AB 786

Bill Subjects

Abstract

Existing law, the Money Transmission Act, provides for the regulation of money transmissions by the Department of Financial Institutions and the Commissioner of Financial Institutions. The Governor's Reorganization Plan No. 2, as of July 1, 2013, abolished the Department of Financial Institutions and transferred its responsibilities to the Department of Business Oversight and the Commissioner of Business Oversight. Existing law requires a person who engages in the business of money transmission in this state to be licensed and provides that only a corporation or limited liability company may be issued a license. Existing law exempts certain persons or entities from the application of the act, as specified. Existing law authorizes the commissioner, by regulation or order, to exempt from the act any person or transaction or class of persons or transactions, if the commissioner finds such action to be in the public interest and not necessary. This bill would further exempt from the act 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. The bill would authorize the commissioner, by regulation or order, to exempt from all or part of the act any person or transaction or class of persons or transactions based on that finding. The bill would require the commissioner to adopt regulations to carry out and implement this section. The bill would require the commissioner to make these exemptions public on the commissioner's Internet Web site, as specified. Existing law requires a licensee to maintain tangible shareholders' equity, as defined, in an amount to be determined from time to time by the commissioner, but not less than $500,000. This bill would require an applicant to possess, and a licensee to maintain at all times, tangible shareholder's equity of $250,000 to $500,000, depending on estimated or actual transaction volume, as determined by the commissioner based on specified factors. The bill would authorize the commissioner to increase that net worth required if the commissioner determines that a higher net worth is necessary based on the aforementioned factors. The bill would require the commissioner to adopt regulations to carry out and implement those factors. Existing law requires a licensee to at all times own eligible securities, meaning any United States currency eligible security or foreign currency eligible security, having an aggregate market value computed in accordance with United States generally accepted accounting principles, as specified. This bill would specify that any receivable owed by a bank and resulting from an automated clearinghouse or credit-funded transmission is a United States currency eligible security. Existing law provides that a licensee shall be deemed to own an eligible security if certain requirements are met. Existing law provides that no licensee shall be deemed not to own an eligible security solely on account of certain facts, provided that, but for that fact, the licensee would be deemed to own the eligible security. This bill would provide that no licensee shall be deemed not to own an eligible security solely on account of the fact that the licensee holds the eligible security in a custodial capacity as an agent of its customers in a pooled account in the name of the licensee, as determined by the commissioner based on specified factors. Existing law requires a licensee or its agent to forward all money received for transmission or give instructions committing equivalent money to the person designated by the customer within 10 days after receiving that money, unless otherwise ordered by the customer. In the case of money received for transmission, existing law requires a receipt to be provided by a licensee or its agent to all customers and requires the receipt to include a specified statement in this regard. This bill would provide an exception to these requirements when the money transmission is for the payment of goods or services. Existing law provides the commissioner with certain powers for the purposes of enforcing and administering the act. This bill would authorize the commissioner to prepare written decisions, opinion letters, and other formal written guidance and would require the commissioner to make these documents public on the commissioner's Internet Web site subject to certain limitations. The bill would also authorize the commissioner to offer guidance to a prospective licensee regarding the conditions of licensure and would require the commissioner offering such guidance to provide a prospective applicant with the minimum net worth required.