Section 2, 3(A)

Money Transmitters

Activity covered:

• the sale or issuance of payment instruments

• receiving money for transmission or transmitting money within the United States or to

Sections 4(k), 5

Money transmitters, check cashers and foreign currency exchangers who "conduct the

business" of:

• receiving money for transmission or transmitting money

• exchanging payment instruments and/or money into any form of payment instruments or

• receiving money from obligors for the purpose of paying that obligor’s bills

Section 4

• United States (including department, agency or instrumentality)

• United States Post Office

• the State of any political subdivisions

• Banks and other types of financial institutions

• The provision of electronic transfer of benefits for federal, state, or county governmental

• Authorized delegates acting within the scope of their contract with a licensee

Section 6

• United States (including any department or agency)

• The State or any political subdivisions

• banks and other types of financial institutions

• check cashers or foreign currency exchangers who engage in activity covered by the Act

• licensed consumer lenders

• escrow companies

• trust companies

• mortgage bankers

• collection agencies

Sections 3(O), 6

• cash

• certificates of deposit or other debt obligations of a financial institution, either domestic or

• bills of exchange or time drafts drawn on and accepted by a commercial bank which are

• any investment bearing a rating of one of the three highest grades as defined by

• shares in money market mutual fund, interest-bearing bills or notes or bonds, debentures or

• any demand borrowing agreement made to a corporation or subsidiary of a corporation

• receivables due to a licensee from its authorized delegates which are not past due or

Sections 4(n), 14

• money on hand or on deposit in name of licensee

• certificates of deposit or other debt instruments of a bank, savings and loan association, or

• bills of exchange or other time drafts drawn on and accepted by a bank that are eligible for

• commercial paper bearing a rating of one of the three highest grades as defined by

• securities, obligations, etc. whose payment is guaranteed by the general taxing authority of

• stocks, bonds, etc or corporation organized in any U.S. State that bear rating of 1 of 3

• any receivable due a licensee from its delegate pursuant to contract if those receivables do

Section 7

• Applicant’s history of (as distinct from individual persons) material litigation and

• Sample authorized delegate contract

For corporate applicants:

• Information on executive officers, key shareholders (name, business and residential

• Copies of most recent audited financial statement and for immed. preceding 2 year

• Copies of all filings made with the SEC

For non-corporate applicants

• Name, business and residence address, personal financial statement and employment

• history of material litigation and criminal convictions for 5 year period for each

• copies of most recent audited financial statement and for immed .preceding 2 year

Sections 7 and 8

For each executive officers, director and branch manager or individual controlling person

(unless the controlling person is a publicly traded company on a recognized national exchange

with assets in excess of $500 million):

• statement of personal history which includes name, aliases, record of criminal convictions

• alien registration information,

• photographs and fingerprints taken by state law enforcement agency if

*fingerprints and photographs are submitted to appropriate state agency for criminal

background check

- An identification statement for each branch manager including (among other

information):

• record of criminal convictions (excluding traffic convictions)

• alien registration information

• employment history and residence addresses for past 15 years

Other information:

• a financial statement audited by a licensed independent CPA

• copies of any financial statement filed with the Sec in the past 3 years

Section 8

Minimum $50,000 – if more than one location or business conducted through authorized

delegates the amount of security device increase by $10,000 per location to maximum of

Sections 8, 10

$300,000 unless the licensee engages solely in check cashing or foreign currency exchange

(where no bond is required).

Amount is increased by $25,000 per authorized delegate to a max. of $1 million.

Licensee must have net worth of at least $500,000 in order to do business through delegates

plus $25,000 for each authorized delegate not to exceed $1 million (according to financial

statements calculated in accordance with GAAP and audited by a licensed independent

CPA)

Section 10

Superintendent must approve or deny application within 120 days from date a complete

application is submitted. Period can be extended by written consent of the applicant.

Superintendent required to notify applicant when application deemed complete

In absence of approval, denial or extension, application deemed approved at end of 120-day

period

Applicants who receive denial may contest denial within 30 days from receipt of written

Section 9

Same as Non-Bank Funds Transmitters Draft except for the hearing provisions which vary

slightly

Section 11

Annual Renewal

Superintendent sends renewal form to licensee 3 months prior to renewal date

Information to be included in renewal report:

• copy of most recent audited consolidated annual financial statement

• for most recent quarter for which data is available (no more than 120 days prior to renewal

• list of permissible investments

• list of locations where business regulated by the Act is conducted by licensee or authorized

If licensee does not file a renewal report or pay renewal fee and has not been given an

extension – licensee is notified in writing and a hearing is scheduled. Licensee must show cause

as to why its license should not be suspended ending compliance with renewal

Section 9

Licensees need to pay renewal fee on or before 1^st date of month selected by

superintendent as renewal month.

The contents of the renewal report to be prescribed by rule.

A license for which no renewal fee or report is received as of the specified renewal date is

automatically suspended

A licensee many renew a suspended license not later than the first of the following month by

paying the renewal fee plus $100 for each day that the licensee is late with filing the report of

paying the fee.

Section 9

If a licensee maintains one or more locations in the State in addition to its principal place of

business, that are not under the control of authorized delegates, the license must obtain separate

branch office licenses for each of those locations.

Sections 3(F), 3(G), 13

Control is defined as "ownership of, or

the power to vote twenty-five percent or more of the outstanding

voting securities of a licensee or controlling person."

Licensee required to provide notice of change in control within 15 days after the change or

Sections 4(e), 4(f), 18

Control is defined as "ownership of fifteen

percent or more of a licensee or controlling person, or the power to vote

fifteen percent or more of the outstanding voting securities of a licensee or controlling

person"

Direct or indirect acquisition of control requires prior written approval of the

Grounds for denial include:

• acquisition contrary to law, will jeopardize the financial condition of the licensee or public

• the competence, experience and integrity of person who seeks to control the licensee (or

Special treatment (exemptions) for certain methods of acquisition (e.g., by inheritance)

Section 14

Examination without prior notice only if superintendent has a reasonable basis to believe that

the licensee or its authorized delegate is in noncompliance with provisions of the

Section 15

For purposes of enforcing the Act, the superintendent and the attorney general are given free

access to offices, places of business and files of licensee or authorized delegates

Section 15

Specified records to be kept for period of 3 years. Records may be kept out of

Section 15

Each licensee must keep records for at least 5 years after making final entry on a

transaction

For each authorized delegate, the licensee shall maintain records that demonstrate that the

licensee conducted a reasonable background investigation – such records must also be preserved

for 5 years after most recent designation as a delegate

If records are maintained out of state, must be available at the superintendent’s office not

more than 5 business days after demand issued.

Section 16

Confidential licensee information may be released to representatives of state or federal

agencies that state in writing and under oath that they will maintain confidentiality of

information if:

1. the licensee provides consent prior to release; or

 

 

2. the superintendent finds that release is reasonably necessary for protection of public and in

Section 24

Confidential licensee information may be released to:

1. representatives of federal agencies insuring accounts in the financial institution

 

 

2. representatives of state or federal agencies and foreign countries having reg. Authority over

the financial institution

 

3. the state attorney general

 

 

4. federal, state or county grand jury (in response to a lawful subpoena)

 

 

5. the auditor general of the state for purposes of conducting required audits

Section 17

Section 11

Similar provisions in both Acts, but President’s Commission Draft includes a few more

grounds for license suspension nor revocation including:

1. an authorized delegate has violated any provision of the Model Money Laundering Act or

has violated any rule or regulation adopted pursuant to the Act or superintendent’s order

as a result of a course of a negligent failure to supervise or as a result of willful

misconduct of the licensee

 

2. licensee fails to pay a judgment entered in favor of a claimant, plaintiff or

creditor arising out of licensee’s business regulated under the Act within 30 days after the

judgment is final

 

3. licensee has been convicted in any state of a felony of any crime of breach of trust or

dishonesty

 

4. the licensee has exhibited a pattern of failure or refusal to promptly pay lawful and

Sections 18, 19, 20

Licensees must enter into express written contracts with authorized delegates

Special provisions:

Failure of an authorized delegate to remit all money owing to a licensee within the time

presented shall result in liability of authorized delegate to licensee for three times the

licensee’s actual damages.

Authorized delegate is deemed to consent to superintendent’s inspection with or without

prior notice of its books and records when superintendent has reasonable basis to believe that

licensee or authorized delegate is in noncompliance with the Ac

Superintendent may revoke or suspend authorized delegates status if the delegate:

1. violates any provision of section 20 of the Act or rule, regulation or order

 

 

2. has engaged in any unsafe or unsound act with respect to business of selling or issuing

payment instruments of the licensee or the business of money transmission

 

3. has made or caused to be made in any application or report filed with the superintendent or

Section 10

Contract between licensee and authorized delegate shall contain a copy of the Act as an

appendix.

The superintendent may issue an order to cease and desist against the license or its

authorized delegate if:

1. the authorized delegate has violated, is violating or is about to violate any applicable, rule or

regulation or order

 

2. the authorized delegate has failed to cooperate with an examination or investigation by the

superintendent or the attorney general

 

3. the competence experience, integrity of the authorized delegate or controlling person of the

delegate indicates that it would not be in the public interest to permit that person to participate in

the licensee’s business

 

4. the financial condition of the authorized delegate might jeopardize the interests of the

public

 

5. the authorized delegate has engaged in, is engaging in or is about to engage in any unsafe,

Section 22

Section 12

No license may be suspended or revoked except after a hearing. The superintendent shall

also hold a hearing when requested by an applicant whose application for license has been

denied

Superintendent shall give the licensee or applicant min. of 10 days written notice of time and

place of hearing by registered or certified mail.

Any order suspending, revoking or denying a license shall state the grounds and is not

effective until 10 days after written notice has been sent by registered or certified mail to last

known address

Any hearing required by this sect conducted on the record

Superintendent granted subpoena powers to compel production of physical items and

witnesses

Licensee may seek court review of superintendent’s findings and order

Section 23

If, after notice and hearing, superintendent finds that person s intentionally violated the Act,

or any rule adopted under the Act, the superintendent may order the person to pay a civil penalty

not to exceed $1,000 for each violation or in the case of a continuing violation

$1,000 for each day that the violation continues.

No proceeding initiated and no penalty shall be assessed until after such person is notified in

writing of the violation and is afforded a reasonable period of time to correct the

Section 23

Any person who knowingly violates any provision of the Act shall be assessed a civil penalty

in an amount equal to the gross business conducted in connection with the violation

plus the state’s costs and expenses of the investigation and prosecution, including

reasonably attorney’s fees

Section 24

If it appears to the superintendent that any person has committed or is about to commit a

violation of the Act or of any rule or order, the superintendent may apply to relevant court for

order enjoining a person from violating the Act

Section 19

Injunctive relief provision very similar to Non-Bank Funds Transfer Draft

Section 25

Misdemeanor: Knowing and willful violation of any provision for the

Act for which a penalty is not prescribed

Felony: Knowing and willfully making a material, false statement in any

document filed or required to be filed with the intend to deceive the recipient of the

document

Felony: Knowingly and Willfully engaging in the business of money

Section 22

Felony: Violation of any provision of the Act (either directly or

indirectly) for which a different penalty is not specified, Each transaction in violation of the act

and each day violating continues is a separate offense

Felony: Knowingly making a false statement, misrepresentation or false

certification in any application, financial statement, account record, customer receipt , report, or

other document filed or required to be filed under this ac or who knowingly makes any false

entry or omits a material entry onto any such document

Felony: Refusal to permit any lawful investigation by the superintendent