Preproposal statement of inquiry was filed as WSR 03-115 [03-15-044].
Title of Rule: Regulation of money services providers (money transmitters and currency exchangers).
Purpose: To implement the Uniform Money Services Act, chapter 287, Laws of 2003, chapter 19.230 RCW; specifically to facilitate licensing, monitoring, investigation and examination of money services businesses as required by the act. This is to replace the emergency rule filed as WSR 04-07-182.
Statutory Authority for Adoption: RCW 19.230.310 and 43.320.040.
Summary: Licensing requirements, financial security standards, record-keeping and reporting requirements, examination authority, and a schedule of fees to support the regulatory program are established by the proposed rule.
Reasons Supporting Proposal: The rule is necessary to implement the statute and to carry out the duties assigned by the legislature and the governor. The rule establishes reasonable standards and fees with a minimum of impact on the affected businesses. The regulatory program provides protection and remedies for consumers.
Name of Agency Personnel Responsible for Drafting: David Cheal, 150 Israel Road, Olympia, WA 98504-1200, (360) 902-0512; Implementation: Chuck Cross, 150 Israel Road, Olympia, WA 98504-1200, (360) 902-8733; and Enforcement: Kwadwo Boateng, 150 Israel Road, Olympia, WA 98504-1200, (360) 902-8725.
Rule is not necessitated by federal law, federal or state court decision.
Explanation of Rule, its Purpose, and Anticipated Effects: The proposed rule directs the affected businesses to apply for a license, and outlines the application requirements. It establishes minimum net worth and surety bond requirements. Reasons for license denial are listed. Record-keeping and reporting requirements, including coordination with certain federal requirements are provided. Investigation and examination authority is detailed. Fees sufficient to support the regulatory program, as directed by the act, are imposed.
The effects of the proposed rule are that money transmitters and currency exchangers are provided with direction and detail as to how to comply with the law.
Proposal Changes the Following Existing Rules: 1. Authorized delegates (agents) of licensed businesses that are added after the license is issued may be reported periodically after they are added by the licensee, rather than by preapplication.
2. Money transmission transaction record keeping is made identical to federal requirements.
3. Other changes are minor technical, grammatical and style corrections.
A small business economic impact statement has been prepared under chapter 19.85 RCW.
Background for Proposed Rule: The Uniform Money Services Act ("act") was enacted by the Washington state legislature and signed by the governor in 2003. This is the Washington version of a national model act prepared by the National Conference of Commissioners on Uniform State Laws, and enacted in forty-three states. As with all proposed uniform laws, the adoption and recommendation of the Uniform Money Services Act by the Uniform Law Commissioners represents their judgment that this is an area of the law that would benefit from uniform national standards and procedures, while preserving a reasonable degree of local flexibility. The National Conference of Uniform Law Commissioners is composed of appointed delegates from every state.
The purpose of the act is to require the licensing of money transmitting and currency exchange businesses, to establish financial security, reporting and record keeping, and examination standards for the industry, and to provide for general monitoring of the industry by the state through the department. The act is part of a national effort to regulate a previously unregulated industry with the goal of enhancing consumer protection, preventing money laundering and preventing terrorist financing. The system of state regulation reflected in the act is coordinated with federal registration and reporting and record-keeping requirements.
Description of the Proposed Rule: The proposed rule:
• Directs the affected business to apply for a license, and outlines the requirements;
• Establishes minimum net worth and surety bond requirements;
• Lists reasons for license denial;
• Provides record-keeping and reporting requirements; including coordination with certain federal requirements;
• Provides for periodic examination of money transmitter businesses; and
• Imposes fees to support the regulatory program, as directed by the act.
It should be noted that all of these requirements are prescribed by state law. This rule provides necessary detail, as directed by the act.
REQUIRED ELEMENTS OF SBEIS:
ELEMENT 1. A brief description of the reporting, record-keeping, and other compliance requirements of the proposed rule and the kinds of professional services that a small business is likely to need in order to comply with the requirements.
RESPONSE: Reporting. There are four reporting requirements: An annual report, quarterly reports, reports of "material changes" as defined in the act and the rules, and the reporting of certain events within one day of their occurrence.
Annual reports: The annual report must include an audited financial statement, a list of current authorized delegates and locations where money services are provided, certification that the licensee is invested only in the types of investments authorized for money transmitter licensees by the act, and proof that the licensee has the required net worth and surety bond.
Quarterly reports: Within forty-five days of the end of each fiscal quarter licensees must report additions and deletions of locations where money services are provided, any change in the name or trade name of an existing authorized delegate, and additions and deletions from its roster of authorized delegates.
Immediate reports: Licensees must immediately report filing for bankruptcy protection, action against the license of the licensee in another jurisdiction, criminal charges, cancellation or impairment of its security bond, a charge or conviction of a felony of the licensee, executive officer, board director, manager or person in control, or other similar events.
Material changes: Changes in certain items listed that are initially part of a licensee's license application must be reported within thirty days of the occurrence of the change. Generally, these include changes in ownership, management, address or trade name.
A small business would need the services of an independent accountant to prepare the annual audited financial statement. Other reporting and record-keeping and other compliance requirements could be performed by the licensee or his or her employees.
Record keeping: The act requires licensees to keep records that demonstrate compliance for a period of five years. These records include a general ledger, bank statements, names and addresses of authorized delegates, and compliance with federal record-keeping requirements. The act authorizes the department to require retention of other records, however, the rule makes no additional record-keeping requirements.
Other compliance requirements: The act requires the obtaining of a license, prior notice of proposed changes in control following licensure, approval of a change in control, maintenance of a certain level of net worth, obtaining and maintaining of a surety bond, and payment of an annual assessment.
The rule provides details for making a request for approval of a change in control. The rule also prescribes the dollar amount of the initial license fee, the initial license application processing fee, the annual assessment, net worth amounts, and surety bond amounts.
ELEMENT 2. An analysis of the costs of compliance for identified industries, including costs of equipment, supplies, and increased administrative costs.
RESPONSE: The following cost analysis addresses only those elements of the proposed rule over which the department has some discretion, or is required by the act to determine a level or amount.
Initial licensing: Each applicant must pay a $500 fee to cover the cost of processing the application, and an additional $50 for each authorized delegate or additional location where money services are to be provided, up to a maximum of $15,000.
The fee for the initial license is $500, plus $50 for each authorized delegate or additional location where money services are to be provided, up to a maximum of $15,000.
The range of cost for processing the license application and initial licensing is $1,000 for one location and up to $30,000 for a licensee with one hundred fifty or more locations.
Annual assessment: Each licensee must pay an annual assessment of $500, plus $50 for each authorized delegate or additional location where money services are provided, up to a maximum of $15,000. The range of annual assessment cost is $500 for a single location and no authorized delegates, to $15,000 for one hundred fifty or more authorized delegates or additional licensee-owned locations.
Reporting: Money transmitter licensees are required to have an annual audited financial statement prepared according to generally accepted accounting principles. However, this requirement is imposed by the act without further interpretation or qualification by the proposed rule, and therefore will not be included in this analysis.
Other reporting expenses depend on the unique business experience of each licensee. Reporting other than the annual report depends on the frequency of material changes in the business, ownership changes, expansion or contraction of the number of authorized delegates, financial reversal, including claims against its bond, involvement in significant litigation, adverse action by regulators, the number of transactions that require federal reporting, or criminal charges against owners or officers. The range of additional reporting expenses is infinite and largely unpredictable. However, it would not be unusual for a small volume licensee to experience no reporting obligations except for the annual report. The larger affected businesses could easily experience all of the additional reporting requirements.
All reporting requirements are imposed by state and federal law and not this proposed rule.
Record keeping: Transaction record-keeping requirements are identical to federal requirements. No additional record-keeping requirements are imposed by the proposed rule.
Other compliance requirements: Financial security; fees. The act requires a minimum level of financial security and stability on the part of money transmitters. The rule establishes surety bond amounts within statutory parameters, graduated according to volume of money transmission business during the previous twelve months, and the number of locations where money transmission services are provided. The required penal sum of the surety bond ranges from $10,000 to $550,000.
Licensees have the option of assigning a certificate of deposit to the department in lieu of the surety bond. The certificate must be for a principal amount equal to the surety bond that would otherwise be required. The licensee receives the interest generated by the certificate of deposit. The cost to the licensee who chooses this option would be the difference between the interest received and the yield from other lost investment opportunities for those funds.
According to information supplied by licensees, surety bond premiums range from $1,000 to $10,000. Premiums are based not only on the penal sum of the bond, but the financial liquidity of the bond purchaser.
The rule also establishes a schedule of net worth requirements as directed by the act, graduated according to the licensee's volume of money transmission business during the previous twelve months.
In addition to licensing, reporting and record keeping, and financial security requirements, licensees are required to pay certain fees. RCW 19.230.320 requires the department to establish fees by rule sufficient to cover the costs of administering the act.
The rule establishes five types of fees:
(1) A license application fee of $500 plus $50 for each additional location where money services are provided, to cover the cost of investigation of the applicant, and other administrative costs of processing the application;
(2) An initial license fee;
(3) An annual assessment fee;
(4) A transaction fee of $30 to cover the administrative cost of recording changes in vital information about a licensee as they occur, such as address change, ownership change and management change; and
(5) A fee of $75 per hour of staff time to cover the costs of required examinations and investigations of licensees.
The application, initial license and annual assessment fees are graduated according to the number of authorized delegates and licensee-owned locations where money services are provided. These fees are each capped at $15,000.
ELEMENT 3. Whether compliance with the proposed rule will cause businesses to lose sales or revenue.
Response: Compliance with the rule should give potential customers greater assurance that their money will be transmitted according to their wishes. Compliance also provides a range of remedies to consumers who experience difficulty. Compliance should provide a competitive advantage over money transmitters who are unlicensed, particularly after awareness grows among consumers that this is a regulated industry. Therefore, rather than cause the loss of sales, regulation under the law and this rule should have the opposite effect in the long term.
ELEMENT 4. A comparison of compliance costs for the small business segment and the large business segment of the affected industries, and whether the impact on small business is disproportionate.
Response: Based on data supplied by the affected businesses, the largest ten percent of licensees have an average annual total dollar volume of money transmissions of $125,960,000. Estimated average annual compliance costs excluding the first year are $36,500.1 Cost per "$100 of sales" (see RCW 19.85.040 (1)(c)) is $.0289. ($36,500/$1,259,600.)
Based on data supplied by the affected businesses, licensees with fifty or fewer employees (i.e., "small businesses," as defined by RCW 19.85.020) have an average total dollar volume of money transmissions of $2,581,412. Average annual cost of compliance, excluding the first year, for this size business is $3,850.2 Cost per $100 of sales is $.1491. ($3,850/$25,814.)
Therefore, even though the cost of compliance is low for all licensees, the small business segment will experience a disproportionate cost.
ELEMENT 5. Steps taken by the agency under RCW 19.85.030(2) to reduce costs of the proposed rule on small businesses, or reasonable justification for not doing so, addressing the specified mitigation steps.
Response: We have reviewed the six steps under RCW 19.85.030 (3)(a) through (f). Our analysis is as follows:
(a) Reducing, modifying, or eliminating substantive regulatory requirements: All the regulatory requirements of the proposed rule are required by state law. The agency does not have the authority to eliminate statutory requirements. The fee elements are graduated to reduce the impact on small business. Reporting requirements, including the audited annual financial statement, may have a disproportionate impact on small businesses, but are required by statute. The bond requirements are graduated to lessen the impact on small business. While the fee amounts could be reduced, the department is required by law to adopt a schedule of fees that will cover the costs of the regulatory program. The schedule in the proposed rule represents the best estimate of department of the amount required to cover those costs.
(b) Simplifying, reducing or eliminating record-keeping and reporting requirements: Reporting and record-keeping elements of the proposed rule are all required by statute except for transaction reports. However, the transaction report requirement duplicates federal transaction report requirements, and therefore does not impose additional costs.
(c) Reducing the frequency of inspections. Although the department does have the duty to conduct examinations and investigations, the proposed rule does not specify any particular frequency. The act gives the director the discretion as to the frequency of examinations and the circumstances requiring an investigation. The clear intent of the law is that investigations and examinations be carried out as required to insure safety and soundness of the affected businesses, and to support enforcement activities as they arise. To reduce frequency of these activities below those levels would be contrary to the department's fundamental mission.
(d) Delaying compliance timetables: The law does not give the department the option to delay compliance.
(e) Reducing or modifying fine schedules for noncompliance: The only "fine" or monetary penalty for noncompliance in the proposed rule is the late fee of 25% for late filing of the annual report. Various amounts were considered, but it was decided that this is the lowest amount likely to deter late filing.
(f) Other mitigation techniques: The department has provided, and will likely continue to provide a great many hours of staff time to advise and assist licensees in meeting their licensing and other compliance requirements. This service has undoubtedly reduced the cost of retaining professional accounting, consulting or legal services.
ELEMENT 6. A description of how the agency will involve small business in the development of the proposed rule.
Response: A total of eight meetings have been held in various locations throughout the state, where known affected small businesses were contacted and invited to participate in a discussion of the proposed rule. In addition, an advisory panel was convened, to provide a thorough review of the proposed rule. The panel consisted of a representative from large affected businesses, a representative of small affected businesses and two consumer advocates. Several proposals of the panel were incorporated into the proposed rule.
ELEMENT 7. A list of the industry(ies) affected by the proposed rule.
Response: The industry affected by the proposed rule is money transmitters and currency exchangers. Currently there are no currency exchange licensees, however money transmitter licensees are authorized to provide currency exchange services without a separate currency exchange license. There is no standard industrial classification code for this industry.
|Annual assessment||---------||$15,000 (maximum amount)|
|Miscellaneous reporting costs||---------||2,500|
2. Average annual predicted compliance costs for affected businesses with less than fifty employees are computed as follows:
|Annual assessment||----------||$750 ($500 plus $50 each for five authorized delegates)|
|Miscellaneous reporting costs||----------||300|
A copy of the statement may be obtained by writing to Chuck Cross, Assistant Director, Consumer Services, Department of Financial Institutions, P.O. Box 41200, Olympia, WA 98504-1200, phone (360) 902-8733, fax (360) 664-2258.
RCW 34.05.328 does not apply to this rule adoption. Rules adopted by the Department of Financial Institutions are not subject to RCW 34.05.328, except as voluntarily made applicable.
Hearing Location: Department of Financial Institutions, 150 Israel Road, Olympia, WA 98504-1200, on June 22, 2004, at 7:00 p.m.
Assistance for Persons with Disabilities: Contact David Cheal by June 18, 2004, TDD (360) 664-8126 or (360) 902-0512.
Submit Written Comments to: David Cheal, Department of Financial Institutions, 150 Israel Road, Olympia, WA 98501, fax (360) 664-2258, by June 22, 2004.
Date of Intended Adoption: June 23, 2004.
May 5, 2004
REGULATION OF MONEY SERVICES PROVIDERS
WAC 208-690-010 Definitions. The definitions in RCW 19.230.010 and this section apply throughout this chapter unless the context clearly requires otherwise.
(1) "Act" means the Uniform Money Services Act, chapter 19.230 RCW.
(2) "Audited financial statement" means a statement prepared by an independent accountant according to generally accepted accounting principles.
(3) "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.
(4) "RCW" means the Revised Code of Washington.
(5) "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.
WAC 208-690-020 Voluntary license application. (1) Any person otherwise exempt from licensing under the provisions of the act may voluntarily submit an application to the director for a money transmitter or currency exchange license. The director shall review such application and may grant or deny licenses to such applicants upon the same grounds and subject to payment of the same fees as are applicable to persons required to be licensed.
(2) Upon receipt of a license under this section, the licensee is required to maintain a valid license and is subject to all the provisions of the act and these rules until the license is surrendered or revoked.
(1) A completed application in a form and in a medium prescribed by the director. The application must contain:
(a) The legal name, business address, and residential address, if applicable, of the applicant and any fictitious or trade name used by the applicant in conducting its business;
(b) The legal name, residential and business address, date of birth, Social Security number, employment history for the five-year period preceding the submission of the application of the applicant's proposed responsible individual, and documentation that the proposed responsible individual is a citizen of the United States or has obtained legal immigration status to work in the United States. In addition, the applicant shall provide the fingerprints of the proposed responsible individual and a personal credit report from a recognized independent credit reporting agency on the proposed responsible individual;
(c) For the ten-year period preceding submission of the application, a list of any criminal convictions of the proposed responsible individual of the applicant, any material litigation in which the applicant has been involved, and any litigation involving the proposed responsible individual relating to the provision of money services;
(d) A description of any money services previously provided by the applicant and the money services the applicant seeks to provide in this state;
(e) A list of the applicant's authorized delegates including the business name and any additional names by which the business may be known, the business address and name of the primary contact person for each authorized delegate, and the locations in this state where the applicant and its authorized delegates propose to engage in the provision of money services;
(f) A list of other states in which the applicant is licensed to engage in money transmission, or provide other money services, and any license revocations, suspensions, restrictions, or other disciplinary action taken against the applicant in another state;
(g) A list of any license revocations, suspensions, restrictions, or other disciplinary action taken against any money services business involving the proposed responsible individual;
(h) Information concerning any bankruptcy or receivership proceedings involving or affecting the applicant or the proposed responsible individual;
(i) A sample form of the contract for authorized delegates, if applicable;
(j) A description of the source of money and credit to be used by the applicant to provide money services; and
(k) A full description of the screening process used by the applicant in selecting authorized delegates, including a sample of any forms used, and the method used to screen for criminal history.
(2) If the applicant is a corporation, limited liability company, partnership, or other entity, the applicant shall also provide:
(a) The date of the applicant's incorporation or formation and the state or country of incorporation or formation;
(b) If applicable, a certificate of good standing from the state or country in which the applicant is incorporated or formed;
(c) A brief 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;
(d) The legal name, any fictitious or trade name, all business and residential addresses, date of birth, Social Security number, and employment history in the ten-year period preceding the submission of the application for each executive officer, board director, or person that has control of the applicant;
(e) If the applicant or its corporate parent is not a publicly traded entity, the fingerprints of each executive officer, board director, or person that has control of the applicant;
(f) A list of any criminal convictions, material litigation, and any litigation related to the provision of money services, in the ten-year period preceding the submission of the application in which any executive officer, board director, or person in control of the applicant has been involved;
(g) A copy of the applicant's audited financial statements for the most recent fiscal year or, if the applicant is a wholly owned subsidiary of another corporation, the most recent audited consolidated annual financial statement of the parent corporation or the applicant's most recent audited consolidated annual financial statement, and in each case, if available, for the two-year period preceding the submission of the application;
(h) 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 preceding the submission of the application;
(i) 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);
(j) If the applicant is a wholly owned subsidiary of:
(i) 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. Sec. 78m); or
(ii) 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;
(k) If the applicant has a registered agent in this state, the name and address of the applicant's registered agent in this state.
(3) If the application is for money transmission, a surety bond as required by WAC 208-690-040 or an assignment of a certificate of deposit, as required by WAC 208-690-045.
(4) An 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) If the application is for money transmission, a certification that the applicant's investment portfolio includes only permissible investments under RCW 19.230.200 and 19.230.210.
The director may waive one or more requirements of subsection (1) or (2) of this section or permit an applicant to submit other information in lieu of the required information.
(1) A completed notification form prescribed by the director;
(2) For each proposed 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; and
(3) The fees required by WAC 208-690-130.
(2) An authorized delegate, or any other person exempt from the licensing requirements of chapter 19.230 RCW, cannot have an authorized delegate.
(3) 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.
(2) The penal sum of the bond shall be calculated annually according to the following schedule:
(a) Ten thousand dollars 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) Twenty thousand dollars 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) Thirty thousand dollars 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) Forty thousand dollars 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) Fifty thousand dollars 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 ten thousand dollars 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 five hundred thousand dollars.
(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 any proceedings against the licensee in any state or foreign country.
(6) The filing of a state or federal criminal charge against the licensee, person in control, responsible individual, executive officer, board director, employee, authorized delegate or principal, based on conduct related to providing money services or money laundering.
(7) A licensee, executive officer, board director, person in control, responsible individual, principal or authorized delegate being convicted of a crime.
(8) Any unsafe or unsound practice.
(9) A judicial or administrative finding against a money transmitter licensee under chapter 19.86 RCW, or an examination report finding that the money transmitter licensee engaged in an unfair or deceptive act or practice in the conduct of its business.
(10) Other events and circumstances that, in the judgment of the director, impair the ability of the licensee to meet its obligations to its money services customers.
(a) Ten thousand dollars if the applicant has not previously engaged in the provision of money services, or the applicant or licensee had money transmission receipts of less than one million dollars for the previous twelve months;
(b) Twenty thousand dollars 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) Thirty thousand dollars 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) Forty thousand dollars 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) Fifty thousand dollars 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.
(a) The application is incomplete;
(b) The surety bond or net worth requirements of WAC 208-690-040 through 208-690-060 have not been met;
(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, an executive officer, proposed responsible person, board director, person in control or authorized delegate has been convicted of any felony within the past ten years;
(ii) The applicant, an executive officer, proposed responsible person, board director, person in control or authorized delegate has been convicted of a crime involving a financial transaction within the past ten years;
(iii) The applicant, 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 ten years;
(iv) The applicant, 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 any proposed 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 five years;
(vi) The applicant has allowed a business under its 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 any authorized delegate thereof, fails to respond to a request for information from the director;
(e) The description of the screening process used by the applicant in selecting authorized delegates supplied by the applicant describes a process that is ineffective in determining the fitness of proposed authorized delegates;
(f) The applicant has failed to register with the United States Department of the Treasury as required by 31 U.S.C. Section 5330;
(g) The applicant, 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 return the application or extend the review period 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.
RECORDKEEPING AND REPORTING
WAC 208-690-075 Transaction records. In addition to the records required to be retained under RCW 19.230.170, a money transmitter licensee shall maintain a record of money transmittals in accordance with Title 31, Code of Federal Regulations, Part 103.33(f), as now appearing or hereafter amended.
(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 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.
(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 or its delegates 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.
(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, revocation or surrender of a money services license in any other jurisdiction;
(6) The conviction of the licensee, an executive officer, responsible individual, board director, principal, or person in control of a misdemeanor or gross misdemeanor involving a financial transaction; and
(7) Other similar activities or events.
The fee prescribed by WAC 208-690-150 must accompany each report.
(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, principal, or person in control of the licensee, for a felony; or
(6) A charge or conviction of an authorized delegate for a felony.
(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.
(a) Any deletion of licensee-owned locations where money services are provided, including mobile locations;
(b) Any change in the name or trade name (DBA or doing business as) or business address 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 no changes in the name or trade name (DBA or doing business as) or business address of any authorized delegate during a fiscal quarter, no report is required.
WAC 208-690-130 License fees. (1) A nonrefundable license application fee of five hundred dollars shall be paid by each license applicant, plus fifty dollars for each additional location where the licensee or an authorized delegate will provide money services, up to a maximum of fifteen thousand dollars. A nonrefundable application fee of fifty dollars 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 five hundred dollars, plus fifty dollars for each additional location where the applicant or an authorized delegate will provide money services, up to a maximum of fifteen thousand dollars. This initial license fee is refundable if the application is denied. A licensee shall pay an initial license fee of fifty dollars 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.
(a) Change of a 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) Change of 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 from, and in addition to investigation and examination fees under WAC 208-690-170.
(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.
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, either personally or by designee, 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 or designated representative 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 or designated person 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 or by designee of such original books, accounts, papers, documents, records, files, or other information. 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 or designated person may issue a subpoena or subpoena duces tecum requiring attendance or compelling production of the books, accounts, papers, documents, records, files, or other information.
(2) The licensee, applicant, or person subject to licensing under this chapter shall pay the cost of examinations and investigations as specified in 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.