WSR 99-22-048

PERMANENT RULES

DEPARTMENT OF

FINANCIAL INSTITUTIONS

[ Filed October 29, 1999, 2:54 p.m. ]

Date of Adoption: October 27, 1999.

Purpose: To correct typographical errors in chapter 208-630 WAC that were created when chapter 50-30 WAC was consolidated into Title 208 WAC in 1996. The typos to be fixed are mainly internal references to chapter 50-30 WAC. There will be no change to the meaning, interpretation, or effect of the rules.

Citation of Existing Rules Affected by this Order: Amending WAC 208-630-015, 208-630-025, 208-630-035, and 208-630-100.

Statutory Authority for Adoption: RCW 43.320.040, 31.45.090, and 31.45.200.

Adopted under notice filed as WSR 99-14-007 on June 24, 1999.

Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 0, Amended 0, Repealed 0.

Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 4, Repealed 0.

Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 4, Repealed 0.

Number of Sections Adopted Using Negotiated Rule Making: New 0, Amended 0, Repealed 0; Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 4, Repealed 0. Effective Date of Rule: Thirty-one days after filing.

October 27, 1999

John L. Bley

Director

OTS-3191.2


AMENDATORY SECTION(Amending WSR 96-03-059, filed 1/12/96, effective 2/12/96)

WAC 208-630-015
Examinations.

(1) The director or his or her designee shall examine the business and records of any licensee or licensee's agent at least every twenty-four months.  Every licensee so examined shall pay to the director the actual cost of examining and supervising each licensed place of business at the examination hourly rate established in WAC ((50-30-020(2))) 208-630-023.  The director may accept an audit report prepared by an independent certified public accountant or an examination prepared by another state in lieu of, in whole or in part, an examination performed by the director.

(2) The director may examine the business and records of any agent or person who the director has reason to believe is engaging in business which requires a licensee under chapter 31.45 RCW.

[Statutory Authority: RCW 43.320.040 and 31.45.200.  96-03-059, codified as 208-630-015, filed 1/12/96, effective 2/12/96.]


AMENDATORY SECTION(Amending WSR 96-03-059, filed 1/12/96, effective 2/12/96)

WAC 208-630-025
Application for small loan endorsement to a check casher or check seller license.

Each applicant for a small loan endorsement to a license must apply to the director by filing the following:

(1) An application in the form prescribed by the director including at least the following information:

(a) The legal name, residence, and business address of the applicant, and if the applicant is a partnership, corporation, or association, the name and address of every member, partner, officer, principal and board director;

(b) The trade name or name under which the applicant will do business under the act, the street and mailing address of each location in which the applicant will engage in business under the act;

(c) The location at which the applicant's records will be kept; and

(d) Financial statements and any other pertinent information the director may require with respect to the applicant and its board directors, officers, trustees, members, principals or employees, including information regarding any civil litigation against the applicant or any substantial investor in the applicant (a person or shareholder with an interest of ten percent or more);

(2) A surety bond and related power of attorney, or other security acceptable to the director in an amount equal to the penal sum of the required bond as set forth in WAC ((50-30-030 (2)(b))) 208-630-030(2).  In lieu of the bond, the applicant may demonstrate to the director net worth in excess of three times the amount of the penal sum of the required bond in accordance with RCW 31.45.030 (5)(b) and (e) and WAC ((50-30-030)) 208-630-035;

(3) A current financial statement as of the most recent quarter end prepared in accordance with generally accepted accounting principles which includes a statement of assets and liabilities and a profit and loss statement;

(4) Information on the applicant's or any affiliate's current or previous small loan or related type business in this state or any other state, including but not limited to name, address, city, state, licensing authority, and whether any enforcement action is pending or has been taken against the applicant in any state;

(5) A copy of the applicant's proposed procedures for resolving borrowers' complaints; and

(6) An application fee.

[Statutory Authority: RCW 43.320.040 and 31.45.200.  96-03-059, codified as 208-630-025, filed 1/12/96, effective 2/12/96.]


AMENDATORY SECTION(Amending WSR 96-03-059, filed 1/12/96, effective 2/12/96)

WAC 208-630-035
Alternatives to the surety bond.

(1) Type of alternative allowed. In lieu of the surety bond required in WAC ((50-30-030)) 208-630-030, an applicant or licensee may substitute one of the following alternatives with the approval of the director.  Any alternative to the surety bond shall secure the same obligations as would the surety bond.  The amount of alternative substituted under (a), (b) and (c) of this subsection must be equal to or greater than the amount of the required surety bond.

(a) Securities. Substitute security assigned to the director.  The value of the substitute security shall be based on the principal amount or market value, whichever is lower.  The applicant or licensee must deposit the substitute security with a financial institution in this state approved by the director.  The depositor is entitled to receive all interest and dividends on the substitute security, has the right, with the approval of the director, to substitute other qualified securities for those deposited, and shall be required to do so on written order of the director made for good cause shown.

(b) Irrevocable letter of credit. An irrevocable letter of credit issued in favor of the director.  The irrevocable letter of credit must be issued by a financial institution in the state approved by the director and deposited with the director.  An irrevocable letter of credit may only be substituted if it provides the same protection to consumers as would a surety bond.

(c) Time deposit. An assignment in favor of the director of a certificate of deposit.  The certificate of deposit must be issued by a financial institution in the state.  The depositor is entitled to receive all interest and dividends on the certificate of deposit.

(d) Demonstration of net worth. A licensee or applicant for a small loan endorsement may demonstrate net worth in excess of three times the amount of the required bond.  The licensee shall notify the director within ten business days of any date upon which its net worth decreases below the required amount.  A licensee that fails to maintain the required level of net worth and continues to operate under a small loan endorsement will be required to maintain a surety bond for five years after the date of noncompliance.  During this five-year period, the director will not accept a demonstration of net worth in lieu of a surety bond.

(i) Reports required. A licensee that maintains net worth in lieu of a surety bond shall submit to the director within forty-five days after the close of each quarter year-to-date financial statements prepared in accordance with generally accepted accounting principles.  The financial statements must include at a minimum a statement of assets and liabilities and a profit and loss statement.  The director may continue to require other documents, agreements or information necessary to properly evaluate and ensure that the licensee remains in compliance with this section.

(ii) Bad debts and judgments. A licensee that maintains net worth in lieu of a surety bond may not consider bad debts and certain judgments as assets.  The director may approve exceptions in writing.  The licensee must charge off its books any debt upon which any payment is six months or more past due.  The licensee may not count as an asset any judgment more than two years old which has not been paid.  Time consumed by an appeal from a judgment is not counted in the two-year limit.

(2) Noncompliance. A licensee that does not comply with this section must obtain and file with the director a surety bond in the required amount in WAC ((50-30-030)) 208-630-030 by the date specified by the director.

[Statutory Authority: RCW 43.320.040 and 31.45.200.  96-03-059, codified as 208-630-035, filed 1/12/96, effective 2/12/96.]


AMENDATORY SECTION(Amending WSR 96-03-059, filed 1/12/96, effective 2/12/96)

WAC 208-630-100
Trust accounts--Limitations and prohibitions.

(1) At least monthly a licensee in the business of selling checks shall withdraw from the trust account an amount equal to fees earned for the corresponding period from the sale of monetary instruments.  The remaining balance of the trust account must be sufficient to cover all monetary instruments that remain outstanding and drawn against the trust account.

(2) A licensee is prohibited from allowing the bank of account to charge back checks or drafts deposited to the trust account and subsequently dishonored against said trust account.

(3) Withdrawals from the trust account by a licensee, whose license has been suspended, terminated, or not renewed, will not be allowed, without the director's consent, until a closing audit report has been received according to WAC ((50-30-090)) 208-630-090(2).

[Statutory Authority: RCW 43.320.040 and 31.45.200.  96-03-059, recodified as 208-630-100, filed 1/12/96, effective 2/12/96.  Statutory Authority: 1991 c 355 24.  92-02-105, 50-30-100, filed 1/2/92, effective 2/2/92.]

Washington State Code Reviser's Office