Bill Text: CA AB2209 | 2013-2014 | Regular Session | Amended
NOTE: There are more recent revisions of this legislation. Read Latest Draft
Bill Title: Money Transmission Act.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2014-09-20 - Chaptered by Secretary of State - Chapter 499, Statutes of 2014. [AB2209 Detail]
Download: California-2013-AB2209-Amended.html
Bill Title: Money Transmission Act.
Spectrum: Partisan Bill (Democrat 1-0)
Status: (Passed) 2014-09-20 - Chaptered by Secretary of State - Chapter 499, Statutes of 2014. [AB2209 Detail]
Download: California-2013-AB2209-Amended.html
BILL NUMBER: AB 2209 AMENDED
BILL TEXT
AMENDED IN SENATE JUNE 9, 2014
AMENDED IN ASSEMBLY MAY 5, 2014
INTRODUCED BY Assembly Member Dickinson
FEBRUARY 20, 2014
An act to amend Sections 2001, 2003, 2010, 2031, 2032, 2036, 2038,
2039, 2043, 2082, 2088, 2102, 2103, 2105, 2124, and 2175
of, and to add Section 2176 to, the Financial Code, relating to money
transmission.
LEGISLATIVE COUNSEL'S DIGEST
AB 2209, as amended, Dickinson. Money Transmission Act.
Existing law, the Money Transmission Act, provides for the
regulation of money transmissions and, unless an exemption applies,
requires the licensure by the Commissioner of Business Oversight of
persons, including corporations and limited liability companies, to
engage in this activity. Existing law declares the need to regulate
money transmission businesses in the 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 California. Under existing law, a licensure
licensee under the act is required to file various reports
with the commissioner with specified information, including the
total volume of activities, number of transactions conducted and
outstanding money transmissions in California and the United States
in a given calendar year quarter, as specified. It is
Existing law makes it a felony to make a false
statement, misrepresentation, or false certification in a record
filed or required to be maintained under the act, or to engage in an
activity for which a license is required without being licensed or
exempt from licensure.
This bill would revise the definition of money
transmission for purposes of the act, by deleting the component of
the definition involving receipt of money for transmission and
replacing it with a third party's acceptance of currency, funds, or
other value from a payor and delivery of the currency, funds, or
other value to a payee. The bill would exclude from this definition
transactions in which the recipient of the currency, funds, or other
value is an agent of the payee, as specified. exempt
from the requirements of the act a transaction in which the recipient
of the money, or other monetary value is an agent of the payee, and
delivery of the money or other monetary value to the agent satisfies
the payor's obligation to the payee. The bill would revise and
reorganize various provisions of the act relating to, among other
things, the definition of other relevant terms under the act, and the
required contents of license applications and customer receipts. The
bill would require that the report described above also include
, if feasible whether an outstanding money transmission was
conducted via mobile or other electronic
application or Internet Web site . By expanding the scope
of an existing crime, this bill would impose a state-mandated local
program.
This bill would include legislative declarations relating
to the expansion of money transmission services to include the use
of mobile applications, alternative point of sale systems, and other
consumer payment systems. The bill would authorize the
commissioner to exercise any power set forth in the act with respect
to a money transmission business, if necessary for the general
welfare of the public, regardless of the licensure status of the
money transmission business. The bill would revise provisions
relating to the commissioner's authority to provide guidance to
prospective applicants for a license to operate money transmission
business.
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. Section 2001 of the Financial Code is amended to read:
2001. 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, which have expanded
money transmission to include the use of mobile applications,
alternative point of sale systems, and other consumer payment
systems.
(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.
SEC. 2. Section 2003 of the Financial Code is amended to read:
2003. For purposes of this division, 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 subdivisions (q) and
(v), (s) and (x), 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 is not itself licensed as a money
transmitter in California and 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
division.
(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 Business Oversight.
(h) "Control" has the meaning set forth in Section 1250.
(i) "Day" means calendar day.
(j) "E-commerce" means the transaction of goods or services
initiated via mobile application or an Internet Web site.
(j)
(k) "In California" or "in this state" means physically
located in California, or with, to, or from persons located in
California.
(k)
(l) "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)
(m) "Licensee" means a corporation or limited liability
company licensed under this division.
(m)
(n) "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.
(n)
(o) "Monetary value" means a medium of exchange,
whether or not redeemable in money.
(o)
(p) "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.
(p)
(q) "Money transmission" means any of the following:
(1) Selling or issuing payment instruments.
(2) Selling or issuing stored value.
(3) (A) A third party's acceptance of currency, funds, or other
value from a payor and delivery of the currency, funds, or other
value to the payee. "Money transmission" does not include a
transaction in which the recipient of the currency, funds, or other
value is an agent of the payee, and delivery of the funds to the
agent satisfies the payor's obligation to the payee.
(B) For purposes of this paragraph, "agent" has the same meaning
as that term is defined in Section 2295 of the Civil Code.
(C) For purposes of this paragraph, "payee" means the intended
recipient of currency, funds, or other value from a payor.
(3) Receiving money for transmission.
(q)
(r) "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.
(r)
(s) "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.
(s)
(t) "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.
(t)
(u) "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.
(u)
(v) "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.
(v)
(w) "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.
(w)
(x) "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, except to the extent required by
applicable law to be redeemable in cash for its cash value.
(x)
(y) "Traveler's check" means an instrument that meets
all of the following:
(1) Is designated on its face by the term "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.
SEC. 3. Section 2010 of the Financial Code is amended to read:
2010. This division does not apply to the following:
(a) The United States or a department, agency, or instrumentality
thereof, including any 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
Chapter 20 (commencing with Section 1750) or that is authorized under
federal law to maintain a federal agency or federal branch office in
this state; a trust company licensed pursuant to Section 1042 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, with an office in
California, 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. Sec. 1 et seq.) 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
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 that delivers wages or salaries on behalf of
employers to employees or facilitates the payment of payroll taxes to
state and federal agencies, makes payments relating to employee
benefit plans, makes distribution of other authorized deductions from
employees' wages or salaries, or transmits other funds on behalf of
an employer in connection with transactions related to employees.
Notwithstanding this subdivision, a person described herein that
offers money transmission services or provides stored value cards
directly to individual customers shall comply with this division to
the extent of that activity.
(k) A person listed under subdivision (d) is exempted from all the
provisions of this division, except Sections 2062 and 2063.
(l) A transaction in which the recipient of the money, or other
monetary value is an agent of the payee, and delivery of the money or
other monetary value to the agent satisfies the payor's obligation
to the payee.
(1) For purposes of this subdivision, "agent" has the same meaning
as that term is defined in Section 2295 of the Civil Code.
(2) For purposes of this subdivision, "payee" means the provider
of goods or services, who is owed payment of money or other monetary
value from the payor for the goods or services.
(3) For purposes of this subdivision, "payor" means the recipient
of goods or services, who owes payment of money or monetary value to
the payee for the goods or services.
SEC. 4. Section 2031 of the Financial Code is amended to read:
2031. Only the following persons may apply for or be issued a
license:
(a) A corporation or limited liability company organized under the
laws of this state.
(b) 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.
(c) 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 Article 8
(commencing with Section 17708.01) of the Corporations Code, except a
limited liability company that is organized outside the United
States shall not be issued a license.
SEC. 5. Section 2032 of the Financial Code is amended to read:
2032. (a) An applicant for licensure under this division shall
pay to the commissioner a nonrefundable fee of five thousand dollars
($5,000).
(b) An applicant for a license under this division 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 instrument or instrument upon which
stored value is recorded, if applicable.
(8) A sample form of receipt for transactions that involve money
received for transmission.
(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 educational background for each 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. Sec. 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 in 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.
(c) The commissioner may waive any of the information required
under subdivision (b) or permit an applicant to submit other
information instead of the required information.
SEC. 6. Section 2036 of the Financial Code is amended to read:
2036. The commissioner may impose on any authorization, approval,
license, or order issued pursuant to this division any conditions
that are necessary for the safety and soundness of the licensee, or
reasonable or necessary to maintain or enhance consumer
protection.
SEC. 7. Section 2038 of the Financial Code is amended to read:
2038. 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 (a) of Section
2032.
(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.
SEC. 8. Section 2039 of the Financial Code is amended to read:
2039. (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 any other reports as may be required pursuant
to Sections 453, 454, and 455, each licensee shall, within 90 days
after the end of each fiscal year, or within any 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 any 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 any 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 any 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 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 2081.
(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 division and in the United States in the
calendar year quarter categorized by type of money transmission, and
, if feasible whether the transmission was conducted via
mobile application or other electronic
application Internet Web site . 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.
SEC. 9. Section 2043 of the Financial Code is amended to read:
2043. (a) On or before April 1, 2013, and annually thereafter,
each licensee shall 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 or she
is being asked to engage in money transmission for a fraudulent
transaction involving an elder or dependent adult.
(b) To ensure that agents that are newly appointed by licensees
pursuant to Section 2060 receive the training materials described in
subdivision (a) in a
timely manner, each licensee shall provide those materials to any
newly appointed agent no later than one month following the
appointment of that agent.
(c) This section shall not apply to licensees that are engaged
solely in selling or issuing stored value pursuant to paragraph (2)
of subdivision (p) (q) of Section 2003.
Licensees that engage in money transmission activities pursuant to
paragraph (1) or (3) of that subdivision, shall be subject to this
section only with respect to their agents under contract for
activities described in those paragraphs. Additionally, this section
shall not apply to licensees who exclusively offer their services via
an Internet Web site, or mobile
electronic application , or both .
SEC. 10. Section 2082 of the Financial
Code is amended to read:
2082. (a) "Eligible security" means any United States currency
eligible security or foreign currency eligible security.
(b) For the purposes of this division, 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 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 (15 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. 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 (15 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 (15 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 division.
(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.
(12) Any receivable owed by a bank and resulting from an automated
clearinghouse , debit, or credit-funded transmission.
(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 2086.
(d) For the purposes of this division, "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 (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) Market value when used with respect to any other eligible
security owned by a licensee.
SEC. 10. SEC. 11. Section 2088 of the
Financial Code is amended to read:
2088. (a) The commissioner may by regulation or order declare a
credit rating agency 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 division "eligible securities rating
service" means any credit rating agency that the commissioner by
regulation or order declared to be an eligible securities ratings
service.
SEC. 11. SEC. 12. Section 2102 of
the Financial Code is amended to read:
2102. (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) The refund would violate law.
(b) If a customer's instructions as to when the money shall be
forwarded or transmitted are not complied with and the money has not
yet been forwarded or transmitted, the customer has a right to a
refund of his or her money. If a customer does not receive his or her
refund, 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.
SEC. 12. SEC. 13. Section 2103 of the
Financial Code is amended to read:
2103. (a) In the case of money received for transmission, the
licensee or its agent shall give the sender or customer a receipt at
the time of the transaction.
(1) The receipt shall contain the following information, as
applicable:
(A) The name of the sender.
(B) The name of the designated recipient.
(C) The date of the transaction, which is the day the customer
funds the money transmission.
(D) The name of the licensee.
(E) The amount to be transferred to the designated recipient, in
the currency in which the money transmission is funded, using the
term "Transfer Amount" or a substantially similar term.
(F) Any fees and taxes imposed on the money transmission by the
licensee or its agent which are payable or have been paid by the
sender, in the currency in which the money transmission is funded,
using the terms "transfer fees" for fees and "transfer taxes" for
taxes, or substantially similar terms.
(G) The total amount of the transaction, which is the sum of
subparagraphs (E) and (F), in the currency in which the money
transmission is funded, using the term "total" or a substantially
similar term.
(H) The exchange rate, if any, used by the licensee or its agent
for the money transmission, rounded consistently for each currency to
no fewer than two decimal places and no more than four decimal
places, using the term "exchange rate" or a substantially similar
term.
(I) For all transmissions, other than transmissions related to
e-commerce transactions, the amount that will be received by the
designated recipient, in the currency in which the funds will be
received, using the term "total to recipient" or a substantially
similar term. For transmissions related to e-commerce transactions,
the amount that will be received by the designated recipient before
any fees and fees, taxes
imposed on the money transmission by the licensee or its agent and
, or other amounts payable by the designated
recipient are deducted, using the term "total to recipient" or a
substantially similar term. These fees and
fees, taxes , or other amounts shall be disclosed to
the designated recipient. The disclosure of fees and
fees, taxes , or other amounts
payable by the designated recipient, which need not be disclosed to
the sender, shall be disclosed as part of a separate written
agreement between the licensee and the designated recipient.
(2) (A) In addition to the disclosures set forth in paragraph (1),
the receipt shall either include or have attached a conspicuous
statement 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 2102 of the California
Financial Code.''
(B) The right to refund statement set forth in subparagraph (A) is
not required to be included on receipts involving transactions where
the sender is a commercial entity, transactions that involve
entities of a type listed in subdivisions (a), (b), and (c) of
Section 2010, or e-commerce transactions where the customer sends a
payment for goods or services.
(3) The receipt required by this section shall be made 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. For transactions that do
not occur in a branch office, the receipt shall be made in English
and in the language principally used by that licensee or that agent
to advertise, solicit, or negotiate money transmission, either orally
or in writing.
(4) The receipt required by this subdivision may be provided
electronically for transactions that are initiated electronically or
in which a customer agrees to receive an electronic receipt.
(5) Disclosures in the receipt required by this subdivision shall
be in a minimum 8-point font, except for receipts provided via mobile
phone or text message.
(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. In the event that a licensee
or agent conducts money transmission activity via an Internet Web
site or mobile application that is not in a branch office, the
commissioner may authorize an alternative disclosure meeting the
requirements of this section. Any Internet Web site through which a
licensee conducts money transmission shall clearly identify the name
of the licensee as well as any trade names used by the licensee on
the Internet Web site.
(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.
SEC. 13. SEC. 14. Section 2105 of
the Financial Code is amended to read:
2105. (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 Business Oversight at
its toll-free telephone number, 1-800-622-0620,
by email at
consumer.complaint@dfi.ca.gov, or by mail at
consumer.services@dbo.ca.gov, or by mail at
Department of Business Oversight, Consumer
Services, 1515 K Street, Suite 200,
S ervices, 1810 13th Street, S acramento, CA
95814.''
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.
(c) In the event that a licensee or agent conducts money
transmission activity via an Internet Web site or mobile application
that is not in a branch office, the commissioner may authorize an
alternative form of the notice required in subdivision (a).
SEC. 14. SEC. 15. Section 2124 of
the Financial Code is amended to read:
2124. (a) A licensee shall maintain the following records for
determining its compliance with this division for at least three
years:
(1) A record of each payment instrument or 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
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 2102 for six months or a longer period
of time specified in the contract between the licensee and its agent.
(c) The items specified in subdivisions (a) and (b) may be
maintained in any form of record.
(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.
(e) If records not required to be maintained in English pursuant
to Section 456 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.
(f) Each licensee shall maintain any other records required by the
commissioner.
SEC. 15. SEC. 16. Section 2175 of the
Financial Code is amended to read:
2175. The commissioner may offer informal guidance to any
prospective applicant for a license under this division, regarding
the conditions of licensure that may be applied to that person. The
commissioner shall inform any applicant that requests that guidance
of the minimum net worth, and other licensing requirements, that will
be required of that applicant, based on the information provided by
the applicant concerning its plan to conduct business under this
division, and the factors used to make that determination as
described in Section 2040.
SEC. 16. SEC. 17. Section 2176 is
added to the Financial Code, to read:
2176. At any time, if the commissioner deems it necessary for the
general welfare of the public, he or she may exercise any power set
forth in this division with respect to a money transmission business,
regardless of whether an application for a license has been filed
with the commissioner, a license has been issued, or, if issued, the
license has been surrendered, suspended, or revoked.
SEC. 17. SEC. 18. 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.
