Date of Adoption: March 24, 2004.

     Purpose: To implement the Uniform Money Services Act, chapter 287, Laws of 2008 [2003], chapter 19.230 RCW; specifically to facilitate licensing, monitoring, investigation and examination of money services businesses as required by the act. This is an extension of the emergency rule filed as WSR 03-24-035, on November 25, 2003. The agency has filed a notice of intent to adopt this, or a substantially similar rule as a permanent rule. The CR-101 was filed on July 11, 2003, WSR 03-115-044. The agency is actively undertaking the appropriate procedures to adopt the rule as a permanent rule.

     Statutory Authority for Adoption: RCW 43.320.040, chapter 19.230 RCW.

     Under RCW 34.05.350 the agency for good cause finds that state or federal law or federal rule or a federal deadline for state receipt of federal funds requires immediate adoption of a rule.

     Reasons for this Finding: As of October 1, 2003, both new and existing money services businesses may not operate without a license issued by the Department of Financial Institutions. Periodic reporting to federal and state agencies is required, as well as procedures for investigations and examinations. To provide a framework for these various regulatory activities, an emergency rule is necessary.

     Number of Sections Adopted in Order to Comply with Federal Statute: New 0, Amended 0, Repealed 0; Federal Rules or Standards: New 0, Amended 0, Repealed 0; or Recently Enacted State Statutes: New 23, Amended 0, Repealed 0.

     Number of Sections Adopted at Request of a Nongovernmental Entity: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted on the Agency's Own Initiative: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted in Order to Clarify, Streamline, or Reform Agency Procedures: New 0, Amended 0, Repealed 0.

     Number of Sections Adopted Using Negotiated Rule Making: New 19, Amended 0, Repealed 0;      Pilot Rule Making: New 0, Amended 0, Repealed 0; or Other Alternative Rule Making: New 0, Amended 0, Repealed 0.
     Effective Date of Rule: Immediately.

March 22, 2004

Helen P. Howell

Director

REGULATION OF MONEY SERVICES PROVIDERSPART A

DEFINITIONS
NEW SECTION
WAC 208-690-010   Definitions.   The definitions in this section apply throughout this chapter unless the context clearly requires otherwise.

     (1) "Act" means the Uniform Money Services Act, chapter 19.230 RCW, and C 287 L 2003.

     (2) "Affiliate" means any person who directly or indirectly through one or more intermediaries, controls, is controlled by, or is under common control with, another person.

     (3) "Annual license assessment due date" means the date specified in WAC 208-690-090.

     (4) "Applicant" means a person that files an application for a license under this chapter, including the applicant's proposed responsible individual and executive officers, and persons in control of the applicant.

     (5) "Audited financial statement," means a statement prepared by an independent accountant according to generally accepted accounting principles.

     (6) "Authorized delegate," means a person a licensee designates to provide money services on behalf of the licensee. A person that is exempt from licensing under this chapter cannot have an authorized delegate.

     (7) "Board director" means a member of the applicant or licensee's board of directors if the applicant or licensee is a corporation or limited liability company, or a partner if the applicant or licensee is a partnership.

     (8) "Control" means:

     (a) Ownership of, or the power to vote, directly or indirectly, at least twenty-five percent of a class of voting securities or voting interests of a licensee or applicant, or person in control of a licensee or applicant;

     (b) Power to elect a majority of executive officers, managers, directors, trustees, or other persons exercising managerial authority of a licensee or applicant, or person in control of a licensee or applicant; or

     (c) Power to exercise directly or indirectly, a controlling influence over the management or policies of a licensee or applicant, or person in control of a licensee or applicant;

     (9) "Currency exchange" means exchanging the money of one government for the money of another government, or holding oneself out as able to exchange the money of one government for the money of another government. The following persons are not considered currency exchangers:

     (a) Affiliated businesses that engage in currency exchange for a business purpose other than currency exchange;

     (b) A person who provides currency exchange services for a person acting primarily for a business, commercial, agricultural, or investment purpose when the currency exchange is incidental to the transaction;

     (c) A person who deals in coins or money whose value is primarily determined because it is rare, old, or collectible;

     (d) A person who in the regular course of business chooses to accept from a customer the money of a country other than the United States in order to complete the sale of a good or service other than currency exchange, that may include cash back to the customer, and does not otherwise engage in currency exchange for compensation or gain.

     (10) "Currency exchanger" means a person that is engaged in currency exchange.

     (11) "Director" means the director of the Department of Financial Institutions, and includes a designee of the director.

     (12) "Executive officer" means a president, chairperson of the executive committee, chief financial officer, responsible individual, or other individual who performs similar functions.

     (13) "Financial institution" means any person doing business under the laws of any state or the United States relating to commercial banks, bank holding companies, savings banks, savings and loan associations, trust companies, or credit unions.

     (14) "Licensee" means a person licensed under Chapter 19.230, RCW.

     (15) "Mail" includes electronic mail.

     (16) "Material litigation" means litigation that according to generally accepted accounting principles is significant to an applicant's or licensee's financial health and would be required to be included in an applicant's or licensee's audited financial statements, report to shareholders, or similar records.

     (17) "Mobile location" means a vehicle or movable facility where money services are provided

     (18) "Money" means a medium of exchange or unit of account that is authorized, adopted or recognized by the United States or a foreign government. "Money" also includes a medium of exchange or unit of account established by an intergovernmental organization or by agreement between two or more governments.

     (19) "Money services," means money transmission or currency exchange.

     (20) "Money transmission" means receiving money or its equivalent value to transmit, deliver, or instruct to be delivered, the money or its equivalent value to another location, inside or outside the United States, by any means including but not limited to wire, facsimile, or electronic transfer. "Money transmission" does not include the provision solely of connection services to the Internet, telecommunications services, or network services, or network access.

     (21) "Money transmitter" means a person that is engaged in money transmission.

     (22) "Outstanding money transmission" means the value of all money transmissions reported to the licensee for which the money transmitter has received money or its equivalent value from the customer for transmission, but has not yet completed the money transmission by delivering the money or monetary value to the person designated by the customer.

     (23) "Payment instrument" means a check, draft money order, traveler's check, or other instrument for the transmission or payment of money or its equivalent value, whether or not negotiable. "Payment instrument" does not include a credit card voucher, letter of credit, or instrument that is redeemable by the issuer in goods or services.

     (24) "Person" means an individual, corporation, business trust, estate, trust, partnership, limited liability company, association, joint venture; government, governmental subdivision, agency or instrumentality; public corporation; or any other legal or commercial entity.

     (25) "Principal" means any person who controls, directly or indirectly through one or more intermediaries, alone or in concert with others, a ten percent or greater interest in a partnership, company, corporation, or association, or the owner of a sole proprietorship.

     (26) "RCW" means the Revised Code of Washington.

     (27) "Record" means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium, and is retrievable in perceivable form.

     (28) "Responsible individual" means an individual who is employed by a licensee and has principal managerial authority over the provision of money services by the licensee in this state.

     (29) "State" means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any other territory or insular possession subject to the jurisdiction of the United States.

     (30) "Stored value" means the recognition of value or credit to the account of persons, when that value or credit is primarily intended to be redeemed for a limited universe of goods, intangibles, services, or other items provided by the issuer of the stored value, its affiliates, or other involved in transactions functionally related to the goods, intangibles, services; or other items sold by the issuer or its affiliates.

     (31) "Unsafe or unsound practice" means a practice or conduct by a person licensed or required to be licensed by the Act to provide money services, or an authorized delegate of such a person, which creates the likelihood of material loss, insolvency, or dissipation of the licensee's assets, or otherwise materially prejudices the financial condition of the licensee or the interests of its customers.

Statutory authority: RCW 19.230.010.

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APPLICATION OF THE ACT
NEW SECTION
WAC 208-690-020   Application.   The Act and these rules apply only to the activities of money transmission and currency exchange, as defined in the Act and these rules. These definitions focus on activities engaged in rather than the entity that engages in them. Section 4 of the Act (RCW 19.230.020) lists certain exclusions. As a general rule, there is no attempt to include in the application of the Act and these rules those financial activities that are otherwise regulated and involve the transfer of money or its equivalent value as an ancillary or incidental part of the core activity. The target of the Act and these regulations is money transmission and currency exchange as stand-alone for-profit services.

     A person who obtains a license to engage in money transmission may provide currency exchange services without obtaining a separate currency exchange license.

Statutory authority: RCW 19.230.020.

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LICENSING
NEW SECTION
WAC 208-690-030   License application.   Each person required to have a money transmission or currency exchange license must apply to the director by filing:

     (1) A completed application in the form prescribed by the director;

     (2) For the responsible individual and principal(s):

     (a) Biographical information, including employment history for the immediate previous five years;

     (b) A personal credit report from a recognized independent credit-reporting agency;

     (c) A signed authorization for a background investigation on a form prescribed by the director.

     (3) If the application is for money transmission, a surety bond as required by WAC 208-690-040;

     (4) A non-refundable application fee as prescribed by WAC 208-690-130(1). The application fee is not refundable.

     (5) An initial license fee as prescribed by WAC 208-690-130(2). The initial license fee will be refunded if the license application is denied.

     (6) For each authorized delegate, the business name, including any additional names by which the business may be known, the business address and the name of the primary contact person. If an authorized delegate provides money services at more than one location the business address of each such location must be provided.

     (7) A full description of the screening process used by the applicant in selecting authorized delegates, including any sample forms used, the method used to screen for criminal history, and a sample of the contract which the applicant uses to establish the legal relationship of authorized delegate.

     (8) If the applicant is a money transmitter, a certification that the applicant's investment portfolio includes only permissible investments under RCW 19.230.200 and 19.230.210.

Statutory authority: RCW 19.230.030

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     (1) A completed application in the form prescribed by the director;

     (2) For each proposed additional authorized delegate, the business name, including any additional names by which the business may be known, the business address and name of the primary contact person, and the business address of each location where the authorized delegate will provide money services;

     (3) Fees required by WAC 208-690-130 for the addition of authorized delegates.

Statutory authority: RCW 19.230.030

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     (2) Any person who is designated by a licensee to provide money services on behalf of the licensee is an authorized delegate, regardless of whether that person would be exempt from the application of chapter 19.230 RCW if they provided money services on their own behalf.

Statutory authority: RCW 19.230.005; 19.230.010(3); 199.230.320.

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     Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 208-690-040   Surety bond.   (1) Each money transmitter licensee shall continuously maintain a surety bond as required by RCW 19.230.050, issued by a company authorized to do surety business in this state, as a surety. The surety may not be a wholly owned subsidiary or affiliate of the applicant or licensee.

     (2) The penal sum of the bond shall be calculated annually according to the following schedule:

     (a) $10,000 if the applicant or licensee had money transmission receipts of less than one million dollars for the previous twelve months, including applicants who have not previously engaged in providing money transmission services.

     (b) $20,000 if the applicant or licensee had money transmission receipts of at least one million but less than two million dollars for the previous twelve months.

     (c) $30,000 if the applicant or licensee had money transmission receipts of at least two million but less than three million dollars for the previous twelve months.

     (d) $40,000 if the applicant or licensee had money transmission receipts of at least three million but less than four million dollars for the previous twelve months.

     (e) $50,000 if the applicant or licensee had money transmission receipts of four million dollars or more for the previous twelve months.

     In addition to these amounts the penal sum of the bond is increased by $10,000 for each additional location where that applicant provides money services, including each location of authorized delegates, and each location owned and operated by the applicant, up to a maximum total amount of $500,000.

Statutory authority: RCW 19.230.050.

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Statutory authority: RCW 19.230.050.

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     (1) Significant reduction of net worth.

     (2) Financial losses.

     (3) Potential losses resulting from violations of Chapter 19.230, RCW, or these rules;

     (4) Licensee filing for bankruptcy.

     (5) The initiation of license revocation proceedings against the licensee in any state or foreign country.

     (6) The filing of a state or federal criminal indictment against the licensee, key officer, board director or principal, based on conduct related to providing money services or money laundering.

     (7) A licensee, executive officer, board director, or principal being convicted of a crime.

     (8) The safety and soundness of the licensee.

     (9) Other events and circumstance that, in the judgment of the director, impair the ability of the licensee to meet its obligations to its money services customers.

Statutory authority: RCW 19.230.050(6).

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     (a) $10,000 if the applicant has not previously engaged in the provision of money services, or it had money transmission receipts of less than one million dollars for the previous twelve months.

     (b) $20,000 if the applicant or licensee had money transmission receipts of at least one million dollars but less than two million dollars for the previous twelve months;

     (c) $30,000 if the applicant or licensee had money transmission receipts of at least two million dollars but less than three million dollars for the previous twelve months;

     (d) $40,000 if the applicant or licensee had money transmission receipts of at least three million dollars but less than four million dollars for the previous twelve months; or

     (e) $50,000 if the applicant or licensee had money transmission receipts of four million dollars or more for the previous twelve months.

     (2) Determinations of net worth must be made according to generally accepted accounting principles.

Statutory authority: RCW 19.230.060.

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     (a) The application is incomplete;

     (b) The surety bond, or net worth requirements of WAC 208-690-040 through WAC 208-690-060 have not been met, or is currently or has been insufficient;

     (c) The general fitness and character requirements of RCW 19.230.070 or 19.230.100 have not been met as demonstrated by findings including but not limited to the following:

     (i) The applicant or licensee, an executive officer, proposed responsible person, board director or person in control has been convicted of any felony within the past 10 years;

     (ii) The applicant or licensee, an executive officer, proposed responsible person, board director or person in control has been convicted of a crime involving a financial transaction within the past 10 years;

     (iii) The applicant or licensee, an executive officer, proposed responsible person, board director or person in control has criminal, civil, or administrative charges issued against him/them in any jurisdiction for violations relating to a financial transaction(s) within the past 10 years;

     (iv) The applicant or licensee, an executive officer, proposed responsible person, board director, or person in control has falsified any information supplied in connection with the application;

     (v) The applicant or licensee, or any authorized delegate thereof, has had an adverse action taken against any business license related to providing financial services by a jurisdiction within the United States within the past 5 years.

     (vi) The applicant or licensee has allowed a business under their control to deteriorate to a condition of insolvency determined by the fact that its liabilities exceed its assets or it cannot meet its liabilities as they mature.

     (d) The applicant or licensee, or any authorized delegate thereof, fails to respond to a request for information from the director.

     (e) The applicant or licensee has failed to register with the United States Department of the Treasury as required by 31 USC Section 5330.

     (f) The applicant or licensee, an executive officer, proposed responsible individual, board director, or person in control is listed on the specially designated nationals and blocked persons list prepared by the United States department of the treasury as a potential threat to commit terrorist acts or to finance terrorist acts.

     (2) In lieu of denying an application as authorized by any of the findings in subsection (1) of this section, the director may suspend processing that application if the director determines that the condition or circumstances that would likely lead to denial may be temporary and resolved satisfactorily within a reasonable period of time. The director may resume processing the application if the director determines that a favorable resolution of the disqualifying condition has occurred.

     (3) The director may revoke or suspend a license and issue an order to cease and desist operations as a money services licensee if (a) another jurisdiction initiates an adverse action against the money services license of the licensee, or (b) upon finding the existence of any condition or fact that would have led to denial of a license if known by the director during the processing of the application.

Statutory authority: RCW 19.230.070.

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RECORDKEEPING AND REPORTING

REQUIREMENTS
NEW SECTION
WAC 208-690-075   Transaction records.   In addition to the records required to be retained under RCW 19.230.170, a licensee shall maintain a record of all money services transactions including for each transaction:

     (1) The customer's name, social security number and address;

     (2) The date and time of the transaction;

     (3) Whether the transaction was a money transmission or currency exchange; and

     (4) The amount of the transaction.

     The record of money services transactions shall be retained for a period of at least five years, and shall be recorded in a format and medium prescribed by the director.

Statutory Authority: RCW 19.230.170(e).

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Statutory authority: RCW 19.230.110.

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     (1) If the licensee is a money transmitter a copy of the licensee's most recent audited annual financial statement or, if the licensee is a wholly owned subsidiary of another corporation, the most recent audited consolidated annual financial statement of the parent company.

     (2) A list of current authorized delegates in a form and in a medium prescribed by the director.

     (3) If the licensee is a money transmitter, a certification that the licensee's investment portfolio includes only permissible investments under RCW 19.230.200 and 19.230.210.

     (4) If the licensee is a money transmitter, proof that the licensee has an adequate surety bond or assignment of a certificate of deposit and net worth as required by WAC 208-690-040 through WAC 208-690-060.

     (5) A description of each material change, as defined by WAC 208-690-110, which has not been previously reported to the director.

Statutory authority: 19.230.110.

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     (2) The director may reinstate an expired license under this section if, by August 20, the licensee:

     (a) Files the complete annual report and pays both the annual license assessment and the late fee; and

     (b) The licensee did not engage in providing money services during the period its license was expired.

     (3) If any of the deadlines in this section occur on a day that is not a business day, the deadline shall be the next business day.

Statutory authority: RCW 19.230.110

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     (1) A change of the physical and/or mailing address;

     (2) A change of the responsible individual;

     (3) A change of the licensee's name or DBA (Doing Business As);

     (4) A change in the location where the records of the licensee that are required to be retained under RCW 19.230.170 are kept;

     (5) The obtaining or surrender of a money services license in any other jurisdiction;

     (6) The conviction of the licensee, an executive officer, responsible person, or person in control of a felony or of any crime involving a financial transaction; and

     (7) Other similar activities or events.

     The fee prescribed by WAC 208-690-150 must accompany each report.

Statutory Authority: RCW 19.230.120; RCW 19.230.150

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     (1) The filing of a petition by or against the licensee, or any authorized delegate of the licensee, under the United States Bankruptcy Code (11 U.S.C. 101-110) for bankruptcy or reorganization;

     (2) The filing of a petition by or against the licensee, or any authorized delegate of the licensee, for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of creditors;

     (3) The commencement of a proceeding to revoke, suspend, restrict, or condition its license, or otherwise discipline or sanction the licensee, in a state or country in which the licensee engages in business or is licensed;

     (4) The cancellation or other impairment of the licensee's bond or other security;

     (5) A charge or conviction of the licensee or of an executive officer, responsible individual, board director of the licensee, or person in control of the licensee, for a felony; or

     (6) A charge or conviction of an authorized delegate for a felony.

Statutory Authority: RCW 19.230.150.

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     (1) A comprehensive description of the proposed change that sets forth

     (a) The identity of all persons acquiring control under the proposed change;

     (b) The ownership interest and managerial authority of all persons in control under the proposed change.

     (2) For each new person in control under the proposed change,

     (a) Biographical information, including employment history for the immediate previous five years;

     (b) A personal credit report issued by a recognized independent credit reporting agency;

     (c) A signed authorization for a background investigation on a form prescribed by the director.

     (3) A transaction fee as prescribed by WAC 208-690-150.

Statutory Authority: RCW 19.230.160; 19.230.320.

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     (a) Any deletion of previously designated/existing locations where money services are provided, including mobile locations;

     (b) Any change in the name or trade name (DBA or Doing Business As) of an existing authorized delegate;

     (c) Any deletions from its roster of authorized delegates; and

     (d) The fee required by WAC 208-690-150.

     (2) If there is no change in the roster of authorized delegates or locations where money services are provided, or any changes in the name or trade name (DBA or Doing Business As) of any authorized delegate during a fiscal quarter, no filing is required.

Statutory authority: RCW 19.230.150.

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FEES
NEW SECTION
WAC 208-690-130   License fees.   (1) A non-refundable license application fee of $500 shall be paid by each license applicant, plus $50 for each additional location where the licensee or an authorized delegate will provide money services, up to a maximum of $8,000. A non-refundable application fee of $50 shall be paid by a licensee for each authorized delegate or company owned location the licensee seeks to add to its roster after the company license has been issued.

     (2) An applicant shall pay an initial license fee of $500, plus $50 for each additional location where the applicant or an authorized delegate will provide money services, up to a maximum of $8,000. This initial license fee is refundable if the application is denied. A licensee shall pay an initial license fee of $50 for each authorized delegate the licensee seeks to add to its roster after the license has been issued. This fee is refundable if the application to add an authorized delegate is denied. The fee is not refundable if the application is withdrawn.

Statutory Authority: RCW 19.230.320.

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Statutory authority: RCW 19.230.320.

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     (a) Change oaf licensee's physical or mailing address, name or trade name (DBA or Doing Business As);

     (b) Request for approval of a change in control of a licensee;

     (c) The responsible individual;

     (d) Change in the business/trade name or location of an existing authorized delegate, or company-owned location, or deletions from the roster or authorized delegates; or

     (e) Material change.

     (2) Transaction fees to cover administrative costs are separate, distinct and from, and in addition to investigation and examination fees under WAC 208-690-170.

Statutory authority: RCW 19.230.320.

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     Reviser's note: The typographical error in the above section occurred in the copy filed by the agency and appears in the Register pursuant to the requirements of RCW 34.08.040.
NEW SECTION
WAC 208-690-160   Late fees.   A late fee of twenty five percent of the annual license assessment will be added to the assessment if the annual report and license assessment are not received in the office of the Department by 5:00 p.m., July 1. If July 1 is not a business day, the deadline will be the next business day.

Statutory authority: RCW 19.230.320.

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     (a) The review and attendant investigation of changes in control, changes in the responsible individual, changes in the identity or location of authorized delegates, and other material changes.

     (b) The review and attendant investigation of permissible investments of the licensee.

     (c) Any examination of the licensee's books, records and files deemed necessary by the director.

     (2) The licensee, applicant or person subject to licensing under this chapter who is the subject of an examination or investigation shall pay the actual expenses of required out of state travel including but not limited to travel, lodging and per diem expense.

     (3) Investigation and examination fees are separate, distinct from and in addition to transaction fees imposed by WAC 208-690-150.

Statutory authority: RCW 19.230.320.

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ENFORCEMENT
NEW SECTION
WAC 208-690-180   Authority to conduct examinations and investigations.   (1) For the purposes of discovering violations of chapter 19.230 RCW or these rules, discovering unsafe and unsound practices, or securing information lawfully required under chapter 19.230 RCW, the director may at any time investigate or examine the business and, wherever located, the books, accounts, records, papers, documents, files, and other information used in the business of every licensee or its authorized delegates, and of every person who is engaged in the business of providing money services, whether the person acts or claims to act under or without the authority of chapter 19.230 RCW. For these purposes the director shall have free access to the offices and places of business, books accounts papers, documents, other information, records, files, safes, and vaults of all such persons. The director may require the attendance of and examine under oath all persons whose testimony may be required about the business or the subject matter of any investigation, examination or hearing and may require such person to produce books, accounts, papers, documents, records, files and any other information the director declares is relevant to the inquiry. The director may require the production of original books, accounts, papers, documents, records, files, and other information; may require that such original books, accounts, papers, documents, records, files, and other information be copied; or make copies himself or herself of such originals. If the director determines that there is a danger that original records may be destroyed, altered, or removed to deny access, or hinder an examination or investigation, or that original documents are necessary for the preparation of a criminal referral, the director may take possession of originals of any items described in this section, regardless of the source of such items. Originals and copies taken by the director may be held, returned, or forwarded to other regulatory or law enforcement officials as determined necessary by the director. The director may issue a subpoena or subpoena duces tecum requiring attendance or compelling production of the books, accounts, papers, documents, records, files, and other information.

     (2) The licensee, applicant, or person subject to licensing under this chapter shall pay the cost of examinations as specified under RCW 19.230.320 and WAC 208-690-170.

     (3) Information obtained during an examination or investigation under these rules may be disclosed only as provided in RCW 19.230.190.

     (4) The director may retain attorneys, accountants, or other professionals and specialists as examiners, auditors or investigators, to conduct or assist in the conduct or examinations or investigations. The cost of these services shall be borne by the person who is the subject of the examination or investigation.

Statutory authority: RCW 19.230.130.

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