BILL ANALYSIS �
AB 786
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Date of Hearing: May 15, 2013
ASSEMBLY COMMITTEE ON APPROPRIATIONS
Mike Gatto, Chair
AB 786 (Dickinson) - As Introduced: February 21, 2013
Policy Committee: Banking and
Finance Vote: 12-0
Urgency: No State Mandated Local Program:
No Reimbursable:
SUMMARY
This bill makes various changes to the Money Transmission Act
(MTA). Specifically, this bill:
1)Exempts from the MTA a person that delivers payroll money on
behalf of an employer to employees.
2)Revises the minimum net worth requirements so that an
applicant or licensee must maintain minimum net worth ranging
from $100,000 to $500,000 depending on the estimated or actual
transaction volume, as determined by the commissioner of
Department of Business Oversight. Provides the commissioner
with authority to increase net worth up to $2,000,000 if the
commissioner determines that the higher net worth is necessary
to achieve specified purposes.
3)Enhances enforcement of the MTA by providing the commissioner
the authority to bring an action to enjoin a person from
violating the MTA. Additionally, allows the commissioner to
seek ancillary relief, including, but not limited to, a claim
for restitution, disgorgement or damages on behalf of the
persons injured by the act or practice.
FISCAL EFFECT
Minor and absorbable costs to the Department of Business
Oversight.
COMMENTS
1)Purpose . The last five years have witnessed technological
AB 786
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changes that have drastically altered the old business model
of remittances, as well as the ways in which consumers pay for
goods and services. The traditional model involved visiting
the location of a money transmitter agent, but new
technologies have completely changed the way in which
customers send and use money.
2)Opposition . Think Computer Corporation opposes AB 786. They
argue against capital requirements in a non-banking context,
arguing they are ineffective. They point out that money
transmitters do not make loans so capital requirements must be
evaluated in a different light. The argue capital
requirements and other restrictions on money lenders have a
chilling effect on innovation and investment.
3)Background . In the brief time since the MTA became law,
technological innovation in the payments industry has
increased as money transmission has transcended into mobile
applications and new point of sale (POS) devices. As a
result, numerous parties have been raising concerns about the
MTA and potential unintended consequences of its application.
Five years ago the bulk of money transmission activity
involved international remittances where the customer would go
to a brick and mortar location to send money to friends or
family in other countries, now mobile phone users can use apps
to pay for goods and services where the customers payment
method (credit card or bank account) sends money to the third
party provider and then that provider sends payment to the
provider of goods and services.
Analysis Prepared by : Roger Dunstan / APPR. / (916) 319-2081