BILL REQ. #: Z-0087.2
| State of Washington | 58th Legislature | 2003 Regular Session |
Read first time 01/27/2003. Referred to Committee on Financial Services, Insurance & Housing.
AN ACT Relating to licensing and regulating money transmission and currency exchange; adding a new chapter to Title 19 RCW; prescribing penalties; and providing an effective date.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF WASHINGTON:
NEW SECTION. Sec. 1
NEW SECTION. Sec. 2
NEW SECTION. Sec. 3
(1) "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.
(2) "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.
(3) "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.
(4) "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.
(5) "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.
(6) "Currency exchange" means exchanging the money of one
government for money of another government, or holding oneself out as
able to exchange the money of one government for 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 a person who deals in money
whose value is primarily determined because it is rare, old, or
collectible; and
(d) A person who in the regular course of business chooses to
accept from a customer the currency 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 trade in currencies or transmit money for compensation or
gain.
(7) "Executive officer" means a president, chairperson of the
executive committee, chief financial officer, responsible individual,
or other individual who performs similar functions.
(8) "Licensee" means a person licensed under this chapter.
(9) "Material litigation" means litigation that according to
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.
(10) "Money" means a medium of exchange that is authorized or
adopted by the United States or a foreign government or other
recognized medium of exchange. "Money" includes a monetary unit of
account established by an intergovernmental organization or by
agreement between two or more governments.
(11) "Money services" means money transmission or currency
exchange.
(12) "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 by wire, facsimile,
or electronic transfer. "Money transmission" does not include the
provision solely of connection services to the internet,
telecommunications services, or network access.
(13) "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.
(14) "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.
(15) "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.
(16) "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.
(17) "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.
(18) "State" means a state of the United States, the District of
Columbia, Puerto Rico, the United States Virgin Islands, or any
territory or insular possession subject to the jurisdiction of the
United States.
(19) "Director" means the director of financial institutions.
(20) "Unsafe or unsound practice" means a practice or conduct by a
person licensed 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.
(21) "Board director" means a member of the applicant's or
licensee's board of directors if the applicant is a corporation or
limited liability company, or a partner if the applicant or licensee is
a partnership.
(22) "Annual license assessment due date" means the date specified
in rule by the director upon which the annual license assessment is
due.
(23) "Currency exchanger" means a person that is engaged in
currency exchange.
(24) "Money transmitter" means a person that is engaged in money
transmission.
(25) "Mobile location" means a vehicle or movable facility where
money services are provided.
(26) "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 others involved in transactions functionally related to the goods,
intangibles, services, or other items sold by the issuer or its
affiliates.
NEW SECTION. Sec. 4
(1) The United States or a department, agency, or instrumentality
thereof;
(2) Money transmission by the United States postal service or by a
contractor on behalf of the United States postal service;
(3) A state, county, city, or a department, agency, or
instrumentality thereof;
(4) A financial institution or its subsidiaries, affiliates, and
service corporations, or any office of an international banking
corporation, branch of a foreign bank, or corporation organized
pursuant to the Bank Service Corporation Act (12 U.S.C. Sec. 1861-1867)
or a corporation organized under the Edge Act (12 U.S.C. Sec. 611-633);
(5) Electronic funds transfer of governmental benefits for a
federal, state, county, or governmental agency by a contractor on
behalf of the United States or a department, agency, or instrumentality
thereof, or a state or governmental subdivision, agency, or
instrumentality thereof;
(6) A board of trade designated as a contract market under the
federal Commodity Exchange Act (7 U.S.C. Sec. 1-25) or a person that,
in the ordinary course of business, provides clearance and settlement
services for a board of trade to the extent of its operation as, or
for, a board of trade;
(7) A registered futures commission merchant under the federal
commodities laws to the extent of its operation as such a merchant;
(8) A person that provides clearance or settlement services under
a registration as a clearing agency, or an exemption from that
registration granted under the federal securities laws, to the extent
of its operation as such a provider;
(9) An operator of a payment system only to the extent that it
provides processing, clearing, or settlement services, between or among
persons who are all excluded by this section, in connection with wire
transfers, credit card transactions, debit card transactions, stored-value transactions, automated clearinghouse transfers, or similar funds
transfers;
(10) A person registered as a securities broker-dealer or
investment advisor under federal or state securities laws to the extent
of its operation as such a broker-dealer or investment advisor;
(11) An insurance company, title insurance company, or escrow agent
to the extent that such an entity is lawfully authorized to conduct
business in this state as an insurance company, title insurance
company, or escrow agent and to the extent that they engage in money
transmission or currency exchange as an ancillary service when
conducting insurance, title insurance, or escrow activity;
(12) The issuance, sale, use, redemption, or exchange of stored
value or of payment instruments; or
(13) An attorney, to the extent that the attorney is lawfully
authorized to practice law in this state and to the extent that the
attorney engages in money transmission or currency exchange as an
ancillary service to the practice of law.
NEW SECTION. Sec. 5
(a) Licensed as a money transmitter under this chapter; or
(b) An authorized delegate of a person licensed as a money
transmitter under this chapter.
(2) A money transmitter license is not transferable or assignable.
NEW SECTION. Sec. 6
(a) The legal name, business addresses, 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 addresses, 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 upon the request of the director;
(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 that the applicant seeks to provide in
this state;
(e) A list of the applicant's proposed authorized delegates 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 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) Any other information regarding the background, experience,
character, financial responsibility, and general fitness of the
applicant, the applicant's responsible individual, or authorized
delegates that the director may require in rule.
(2) If an 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
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 director may request 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; and
(l) Any other information that the director may require in rule
regarding the applicant, each executive officer, or each board director
to determine the applicant's background, experience, character,
financial responsibility, and general fitness.
(3) A nonrefundable application fee and an initial license fee, as
determined in rule by the director, must accompany an application for
a license under this chapter. The initial license fee must be refunded
if the application is denied.
(4) 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.
NEW SECTION. Sec. 7
(2) The surety bond shall run to the state of Washington as
obligee, and shall run to the benefit of the state and any person or
persons who suffer loss by reason of a licensee's or licensee's
authorized delegate's violation of this chapter or the rules adopted
under this chapter. A claimant against a money transmitter licensee
may maintain an action on the bond, or the director may maintain an
action on behalf of the claimant.
(3) The surety bond shall be continuous and may be canceled by the
surety upon the surety giving written notice to the director of its
intent to cancel the bond. The cancellation is effective thirty days
after the notice of cancellation is received by the director or the
director's designee. Whether or not the bond is renewed, continued,
replaced, or modified, including increases or decreases in the penal
sum, it is considered one continuous obligation, and the surety upon
the bond is not liable in an aggregate or cumulative amount exceeding
the penal sum set forth on the face of the bond. In no event may the
penal sum, or any portion thereof, at two or more points in time, be
added together in determining the surety's liability.
(4) A surety bond or other security must cover claims for at least
five years after the date of a money transmitter licensee's violation
of this chapter, or at least five years after the date the money
transmitter licensee ceases to provide money services in this state,
whichever is longer. However, the director may permit the amount of
the surety bond or other security to be reduced or eliminated before
the expiration of that time to the extent the amount of the licensee's
obligations outstanding in this state are reduced.
(5) In the event that a money transmitter licensee does not
maintain a surety bond or other form of security satisfactory to the
director in the amount required under subsection (1) of this section,
the director may issue a temporary cease and desist order under section
28 of this act.
(6) The director may increase the amount of security required to a
maximum of one million dollars if the financial condition of a money
transmitter licensee so requires, as evidenced by reduction of net
worth, financial losses, potential losses as a result of violations of
this chapter or rules adopted under this chapter, or other relevant
criteria specified by the director in rule.
NEW SECTION. Sec. 8
NEW SECTION. Sec. 9
(a) The applicant has complied with sections 6, 7, and 8 of this
act;
(b) The financial condition and responsibility, financial and
business experience, competence, character, and general fitness of the
applicant; and the competence, financial and business experience,
character, and general fitness of the executive officers, proposed
responsible individual, board directors, and persons in control of the
applicant; indicate that it is in the interest of the public to permit
the applicant to engage in the business of providing money transmission
services; and
(c) Neither the applicant, nor any executive officer, nor person
who exercises control over the applicant, nor the proposed responsible
individual is listed on the specially designated nationals and blocked
persons list prepared by the United States department of the treasury
or department of state under Presidential Executive Order No. 13224.
(2) The director may for good cause extend the application review
period.
(3) An applicant whose application is denied by the director under
this chapter may appeal under chapter 34.05 RCW.
(4) A money transmitter license issued under this chapter is valid
from the date of issuance and remains in effect with no fixed date of
expiration unless otherwise suspended or revoked by the director or
unless the license expires for nonpayment of the annual license
assessment and any late fee, if applicable.
(5) A money transmitter licensee may surrender a license by
delivering the original license to the director along with a written
notice of surrender. The written notice of surrender must include
notice of where the records of the licensee will be stored and the
name, address, telephone number, and other contact information of a
responsible party who is authorized to provide access to the records.
The surrender of a license does not reduce or eliminate the licensee's
civil or criminal liability arising from acts or omissions occurring
prior to the surrender of the license, including any administrative
actions undertaken by the director or the director's designee to revoke
or suspend a license, to assess fines, to order payment of restitution,
or to exercise any other authority authorized under this chapter.
NEW SECTION. Sec. 10
(a) Licensed to provide currency exchange under this chapter;
(b) Licensed for money transmission under this chapter; or
(c) An authorized delegate of a person licensed under this chapter.
(2) A license under this chapter is not transferable or assignable.
NEW SECTION. Sec. 11
(a) The legal name, business addresses, and residential address, if
applicable, of the applicant and any fictitious or trade name used by
the applicant in conducting its business, and the legal name,
residential and business addresses, date of birth, social security
number, employment history for the five-year period preceding the
submission of the application; and upon request of the director,
fingerprints 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;
(b) For the ten-year period preceding the 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;
(c) A description of any money services previously provided by the
applicant and the money services that the applicant seeks to provide in
this state;
(d) A list of the applicant's proposed authorized delegates and the
locations in this state where the applicant and its authorized
delegates propose to engage in currency exchange;
(e) A list of other states in which the applicant engages in
currency exchange or provides other money services and any license
revocations, suspensions, restrictions, or other disciplinary action
taken against the applicant in another state;
(f) A list of any license revocations, suspensions, restrictions,
or other disciplinary action taken against any money services business
involving the proposed responsible individual;
(g) Information concerning any bankruptcy or receivership
proceedings involving or affecting the applicant or the proposed
responsible individual;
(h) A sample form of contract for authorized delegates, if
applicable;
(i) A description of the source of money and credit to be used by
the applicant to provide currency exchange; and
(j) Any other information regarding the background, experience,
character, financial responsibility, and general fitness of the
applicant, the applicant's responsible individual, or authorized
delegates that the director may require in rule.
(2) If an 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
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 director may request the fingerprints for each
executive officer, board director, or person that has control of the
applicant; and
(f) A list of any criminal convictions, material litigation, and
any litigation related to the provision of money services, in which any
executive officer, board director, or person in control of the
applicant has been involved in the ten-year period preceding the
submission of the application.
(3) A nonrefundable application fee and an initial license fee, as
determined in rule by the director, must accompany an application for
a currency exchange license under this chapter. The license fee must
be refunded if the application is denied.
(4) 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.
NEW SECTION. Sec. 12
(a) The applicant has complied with section 11 of this act;
(b) The financial and business experience, competence, character,
and general fitness of the applicant; and the competence, financial and
business experience, character, and general fitness of the executive
officers, proposed responsible individual, board directors, and persons
in control of the applicant indicate that it is in the interest of the
public to permit the applicant to engage in the business of providing
currency exchange; and
(c) Neither the applicant, nor any executive officer, nor person
who exercises control over the applicant, nor the proposed responsible
individual are listed on the specially designated nationals and blocked
persons list prepared by the United States department of treasury or
department of state under Presidential Executive Order No. 13224.
(2) The director may for good cause extend the application review
period.
(3) An applicant whose application is denied by the director under
this chapter may appeal under chapter 34.05 RCW.
(4) A currency exchange license issued under this chapter is valid
from the date of issuance and remains in effect with no fixed date of
expiration unless otherwise suspended or revoked by the director, or
unless the license expires for nonpayment of the annual license
assessment and any late fee, if applicable.
(5) A currency exchange licensee may surrender a license by
delivering the original license to the director along with a written
notice of surrender. The written notice of surrender must include
notice of where the records of the licensee will be stored and the
name, address, telephone number, and other contact information of a
responsible party who is authorized to provide access to the records.
The surrender of a license does not reduce or eliminate the licensee's
civil or criminal liability arising from acts or omissions occurring
prior to the surrender of the license, including any administrative
actions undertaken by the director or the director's designee to revoke
or suspend a license, to assess fines, to order payment of restitution,
or to exercise any other authority authorized under this chapter.
NEW SECTION. Sec. 13
(2) A licensee shall submit an annual report with the annual
license assessment, in a form and in a medium prescribed by the
director in rule. The annual report must state or contain:
(a) 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
corporation or the licensee's most recent audited consolidated annual
financial statement;
(b) A description of each material change, as defined in rule by
the director, to information submitted by the licensee in its original
license application which has not been previously reported to the
director on any required report;
(c) If the licensee is a money transmitter, a list of the
licensee's permissible investments and a certification that the
licensee continues to maintain permissible investments according to the
requirements set forth in sections 22 and 23 of this act;
(d) If the licensee is a money transmitter, proof that the licensee
continues to maintain adequate security as required by section 7 of
this act; and
(e) A list of the locations in this state where the licensee or an
authorized delegate of the licensee engages in or provides money
services.
(3) If a licensee does not file an annual report or pay its annual
license assessment by the annual license assessment due date, the
director or the director's designee shall send the licensee a notice of
suspension and assess the licensee a late fee not to exceed twenty-five
percent of the annual license assessment as established in rule by the
director. The licensee's annual report and payment of both the annual
license assessment and the late fee must arrive in the department's
offices by 5:00 p.m. on the thirtieth day after the assessment due date
or any extension of time granted by the director, unless that date is
not a business day, in which case the licensee's annual report and
payment of both the annual license assessment and the late fee must
arrive in the department's offices by 5:00 p.m. on the next occurring
business day. If the licensee's annual report and payment of both the
annual license assessment and late fee do not arrive by such date, the
expiration of the licensee's license is effective at 5:00 p.m. on the
thirtieth day after the assessment due date, unless that date is not a
business day, in which case the expiration of the licensee's license is
effective at 5:00 p.m. on the next occurring business day. The
director, or the director's designee, may reinstate the license if,
within twenty days after its effective date, the licensee:
(a) Files the annual report and pays both the annual license
assessment and the late fee; and
(b) The licensee did not engage in or provide money services during
the period its license was expired.
NEW SECTION. Sec. 14
(2) A contract between a licensee and an authorized delegate must
require the authorized delegate to operate in full compliance with this
chapter and the rules adopted under this chapter.
(3) Neither the licensee nor an authorized delegate may authorize
subdelegates.
(4) An authorized delegate shall remit all money owing to the
licensee in accordance with the terms of the contract between the
licensee and the authorized delegate.
(5) If a license is suspended or revoked or a licensee surrenders
its license, the director shall notify all authorized delegates of the
licensee whose names are filed with the director of the suspension,
revocation, or surrender and shall publish the name of the licensee.
An authorized delegate shall immediately cease to provide money
services as a delegate of the licensee upon receipt of notice, or after
publication is made, that the licensee's license has been suspended,
revoked, or surrendered.
(6) An authorized delegate may not provide money services other
than those allowed the licensee under its license. In addition, an
authorized delegate may not provide money services outside the scope of
activity permissible under the contract between the authorized delegate
and the licensee, except activity in which the authorized delegate is
authorized to engage under section 5 or 10 of this act.
NEW SECTION. Sec. 15
(2) The licensee, applicant, or person subject to licensing under
this chapter shall pay the cost of examinations and investigations as
specified in section 34 of this act or rules adopted under this
chapter.
(3) Information obtained during an examination or investigation
under this chapter may be disclosed only as provided in section 21 of
this act.
NEW SECTION. Sec. 16
(2) A joint examination or investigation, or an acceptance of an
examination or investigation report, does not preclude the director
from conducting an examination or investigation under this chapter. A
joint report or a report accepted under this section is an official
report of the director for all purposes.
NEW SECTION. Sec. 17
(2) A licensee shall file with the director within forty-five days
after the end of each fiscal quarter a current list of all authorized
delegates and locations in this state where the licensee, or an
authorized delegate of the licensee, provides money services, including
mobile locations. The licensee shall state the name and street address
of each location and authorized delegate operating at the location.
(3) A licensee shall file a report with the director within one
business day after the licensee has reason to know of the occurrence of
any of the following events:
(a) 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. Sec. 101-110) for bankruptcy or reorganization;
(b) 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 its creditors;
(c) 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;
(d) The cancellation or other impairment of the licensee's bond or
other security;
(e) 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
(f) A charge or conviction of an authorized delegate for a felony.
NEW SECTION. Sec. 18
(a) Provide the director with written notice of a proposed change
of control within fifteen days after learning of the proposed change of
control and at least thirty days prior to the proposed change of
control;
(b) Request approval of the change of control by submitting the
information required in rule by the director; and
(c) Submit, with the notice, a nonrefundable fee as prescribed in
rule by the director.
(2) After review of a request for approval under subsection (1) of
this section, the director may require the licensee to provide
additional information concerning the licensee's proposed persons in
control. The additional information must be limited to the same types
required of the licensee, or persons in control of the licensee, as
part of its original license application.
(3) The director shall approve a request for change of control
under subsection (1) of this section if, after investigation, the
director determines that the person, or group of persons, requesting
approval meets the criteria for licensing set forth in sections 9 and
12 of this act and that the public interest will not be jeopardized by
the change of control.
(4) Subsection (1) of this section does not apply to a public
offering of securities.
(5) Before filing a request for approval to acquire control of a
licensee, or person in control of a licensee, a person may request in
writing a determination from the director as to whether the person
would be considered a person in control of a licensee upon consummation
of a proposed transaction. If the director determines that the person
would not be a person in control of a licensee, the director shall
respond in writing to that effect and the proposed person and
transaction is not subject to the requirements of subsections (1)
through (3) of this section.
(6) The director may exempt by rule any person from the
requirements of subsection (1)(a) of this section, if it is in the
public interest to do so.
NEW SECTION. Sec. 19
(a) A general ledger posted at least monthly containing all assets,
liabilities, capital, income, and expense accounts;
(b) Bank statements and bank reconciliation records;
(c) A list of the last known names and addresses of all of the
licensee's authorized delegates;
(d) Copies of all currency transaction reports and suspicious
activity reports filed in compliance with section 20 of this act; and
(e) Any other records required in rule by the director.
(2) The items specified in subsection (1) of this section may be
maintained in any form of record that is readily accessible to the
director or the director's designee upon request.
(3) Records may be maintained outside this state if they are made
accessible to the director on seven business days' notice that is sent
in writing.
(4) All records maintained by the licensee are open to inspection
by the director or the director's designee.
NEW SECTION. Sec. 20
(2) The timely filing of a complete and accurate report required
under subsection (1) of this section with the appropriate federal
agency is compliance with the requirements of subsection (1) of this
section, unless the director notifies the licensee that reports of this
type are not being regularly and comprehensively transmitted by the
federal agency.
NEW SECTION. Sec. 21
(2) The director may disclose information not otherwise subject to
disclosure under subsection (1) of this section to representatives of
state or federal agencies who agree in writing to maintain the
confidentiality of the information; or if the director finds that the
release is reasonably necessary for the protection of the public and in
the interests of justice.
(3) This section does not prohibit the director from disclosing to
the public a list of persons licensed under this chapter or the
aggregated financial data concerning those licensees.
NEW SECTION. Sec. 22
(2) The director, with respect to any money transmitter licensee,
may limit the extent to which a type of investment within a class of
permissible investments may be considered a permissible investment,
except for money, time deposits, savings deposits, demand deposits, and
certificates of deposit issued by a federally insured financial
institution. The director may prescribe in rule, or by order allow,
other types of investments that the director determines to have a
safety substantially equivalent to other permissible investments.
NEW SECTION. Sec. 23
(a) Cash, time deposits, savings deposits, demand deposits, a
certificate of deposit, or senior debt obligation of an insured
depositary institution as defined in section 3 of the federal Deposit
Insurance Act (12 U.S.C. Sec. 1813) or as defined under the federal
Credit Union Act (12 U.S.C. Sec. 1781);
(b) Banker's acceptance or bill of exchange that is eligible for
purchase upon endorsement by a member bank of the federal reserve
system and is eligible for purchase by a federal reserve bank;
(c) An investment bearing a rating of one of the three highest
grades as defined by a nationally recognized organization that rates
securities;
(d) An investment security that is an obligation of the United
States or a department, agency, or instrumentality thereof; an
investment in an obligation that is guaranteed fully as to principal
and interest by the United States; or an investment in an obligation of
a state or a governmental subdivision, agency, or instrumentality
thereof;
(e) Receivables that are payable to a licensee from its authorized
delegates, in the ordinary course of business, pursuant to contracts
which are not past due or doubtful of collection, if the aggregate
amount of receivables under this subsection (1)(e) does not exceed
twenty percent of the total permissible investments of a licensee and
the licensee does not hold, at one time, receivables under this
subsection (1)(e) in any one person aggregating more than ten percent
of the licensee's total permissible investments; and
(f) A share or a certificate issued by an open-end management
investment company that is registered with the United States securities
and exchange commission under the Investment Companies Act of 1940 (15
U.S.C. Sec. 80(a)(1) through (64), and whose portfolio is restricted by
the management company's investment policy to investments specified in
(a) through (d) of this subsection.
(2) The following investments are permissible under section 22 of
this act, but only to the extent specified as follows:
(a) An interest-bearing bill, note, bond, or debenture of a person
whose equity shares are traded on a national securities exchange or on
a national over-the-counter market, if the aggregate of investments
under this subsection (2)(a) does not exceed twenty percent of the
total permissible investments of a licensee and the licensee does not,
at one time, hold investments under this subsection (2)(a) in any one
person aggregating more than ten percent of the licensee's total
permissible investments;
(b) A share of a person traded on a national securities exchange or
a national over-the-counter market or a share or a certificate issued
by an open-end management investment company that is registered with
the United States securities and exchange commission under the
Investment Companies Act of 1940 (15 U.S.C. Sec. 80(a)(1) through (64),
and whose portfolio is restricted by the management company's
investment policy to shares of a person traded on a national securities
exchange or a national over-the-counter market, if the aggregate of
investments under this subsection (2)(b) does not exceed twenty percent
of the total permissible investments of a licensee and the licensee
does not, at one time, hold investments under this subsection (2)(b) in
any one person aggregating more than ten percent of the licensee's
total permissible investments;
(c) A demand-borrowing agreement made to a corporation or a
subsidiary of a corporation whose securities are traded on a national
securities exchange, if the aggregate of the amount of principal and
interest outstanding under demand-borrowing agreements under this
subsection (2)(c) does not exceed twenty percent of the total
permissible investments of a licensee and the licensee does not, at one
time, hold principal and interest outstanding under demand-borrowing
agreements under this subsection (2)(c) with any one person aggregating
more than ten percent of the licensee's total permissible investments;
and
(d) Any other investment the director designates, to the extent
specified in rule by the director.
(3) The aggregate of investments under subsection (2) of this
section may not exceed fifty percent of the total permissible
investments of a licensee.
NEW SECTION. Sec. 24
NEW SECTION. Sec. 25
(a) The licensee violates this chapter or a rule adopted or an
order issued under this chapter or is convicted of a violation of a
state or federal money laundering or terrorism statute;
(b) The licensee does not cooperate with an examination,
investigation, or subpoena lawfully issued by the director or the
director's designee;
(c) The licensee engages in fraud, intentional misrepresentation,
or gross negligence;
(d) An authorized delegate is convicted of a violation of a state
or federal money laundering statute, or violates this chapter or a rule
adopted or an order issued under this chapter as a result of the
licensee's willful misconduct or deliberate avoidance of knowledge;
(e) The financial condition and responsibility, competence,
experience, character, or general fitness of the licensee, authorized
delegate, person in control of a licensee, or responsible individual of
the licensee or authorized delegate indicates that it is not in the
public interest to permit the person to provide money services;
(f) The licensee engages in an unsafe or unsound practice, or an
unfair and deceptive act or practice;
(g) The licensee is insolvent, fails to maintain the required net
worth, suspends payment of its obligations, or makes a general
assignment for the benefit of its creditors;
(h) The licensee does not remove an authorized delegate after the
director issues and serves upon the licensee a final order including a
finding that the authorized delegate has violated this chapter; or
(i) The licensee, its responsible individual, or any of its
executive officers or other persons in control of the licensee are
listed or become 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 determining whether a licensee or other person subject to
this chapter is engaging in an unsafe or unsound practice, the director
may consider the size and condition of the licensee's money
transmission services, the magnitude of the loss or potential loss to
consumers or others, the gravity of the violation of this chapter, any
action against the licensee by another state or the federal government,
and the previous conduct of the person involved.
NEW SECTION. Sec. 26
(a) The authorized delegate violated this chapter or a rule adopted
or an order issued under this chapter;
(b) The authorized delegate does not cooperate with an examination,
investigation, or subpoena lawfully issued by the director or the
director's designee;
(c) The authorized delegate engaged in fraud, intentional
misrepresentation, or gross negligence;
(d) The authorized delegate is convicted of a violation of a state
or federal money laundering or terrorism statute;
(e) The competence, experience, character, or general fitness of
the authorized delegate or a person in control of the authorized
delegate indicates that it is not in the public interest to permit the
authorized delegate to provide money services;
(f) The authorized delegate engaged in or is engaging in an unsafe
or unsound practice, or unfair and deceptive act or practice; or
(g) The authorized delegate, or any of its executive officers or
other persons in control of the authorized delegate, are listed or
become 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 determining whether an authorized delegate is engaging in an
unsafe or unsound practice, the director may consider the size and
condition of the authorized delegate's provision of money services, the
magnitude of the loss or potential loss to consumers or others, the
gravity of the violation of this chapter or a rule adopted or order
issued under this chapter, any action against the authorized delegate
taken by another state or the federal government, and the previous
conduct of the authorized delegate.
NEW SECTION. Sec. 27
(2) If as a result of such investigation or examination, the
director finds that a person has violated section 5 or 10 of this act,
the director may issue a temporary cease and desist order as authorized
under section 28 of this act.
(3) If as a result of such an investigation or examination, the
director finds that a person has violated section 5 or 10 of this act,
the director may issue an order to prohibit the person from continuing
to engage in providing money services, to compel the person to pay
restitution to damaged parties, to impose civil money penalties on the
person, and to prohibit from participation in the affairs of any
licensee or authorized delegate, or both, any executive officer, person
in control, or employee of the person.
(4) The director may petition the superior court for the issuance
of a temporary restraining order under the rules of civil procedure.
NEW SECTION. Sec. 28
(2) A temporary order to cease and desist remains effective and
enforceable pending the completion of an administrative proceeding
under chapter 34.05 RCW. If, after a hearing, the director finds that
by a preponderance of the evidence, all or any part of the order is
supported by the facts, the director may make the temporary order to
cease and desist permanent under chapter 34.05 RCW.
(3) A licensee, an authorized delegate, or other person subject to
this chapter that is served with a temporary order to cease and desist
may petition the superior court for a judicial order setting aside,
limiting, or suspending the enforcement, operation, or effectiveness of
the order pending the completion of an administrative proceeding under
chapter 34.05 RCW.
NEW SECTION. Sec. 29
NEW SECTION. Sec. 30
(2) A licensee that commits willful misconduct in its supervision
of its authorized delegate or willfully avoids knowledge of its
authorized delegate's business activities may be subjected to
administrative sanctions for any violations of this chapter or rules
adopted under this chapter by the licensee's authorized delegates.
(3) The responsible individual is responsible under the license and
may be subjected to administrative sanctions for any violations of this
chapter or rules adopted under this chapter committed by the licensee
or, if the responsible individual commits willful misconduct in
supervising an authorized delegate or willfully avoids knowledge of an
authorized delegate's business activities, violations committed by the
licensee's authorized delegates.
NEW SECTION. Sec. 31
NEW SECTION. Sec. 32
(2) A person that knowingly engages in an activity for which a
license is required under this chapter without being licensed under
this chapter and who receives more than five hundred dollars in
compensation within a thirty-day period from this activity is guilty of
a gross misdemeanor under chapter 9A.20 RCW.
(3) A person that knowingly engages in an activity for which a
license is required under this chapter without being licensed under
this chapter and who receives no more than five hundred dollars in
compensation within a thirty-day period from this activity is guilty of
a misdemeanor under chapter 9A.20 RCW.
NEW SECTION. Sec. 33
NEW SECTION. Sec. 34
(a) An annual license assessment specified in rule by the director
paid by each licensee on or before the annual license assessment due
date;
(b) A late fee for late payment of the annual license assessment as
specified in rule by the director;
(c) An hourly examination or investigation fee to cover the costs
of any examination or investigation of the books and records of a
licensee or other person subject to this chapter;
(d) A nonrefundable application fee to cover the costs of
processing license applications made to the director under this
chapter;
(e) An initial license fee to cover the period from the date of
licensure to the end of the calendar year in which the license is
initially granted; and
(f) A transaction fee or set of transaction fees to cover the
administrative costs associated with processing changes in control,
changes of address, and other administrative changes as specified in
rule by the director.
(2) The director shall ensure that when an examination or
investigation, or any part of the examination or investigation, of any
licensee applicant or person subject to licensing under this chapter,
requires travel and services outside this state by the director or
designee, the licensee applicant or person subject to licensing under
this chapter that is the subject of the examination or investigation
shall pay the actual travel expenses incurred by the director or
designee conducting the examination or investigation.
(3) All moneys, fees, and penalties collected under this chapter
shall be deposited into the financial services regulation account.
NEW SECTION. Sec. 35
(2) Every money transmitter licensee and its authorized delegates
shall provide a receipt to the customer that clearly states the amount
of money presented for transmission and the total of any fees charged
by the licensee. If the rate of exchange for a money transmission to
be paid in the currency of another country is fixed at the time the
money transmission is initiated, then the receipt provided to the
customer shall disclose the rate of exchange for that transaction, and
the duration, if any, for the payment to be made at the fixed rate of
exchange so specified. If the rate of exchange for a money
transmission to be paid in the currency of another country is not fixed
at the time the money transmission is sent, the receipt provided to the
customer shall disclose that the rate of exchange for that transaction
will be set at the time the recipient of the money transmission picks
up the funds in the foreign country. As used in this section, "fees"
does not include revenue that a licensee or its authorized delegate
generates, in connection with a money transmission, in the conversion
of the money of one government into the money of another government.
(3) Every money transmitter licensee and its authorized delegates
shall refund to the customer all moneys received for transmittal within
ten days of receipt of a written request for a refund unless any of the
following occurs:
(a) The moneys have been transmitted and delivered to the person
designated by the customer prior to receipt of the written request for
a refund;
(b) Instructions have been given committing an equivalent amount of
money to the person designated by the customer prior to receipt of a
written request for a refund;
(c) The licensee or its authorized delegate has reason to believe
that a crime has occurred, is occurring, or may potentially occur as a
result of transmitting the money as requested by the customer or
refunding the money as requested by the customer; or
(d) The licensee is otherwise barred by law from making a refund.
NEW SECTION. Sec. 36
(1) Directly or indirectly employ any scheme, device, or artifice
to defraud or mislead any person, including but not limited to engaging
in bait and switch advertising or sales practices;
(2) Directly or indirectly engage in any unfair or deceptive act or
practice toward any person, including but not limited to any false or
deceptive statement about fees or other terms of a money transmission
or currency exchange;
(3) Directly or indirectly obtain property by fraud or
misrepresentation;
(4) Knowingly make, publish, or disseminate any false, deceptive,
or misleading information in the provision of money services;
(5) Knowingly receive or take possession for personal use of any
property of any money services business, other than in payment for
services rendered, and with intent to defraud, omit to make, or cause
or direct to omit to make, a full and true entry thereof in the books
and accounts of the business;
(6) Make or concur in making any false entry, or omit or concur in
omitting any material entry, in the books or accounts of the business;
(7) Knowingly make or publish to the director or director's
designee, or concur in making or publishing to the director or
director's designee any written report, exhibit, or statement of its
affairs or pecuniary condition containing any material statement which
is false, or omit or concur in omitting any statement required by law
to be contained therein; or
(8) Fail to make any report or statement lawfully required by the
director or other public official.
NEW SECTION. Sec. 37
NEW SECTION. Sec. 38
NEW SECTION. Sec. 39
NEW SECTION. Sec. 40
NEW SECTION. Sec. 41
NEW SECTION. Sec. 42 Sections 1 through 41 of this act
constitute a new chapter in Title 19 RCW.