BILL ANALYSIS Ó ------------------------------------------------------------ |SENATE RULES COMMITTEE | AB 1525| |Office of Senate Floor Analyses | | |1020 N Street, Suite 524 | | |(916) 651-1520 Fax: (916) | | |327-4478 | | ------------------------------------------------------------ THIRD READING Bill No: AB 1525 Author: Allen (D), et al. Amended: 7/5/12 in Senate Vote: 21 SENATE BANKING & FINANCIAL INST. COMM. : 4-2, 6/27/12 AYES: Vargas, Evans, Kehoe, Liu NOES: Blakeslee, Walters NO VOTE RECORDED: Padilla ASSEMBLY FLOOR : 46-26, 5/17/12 - See last page for vote SUBJECT : Elder or dependent adult financial abuse SOURCE : California Senior Legislature San Diego County District Attorney DIGEST : This bill requires specified money transmission licensees to provide, on or before April 1, 2013, and annually thereafter, each of their agents with training materials on recognizing elder or dependent adult financial abuse, and on the appropriate response to suspected elder or dependent adult financial abuse in a transaction. ANALYSIS : Existing law provides for the Money Transmission Act (Division 1.2 of the Financial Code, Section 2000 et seq.), as follows: 1. Corporations and limited liability companies are eligible for licensure, as specified. Once licensed, CONTINUED AB 1525 Page 2 these entities employ "agents." Agents are defined as persons who provide money transmission in California on behalf of licensees. Agents do not include officers or employees of licensees. Licensees are liable for the transmission of money, once that money is received by an agent. 2. Once licensed, licensees and the agents working on their behalf are authorized to sell or issue payment instruments, as defined (activities that would be covered by this bill); sell or issue stored value (not covered by this bill); and receive money for transmission (covered by this bill). This bill: 1. Requires, on or before April 1, 2013, and annually thereafter, each corporation or limited liability company licensed for money transmission provide its agents under contract with training materials on recognizing elder or dependent adult financial abuse, and how to appropriately respond if the agent suspects that he/she is being asked to engage in money transmission for a fraudulent transaction involving an elder or dependent adult. 2. Requires, to ensure that agents that are newly appointed by licensees receive the training materials described above in a timely manner, each licensee provide those materials to any newly appointed agent no later than one month following the appointment of that agent. 3. Specifies this bill does not apply to licensees that are engaged solely in selling or issuing stored value. Licensees that engage in money transmission activities such as selling or issuing payment instrument or receiving money for transmission shall be subject to this bill only with respect to their agents under contract for those activities. Background : Wire Transfer Fraud: According to background information provided by the author using statistics from the National CONTINUED AB 1525 Page 3 White Collar Crime Center, 1,259 California seniors, aged 60 or older, lost a total of over $7.1 million during 2011, via scams that involved wire transfers. From January to March 15, 2012, 212 California seniors lost a total of just under $2 million to scams involving wire transfers. The Federal Trade Commission (FTC) reports that wire transfers are the number one form of consumer scam. In 2010 alone, 43,866 complaints involving wire transfer scams were made to the FTC. These scams involved people posing as family members, friends, legitimate businesses, sweepstake contests, and government entities. The author's office observes that seniors are particularly vulnerable to these scams, and are thus easy targets. Regulation of Money Transmitters in California: California's Money Transmission Act licenses businesses, which then hire agents to perform authorized services. For example, Western Union is a licensee, which hires several thousand agents across California, including grocery stores, convenience markets, and other storefronts, to offer Western Union's money transmission services. Protections Currently Exist Under The Money Transmission Act . The Money Transmission Act does not cap the amount of money that may be transmitted by any individual. However, the federal Bank Secrecy Act requires money services businesses, including money transmitters, to register with the Financial Crimes Enforcement Network (FinCEN). Each entity that is registered with FinCEN is required to file a cash transaction report for any deposit, withdrawal, exchange of currency, or other payment or transfer that exceeds $10,000. The reporting entity is required to verify and record the name and address of the individual presenting the transaction, as well as the identity, account number, and social security number or tax identification number of any person or entity on whose behalf the transaction is made. Multiple currency transactions by or on behalf of the same person or entity during a business day, including transactions conducted at multiple locations of the same entity, must be aggregated. Money services businesses are also required to file suspicious activity reports with FinCEN when a transaction CONTINUED AB 1525 Page 4 conducted by, at, or through that business is both suspicious and in an amount of $2,000 or more. A transaction is suspicious, if the money services business knows, suspects, or has reason to suspect that the transaction involves funds derived from illegal acts, is intended or conducted to hide or disguise funds derived from illegal activity, is designed to evade the requirements of the Bank Secrecy Act, or serves no business or apparent lawful purpose, and for which there is no reasonable explanation after examining all available facts. The filing of a cash transaction report or a suspicious activity report by a money transmitter does not invalidate the money transfer that gave rise to those reports. Instead, the Department of Financial Institutions uses information that its licensees have filed with FinCEN during its periodic examinations of those licensees. FISCAL EFFECT : Appropriation: No Fiscal Com.: No Local: No SUPPORT : (Verified 8/9/12) California Senior Legislature (co-source) San Diego County District Attorney (co-source) AARP Alzheimer's Association American Federation of State, County and Municipal Employees, AFL-CIO Area Agency on Aging for San Luis Obispo and Santa Barbara Counties California Advocates for Nursing Home Reform California Police Chiefs Association Crime Victims Action Alliance Los Angeles County District Attorney's Office Older Women's League San Francisco Advisory Council to Aging and Adult Services OPPOSITION : (Verified 8/9/12) California Grocers Association California Retailers Association CONTINUED AB 1525 Page 5 ASSEMBLY FLOOR : 46-26, 5/17/12 AYES: Alejo, Allen, Ammiano, Atkins, Beall, Block, Blumenfield, Bonilla, Bradford, Brownley, Buchanan, Butler, Charles Calderon, Campos, Carter, Cedillo, Chesbro, Davis, Dickinson, Eng, Feuer, Fong, Fuentes, Furutani, Galgiani, Gatto, Gordon, Hall, Hayashi, Roger Hernández, Hill, Hueso, Huffman, Lara, Ma, Mendoza, Mitchell, Monning, V. Manuel Pérez, Portantino, Solorio, Swanson, Torres, Wieckowski, Williams, John A. Pérez NOES: Achadjian, Bill Berryhill, Conway, Donnelly, Beth Gaines, Garrick, Gorell, Grove, Hagman, Harkey, Huber, Jeffries, Jones, Knight, Logue, Mansoor, Miller, Morrell, Nestande, Nielsen, Norby, Olsen, Silva, Smyth, Valadao, Wagner NO VOTE RECORDED: Cook, Fletcher, Halderman, Bonnie Lowenthal, Pan, Perea, Skinner, Yamada JJA:d 8/9/12 Senate Floor Analyses SUPPORT/OPPOSITION: SEE ABOVE **** END **** CONTINUED