November 26, 2007
Transmitter of Money Abroad Law Changes January 1, 2008
To: Officers and Directors of Transmitters of Money Abroad
From: Robert Venchiarutti, Deputy Commissioner
Subject: Amendments to Chapter 14 of the Financial Code: Transmission of Money Abroad
The purpose of this memorandum is to provide a summary of certain key amendments to Chapter 14 of the Financial Code, Transmission of Money Abroad, as contained in the recently enacted AB 1508, approved by the Governor on September 26, 2007, and referred to as Chapter 242 (the Act). The Act becomes effective on January 1, 2008.
1. AGENTS AND BRANCHES
The last day DFI will accept agent or branch applications is December 31, 2007.
Beginning January 1, 2008, licensees do not need to obtain authorization by the Commissioner to appoint an agent. Instead, the licensee is required to conduct a review of the proposed agent's fitness to act as an agent and determine that the proposed agent is of "good character," "sound financial standing," and must maintain records of this review for 3 years after the agent relationship is terminated. The Act retains the prohibition against an agent of a licensee appointing a subagent to receive transmission money.
Also, beginning January 1, 2008, licensees are no longer required to obtain approval of the Commissioner to establish or change the address of a branch office.
However, the Act requires the licensee, at the end of each calendar quarter, to file with the Commissioner a report containing, among other things, the current status and address of each agent and branch office in this state.
Sources: Financial Code Section 1803.5 repealed; Financial Code Section 1803.1, 1803.2, 1803.3, 1803.4, 1803.5, 1803.6 added, 1805 and 1805.5 repealed; Financial Code Section 1807 amended
2. NEW REQUIREMENT OF MAINTENANCE OF ELIGIBLE SECURITIES
Beginning January 1, 2008, licensees must own at all times eligible securities specifically listed in the statute in an amount not less than the aggregate amount of all outstanding transmission money received by the licensee. The licensee is also required to file, at the end of each calendar quarter, a report containing, among other things, the volume of transmission money received, a schedule of eligible securities, balance sheets and income statements and other financial reports.
Sources: Financial Code Sections 1816.1, 1816.2, 1816.3, 1816.4, 1816.5, 1816.6, 1816.7, 1816.8 added.
3. RECEIPT FORMS
The Act prohibits a new licensee from using receipt forms until approved by the Commissioner. The Act requires a licensee to file a certified copy of its receipt form within 10 business days of its first use and requires the Commissioner to notify the licensee if the receipt form does not comply with specified requirements.
Source: Financial Code Section 1809 amended.
4. NEW ENFORCEMENT POWERS OF THE COMMISSIONER.
The Act authorizes the Commissioner, when necessary to protect the public, to issue an order immediately revoking or suspending that licensee's license and specifies procedures for a hearing following the issuance of such an order. The Act also gives the Commissioner the authority to revoke or suspend a license, after notice and opportunity for hearing, for a violation of any state or federal law (such as the Bank Secrecy Act) that reasonably applies to the conduct of the licensee.
Source: Financial Code Sections 1819 and 1821 amended; Financial Code Section 1819.5 added.
The text of the AB 1508 amendments can be viewed at http://www.leginfo.ca.gov/pub/07-08/bill/asm/ab_1501-1550/ab_1508_bill_20070926_chaptered.html
Disclaimer: this summary is not intended to constitute legal advice. Please confer with your legal counsel regarding the provisions of state laws discussed in this summary.