide money transmission, either directly or through an agent.
(f) "Business day" means one of the following:
(1) When used with respect to any act to be performed in this
state, any day other than Saturday, Sunday, or any other day that is
provided for as a holiday in the Government Code.
(2) When used with respect to any act to be performed in any
jurisdiction other than this state, any day other than a day that is
a legal holiday under the laws of that jurisdiction.
(g) "Commissioner" means the Commissioner of Financial
Institutions.
(h) "Control" has the meaning set forth in Section 700.
(i) "Day" means calendar day.
(j) "In California" or "in this state" means physically
located in California, or with, to, or from persons located in
California.
(k) "Issue" and "issuer" mean, with regard to a payment
instrument, the entity that is the maker or drawer of the instrument
in accordance with the California Commercial Code and is liable for
payment. With regard to stored value, "issue" and "issuer" mean the
entity that is liable to the holder of stored value and has
undertaken or is obligated to pay the stored value. Only a licensee
may issue stored value or payment instruments.
(l) "Licensee" means a corporation or limited liability
company licensed under this chapter.
(m) "Monetary value" means a medium of exchange, whether or not
redeemable in money.
(n) "Money" means a medium of exchange that is authorized or
adopted by the United States or a foreign government. The term
includes a monetary unit of account established by an
intergovernmental organization or by agreement between two or more
governments.
(o) "Money transmission" means any of the following:
(1) Selling or issuing payment instruments.
(2) Selling or issuing stored value.
(3) Receiving money for transmission.
(p) "Outstanding," with respect to payment instruments and stored
value, means issued or sold by the licensee in the United States and
not yet paid or refunded by the licensee, or issued or
sold on behalf of the licensee in the United States by its agent and
reported as sold, but not yet paid or refunded by the
licensee. "Outstanding," with respect to receiving money for
transmission means all money or monetary value received in the United
States for transmission by the licensee or its agents but not yet
paid to the beneficiaries or refunded to the person from whom the
money or monetary value was received. All outstanding money
transmission of a licensee is and shall remain a liability of the
licensee until it is no longer outstanding.
(q) "Payment instrument" means a check, draft, money order,
traveler's check, or other instrument for the transmission or payment
of money or monetary value, whether or not negotiable. The term does
not include a credit card voucher, letter of credit, or any
instrument that is redeemable by the issuer for goods or services
provided by the issuer or its affiliate.
(r) "Person" means an individual, corporation, business trust,
estate, trust, partnership, proprietorship, syndicate, limited
liability company, association, joint venture, government,
governmental subdivision, agency or instrumentality, public
corporation or joint stock company, or any other organization or
legal or commercial entity, provided, however, that "person," when
used with respect to acquiring control of or controlling a specified
person, includes any combination of two or more persons acting in
concert.
(s) "Receiving money for transmission" or "money received for
transmission" means receiving money or monetary value in the United
States for transmission within or outside the United States by
electronic or other means. The term does not include sale or issuance
of payment instruments and stored value.
(t) "Record" means information that is inscribed on a tangible
medium or that is stored in an electronic or other medium and is
retrievable in perceivable form.
(u) "State" means a state of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any
territory or insular possession subject to the jurisdiction of the
United States.
(v) "Stored value" means monetary value representing a claim
against the issuer that is stored on an electronic or digital medium
and evidenced by an electronic or digital record, and that is
intended and accepted for use as a means of redemption for money
or monetary value or payment for goods or services. The term
does not include a credit card voucher, letter of credit, or any
stored value that is only redeemable by the issuer for
goods or services provided by the issuer or its affiliate.
(w) "Travelers "Traveler's
check" means an instrument that meets all of the following:
(1) Is designated on its face by the term "travelers
"traveler's check" or by any substantially
similar term or is commonly known and marketed as a traveler's check.
(2) Contains a provision for a specimen signature of the purchaser
to be completed at the time of purchase.
(3) Contains a provision for a countersignature of the purchaser
to be completed at the time of negotiation.
Article 2. Exemptions
1805. This chapter does not apply to the following:
(a) The United States or a department, agency, or instrumentality
thereof, including any Federal Reserve Bank
federal reserve bank and any federal home loan bank.
(b) Money transmission by the United States Postal Service or by a
contractor on behalf of the United States Postal Service.
(c) A state, county, city, or any other governmental agency or
governmental subdivision of a state.
(d) A commercial bank or industrial bank, the deposits of which
are insured by the Federal Deposit Insurance Corporation or its
successor, or any foreign (other nation) bank that is licensed under
Article 3 (commencing with Section 1750) of Chapter 13.5 or that is
authorized under federal law to maintain a federal agency or federal
branch office in this state; a banking holding company
organized pursuant to the Bank Service Corporation Act (12 U.S.C.
Secs. 1861-1867, incl.); a trust company licensed pursuant
to Section 401 or a national association authorized under federal law
to engage in a trust banking business; an association or federal
association, as defined in Section 5102 the deposits of which are
insured by the Federal Deposit Insurance Corporation or its
successor; and any federally or state chartered credit union the
member accounts of which are insured or guaranteed as provided in
Section 14858.
(e) Electronic funds transfer of governmental benefits for a
federal, state, county, or local governmental agency by a
contractor on behalf of the United States or a department, agency, or
instrumentality thereof, or a state or governmental subdivision,
agency, or instrumentality thereof.
(f) A board of trade designated as a contract market under the
federal Commodity Exchange Act (7 U.S.C. Secs. 1-25, incl.) or a
person that, in the ordinary course of business, provides clearance
and settlement services for a board of trade to the extent of its
operation as or for such a board.
(g) A person that provides clearance or settlement services
pursuant to a registration as a clearing agency or an exemption from
registration granted under the federal securities laws to the extent
of its operation as such a provider.
(h) An operator of a payment system to the extent that it provides
processing, clearing, or settlement services, between or among
persons excluded by this section, in connection with wire transfers,
credit card transactions, debit card transactions,
stored-value stored value transactions,
automated clearing house transfers, or similar funds transfers, to
the extent of its operation as such a provider.
(i) A person registered as a securities broker-dealer under
federal or state securities laws to the extent of its operation as
such a broker-dealer.
(j) A person listed under subdivision (d) is exempted from all the
provisions of this chapter, except Sections 1827 and 1828.
1806. (a) The commissioner
may, by regulation or order, either unconditionally or upon specified
terms and conditions or for specified periods, exempt from this
chapter any person or transaction or class of persons or
transactions, if the commissioner finds such action to be in the
public interest and that the regulation of such persons or
transactions is not necessary for the purposes of this chapter.
(b) For purposes of issuing an exemption pursuant to subdivision
(a) for stored value, the commissioner may consider whether the
stored value is accepted as payment for a limited scope of goods and
services that can be clearly distinguished by (1) their location in
the same premises or a limited local area, or (2) their close
financial or business relationship with the issuer. These are not the
exclusive grounds upon which an exemption may be based.
Article 3. Licenses
1810. (a) A person shall not engage in the business of money
transmission in this state, or advertise, solicit, or hold itself out
as providing money transmission in this state, unless the person is
licensed or exempt from licensure under this chapter or is
an agent of a person licensed or exempt from licensure
under this chapter.
(b) A license under this chapter is not transferable or
assignable.
1811. (a) No person other than a corporation or limited
liability company may apply for or be issued a license.
(b) No person other than the following may be issued a license:
(1) A corporation or limited liability company
organized under the laws of this state.
(2) A corporation, other than a corporation organized under the
laws of this state, that is qualified to transact intrastate business
in this state under Chapter 21 (commencing with Section 2100) of
Division 1 of Title 1 of the Corporations Code.
(3) A limited liability company, other than a limited liability
company organized under the laws of this state, that is qualified to
transact intrastate business in this state under Chapter 10
(commencing with Section 17450) of Title 2.5 of the Corporations
Code, except that a limited liability company that is organized
outside the United States shall not be issued a license.
1812. (a) In this section, "material litigation" means litigation
that according to United States generally accepted accounting
principles is significant to an applicant's or a licensee's financial
health and would be required to be disclosed in the applicant's or
licensee's annual audited financial statements, report to
shareholders, or similar records.
(b) An applicant for licensure under this chapter shall pay to the
commissioner a nonrefundable fee of five thousand dollars ($5,000).
(c) An applicant for a license under this chapter shall do so in a
form and in a medium prescribed by the commissioner by order or
regulation. The application shall state or contain all of the
following:
(1) The legal name and residential business address of the
applicant and any fictitious or trade name used by the applicant in
conducting its business.
(2) A list of any criminal convictions of the applicant and any
material litigation in which the applicant has been involved in the
10-year period next preceding the submission of the application.
(3) A description of any money transmission services previously
provided by the applicant and the money transmission services that
the applicant seeks to provide in this state.
(4) A list of the applicant's proposed agents and the locations in
this state where the applicant and its agents propose to engage in
money transmission.
(5) A list of other states in which the applicant is licensed to
engage in money transmission and any license revocations,
suspensions, or other disciplinary action taken against the applicant
in another state.
(6) Information concerning any bankruptcy or receivership
proceedings affecting the licensee.
(7) A sample form of payment instruments or instruments
instrument or instrument upon which stored value
is recorded, if applicable.
(8) A sample form of receipts for receipts of money
receipt for money received for transmission
transactions.
(9) The name and address of any bank through which the applicant's
payment instruments and stored value will be paid.
(10) A description of the source of money and credit to be used by
the applicant to provide money transmission services.
(11) The date of the applicant's incorporation or formation and
the state or country of incorporation or formation.
(12) A certificate of good standing from the state or country in
which the applicant is incorporated or formed.
(13) A description of the structure or organization of the
applicant, including any parent or subsidiary of the applicant, and
whether any parent or subsidiary is publicly traded.
(14) The legal name, any fictitious or trade name, all business
and residential addresses, and the employment, in the 10-year period
next preceding the submission of the application, of each executive
officer, manager, director, or person that has control, of the
applicant, and the education background for each such person.
(15) A list of any criminal convictions and material litigation in
which any executive officer, manager, director, or person in
control, of the applicant has been involved in the 10-year period
next preceding the submission of the application.
(16) A copy of the applicant's audited financial statements for
the most recent fiscal year and, if available, for the two-year
period next preceding the submission of the application.
(17) A copy of the applicant's unconsolidated financial statements
for the current fiscal year, whether audited or not, and, if
available, for the two-year period next preceding the submission of
the application.
(18) If the applicant is publicly traded, a copy of the most
recent report filed with the United States Securities and Exchange
Commission under Section 13 of the federal Securities Exchange Act of
1934 (15 U.S.C. Sec. 78m).
(19) If the applicant is a wholly owned subsidiary of:
(A) A corporation publicly traded in the United States, a copy of
audited financial statements for the parent corporation for the most
recent fiscal year or a copy of the parent corporation's most recent
report filed under Section 13 of the federal Securities Exchange Act
of 1934 (15 U.S.C. Section 78m) and, if available, for the two-year
period next preceding the submission of the application.
(B) A corporation publicly traded outside the United States, a
copy of similar documentation filed with the regulator of the parent
corporation's domicile outside the United States.
(20) The name and address of the applicant's registered agent in
this state.
(21) The applicant's plan for engaging money transmission
business, including without limitation three years of pro forma
financial statements.
(22) Any other information the commissioner requires with respect
to the applicant.
(d) The commissioner may waive any of the information required
under subdivision (c) and authorize or permit
an applicant to submit other information instead of the
required information .
1813. (a) The commissioner may conduct an examination of the
applicant and the applicant shall pay the reasonable cost of the
examination.
(b) If the commissioner finds all of the following with respect to
an application for a license, the commissioner shall approve the
application:
(1) The applicant has adequate tangible shareholder's
shareholders' equity, as specified in Section
1820 to engage in the business of receiving money
for transmission and the financial condition of
the applicant is otherwise such that it will be safe and sound for
the applicant to engage in the business of receiving money
money transmission .
(2) The applicant, the directors and officers of the applicant,
that any person which any person that
controls the applicant, and the directors and officers of any person
that controls the applicant are of good character and sound financial
standing.
(3) The applicant is competent to engage in the business of
receiving money for
transmission.
(4) The applicant's plan for engaging in the business of
receiving money for transmission affords
reasonable promise of successful operation.
(5) It is reasonable to believe that the applicant, if licensed,
will engage in the business of receiving money
for transmission and will comply with all
applicable provisions of this chapter and of any regulation or order
issued under this chapter.
(c) The commissioner shall deny an application for a license if
her of he or she finds, after notice
and a hearing, that the requirements of subdivision (b) have not been
satisfied.
1814. (a) Before any corporation or limited liability
company is issued a license, the corporation or limited
liability company shall file with the commissioner, in such
form as the commissioner may by regulation or order require, an
appointment irrevocably appointing the commissioner to be the
corporation's or limited liability company's attorney to
receive service of any lawful process in any noncriminal judicial or
administrative proceeding against the corporation or limited
liability company , or any of its successors, that arises under
this chapter or under any regulation or order issued under this
chapter after such appointment has been filed, with the same force
and validity as if served personally on the corporation or
limited liability company or its successor, as the case may be.
(b) Service may be made by leaving a copy of the process at any
office of the commissioner, but that service is not effective unless
(1) the party making that service, who may be the commissioner, sends
notice of service and a copy of the process by registered or
certified mail to the party served at its last address on file with
the commissioner, and (2) an affidavit of compliance with this
section by the party making service is filed in the case on or before
the return date, if any, or within such further time as the court,
in the case of a judicial proceeding, or the administrative agency,
in the case of an administrative proceeding, allows.
(c) The provisions of this section are in addition to ,
and not in limitation of, other provisions of law relating to
service of process.
1815. (a) No person shall, directly or indirectly, acquire
control of a licensee unless the commissioner has first approved, in
writing, the acquisition of control. An application to acquire
control of a licensee shall be in writing, under oath, and in a form
prescribed by the commissioner. The application shall contain that
information which the commissioner may require.
(b) The commissioner shall not approve the application unless the
commissioner finds all of the following:
(1) The applicant and all of the officers and directors of the
applicant are of good character and sound financial standing.
(2) The applicant is competent to engage in the business of money
transmission.
(3) It is reasonable to believe that, if the applicant acquires
control of the licensee, the applicant and the licensee will comply
with all applicable provisions of this chapter and any regulation or
order issued under this chapter.
(4) The applicant's plans, if any, to make any major change in the
business, corporate structure, or management of the licensee are not
detrimental to the safety and soundness of the licensee.
(c) For the purposes of subdivision (b), the commissioner may find
an applicant's plan to make major changes in the management of a
licensee is detrimental to the licensee if the plan provides for a
person who is not of good character to become a director or officer
of the licensee. The grounds specified in this subdivision shall not
be deemed to be the only grounds upon which the commissioner may
find, for the purposes of subdivision (b), that an applicant's plan
to make a major change in the management of a licensee is detrimental
to the licensee.
(d) If it appears to the commissioner that any person is violating
or failing to comply with this section, the commissioner may direct
the person to comply with this section by an order issued over the
commissioner's official seal.
(e) Whenever it appears to the commissioner that any person has
committed or is about to commit a violation of any provision of this
section or of any regulation or order of the commissioner issued
pursuant to this section, the commissioner may apply to the superior
court for an order enjoining the person from violating or continuing
to violate this section or that regulation or order, and for other
equitable relief as the nature of the case or interests of the
licensee, the controlling person, the creditors or shareholders of
the licensee or controlling person or the public may require.
(f) The commissioner may, for good cause, amend, alter, suspend,
or revoke any approval of a proposal to acquire control of a licensee
issued pursuant to this section.
(g) There shall be exempted from the provisions of this section
any transaction which the commissioner by regulation or order exempts
as not being comprehended within the purposes of this section and
the regulation of which he or she finds is not necessary or
appropriate in the public interest or for the protection of a
licensee or the customers of a licensee.
(h) The commissioner may conduct an examination of the applicant
and the applicant shall pay the reasonable cost of the examination.
1816. The commissioner may impose on any authorization, approval,
license, or order issued pursuant to this chapter any conditions
that he or she deems reasonable or necessary to the public interest.
1817. (a) As security, each licensee shall deposit and thereafter
maintain on deposit with the Treasurer cash in an amount not less
than, or securities having a market value not less than, such amount
as the commissioner may find and order from time to time as necessary
to secure the faithful performance of the obligations of the
licensee with respect to money transmission in California
. These securities shall be subject to the approval of the
commissioner and shall consist of interest-bearing bonds, notes, or
other obligations of the United States or any agency or
instrumentality thereof, or of the State of California, or of any
city, county, or city and county, political subdivision or district
of the State of California, or that are guaranteed by the United
States or the State of California.
(b) So long as a licensee that maintains securities on deposit
with the Treasurer pursuant to this section is solvent, that licensee
shall be entitled to receive any interest paid on the securities.
(c) In lieu of the deposit of cash or securities pursuant to
subdivision (a), a licensee may deliver to the commissioner the bond
of a surety company, in form and written by a company satisfactory to
the commissioner, in an amount not less than the amount of the
deposit of cash or
securities required of the licensee, conditioned upon the faithful
performance of the obligations of the licensee with respect to money
transmission in California . The commissioner shall
deposit such bond with the Treasurer.
(d) A licensee that sells or issues payment instruments or stored
value shall maintain securities on deposit or a bond of a surety
company in an amount of no less than five hundred thousand dollars
($500,000) or 50 percent of the average daily outstanding payment
instrument and stored value obligations in California, whichever is
greater; provided that such amount shall not be more than two million
dollars ($2,000,000).
(e) A licensee that engages in receiving money for transmission
shall maintain securities on deposit or a bond of a surety company in
an amount greater than the average daily outstanding obligations for
money received for transmission in California, provided that such
amount shall not be less than two hundred fifty thousand dollars
($250,000) nor more than two seven
million dollars ($2,000,000) ($7,000,000)
.
(f) The amount of securities on deposit or a bond of a surety
company required to be maintained by subdivisions (d) and (e) are
cumulative.
(g) The money and securities deposited with the State Treasurer
pursuant to this section and the proceeds of any bond held by the
State Treasurer pursuant to this section shall constitute a trust
fund for the benefit persons of persons in
California who purchased payment instruments or stored value
from the licensee or its agent, or persons in California
who delivered to any licensee or its agent money or monetary value
for money transmission. Suit to recover on any bond may be
brought by any party aggrieved in a court of competent jurisdiction
of any county in which the licensee has an agent.
(h) Securities on deposit or a bond shall cover claims for so long
as the commissioner specifies, but for at least four years after the
licensee ceases to provide services under this chapter in this
state. However, the commissioner may permit the amount of the
security to be reduced or eliminated before the expiration of that
time to the extent the amount of the licensee's payment instruments
or stored-value stored value
obligations outstanding, or outstanding money or monetary value
received for money transmission, is less than the deposit
or bond. The commissioner may permit a licensee to substitute another
form of security acceptable to the commissioner for the security
effective at the time the licensee ceases to provide money
transmissions in this state.
1818. Fees shall be paid to, and collected by, the commissioner,
as follows:
(a) The fee for filing an application for a license is five
thousand dollars ($5,000), as provided in subdivision (b) of Section
1812.
(b) The fee for filing an application for approval to acquire
control of a licensee is three thousand five hundred dollars
($3,500).
(c) A licensee shall pay annually on or before July 1, a licensee
fee of two thousand five hundred dollars ($2,500).
(d) A licensee shall pay annually on or before July 1, one hundred
twenty-five dollars ($125) for each licensee branch office in this
state.
(e) A licensee shall pay annually on or before July 1, twenty-five
dollars ($25) for each agent branch office in this state.
(f) Whenever the commissioner examines a licensee or any agent of
a licensee, the licensee shall pay, within 10 days after receipt of a
statement from the commissioner, a fee of seventy-five dollars ($75)
per hour for each examiner engaged in the examination plus, if it is
necessary for any examiner engaged in the examination to travel
outside this state, the travel expenses of the examiner.
(g) Whenever the commissioner examines an applicant, the applicant
shall pay, within 10 days after receipt of a statement from the
commissioner, a fee of seventy-five dollars ($75) per hour for each
examiner engaged in the examination plus, if it is necessary for any
examiner engaged in the examination to travel outside this state, the
travel expenses of the examiner.
(h) Each fee for filing an application shall be paid at the time
the application is filed with the commissioner. No fee for filing an
application shall be refundable, regardless of whether the
application is approved, denied, or withdrawn.
1819. (a) The commissioner may by order or regulation grant
exemptions from this section in cases where the commissioner finds
that the requirements of this section are not necessary or may be
duplicative.
(b) In addition to such other reports as may be required pursuant
to Sections 283, 284, and 285, each licensee shall, within 90 days
after the end of each fiscal year, or within such extended time as
the commissioner may prescribe, file with the commissioner an audit
report for the fiscal year that shall comply with all of the
following provisions:
(1) The audit report shall contain audited financial statements of
the licensee for or as of the end of the fiscal year prepared in
accordance with United States generally accepted accounting
principles and such other information as the commissioner may
require.
(2) The audit report shall be based upon an audit of the licensee
conducted in accordance with United States generally accepted
auditing standards and such other requirements as the commissioner
may prescribe.
(3) The audit report shall be prepared by an independent certified
public accountant or independent public accountant who is not
unsatisfactory to the commissioner.
(4) The audit report shall include or be accompanied by a
certificate of opinion of the independent certified public accountant
or independent public accountant that is satisfactory in form and
content to the commissioner. If the certificate or opinion is
qualified, the commissioner may order the licensee to take such
action as the commissioner may find necessary to enable the
independent or certified public accountant or independent public
accountant to remove the qualification.
(c) Each licensee shall, not more than 45 days after the end of
each calendar year quarter, or within a longer period as the
commissioner may by regulation or order specify, file with the
commissioner a report containing all of the following:
(1) Financial statements, including balance sheet, income
statement, statement of changes in shareholders' equity, and
statement of cashflows, for, or as of the end of, that
fiscal calendar year quarter, verified by two of
the licensee's principal officers. The verification shall state that
each of the officers making the verification has a personal
knowledge of the matters in the report and that each of them believes
that each statement on the report is true.
(2) For issuers and sellers of payment instruments and stored
value, a schedule of eligible securities owned by the licensee
pursuant to Section 1830.
(3) Other information as the commissioner may by regulation or
order require.
(d) Each licensee, not more than 45 days after the end of each
calendar year quarter, shall file with the commissioner a report
containing all of the following:
(1) The current address of each branch office of the licensee in
this state. If a branch office was opened or closed during the
calendar year quarter, the date it was opened or closed. If a branch
office was relocated during the calendar year quarter, the addresses
of the old and new locations and the date of relocation.
(2) The name of each person who acted as an agent in this state of
the licensee during the calendar year quarter and the address for
each agent branch office. If a person was appointed or terminated as
an agent during the calendar year quarter, the date of appointment or
termination. If an agent branch office relocated, the addresses for
the old and new locations and the date of relocation.
(3) The total volume of activities, number of transactions
conducted , and outstanding money transmission obligations
in California under this chapter and in the United States in the
calendar year quarter categorized by type of money transmission. For
money received for transmission, a report of the average daily
outstanding transmission liabilities in California, and, if
applicable, a schedule of each foreign country to which money was
sent, along with the total amount of money sent to that foreign
country in that calendar year quarter. For payment instruments and
stored value, a report of the average daily outstanding payment
instruments and stored value liabilities in California in that
calendar year quarter.
(4) Other information as the commissioner may by regulation or
order require.
(e) Each licensee shall file with the commissioner other reports
as and when the commissioner may by regulation or order require.
1820. (a) A licensee under this chapter shall maintain tangible
shareholders' equity in an amount determined to be adequate by the
commissioner from time to time, but in no event shall tangible
shareholders' or members' equity be less than five hundred
thousand dollars ($500,000). "Tangible shareholders' equity" means
shareholders' equity minus intangible assets as determined in
accordance with United States generally accepted accounting
principles.
(b) The commissioner at any time may require a licensee to write
down any asset held by it to a valuation that will represent its then
fair market value. Any receivable or debt due to a licensee that is
past due and unpaid for the period of one year shall be charged off,
unless it is well secured or is in process of collection.
(c) The aggregate value of a licensee's accounts receivable,
excluding money transmission receivables, loans or extensions of
credit to any one person, or that person's affiliates, cannot exceed
50 percent of the licensee's tangible shareholders' equity without
the advanced written approval of the commissioner. Whenever such
amount equals or exceeds 20 percent of the licensee's tangible
shareholders' equity, the licensee shall maintain records evidencing
such amount and any security or other source of payment for the
amount owed, and such other records as the commissioner may require
by order or regulation.
1821. (a) A licensee shall conduct money transmission in
California under its true name unless it has complied with Chapter 5
(commencing with Section 17900) of Part 3 of Division 7 of the
Business and Professions Code.
(b) A licensee may only conduct money transmission in California
under its true name unless it has obtained
provided 30-day advance approval from
written notice to the commissioner. A licensee may also use a
trade name or logo, so long as there is reasonable disclosure of
its true name is displayed at the same time
.
1822. (a) In addition to the fees provided in Section 1818, the
commissioner shall levy an assessment each fiscal year, on a pro rata
basis, on those licensees that at any time during the preceding
calendar year engaged in the business of money transmission in
California in an amount that is, in his or her judgment, sufficient
to meet the commissioner's expenses in administering the provisions
of this chapter and to provide a reasonable reserve for
contingencies.
(b) For licensees that sell or issue payment instruments or stored
value, the amount of the annual assessment on any licensee shall not
exceed the sum of the products determined by multiplying (1)
increments of the aggregate face amount of payment instruments and
stored value issued or sold in California by the licensee, directly
or indirectly through agents, in the calendar year next preceding the
date of such assessment, or by (2) percentages of
the base assessment rate, according to the following table:
Aggregate face amount of Percentage
payment instruments and of base
stored value sold (in assessment
millions) rate
First $ 1..................... 100.0
Next $9....................... 25.0
Next $40................ 12.5
Next $50...................... 6.0
Next $400..................... 3
Next $500..................... 2
Excess over $1,000............ 1
The base assessment rate shall be fixed from time to time by the
commissioner but shall not exceed one dollar ($1) per one thousand
dollars ($1,000) face amount of payment instruments and stored value
sold.
(c) For licensees receiving money for transmission, the basis of
the apportionment of the assessment among the licensees assessed
shall be the proportion that the total amount of money received for
transmission by the licensee in California bears in relation to the
total amount of money received for transmission by all licensees in
California, as shown by the reports of licensees to the commissioner
for the preceding calendar year. The assessment rate shall be fixed
from time to time by the commissioner but shall not exceed one dollar
($1) per one thousand dollars ($1,000) of transmission
money received for transmission in California by
the licensee.
(d) The commissioner shall notify each licensee by mail of the
amount levied against it. The licensee shall pay the amount levied
within 20 days. If payment is not made to the commissioner within
that time, the commissioner shall assess and collect, in addition to
the annual assessment, a penalty of 5 percent of the assessment for
each month or part thereof that the payment is delinquent.
Article 4. Agents
1825. (a) In this section, "remit" means to make direct payments
of money to a licensee or its representative authorized to receive
money or to deposit money in a bank in an account specified by the
licensee.
(b) No licensee shall appoint or continue any person as agent,
unless the licensee and the person have made a written contract. A
written contract between a licensee and an agent shall require the
agent to operate in full compliance with this chapter.
(c) The written contract shall contain each of the following
provisions:
(1) That the licensee appoints the person as its agent with
authority to conduct money transmission on behalf of the licensee.
(2) That the agent shall make and keep accounts, correspondence,
memoranda, papers, books, and other records as the commissioner by
regulation or order requires and preserve the records for the time
specified by the regulation or order.
(3) That all money or monetary value, less fees due agents
provided for and expressly set forth in the written agreement,
received by the agent for money transmission on behalf of the
licensee shall be trust funds owned by and belonging to the licensee
until the time when the money or an equivalent amount are remitted by
the agent to the licensee in accordance with this section.
(4) That the money must be remitted in accordance with the
provisions of this chapter.
(5) Any other provisions that the commissioner may by
regulation or order find to be necessary to carry out the
provisions and purposes of this chapter.
(d) An agent shall remit all money owing to the licensee in
accordance with the terms of the contract between the licensee and
the agent.
(e) An agent of a licensee shall remit any money, less fees,
received on behalf of the licensee for money transmission as follows:
(1) Within three business days of receipt.
(2) In case the aggregate face amount of the money, less fees,
does not in any calendar week exceed ten thousand dollars ($10,000),
within 10 business days of receipt.
(3) Within a period longer than three business days of receipt, if
the agent has previously deposited with, and during such period
maintains on deposit with, an office of an insured bank or of an
insured savings and loan association located in the United States in
an account that is in the sole and exclusive name of the licensee an
amount that, for each day by which such period exceeds three business
days, is not less than the aggregate face amount of money received
on behalf of the licensee for money transmission that the agent
usually sells per day.
(4) Within such shorter period as the licensee may provide.
(f) An agent may not provide money transmission outside the scope
of activity permissible under the contract between the agent and the
licensee. All money or monetary value, less fees, received by an
agent of a licensee shall, from the time when the money is received
by the agent until the time when the money or an equivalent amount is
remitted by the agent to the licensee, constitute trust funds owned
by and belonging to the licensee.
(g) An agent may not use a subagent to conduct money transmissions
on behalf of a licensee.
(h) Each licensee shall exercise reasonable supervision over its
agents to ensure compliance with applicable laws, rules, and
regulations with respect to money transmission.
(i) No agent of a licensee shall, nor shall any licensee cause or
knowingly permit any of its agents to, conduct money transmission on
behalf of the licensee without concurrently receiving money, monetary
value or its equivalent, credit card, or payment instrument, or a
combination of same believed to be valid in an amount not less than
the amount of the money transmission being provided. In the case of a
sale of payment instruments or stored value to an insured bank, an
insured savings and loan association , or an insured
credit union, the licensee or agents of the licensee may receive such
amounts the next business day after the sale.
(j) If any California agent of a licensee shall
commingle any money or monetary value, less fees, received on behalf
of the licensee for money transmission with any other property owned
or controlled by the agent, all such property shall be impressed
with a trust in favor of the licensee in an amount equal to the
aggregate amount of such money so commingled. No money or monetary
value, less fees, received by any California agent
on behalf of the licensee for money transmission, while held by such
agent, nor any property impressed with a trust pursuant to this
subdivision, shall be subject to attachment, levy of execution, or
sequestration by order of any court, except for the benefit of the
licensee.
(k) Each licensee shall be liable as a principal for the money or
monetary value from the time when the money or monetary value is
received by the agent. Each licensee shall be liable as the maker or
drawer on each payment instrument issued or sold by such licensee.
1826. (a) No licensee shall appoint any person as an agent unless
it has conducted a review of the proposed agent's fitness to act as
an agent and has determined that the proposed agent and any persons
who control the proposed agent are of good character and sound
financial standing.
(b) A licensee shall maintain records of this review for each
agent while the agent is providing money transmission on behalf of
the licensee, and for three years after the relationship with the
agent has terminated.
1827. A person may not provide money transmissions on behalf of a
person not licensed or not exempt from licensure under
this chapter. A person that engages in that activity provides money
transmissions services to the same extent as if the person was a
licensee, and shall be jointly and severally liable with the
unlicensed or nonexempt person.
1828. (a) No agent of a licensee who has actual notice that the
commissioner has suspended or revoked the license of the licensee or
that the commissioner has issued an order taking possession of the
property and business of the licensee shall conduct money
transmission on behalf of the licensee.
(b) If any agent of a licensee, after first having actual notice
that the commissioner has suspended or revoked the license of the
licensee or that the commissioner has issued an order taking
possession of the property and business of the licensee, conducts
money transmission on behalf of the licensee, the agent shall be
jointly and severally liable with the licensee for payment of the
money transmission.
Article 5. Eligible Securities
1830. (a) A licensee shall at all times own eligible securities
having an aggregate market value computed in accordance
with United States generally accepted accounting principles of not
less than the aggregate amount of all of its outstanding payment
instruments and stored value obligations issued or sold in the United
States and all outstanding money received for transmission in the
United States.
(b) If the commissioner finds that the financial condition of a
licensee is impaired, or that the financial condition of a licensee
is such that its business is being conducted in an unsafe and unsound
manner, the commissioner, to protect the public interest, may issue
an order, subject to the procedures set forth in Section 1864, doing
one or both of the following:
(1) Increasing the amount of eligible securities that the licensee
must maintain.
(2) Requiring the licensee to obtain, as security for the payment
of outstanding money transmission obligations, additional security in
the form of financial guarantees.
(b)
(c) Eligible securities, even if commingled with other
assets of the licensee, are deemed to be held in trust for the
benefit of the purchasers and holders of the licensee's outstanding
payment instrument and stored value obligations, and all senders of
outstanding money received for transmission, in the event of
bankruptcy or receivership of the licensee, or in the event of an
action by a creditor against the licensee who is not a beneficiary of
this statutory trust. No eligible securities impressed with a trust
pursuant to this subdivision shall be subject to attachment, levy of
execution, or sequestration by order of any court, except for a
beneficiary of this statutory trust.
(c)
(d) All outstanding payment instruments and stored
value issued or sold by a licensee or its agent, and all outstanding
money received for transmission by a licensee or its agent, shall
remain a liability of the licensee from the time money or monetary
value is received by the licensee or its agent until the licensee
receives confirmation that such money or monetary value was received
by the beneficiary, or until the outstanding payment instrument or
stored value obligation has been paid, or until the money is refunded
to the customer.
(d)
(e) A licensee shall maintain a record in the United
States of proof of receipt by the beneficiary or refund to the
customer of money received for transmission.
1831. (a) For the purposes of this chapter, the following are
1831. (a) "Eligible
security" means any United States currency eligible security or
foreign currency eligible security.
(b) For the purposes of this chapter,
the following are United States currency eligible securities:
(1) Cash.
(2) Any deposit in an insured bank or an insured savings and loan
association or insured credit union.
(3) Any bond, note, or other obligation that is issued or is
guaranteed by the United States or any agency of the United States.
(4) Any bond, note, or other obligation that is issued or
guaranteed by any state of the United States or by any governmental
agency of or within any state of the United States and that is
assigned an eligible rating by an eligible securities rating service.
(5) Any bankers acceptance that is eligible for discount by a
federal reserve bank.
(6) Any commercial paper that is assigned an eligible rating by an
eligible rating securities service.
(7) Any bond, note, or other obligation or preferred
stock that is assigned an eligible rating by an eligible
securities rating service.
(8) Any share of an investment company that is an open-end
management company, that is registered under the Investment Company
Act of 1940 (12 U.S.C. Sec. 80a-1, et seq.), that holds itself out to
investors as a money market fund, and that operates in
accordance with all provisions of the Investment Company Act of 1940,
and the regulations of the Securities and Exchange Commission
applicable to money market funds, including Section 270.2a-7 of the
regulations of the Securities and Exchange Commission (17 C.F.R. Sec.
270.2a-7).
For purposes of this paragraph and paragraph (9), "investment
company," "management company," and "open-end" have the meanings set
forth in Sections 3, 4, and 5, respectively, of the Investment
Company Act of 1940 (12 U.S.C. Secs. 80a-4, and 80a-5, respectively).
(9) Any share of an investment company that is an open-end
management company, that is registered under the Investment Company
Act of 1940 (12 U.S.C. Sec. 80a-1 et seq.), and that invests
exclusively in securities that constitute eligible securities
that comply with valuation requirements of this chapter .
(10) Any account due to any licensee from any agent in the
United States on account of the receipt of money on behalf of
the licensee for money transmission by the agent, if the account is
current and not past due or otherwise doubtful of collection.
(11) Any other security or class of securities that the
commissioner has by regulation or order declared to be eligible
securities.
(c) "Foreign currency eligible security" means any of the
following that is denominated in a foreign currency:
(1) Cash.
(2) Any deposit in an office of a bank acceptable to the
commissioner that is located in a foreign country.
(3) Any other security or class of securities that the
commissioner has by regulation or order declared to be eligible
securities pursuant to Section 1835.
(b)
(d) For the purposes of this section
chapter , "value" means the following:
(1) When used with respect to an eligible security owned by a
licensee of the type described in paragraph (10) of subdivision
(a) (b) , net carrying value as
determined in conformity with United States generally accepted
accounting principles. However, in computing the value of the
account, any amount that consists of money that has not been remitted
to the licensee or refunded within 45 business days of receipt by
the agent shall be excluded from the value of the account and shall
be excluded from the calculation of eligible securities.
(2) The following Market value when
used with respect to any other eligible security owned by a licensee
: .
(A) In case the practice and policy of the licensee is to hold
eligible securities to maturity, net carrying value as determined in
conformity with United States generally accepted accounting
principles.
(B) In any other case, market value.
1832. 1830. (a) In computing for
purposes of Section 1831 the aggregate value of eligible securities
owned by a licensee, all of the following shall be excluded:
(1) The value of any eligible security if and to the extent that
the value of the eligible security, when combined with the aggregate
value of all other eligible securities owned by the licensee that are
issued or guaranteed by the same person or by any affiliate of the
same person by whom the eligible security is issued or guaranteed,
exceeds 10 percent of the aggregate value of all eligible securities
owned by the licensee.
(2) The portion of the aggregate value of all eligible securities
of the type described in paragraph (10) of subdivision (a)
(b) of Section 1831 that exceeds 25 percent of
the aggregate value of all eligible securities owned by the licensee;
and that portion of the aggregate value of agent receivables from
any one person that exceeds 10 percent of the aggregate value of all
eligible securities owned by the licensee, or any higher percentage
that the commissioner may approve for the licensee, up to a maximum
of 20 percent.
(3) The portion of the aggregate value of all eligible securities
of the type described in paragraph (6) of subdivision (b) of Section
1831 that exceeds 20 percent of the aggregate value of all eligible
securities owned by the licensee.
(4) The portion of the aggregate value of all eligible securities
of the type described in paragraph (7) of subdivision (b) of Section
1831 that exceeds 20 percent of the aggregate value of all eligible
securities owned by the licensee.
(5) The portion of the aggregate value of all eligible securities
of the type described in paragraph (8) of subdivision (b) of Section
1831, except for a money market fund that invests exclusively in
obligations issued or guaranteed by the United States or any agency
of the United States, that exceeds 20 percent of the aggregate value
of all eligible securities owned by the licensee.
(6) The portion of the aggregate value of all eligible securities
of the type described in paragraphs (6), (7), and (8) of subdivision
(b) of Section 1831 that exceeds 50 percent of the aggregate value of
all eligible securities owned by the licensee.
(b) Subdivision (a) shall not be deemed to require the exclusion
of the value of any of the following eligible securities, and each of
the following eligible securities shall be exempted from the
limitations of subdivision (a):
(1) The following eligible securities:
(A) Cash.
(B) Any deposit in an United States insured bank or an United
States insured savings and loan association or United States insured
credit union.
(B) Any deposit in an insured bank, insured savings and loan
association, or insured
(C) Any bond, note, or other obligation for the payment of which
the full faith and credit of the United States are pledged.
(2) Any eligible security that the commissioner, in view of the
financial condition of the obligor or issuer and such other factors
as may in the opinion of the commissioner be relevant, finds to be of
such quality that exclusion of the value of such eligible security
pursuant to subdivision (a) is not necessary for the purposes of this
chapter and which the commissioner by regulation or order exempts,
in whole or in part, from the limitations of subdivision (a).
1833. (a) A licensee shall be deemed to own an eligible security
only if the following apply:
(1) The licensee owns the eligible security solely and exclusively
in its own right, both of record and beneficially.
(2) The eligible security is not subject to any pledge, lien, or
security interest.
(3) The licensee can freely negotiate, assign, or otherwise
transfer the eligible security.
(b) Notwithstanding subdivision (a), no licensee shall be deemed
not to own an eligible security solely on account of any of the
following facts, provided that, but for that fact, the licensee would
be deemed to own the eligible security under the provisions of
subdivision (a):
(1) The fact that the eligible security is owned of record by a
documented nominee of the licensee or by a securities depository.
(2) The fact that the licensee has pledged the eligible security
with the United States or any state of the United States to secure
payment by the licensee of transmission money.
1834. If the commissioner finds that any eligible security or
class of eligible securities is not of sufficient liquidity or
quality to be eligible securities, the commissioner may by regulation
or order declare the security or class of securities to be
ineligible.
1835. If the commissioner finds that any security or class of
securities that is not an eligible security is of sufficient
liquidity and quality to be an eligible security, the commissioner
may by regulation or order declare the security or class of
securities to be eligible securities.
1836. (a) If the commissioner finds that a rating assigned to a
class of securities by an eligible securities rating service
indicates that the class of securities is of sufficient quality to be
eligible securities, the commissioner may by regulation or order
declare the rating to be an eligible rating.
(b) With respect to this chapter "eligible rating" means any
rating assigned to such security or class of securities by such
eligible securities rating service which the commissioner has by
regulation or order declared to be an eligible rating.
1837. (a) The commissioner may by regulation or order declare a
securities rating service to be an eligible securities rating service
if the commissioner finds the following with respect to the
securities rating service:
(1) It has been continuously engaged in the business of rating
securities for a period of not less than three years.
(2) It is competent to rate securities and is nationally
recognized for rating securities in a competent manner.
(3) It publishes its ratings of securities on a nationwide basis.
(b) With respect to this chapter "eligible securities rating
service" means any securities rating service that the commissioner by
regulation or order declared to be an eligible security
securities ratings service.
1838. A licensee shall maintain eligible securities that are
adequately diversified, predominantly of a duration commensurate with
the licensee's outstanding money transmission obligations, and of
sufficient liquidity and quality to promptly pay the outstanding
money transmission obligations of the licensee.
Article 6. Consumer Disclosures
1840. (a) (1) Each licensee shall file with the commissioner a
certified copy of every receipt form used by it or by its agent for
receiving money for transmission prior to its first use. No licensee
or its agent shall use any receipt, a certified copy of which has not
been filed with the commissioner, or use a receipt that the
commissioner has deemed not to be in compliance pursuant to paragraph
(2).
(2) If the commissioner determines, within 10
30 business days of the filing date of a receipt, that the
receipt does not comply with the requirements of this section or
Sections 1842 and 1843, the commissioner shall notify the licensee in
writing that the receipt is not in compliance with those
requirements.
(b) Notwithstanding subdivision (a), before a new licensee issues
its first receipt to a customer, it shall file with the commissioner
a certified copy of the receipt forms to be used by it or its agents
for receiving money for transmission. The new licensee shall not use
the receipt forms until approved by the commissioner. For purposes of
this subdivision, a new licensee is a licensee that has not been
previously licensed by the commissioner as a money transmitter or has
not previously received money for transmission in California.
(c) If a receipt is required by this chapter to be in English and
another language, the English version of the receipt shall govern any
dispute concerning the terms of the receipt. However, any
discrepancies between the English version and any other version due
to the translation of the receipt from English to another language
including errors or ambiguities shall be construed against the
licensee or its agent and the licensee or its agent shall be liable
for any damages caused by these discrepancies.
(d) Any licensee violating the requirements of this section shall
be subject to a fine of fifty dollars ($50) for each violation. This
provision is in addition to any other enforcement provisions that may
apply to such a violation.
(e) If any licensee or its agent uses a receipt form, a certified
copy of which has not been filed with the commissioner, the licensee
shall be liable for the acts of its agent whether or not the licensee
authorized the agent to use that form.
(f) The receipt form shall comply with the requirements of
Sections 1842 and 1843.
1841. Every licensee or its agent shall forward all money
received for transmission or give instructions committing equivalent
money to the person designated by the customer within 10 days after
receiving that money, unless otherwise ordered by his or her
customer.
1842. (a) Every licensee or its agent shall refund to the
customer within 10 days of receipt of the customer's written request
for a refund any and all money received for transmission unless any
of the following occurs:
(1) The money has been forwarded within 10 days of the date of
receipt
(2) Instructions have been given committing an equivalent amount
of money to the person designated by the customer within 10 days of
the date of the receipt of the money from the customer.
(3) The customer instructs the licensee to transmit the money at a
time beyond 10 days. If the customer gives instructions as to when
the money shall be forwarded or transmitted and the moneys have not
yet been forwarded or transmitted, the licensee or its agent shall
refund the customer's money within 10 days of receipt of the customer'
s written request for a refund.
(4) Refund would violate law.
(b) In the case of money received for transmission, a receipt
shall be provided by a licensee or its agent to all customers which
shall be made available to the customer in English and in the
language principally used by that licensee or that agent to
advertise, solicit, or negotiate, either orally or in writing, at
that branch office if other than English. The receipt shall either
include or have attached a conspicuous statement in English and in
the language principally used by the licensee or that agent to
advertise, solicit, or negotiate, either orally or in writing at that
branch office if other than English in a size equal to at least 10
point bold type, as follows:
RIGHT TO REFUND
""You, the customer, are entitled to a refund
of the money to be transmitted as the result of
this agreement if _____ (name of licensee) does
not forward the money received from you within
10 days of the date of its receipt, or does not
give instructions committing an equivalent
amount of money to the person designated by you
within 10 days of the date of the receipt of
the funds from you unless otherwise instructed
by you.
If your instructions as to when the moneys
shall be forwarded or transmitted are not
complied with and the money has not yet been
forwarded or transmitted, you have a right to a
refund of your money.
If you want a refund, you must mail or deliver
your written request to _____ (name of
licensee) at _____ (mailing address of
licensee). If you do not receive your refund,
you may be entitled to your money back plus a
penalty of up to $1,000 and attorney's fees
pursuant to Section 1842 of the California
Financial Code.''
(c) A cause of action under this section may be brought in small
claims court if it does not exceed the jurisdiction of that court, or
in any other appropriate court. The customer shall be entitled to
recover each of the following:
(1) Any and all money received for transmission, plus any fees and
charges paid by the customer.
(2) A penalty in an amount not to exceed one thousand dollars
($1,000). The court shall award the prevailing party costs and
attorney's fees.
1843. (a) The receipt presented to each customer for money
received for transmission pursuant to subdivision (b) of Section 1842
shall clearly state the rate of exchange for the particular
transaction, if any, the amount of commission or fees, and the net
exchange after all fees and commissions have been deducted. The
receipt shall also state the total amount of money presented by the
customer and the total amount to be delivered to the beneficiary
designated by the customer. These disclosures shall be in English and
in the same language as that principally used by the licensee or any
agent of the licensee to advertise, solicit, or negotiate, either
orally or in writing, at that branch office if other than English.
(b) If window and exterior signs concerning the rates of exchange
for money received for transmission are used, they shall clearly
state in English and in the same language principally used by the
licensee or any agent of the licensee to advertise, solicit, or
negotiate, either orally or in writing, at that branch office if
other than English, the rate of exchange for exchanging the currency
of the United States for foreign currency. If an interior sign or any
advertising is used that quotes exchange rates, it shall, in
addition to clearly stating the rates of exchange for exchanging the
currency of the United States for foreign currency, also state all
commissions and fees charged on all such transactions.
(c) At each branch office, there shall be disclosed the exchange
rates, fees, and commissions charged in English and in the same
language principally used by the licensee or any agent of the
licensee to advertise, solicit, or negotiate, either orally or in
writing, with respect to money received for transmission at that
branch office. At each branch office, there shall be signage clearly
identifying the name of the licensee as well as any trade names used
by the licensee at that branch office.
(d) If the customer does not specify at the time the money is
presented to the licensee or its agent the country to which the money
is to be transmitted, the rate of exchange for the transaction is
not required to be set forth on the receipt. If the customer does
specify at the time the money is presented to the licensee or its
agent the country to which the money is to be transmitted but the
specified country's laws require the rate of exchange for the
transaction to be determined at the time the transaction is paid out
to the intended recipient, the rate of exchange for the transaction
is not required to be set forth on the receipt.
1844. Each licensee or agent shall prominently post on the
premises of each branch office that issues or sells payment
instruments, and at machines located in this state and operated by
the licensee or agent that issues or sells payment instruments, a
notice clearly stating that payment instruments are not insured by
the federal government, the state government, or any other public or
private entity. This notice shall be printed in English and in the
same language principally used by the licensee or any agent of the
licensee to advertise, solicit, or negotiate, either orally or in
writing, with respect to the purchase of payment instruments. The
information required in this notice shall be clear, legible, and in
letters not less than one-half inch in height. The notice shall be
posted in a conspicuous location in the unobstructed view of the
public within the premises. The licensee shall provide to each of its
agents the notice required by this section. In those locations
operated by an agent, the agent, not the licensee, shall be
responsible for the failure to properly post the required notice.
1845. (a) Each licensee or agent shall prominently post on the
premises of each branch office that conducts money transmission a
notice stating that:
""If you have complaints with respect to any
aspect of the money transmission activities
conducted at this location, you may contact the
California Department of Financial Institutions
at its toll-free telephone number, 1-800-622-
0620, by e-mail at
consumer.complaint@dfi.ca.gov, or by mail at
Department of Financial Institutions, Consumer
Services, 1810 13th Street, Sacramento, CA
95811.''
(b) The commissioner may by order or regulation modify the content
of the notice required by this section. This notice shall be printed
in English and in the same language principally used by the licensee
or any agent of the licensee to advertise, solicit, or negotiate
either orally or in writing, with respect to money transmission at
that branch office. The information required in this notice shall be
clear, legible, and in letters not less than one-half inch in height.
The notice shall be posted in a conspicuous location in the
unobstructed view of the public within the premises. The licensee
shall provide to each of its agents the notice required by this
section. In those locations operated by an agent, the agent, and not
the licensee, shall be responsible for the failure to properly post
the required notice.
1846. (a) No licensee shall sell or issue any form of payment
instrument in California unless a certified copy of the payment
instrument has first been filed with the commissioner. The payment
instrument shall clearly identify the licensee as the issuer.
(b) The commissioner may by order or regulation declare that a
form of payment instrument is prohibited if it is misleading in any
material respect or otherwise does not comply with applicable law.
(c) A payment instrument that identifies the agent through which
the licensee sells the payment instrument shall identify the agent as
such and shall identify the licensee at least as conspicuously as it
does the agent.
Article 7. Examinations, Special Reports, and Records
1850. (a) The commissioner may at any time and from time to time
examine the business and any office, within or outside this state, of
any licensee or any agent of a licensee in order to ascertain
whether that business is being conducted in a lawful manner and
whether all money transmission is properly accounted for.
(b) The directors, officers, and employees of any licensee or
agent of a licensee being examined by the commissioner shall exhibit
to the commissioner, on request, any or all of the licensee's
accounts, books, correspondence, memoranda, papers, and other records
and shall otherwise facilitate the examination so far as it may be
in their power to do so.
1851. The commissioner may consult and cooperate with other state
or federal money transmission regulators in enforcing and
administering this chapter. They may jointly pursue examinations and
take other official action that they are otherwise empowered to take.
1852. A licensee shall file a report with the commissioner within
five business days after the licensee has reason to know of the
occurrence any of the following events:
(a) The filing of a petition by or against the licensee under the
United States Bankruptcy Code (11 U.S.C. Secs. 101-110, incl.) for
bankruptcy or reorganization.
(b) The filing of a petition by or against the licensee for
receivership, the commencement of any other judicial or
administrative proceeding for its dissolution or reorganization, or
the making of a general assignment for the benefit of its creditors.
(c) The commencement of a proceeding to revoke or suspend its
license in a state or country in which the licensee engages in
business or is licensed.
(d) The cancellation or other impairment of the licensee's bond or
other security.
(e) A charge or conviction of the licensee or of an executive
officer, manager, director , or person in control of the
licensee for a felony.
(f) A charge or conviction of an agent for a felony.
1853. A licensee that is a money services business under the
regulations adopted pursuant to the United States Bank Secrecy Act
(31 C.F.R. Part 103) and the agents of the licensee that are money
services businesses shall comply with those regulations.
1854. (a) A licensee shall maintain the following records for
determining its compliance with this chapter for at least three
years:
(1) A record of each payment instrument or stored-value
stored value obligation sold.
(2) A general ledger posted at least monthly containing all asset,
liability, capital, income, and expense accounts.
(3) Bank statements and bank reconciliation records.
(4) Records of outstanding payment instruments and
stored-value stored value obligations.
(5) Records of each payment instrument and stored-value obligation
paid within the three-year period.
(6) A list of the last known names and addresses of all of the
licensee's agents and their branch offices.
(7) Any other records the commissioner reasonably requires by
order or regulation.
(b) A licensee or its agent shall maintain records of any receipts
provided pursuant to Section 1842 for six months or a longer period
of time specified in the contract between the licensee and its agent.
(b)
(c) The items specified in subdivision (a)
subdivisions (a) and (b) may be maintained in
any form of record.
(c)
(d) Records may be maintained outside this state if
they are made available to the commissioner on seven days' notice
that is sent in a record.
(d)
(e) If records not required to be maintained in English
pursuant to Section 286 are in a language other than English, the
licensee shall provide records translated into English within seven
days' notice that is sent in a record.
Article 8. Enforcement
1860. (a) If it appears to the commissioner that a licensee is
violating or failing to comply with any law of this state, the
commissioner may direct the licensee to comply with the law by an
order issued under the commissioner's official seal, or if it appears
to the commissioner that any licensee is conducting its business in
an unsafe or injurious manner, the commissioner may in like manner
direct it to discontinue the unsafe or injurious practices. The order
shall require the licensee to show cause before the commissioner, at
a time and place to be fixed by the commissioner, as to why the
order should not be observed.
(b) If, upon any hearing held pursuant to subdivision (a), the
commissioner finds that the licensee is violating or failing to
comply with any law of this state or is conducting its business in an
unsafe or injurious manner, the commissioner may make a final order
directing it to comply with the law or to discontinue the unsafe or
injurious practices. A licensee shall comply with the final order
unless, within 10 days after the issuance of the order, its
enforcement is restrained in a proceeding brought by the licensee.
1861. (a) The commissioner may issue an order suspending or
revoking a license, or taking possession of and placing a licensee in
receivership, if after notice and an opportunity for hearing, the
commissioner finds that:
(1) The licensee is violating this chapter or a regulation adopted
or an order issued under this chapter, or a condition of approval
issued under this chapter.
(2) The licensee does not cooperate with an examination or
investigation by the commissioner.
(3) The licensee engages in fraud, intentional misrepresentation,
or gross negligence.
(4) The competence, experience, character, or general fitness of
the licensee, or any director, officer, employee, or person in
control of a licensee, indicates that it is not in the public
interest to permit the person to provide money transmission services.
(5) The licensee engages in an unsafe or unsound practice.
(6) The licensee is insolvent, suspends payment of its
obligations, or makes a general assignment for the benefit of its
creditors.
(7) The licensee does not remove an agent after the commissioner
issues and serves upon the licensee a final order including a finding
that the agent has violated this chapter.
(8) The licensee has applied for an adjudication of bankruptcy,
reorganization, arrangement, or other relief under any bankruptcy,
reorganization, insolvency, or moratorium law, or any person has
applied for any such relief under that law against the licensee and
the licensee has by any affirmative act approved of or consented to
the action or the relief has been granted.
(9) Any fact or condition exists that, if it had existed at the
time when the licensee applied for its license, would have been
grounds for denying the application.
(b) In determining whether a licensee is engaging in an unsafe or
unsound practice, the commissioner may consider the size and
condition of the licensee's provision of money transmission services,
the magnitude of the loss, the gravity of the violation of this
chapter, and the previous conduct of the person involved.
1862. (a) The commissioner may issue an order suspending or
revoking the designation of an agent if, after notice and an
opportunity for hearing, the commissioner finds that:
(1) The agent violated this chapter or a regulation adopted or an
order issued under this chapter.
(2) The agent did not cooperate with an examination or
investigation by the commissioner.
(3) The agent engaged in fraud, intentional misrepresentation, or
gross negligence.
(4) The agent is convicted of a violation of a state or federal
anti-money laundering statute.
(5) The competence, experience, character, or general fitness of
the agent, or any director, officer, employee, or person in control
of the agent, indicates that it is not in the public interest to
permit the agent to provide money transmissions.
(6) The agent is engaging in an unsafe or unsound practice.
(7) The agent has made or caused to be made in any application or
report filed with the commissioner or in any proceeding before the
commissioner, any statement that was at the time
and in the light of the circumstances
under which it was made, false or misleading with respect to any
material fact, or has omitted to state in any of those applications
or reports , reports, or
proceedings any material fact which is required to be stated
therein.
(8) The agent is an agent of a licensee who, because of its
operations and financial condition, is not competent to supervise and
monitor the agent.
(9) The agent will not comply with all applicable provisions of
this chapter and of any regulation or order issued under this
chapter.
(b) In determining whether an agent is engaging in an unsafe or
unsound practice, the commissioner may consider the size and
condition of the agent's provision of money transmission services,
the magnitude of the loss, the gravity of the violation of this
chapter or a rule adopted or order issued under this chapter, and the
previous conduct of the agent.
(c) No licensee shall appoint as an agent any person with respect
to whom an order issued under this section is in effect.
(d) No person with respect to whom an order issued under this
section is in effect shall become or continue to be an agent of any
licensee.
(e) If applicable, the commissioner may disclose to the licensee
criminal history information upon which an order is based.
1863. (a) Every order, decision, or other official act of the
commissioner is subject to review in accordance with law.
(b) Whenever the commissioner has taken possession of the property
and business of any licensee, the licensee, within 10 days after
that taking, if it deems itself aggrieved thereby, may apply to the
superior court in the county in which the head office of the licensee
is located to enjoin further proceedings. The court, after citing
the commissioner to show cause why further proceedings should not be
enjoined and after a hearing and a determination of the facts upon
the merits, may dismiss the application or enjoin the commissioner
from further proceedings and direct the commissioner to surrender the
property and business to the licensee.
1864. (a) If the commissioner finds that any of the factors set
forth in Section 1861 is true with respect to any licensee and that
it is necessary for the protection of the public interest, the
commissioner may issue an order immediately suspending or revoking
the licensee's license.
(b) Within 30 days after the license is suspended or revoked
pursuant to subdivision (a), the licensee may file with the
commissioner an application for a hearing on the suspension or
revocation.
(c) If the commissioner fails to commence a hearing within 15
business days after the application is filed with the commissioner
pursuant to subdivision (b) or within a longer period of time agreed
to by the licensee, the suspension or revocation shall be deemed
rescinded.
(d) Within 30 days after the hearing, the commissioner shall
affirm, modify, or rescind the suspension or revocation. Otherwise,
the suspension or revocation shall be deemed rescinded.
(e) The right of the licensee to petition for judicial review of
the suspension or revocation shall not be affected by the failure of
the licensee to apply to the commissioner for a hearing on the
suspension or revocation pursuant to subdivision (b).
1865. (a) If the commissioner finds that any of the factors set
forth in Section 1862 is true with respect to any agent and that it
is necessary for the protection of the public interest, the
commissioner may issue an order immediately suspending or barring
that agent from continuing to be or becoming an agent of any licensee
during the period for which that order is in effect.
(b) Within 30 days after an order is issued pursuant to
subdivision (a), the licensee or the agent or former agent with
respect to whom the order was issued may file with the commissioner
an application for a hearing on the order.
(c) If the commissioner fails to commence a hearing within 20
business days after the application is filed with the commissioner
pursuant to subdivision (b) or within a longer period of time agreed
to by the parties, the suspension or revocation shall be deemed
rescinded.
(d) Within 30 days after the hearing, the commissioner shall
affirm, modify, or rescind the order.
(e) The right of the licensee or agent or former agent to petition
for judicial review of the order shall not be affected by the
failure of that person to apply to the commissioner for a hearing on
the order pursuant to subdivision (b).
1866. The commissioner may assess a civil penalty against a
person that violates this chapter or a regulation adopted or an order
issued under this chapter in an amount not to exceed one thousand
dollars ($1,000) for each violation or, in the case of a continuing
violation, one thousand dollars ($1,000) for each day or part thereof
during which the violation continues, plus this state's costs and
expenses for the investigation and prosecution of the matter,
including reasonable attorney's fees.
1867. (a) A person that intentionally makes a false statement,
misrepresentation, or false certification in a record filed or
required to be maintained under this chapter or that intentionally
makes a false entry or omits a material entry in such a record is
guilty of a felony.
(b) A person that knowingly engages in an activity for which a
license is required under this chapter without being licensed or
exempt from licensure under this chapter is guilty of a
felony.
(c) Nothing in this chapter limits the power of the state to
punish any person for any act that constitutes a crime under any
statute.
1868. The enforcement provisions of this chapter are in addition
to any other enforcement powers that the commissioner may have under
law.
Article 9. Voluntary Surrender of License and Miscellaneous
Provisions
1870. Any licensee may surrender its license by filing with the
commissioner the license and a report with any information as the
commissioner requires. The voluntary surrender of the license shall
become effective at the time and upon the conditions as the
commissioner specifies by order.
1871. If any provision of this chapter or the application thereof
to any person or circumstances is held invalid, illegal, or
unenforceable, that invalidity, illegality, or unenforceability shall
not affect other provisions or applications of this chapter that can
be given effect without the invalid, illegal, or unenforceable
provision or application, and to this end, the provisions of this
chapter are declared to be severable.
1872. (a) A license issued under Chapter 14 (commencing with
Section 1800), Chapter 14A (commencing with Section 1851), or
Division 16 (commencing with Section 33000) that is in effect
immediately before January 1, 2011, shall remain in effect as a valid
license under this chapter.
(b) Any person that, prior to January 1, 2011, was not required to
obtain a license under Chapter 14 (commencing with Section 1800),
Chapter 14A (commencing with Section 1851), or Division 16
(commencing with Section 33000), but is required to have a license
under this chapter, shall file an application for a license pursuant
to this chapter by July 1, 2011, in order to continue conducting
money transmission in this state directly or through agents. If the
application is timely filed and pending with the commissioner, that
person may continue to conduct money transmission in this state,
until the application has been approved, abandoned, or denied.
SEC. 3. Chapter 14A (commencing with Section 1851) of Division 1
of the Financial Code is repealed.
SEC. 4. Division 16 (commencing with Section 33000) of the
Financial Code is repealed.
SEC. 5. No reimbursement is required by this act pursuant to
Section 6 of Article XIII B of the California Constitution because
the only costs that may be incurred by a local agency or school
district will be incurred because this act creates a new crime or
infraction, eliminates a crime or infraction, or changes the penalty
for a crime or infraction, within the meaning of Section 17556 of the
Government Code, or changes the definition of a crime within the
meaning of Section 6 of Article XIII B of the California
Constitution.