BILL ANALYSIS                                                                                                                                                                                                    Ó



                                                                      



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          |SENATE RULES COMMITTEE            |                  AB 1525|
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                                 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, 
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             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 

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          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 

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          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


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           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

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