1810. (a) A person shall not engage in the business of money
transmission in this state, or advertise, solicit, or hold itself out
as providing money transmission in this state, unless the person is
licensed or exempt from licensure under this chapter or is an agent
of a person licensed or exempt from licensure under this chapter.
(b) A license under this chapter is not transferable or
assignable.
1811. (a) No person other than a corporation or limited liability
company may apply for or be issued a license.
(b) No person other than the following may be issued a license:
(1) A corporation or limited liability company organized under the
laws of this state.
(2) 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.
(3) 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 Chapter 10
(commencing with Section 17450) of Title 2.5 of the Corporations
Code, except that a limited liability company that is organized
outside the United States shall not be issued a license.
1812. (a) In this section, "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.
(b) An applicant for licensure under this chapter shall pay to the
commissioner a nonrefundable fee of five thousand dollars ($5,000).
(c) An applicant for a license under this chapter 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 education background for each such 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. Section 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.
(d) The commissioner may waive any of the information required
under subdivision (c) or permit an applicant to submit other
information instead of the required information.
1813. (a) The commissioner may conduct an examination of the
applicant and the applicant shall pay the reasonable cost of the
examination.
(b) If the commissioner finds all of the following with respect to
an application for a license, the commissioner shall approve the
application:
(1) The applicant has adequate tangible shareholders' equity, as
specified in Section 1820 to engage in the business of money
transmission and the financial condition of the applicant is
otherwise such that it will be safe and sound for the applicant to
engage in the business of money transmission.
(2) The applicant, the directors and officers of the applicant,
any person that controls the applicant, and the directors and
officers of any person that controls the applicant are of good
character and sound financial standing.
(3) The applicant is competent to engage in the business of money
transmission.
(4) The applicant's plan for engaging in the business of money
transmission affords reasonable promise of successful operation.
(5) It is reasonable to believe that the applicant, if licensed,
will engage in the business of money transmission and will comply
with all applicable provisions of this chapter and of any regulation
or order issued under this chapter.
(c) The commissioner shall deny an application for a license if he
or she finds, after notice and a hearing, that the requirements of
subdivision (b) have not been satisfied.
1814. (a) Before any corporation or limited liability company is
issued a license, the corporation or limited liability company shall
file with the commissioner, in such form as the commissioner may by
regulation or order require, an appointment irrevocably appointing
the commissioner to be the corporation's or limited liability company'
s attorney to receive service of any lawful process in any
noncriminal judicial or administrative proceeding against the
corporation or limited liability company, or any of its successors,
that arises under this chapter or under any regulation or order
issued under this chapter after such appointment has been filed, with
the same force and validity as if served personally on the
corporation or limited liability company or its successor, as the
case may be.
(b) Service may be made by leaving a copy of the process at any
office of the commissioner, but that service is not effective unless
(1) the party making that service, who may be the commissioner, sends
notice of service and a copy of the process by registered or
certified mail to the party served at its last address on file with
the commissioner, and (2) an affidavit of compliance with this
section by the party making service is filed in the case on or before
the return date, if any, or within such further time as the court,
in the case of a judicial proceeding, or the administrative agency,
in the case of an administrative proceeding, allows.
(c) The provisions of this section are in addition to, and not in
limitation of, other provisions of law relating to service of
process.
1815. (a) No person shall, directly or indirectly, acquire control
of a licensee unless the commissioner has first approved, in writing,
the acquisition of control. An application to acquire control of a
licensee shall be in writing, under oath, and in a form prescribed by
the commissioner. The application shall contain that information
which the commissioner may require.
(b) The commissioner shall not approve the application unless the
commissioner finds all of the following:
(1) The applicant and all of the officers and directors of the
applicant are of good character and sound financial standing.
(2) The applicant is competent to engage in the business of money
transmission.
(3) It is reasonable to believe that, if the applicant acquires
control of the licensee, the applicant and the licensee will comply
with all applicable provisions of this chapter and any regulation or
order issued under this chapter.
(4) The applicant's plans, if any, to make any major change in the
business, corporate structure, or management of the licensee are not
detrimental to the safety and soundness of the licensee.
(c) For the purposes of subdivision (b), the commissioner may find
an applicant's plan to make major changes in the management of a
licensee is detrimental to the licensee if the plan provides for a
person who is not of good character to become a director or officer
of the licensee. The grounds specified in this subdivision shall not
be deemed to be the only grounds upon which the commissioner may
find, for the purposes of subdivision (b), that an applicant's plan
to make a major change in the management of a licensee is detrimental
to the licensee.
(d) If it appears to the commissioner that any person is violating
or failing to comply with this section, the commissioner may direct
the person to comply with this section by an order issued over the
commissioner's official seal.
(e) Whenever it appears to the commissioner that any person has
committed or is about to commit a violation of any provision of this
section or of any regulation or order of the commissioner issued
pursuant to this section, the commissioner may apply to the superior
court for an order enjoining the person from violating or continuing
to violate this section or that regulation or order, and for other
equitable relief as the nature of the case or interests of the
licensee, the controlling person, the creditors or shareholders of
the licensee or controlling person or the public may require.
(f) The commissioner may, for good cause, amend, alter, suspend,
or revoke any approval of a proposal to acquire control of a licensee
issued pursuant to this section.
(g) There shall be exempted from the provisions of this section
any transaction which the commissioner by regulation or order exempts
as not being comprehended within the purposes of this section and
the regulation of which he or she finds is not necessary or
appropriate in the public interest or for the protection of a
licensee or the customers of a licensee.
(h) The commissioner may conduct an examination of the applicant
and the applicant shall pay the reasonable cost of the examination.
1816. The commissioner may impose on any authorization, approval,
license, or order issued pursuant to this chapter any conditions that
he or she deems reasonable or necessary to the public interest.
1817. (a) As security, each licensee shall deposit and thereafter
maintain on deposit with the Treasurer cash in an amount not less
than, or securities having a market value not less than, such amount
as the commissioner may find and order from time to time as necessary
to secure the faithful performance of the obligations of the
licensee with respect to money transmission in California. These
securities shall be subject to the approval of the commissioner and
shall consist of interest-bearing bonds, notes, or other obligations
of the United States or any agency or instrumentality thereof, or of
the State of California, or of any city, county, or city and county,
political subdivision or district of the State of California, or that
are guaranteed by the United States or the State of California.
(b) So long as a licensee that maintains securities on deposit
with the Treasurer pursuant to this section is solvent, that licensee
shall be entitled to receive any interest paid on the securities.
(c) In lieu of the deposit of cash or securities pursuant to
subdivision (a), a licensee may deliver to the commissioner the bond
of a surety company, in form and written by a company satisfactory to
the commissioner, in an amount not less than the amount of the
deposit of cash or securities required of the licensee, conditioned
upon the faithful performance of the obligations of the licensee with
respect to money transmission in California. The commissioner shall
deposit such bond with the Treasurer.
(d) A licensee that sells or issues payment instruments or stored
value shall maintain securities on deposit or a bond of a surety
company in an amount of no less than five hundred thousand dollars
($500,000) or 50 percent of the average daily outstanding payment
instrument and stored value obligations in California, whichever is
greater; provided that such amount shall not be more than two million
dollars ($2,000,000).
(e) A licensee that engages in receiving money for transmission
shall maintain securities on deposit or a bond of a surety company in
an amount greater than the average daily outstanding obligations for
money received for transmission in California, provided that such
amount shall not be less than two hundred fifty thousand dollars
($250,000) nor more than seven million dollars ($7,000,000).
(f) The amount of securities on deposit or a bond of a surety
company required to be maintained by subdivisions (d) and (e) are
cumulative.
(g) The money and securities deposited with the State Treasurer
pursuant to this section and the proceeds of any bond held by the
State Treasurer pursuant to this section shall constitute a trust
fund for the benefit of persons in California who purchased payment
instruments or stored value from the licensee or its agent, or
persons in California who delivered to any licensee or its agent
money or monetary value for money transmission. Suit to recover on
any bond may be brought by any party aggrieved in a court of
competent jurisdiction of any county in which the licensee has an
agent.
(h) Securities on deposit or a bond shall cover claims for so long
as the commissioner specifies, but for at least four years after the
licensee ceases to provide services under this chapter in this
state. However, the commissioner may permit the amount of the
security to be reduced or eliminated before the expiration of that
time to the extent the amount of the licensee's payment instruments
or stored value obligations outstanding, or outstanding money or
monetary value received for money transmission, is less than the
deposit or bond. The commissioner may permit a licensee to substitute
another form of security acceptable to the commissioner for the
security effective at the time the licensee ceases to provide money
transmissions in this state.
1818. 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 (b) of Section
1812.
(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.
1819. (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 such other reports as may be required pursuant
to Sections 283, 284, and 285, each licensee shall, within 90 days
after the end of each fiscal year, or within such 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 such 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 such 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 such
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 1830.
(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 chapter and in the United States in the
calendar year quarter categorized by type of money transmission. 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.
1820. (a) A licensee under this chapter shall maintain tangible
shareholders' equity in an amount determined to be adequate by the
commissioner from time to time, but in no event shall tangible
shareholders' equity be less than five hundred thousand dollars
($500,000). "Tangible shareholders' equity" means shareholders' or
members' equity minus intangible assets as determined in accordance
with United States generally accepted accounting principles.
(b) The commissioner at any time may require a licensee to write
down any asset held by it to a valuation that will represent its then
fair market value. Any receivable or debt due to a licensee that is
past due and unpaid for the period of one year shall be charged off,
unless it is well secured or is in process of collection.
(c) The aggregate value of a licensee's accounts receivable,
excluding money transmission receivables, loans or extensions of
credit to any one person, or that person's affiliates, cannot exceed
50 percent of the licensee's tangible shareholders' equity without
the advanced written approval of the commissioner. Whenever such
amount equals or exceeds 20 percent of the licensee's tangible
shareholders' equity, the licensee shall maintain records evidencing
such amount and any security or other source of payment for the
amount owed, and such other records as the commissioner may require
by order or regulation.
1821. (a) A licensee shall conduct money transmission in California
under its true name unless it has complied with Chapter 5
(commencing with Section 17900) of Part 3 of Division 7 of the
Business and Professions Code.
(b) A licensee may only conduct money transmission in California
under its true name unless it has provided 30-day advance written
notice to the commissioner. A licensee may also use a trade name or
logo, so long as there is reasonable disclosure of its true name.
1822. (a) In addition to the fees provided in Section 1818, the
commissioner shall levy an assessment each fiscal year, on a pro rata
basis, on those licensees that at any time during the preceding
calendar year engaged in the business of money transmission in
California in an amount that is, in his or her judgment, sufficient
to meet the commissioner's expenses in administering the provisions
of this chapter and to provide a reasonable reserve for
contingencies.
(b) For licensees that sell or issue payment instruments or stored
value, the amount of the annual assessment on any licensee shall not
exceed the sum of the products determined by multiplying (1)
increments of the aggregate face amount of payment instruments and
stored value issued or sold in California by the licensee, directly
or indirectly through agents, in the calendar year next preceding the
date of such assessment, by (2) percentages of the base assessment
rate, according to the following table:
Aggregate face amount of Percentage
payment instruments and of base
stored value sold (in assessment
millions) rate
First $ 1.................... 100.0
Next $9...................... 25.0
Next $40..................... 12.5
Next $50..................... 6.0
Next $400.................... 3
Next $500.................... 2
Excess over $1,000........... 1
The base assessment rate shall be fixed from time to time by the
commissioner but shall not exceed one dollar ($1) per one thousand
dollars ($1,000) face amount of payment instruments and stored value
sold.
(c) For licensees receiving money for transmission, the basis of
the apportionment of the assessment among the licensees assessed
shall be the proportion that the total amount of money received for
transmission by the licensee in California bears in relation to the
total amount of money received for transmission by all licensees in
California, as shown by the reports of licensees to the commissioner
for the preceding calendar year. The assessment rate shall be fixed
from time to time by the commissioner but shall not exceed one dollar
($1) per one thousand dollars ($1,000) of money received for
transmission in California by the licensee.
(d) The commissioner shall notify each licensee by mail of the
amount levied against it. The licensee shall pay the amount levied
within 20 days. If payment is not made to the commissioner within
that time, the commissioner shall assess and collect, in addition to
the annual assessment, a penalty of 5 percent of the assessment for
each month or part thereof that the payment is delinquent.
1810. (a) A person shall not engage in the business of money
transmission in this state, or advertise, solicit, or hold itself out
as providing money transmission in this state, unless the person is
licensed or exempt from licensure under this chapter or is an agent
of a person licensed or exempt from licensure under this chapter.
(b) A license under this chapter is not transferable or
assignable.
1811. (a) No person other than a corporation or limited liability
company may apply for or be issued a license.
(b) No person other than the following may be issued a license:
(1) A corporation or limited liability company organized under the
laws of this state.
(2) 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.
(3) 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 Chapter 10
(commencing with Section 17450) of Title 2.5 of the Corporations
Code, except that a limited liability company that is organized
outside the United States shall not be issued a license.
1812. (a) In this section, "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.
(b) An applicant for licensure under this chapter shall pay to the
commissioner a nonrefundable fee of five thousand dollars ($5,000).
(c) An applicant for a license under this chapter 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 education background for each such 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. Section 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.
(d) The commissioner may waive any of the information required
under subdivision (c) or permit an applicant to submit other
information instead of the required information.
1813. (a) The commissioner may conduct an examination of the
applicant and the applicant shall pay the reasonable cost of the
examination.
(b) If the commissioner finds all of the following with respect to
an application for a license, the commissioner shall approve the
application:
(1) The applicant has adequate tangible shareholders' equity, as
specified in Section 1820 to engage in the business of money
transmission and the financial condition of the applicant is
otherwise such that it will be safe and sound for the applicant to
engage in the business of money transmission.
(2) The applicant, the directors and officers of the applicant,
any person that controls the applicant, and the directors and
officers of any person that controls the applicant are of good
character and sound financial standing.
(3) The applicant is competent to engage in the business of money
transmission.
(4) The applicant's plan for engaging in the business of money
transmission affords reasonable promise of successful operation.
(5) It is reasonable to believe that the applicant, if licensed,
will engage in the business of money transmission and will comply
with all applicable provisions of this chapter and of any regulation
or order issued under this chapter.
(c) The commissioner shall deny an application for a license if he
or she finds, after notice and a hearing, that the requirements of
subdivision (b) have not been satisfied.
1814. (a) Before any corporation or limited liability company is
issued a license, the corporation or limited liability company shall
file with the commissioner, in such form as the commissioner may by
regulation or order require, an appointment irrevocably appointing
the commissioner to be the corporation's or limited liability company'
s attorney to receive service of any lawful process in any
noncriminal judicial or administrative proceeding against the
corporation or limited liability company, or any of its successors,
that arises under this chapter or under any regulation or order
issued under this chapter after such appointment has been filed, with
the same force and validity as if served personally on the
corporation or limited liability company or its successor, as the
case may be.
(b) Service may be made by leaving a copy of the process at any
office of the commissioner, but that service is not effective unless
(1) the party making that service, who may be the commissioner, sends
notice of service and a copy of the process by registered or
certified mail to the party served at its last address on file with
the commissioner, and (2) an affidavit of compliance with this
section by the party making service is filed in the case on or before
the return date, if any, or within such further time as the court,
in the case of a judicial proceeding, or the administrative agency,
in the case of an administrative proceeding, allows.
(c) The provisions of this section are in addition to, and not in
limitation of, other provisions of law relating to service of
process.
1815. (a) No person shall, directly or indirectly, acquire control
of a licensee unless the commissioner has first approved, in writing,
the acquisition of control. An application to acquire control of a
licensee shall be in writing, under oath, and in a form prescribed by
the commissioner. The application shall contain that information
which the commissioner may require.
(b) The commissioner shall not approve the application unless the
commissioner finds all of the following:
(1) The applicant and all of the officers and directors of the
applicant are of good character and sound financial standing.
(2) The applicant is competent to engage in the business of money
transmission.
(3) It is reasonable to believe that, if the applicant acquires
control of the licensee, the applicant and the licensee will comply
with all applicable provisions of this chapter and any regulation or
order issued under this chapter.
(4) The applicant's plans, if any, to make any major change in the
business, corporate structure, or management of the licensee are not
detrimental to the safety and soundness of the licensee.
(c) For the purposes of subdivision (b), the commissioner may find
an applicant's plan to make major changes in the management of a
licensee is detrimental to the licensee if the plan provides for a
person who is not of good character to become a director or officer
of the licensee. The grounds specified in this subdivision shall not
be deemed to be the only grounds upon which the commissioner may
find, for the purposes of subdivision (b), that an applicant's plan
to make a major change in the management of a licensee is detrimental
to the licensee.
(d) If it appears to the commissioner that any person is violating
or failing to comply with this section, the commissioner may direct
the person to comply with this section by an order issued over the
commissioner's official seal.
(e) Whenever it appears to the commissioner that any person has
committed or is about to commit a violation of any provision of this
section or of any regulation or order of the commissioner issued
pursuant to this section, the commissioner may apply to the superior
court for an order enjoining the person from violating or continuing
to violate this section or that regulation or order, and for other
equitable relief as the nature of the case or interests of the
licensee, the controlling person, the creditors or shareholders of
the licensee or controlling person or the public may require.
(f) The commissioner may, for good cause, amend, alter, suspend,
or revoke any approval of a proposal to acquire control of a licensee
issued pursuant to this section.
(g) There shall be exempted from the provisions of this section
any transaction which the commissioner by regulation or order exempts
as not being comprehended within the purposes of this section and
the regulation of which he or she finds is not necessary or
appropriate in the public interest or for the protection of a
licensee or the customers of a licensee.
(h) The commissioner may conduct an examination of the applicant
and the applicant shall pay the reasonable cost of the examination.
1816. The commissioner may impose on any authorization, approval,
license, or order issued pursuant to this chapter any conditions that
he or she deems reasonable or necessary to the public interest.
1817. (a) As security, each licensee shall deposit and thereafter
maintain on deposit with the Treasurer cash in an amount not less
than, or securities having a market value not less than, such amount
as the commissioner may find and order from time to time as necessary
to secure the faithful performance of the obligations of the
licensee with respect to money transmission in California. These
securities shall be subject to the approval of the commissioner and
shall consist of interest-bearing bonds, notes, or other obligations
of the United States or any agency or instrumentality thereof, or of
the State of California, or of any city, county, or city and county,
political subdivision or district of the State of California, or that
are guaranteed by the United States or the State of California.
(b) So long as a licensee that maintains securities on deposit
with the Treasurer pursuant to this section is solvent, that licensee
shall be entitled to receive any interest paid on the securities.
(c) In lieu of the deposit of cash or securities pursuant to
subdivision (a), a licensee may deliver to the commissioner the bond
of a surety company, in form and written by a company satisfactory to
the commissioner, in an amount not less than the amount of the
deposit of cash or securities required of the licensee, conditioned
upon the faithful performance of the obligations of the licensee with
respect to money transmission in California. The commissioner shall
deposit such bond with the Treasurer.
(d) A licensee that sells or issues payment instruments or stored
value shall maintain securities on deposit or a bond of a surety
company in an amount of no less than five hundred thousand dollars
($500,000) or 50 percent of the average daily outstanding payment
instrument and stored value obligations in California, whichever is
greater; provided that such amount shall not be more than two million
dollars ($2,000,000).
(e) A licensee that engages in receiving money for transmission
shall maintain securities on deposit or a bond of a surety company in
an amount greater than the average daily outstanding obligations for
money received for transmission in California, provided that such
amount shall not be less than two hundred fifty thousand dollars
($250,000) nor more than seven million dollars ($7,000,000).
(f) The amount of securities on deposit or a bond of a surety
company required to be maintained by subdivisions (d) and (e) are
cumulative.
(g) The money and securities deposited with the State Treasurer
pursuant to this section and the proceeds of any bond held by the
State Treasurer pursuant to this section shall constitute a trust
fund for the benefit of persons in California who purchased payment
instruments or stored value from the licensee or its agent, or
persons in California who delivered to any licensee or its agent
money or monetary value for money transmission. Suit to recover on
any bond may be brought by any party aggrieved in a court of
competent jurisdiction of any county in which the licensee has an
agent.
(h) Securities on deposit or a bond shall cover claims for so long
as the commissioner specifies, but for at least four years after the
licensee ceases to provide services under this chapter in this
state. However, the commissioner may permit the amount of the
security to be reduced or eliminated before the expiration of that
time to the extent the amount of the licensee's payment instruments
or stored value obligations outstanding, or outstanding money or
monetary value received for money transmission, is less than the
deposit or bond. The commissioner may permit a licensee to substitute
another form of security acceptable to the commissioner for the
security effective at the time the licensee ceases to provide money
transmissions in this state.
1818. 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 (b) of Section
1812.
(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.
1819. (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 such other reports as may be required pursuant
to Sections 283, 284, and 285, each licensee shall, within 90 days
after the end of each fiscal year, or within such 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 such 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 such 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 such
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 1830.
(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 chapter and in the United States in the
calendar year quarter categorized by type of money transmission. 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.
1820. (a) A licensee under this chapter shall maintain tangible
shareholders' equity in an amount determined to be adequate by the
commissioner from time to time, but in no event shall tangible
shareholders' equity be less than five hundred thousand dollars
($500,000). "Tangible shareholders' equity" means shareholders' or
members' equity minus intangible assets as determined in accordance
with United States generally accepted accounting principles.
(b) The commissioner at any time may require a licensee to write
down any asset held by it to a valuation that will represent its then
fair market value. Any receivable or debt due to a licensee that is
past due and unpaid for the period of one year shall be charged off,
unless it is well secured or is in process of collection.
(c) The aggregate value of a licensee's accounts receivable,
excluding money transmission receivables, loans or extensions of
credit to any one person, or that person's affiliates, cannot exceed
50 percent of the licensee's tangible shareholders' equity without
the advanced written approval of the commissioner. Whenever such
amount equals or exceeds 20 percent of the licensee's tangible
shareholders' equity, the licensee shall maintain records evidencing
such amount and any security or other source of payment for the
amount owed, and such other records as the commissioner may require
by order or regulation.
1821. (a) A licensee shall conduct money transmission in California
under its true name unless it has complied with Chapter 5
(commencing with Section 17900) of Part 3 of Division 7 of the
Business and Professions Code.
(b) A licensee may only conduct money transmission in California
under its true name unless it has provided 30-day advance written
notice to the commissioner. A licensee may also use a trade name or
logo, so long as there is reasonable disclosure of its true name.
1822. (a) In addition to the fees provided in Section 1818, the
commissioner shall levy an assessment each fiscal year, on a pro rata
basis, on those licensees that at any time during the preceding
calendar year engaged in the business of money transmission in
California in an amount that is, in his or her judgment, sufficient
to meet the commissioner's expenses in administering the provisions
of this chapter and to provide a reasonable reserve for
contingencies.
(b) For licensees that sell or issue payment instruments or stored
value, the amount of the annual assessment on any licensee shall not
exceed the sum of the products determined by multiplying (1)
increments of the aggregate face amount of payment instruments and
stored value issued or sold in California by the licensee, directly
or indirectly through agents, in the calendar year next preceding the
date of such assessment, by (2) percentages of the base assessment
rate, according to the following table:
Aggregate face amount of Percentage
payment instruments and of base
stored value sold (in assessment
millions) rate
First $ 1.................... 100.0
Next $9...................... 25.0
Next $40..................... 12.5
Next $50..................... 6.0
Next $400.................... 3
Next $500.................... 2
Excess over $1,000........... 1
The base assessment rate shall be fixed from time to time by the
commissioner but shall not exceed one dollar ($1) per one thousand
dollars ($1,000) face amount of payment instruments and stored value
sold.
(c) For licensees receiving money for transmission, the basis of
the apportionment of the assessment among the licensees assessed
shall be the proportion that the total amount of money received for
transmission by the licensee in California bears in relation to the
total amount of money received for transmission by all licensees in
California, as shown by the reports of licensees to the commissioner
for the preceding calendar year. The assessment rate shall be fixed
from time to time by the commissioner but shall not exceed one dollar
($1) per one thousand dollars ($1,000) of money received for
transmission in California by the licensee.
(d) The commissioner shall notify each licensee by mail of the
amount levied against it. The licensee shall pay the amount levied
within 20 days. If payment is not made to the commissioner within
that time, the commissioner shall assess and collect, in addition to
the annual assessment, a penalty of 5 percent of the assessment for
each month or part thereof that the payment is delinquent.
1810. (a) A person shall not engage in the business of money
transmission in this state, or advertise, solicit, or hold itself out
as providing money transmission in this state, unless the person is
licensed or exempt from licensure under this chapter or is an agent
of a person licensed or exempt from licensure under this chapter.
(b) A license under this chapter is not transferable or
assignable.
1811. (a) No person other than a corporation or limited liability
company may apply for or be issued a license.
(b) No person other than the following may be issued a license:
(1) A corporation or limited liability company organized under the
laws of this state.
(2) 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.
(3) 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 Chapter 10
(commencing with Section 17450) of Title 2.5 of the Corporations
Code, except that a limited liability company that is organized
outside the United States shall not be issued a license.
1812. (a) In this section, "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.
(b) An applicant for licensure under this chapter shall pay to the
commissioner a nonrefundable fee of five thousand dollars ($5,000).
(c) An applicant for a license under this chapter 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 education background for each such 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. Section 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.
(d) The commissioner may waive any of the information required
under subdivision (c) or permit an applicant to submit other
information instead of the required information.
1813. (a) The commissioner may conduct an examination of the
applicant and the applicant shall pay the reasonable cost of the
examination.
(b) If the commissioner finds all of the following with respect to
an application for a license, the commissioner shall approve the
application:
(1) The applicant has adequate tangible shareholders' equity, as
specified in Section 1820 to engage in the business of money
transmission and the financial condition of the applicant is
otherwise such that it will be safe and sound for the applicant to
engage in the business of money transmission.
(2) The applicant, the directors and officers of the applicant,
any person that controls the applicant, and the directors and
officers of any person that controls the applicant are of good
character and sound financial standing.
(3) The applicant is competent to engage in the business of money
transmission.
(4) The applicant's plan for engaging in the business of money
transmission affords reasonable promise of successful operation.
(5) It is reasonable to believe that the applicant, if licensed,
will engage in the business of money transmission and will comply
with all applicable provisions of this chapter and of any regulation
or order issued under this chapter.
(c) The commissioner shall deny an application for a license if he
or she finds, after notice and a hearing, that the requirements of
subdivision (b) have not been satisfied.
1814. (a) Before any corporation or limited liability company is
issued a license, the corporation or limited liability company shall
file with the commissioner, in such form as the commissioner may by
regulation or order require, an appointment irrevocably appointing
the commissioner to be the corporation's or limited liability company'
s attorney to receive service of any lawful process in any
noncriminal judicial or administrative proceeding against the
corporation or limited liability company, or any of its successors,
that arises under this chapter or under any regulation or order
issued under this chapter after such appointment has been filed, with
the same force and validity as if served personally on the
corporation or limited liability company or its successor, as the
case may be.
(b) Service may be made by leaving a copy of the process at any
office of the commissioner, but that service is not effective unless
(1) the party making that service, who may be the commissioner, sends
notice of service and a copy of the process by registered or
certified mail to the party served at its last address on file with
the commissioner, and (2) an affidavit of compliance with this
section by the party making service is filed in the case on or before
the return date, if any, or within such further time as the court,
in the case of a judicial proceeding, or the administrative agency,
in the case of an administrative proceeding, allows.
(c) The provisions of this section are in addition to, and not in
limitation of, other provisions of law relating to service of
process.
1815. (a) No person shall, directly or indirectly, acquire control
of a licensee unless the commissioner has first approved, in writing,
the acquisition of control. An application to acquire control of a
licensee shall be in writing, under oath, and in a form prescribed by
the commissioner. The application shall contain that information
which the commissioner may require.
(b) The commissioner shall not approve the application unless the
commissioner finds all of the following:
(1) The applicant and all of the officers and directors of the
applicant are of good character and sound financial standing.
(2) The applicant is competent to engage in the business of money
transmission.
(3) It is reasonable to believe that, if the applicant acquires
control of the licensee, the applicant and the licensee will comply
with all applicable provisions of this chapter and any regulation or
order issued under this chapter.
(4) The applicant's plans, if any, to make any major change in the
business, corporate structure, or management of the licensee are not
detrimental to the safety and soundness of the licensee.
(c) For the purposes of subdivision (b), the commissioner may find
an applicant's plan to make major changes in the management of a
licensee is detrimental to the licensee if the plan provides for a
person who is not of good character to become a director or officer
of the licensee. The grounds specified in this subdivision shall not
be deemed to be the only grounds upon which the commissioner may
find, for the purposes of subdivision (b), that an applicant's plan
to make a major change in the management of a licensee is detrimental
to the licensee.
(d) If it appears to the commissioner that any person is violating
or failing to comply with this section, the commissioner may direct
the person to comply with this section by an order issued over the
commissioner's official seal.
(e) Whenever it appears to the commissioner that any person has
committed or is about to commit a violation of any provision of this
section or of any regulation or order of the commissioner issued
pursuant to this section, the commissioner may apply to the superior
court for an order enjoining the person from violating or continuing
to violate this section or that regulation or order, and for other
equitable relief as the nature of the case or interests of the
licensee, the controlling person, the creditors or shareholders of
the licensee or controlling person or the public may require.
(f) The commissioner may, for good cause, amend, alter, suspend,
or revoke any approval of a proposal to acquire control of a licensee
issued pursuant to this section.
(g) There shall be exempted from the provisions of this section
any transaction which the commissioner by regulation or order exempts
as not being comprehended within the purposes of this section and
the regulation of which he or she finds is not necessary or
appropriate in the public interest or for the protection of a
licensee or the customers of a licensee.
(h) The commissioner may conduct an examination of the applicant
and the applicant shall pay the reasonable cost of the examination.
1816. The commissioner may impose on any authorization, approval,
license, or order issued pursuant to this chapter any conditions that
he or she deems reasonable or necessary to the public interest.
1817. (a) As security, each licensee shall deposit and thereafter
maintain on deposit with the Treasurer cash in an amount not less
than, or securities having a market value not less than, such amount
as the commissioner may find and order from time to time as necessary
to secure the faithful performance of the obligations of the
licensee with respect to money transmission in California. These
securities shall be subject to the approval of the commissioner and
shall consist of interest-bearing bonds, notes, or other obligations
of the United States or any agency or instrumentality thereof, or of
the State of California, or of any city, county, or city and county,
political subdivision or district of the State of California, or that
are guaranteed by the United States or the State of California.
(b) So long as a licensee that maintains securities on deposit
with the Treasurer pursuant to this section is solvent, that licensee
shall be entitled to receive any interest paid on the securities.
(c) In lieu of the deposit of cash or securities pursuant to
subdivision (a), a licensee may deliver to the commissioner the bond
of a surety company, in form and written by a company satisfactory to
the commissioner, in an amount not less than the amount of the
deposit of cash or securities required of the licensee, conditioned
upon the faithful performance of the obligations of the licensee with
respect to money transmission in California. The commissioner shall
deposit such bond with the Treasurer.
(d) A licensee that sells or issues payment instruments or stored
value shall maintain securities on deposit or a bond of a surety
company in an amount of no less than five hundred thousand dollars
($500,000) or 50 percent of the average daily outstanding payment
instrument and stored value obligations in California, whichever is
greater; provided that such amount shall not be more than two million
dollars ($2,000,000).
(e) A licensee that engages in receiving money for transmission
shall maintain securities on deposit or a bond of a surety company in
an amount greater than the average daily outstanding obligations for
money received for transmission in California, provided that such
amount shall not be less than two hundred fifty thousand dollars
($250,000) nor more than seven million dollars ($7,000,000).
(f) The amount of securities on deposit or a bond of a surety
company required to be maintained by subdivisions (d) and (e) are
cumulative.
(g) The money and securities deposited with the State Treasurer
pursuant to this section and the proceeds of any bond held by the
State Treasurer pursuant to this section shall constitute a trust
fund for the benefit of persons in California who purchased payment
instruments or stored value from the licensee or its agent, or
persons in California who delivered to any licensee or its agent
money or monetary value for money transmission. Suit to recover on
any bond may be brought by any party aggrieved in a court of
competent jurisdiction of any county in which the licensee has an
agent.
(h) Securities on deposit or a bond shall cover claims for so long
as the commissioner specifies, but for at least four years after the
licensee ceases to provide services under this chapter in this
state. However, the commissioner may permit the amount of the
security to be reduced or eliminated before the expiration of that
time to the extent the amount of the licensee's payment instruments
or stored value obligations outstanding, or outstanding money or
monetary value received for money transmission, is less than the
deposit or bond. The commissioner may permit a licensee to substitute
another form of security acceptable to the commissioner for the
security effective at the time the licensee ceases to provide money
transmissions in this state.
1818. 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 (b) of Section
1812.
(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.
1819. (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 such other reports as may be required pursuant
to Sections 283, 284, and 285, each licensee shall, within 90 days
after the end of each fiscal year, or within such 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 such 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 such 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 such
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 1830.
(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 chapter and in the United States in the
calendar year quarter categorized by type of money transmission. 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.
1820. (a) A licensee under this chapter shall maintain tangible
shareholders' equity in an amount determined to be adequate by the
commissioner from time to time, but in no event shall tangible
shareholders' equity be less than five hundred thousand dollars
($500,000). "Tangible shareholders' equity" means shareholders' or
members' equity minus intangible assets as determined in accordance
with United States generally accepted accounting principles.
(b) The commissioner at any time may require a licensee to write
down any asset held by it to a valuation that will represent its then
fair market value. Any receivable or debt due to a licensee that is
past due and unpaid for the period of one year shall be charged off,
unless it is well secured or is in process of collection.
(c) The aggregate value of a licensee's accounts receivable,
excluding money transmission receivables, loans or extensions of
credit to any one person, or that person's affiliates, cannot exceed
50 percent of the licensee's tangible shareholders' equity without
the advanced written approval of the commissioner. Whenever such
amount equals or exceeds 20 percent of the licensee's tangible
shareholders' equity, the licensee shall maintain records evidencing
such amount and any security or other source of payment for the
amount owed, and such other records as the commissioner may require
by order or regulation.
1821. (a) A licensee shall conduct money transmission in California
under its true name unless it has complied with Chapter 5
(commencing with Section 17900) of Part 3 of Division 7 of the
Business and Professions Code.
(b) A licensee may only conduct money transmission in California
under its true name unless it has provided 30-day advance written
notice to the commissioner. A licensee may also use a trade name or
logo, so long as there is reasonable disclosure of its true name.
1822. (a) In addition to the fees provided in Section 1818, the
commissioner shall levy an assessment each fiscal year, on a pro rata
basis, on those licensees that at any time during the preceding
calendar year engaged in the business of money transmission in
California in an amount that is, in his or her judgment, sufficient
to meet the commissioner's expenses in administering the provisions
of this chapter and to provide a reasonable reserve for
contingencies.
(b) For licensees that sell or issue payment instruments or stored
value, the amount of the annual assessment on any licensee shall not
exceed the sum of the products determined by multiplying (1)
increments of the aggregate face amount of payment instruments and
stored value issued or sold in California by the licensee, directly
or indirectly through agents, in the calendar year next preceding the
date of such assessment, by (2) percentages of the base assessment
rate, according to the following table:
Aggregate face amount of Percentage
payment instruments and of base
stored value sold (in assessment
millions) rate
First $ 1.................... 100.0
Next $9...................... 25.0
Next $40..................... 12.5
Next $50..................... 6.0
Next $400.................... 3
Next $500.................... 2
Excess over $1,000........... 1
The base assessment rate shall be fixed from time to time by the
commissioner but shall not exceed one dollar ($1) per one thousand
dollars ($1,000) face amount of payment instruments and stored value
sold.
(c) For licensees receiving money for transmission, the basis of
the apportionment of the assessment among the licensees assessed
shall be the proportion that the total amount of money received for
transmission by the licensee in California bears in relation to the
total amount of money received for transmission by all licensees in
California, as shown by the reports of licensees to the commissioner
for the preceding calendar year. The assessment rate shall be fixed
from time to time by the commissioner but shall not exceed one dollar
($1) per one thousand dollars ($1,000) of money received for
transmission in California by the licensee.
(d) The commissioner shall notify each licensee by mail of the
amount levied against it. The licensee shall pay the amount levied
within 20 days. If payment is not made to the commissioner within
that time, the commissioner shall assess and collect, in addition to
the annual assessment, a penalty of 5 percent of the assessment for
each month or part thereof that the payment is delinquent.
