Substitute Senate Bill No. 793

Public Act No. 01-56

AN ACT CONCERNING MONEY TRANSMISSION.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 36a-3 of the general statutes is repealed and the following is substituted in lieu thereof:

Other definitions applying to this title or to specified parts thereof and the sections in which they appear are:

"Account". Sections 36a-155 and 36a-365.

"Advance fee". Sections 36a-510, 36a-485 and 36a-615.

"Advertise" or "advertisement". Sections 36a-485 and 36a-510.

"Agency bank". Section 36a-285.

"Alternative mortgage loan". Section 36a-265.

"Amount financed". Section 36a-690.

"Annual percentage rate". Section 36a-690.

"Annual percentage yield". Section 36a-316.

"Applicant". Section 36a-736.

"Associate". Section 36a-184.

"Bank". Section 36a-30.

"Bankers' bank". Section 36a-70.

"Banking business". Section 36a-425.

"Billing cycle". Section 36a-565.

"Bona fide nonprofit organization". Section 36a-655.

"Branch". Sections 36a-145 and 36a-410.

"Branch or agency net payment entitlement". Section 36a-428n.

"Branch or agency net payment obligation". Section 36a-428n.

"Broker". Section 36a-510.

"Business and industrial development corporation". Section 36a-626.

"Business and property in this state". Section 36a-428n.

"Cash advance". Section 36a-564.

"Cash price". Section 36a-770.

"Certificate of organization". Section 36a-435.

"Closely related activities". Section 36a-250.

"Collective managing agency account". Section 36a-365.

"Commercial vehicle". Section 36a-770.

"Community bank". Section 36a-70.

"Community development bank". Section 36a-70.

"Connecticut holding company". Section 36a-410.

"Consumer". Sections 36a-155, 36a-676 and 36a-695.

"Consumer Credit Protection Act". Section 36a-676.

"Consumer debtor" and "debtor". Sections 36a-645 and 36a-800.

"Consumer collection agency". Section 36a-800.

"Controlling interest". Section 36a-276.

"Credit". Sections 36a-645 and 36a-676.

"Creditor". Sections 36a-676, 36a-695 and 36a-800.

"Credit card", "cardholder" and "card issuer". Section 36a-676.

"Credit clinic". Section 36a-695.

"Credit rating agency". Section 36a-695.

"Credit report". Section 36a-695.

"Credit sale". Section 36a-676.

"De novo branch". Section 36a-410.

"Debt". Section 36a-645.

"Debt adjustment". Section 36a-655.

"Debt mutual fund". Section 36a-275.

"Debt securities". Section 36a-275.

"Deliver". Section 36a-316.

"Deposit". Section 36a-316.

"Deposit account". Sections 36a-136 and 36a-316.

"Deposit account charge". Section 36a-316.

"Deposit account disclosures". Section 36a-316.

"Deposit contract". Section 36a-316.

"Deposit services". Section 36a-425.

"Depositor". Section 36a-316.

"Earning period". Section 36a-316.

"Electronic payment instrument". Section 36a-596, as amended by this act.

"Eligible account holder". Section 36a-136.

"Eligible collateral". Section 36a-330.

"Equity mutual fund". Section 36a-276.

"Federal Home Mortgage Disclosure Act". Section 36a-736.

"Fiduciary". Section 36a-365.

"Filing fee". Section 36a-770.

"Finance charge". Sections 36a-690 and 36a-770.

"Financial institution". Sections 36a-41, 36a-155, 36a-316, 36a-330 and 36a-736.

"Financial records". Section 36a-41.

"First mortgage loan". Sections 36a-485, 36a-705 and 36a-715.

"Fiscal year". Section 36a-435.

"Foreign banking corporation". Section 36a-425.

"General facility". Section 36a-580.

"Global net payment entitlement". Section 36a-428n.

"Global net payment obligation". Section 36a-428n.

"Goods". Sections 36a-535 and 36a-770.

"Graduated payment mortgage loan". Section 36a-265.

"Guardian". Section 36a-365.

"Holder". Section 36a-596, as amended by this act.

"Home banking services". Section 36a-170.

"Home banking terminal". Section 36a-170.

"Home improvement loan". Section 36a-736.

"Home purchase loan". Section 36a-736.

"Home state". Section 36a-410.

"Immediate family". Section 36a-435.

"Installment loan contract". Sections 36a-535 and 36a-770.

["Instrument". Section 36a-596.]

"Insurance bank". Section 36a-285.

"Insurance department". Section 36a-285.

"Interest". Section 36a-316.

"Interest rate". Section 36a-316.

"Lender". Sections 36a-510 and 36a-770.

"Lessor". Section 36a-676.

"License". Section 36a-626.

"Licensee". Sections 36a-510, 36a-596, as amended by this act, and 36a-626.

"Limited branch". Section 36a-145.

"Limited facility". Section 36a-580.

"Loan broker". Section 36a-615.

"Loss". Section 36a-330.

"Made in this state". Section 36a-770.

"Managing agent". Section 36a-365.

"Material litigation". Section 36a-596, as amended by this act.

"Member". Section 36a-435.

"Membership share". Section 36a-435.

"Money order". Section 36a-596, as amended by this act.

"Money transmission". Section 36a-365, as amended by this act.

"Mortgage broker". Section 36a-485.

"Mortgage insurance". Section 36a-725.

"Mortgage lender". Sections 36a-485 and 36a-705.

"Mortgage loan". Sections 36a-261 and 36a-265.

"Mortgage rate lock-in". Section 36a-705.

"Mortgage servicing company". Section 36a-715.

"Mortgagor". Section 36a-715.

"Motor vehicle". Section 36a-770.

"Multiple common bond membership". Section 36a-435.

"Municipality". Section 36a-800.

"Net worth". Section 36a-596, as amended by this act.

"Network". Section 36a-155.

"Note account". Sections 36a-301 and 36a-445.

"Office". Section 36a-316.

"Open-end credit plan". Section 36a-676.

"Open-end loan". Section 36a-565.

"Organization". Section 36a-800.

"Out-of-state holding company". Section 36a-410.

"Outstanding". Section 36a-596, as amended by this act.

"Passbook savings account". Section 36a-316.

"Payment instrument". Section 36a-596, as amended by this act.

"Periodic statement". Section 36a-316.

"Permissible investment". Section 36a-596, as amended by this act.

"Person". Section 36a-184.

"Post". Section 36a-316.

"Prime quality". Section 36a-596, as amended by this act.

"Principal amount of the loan". Section 36a-510.

"Principal officer". Section 36a-485.

"Processor". Section 36a-155.

"Public deposit". Section 36a-330.

"Purchaser". Section 36a-596, as amended by this act.

"Qualified financial contract". Section 36a-428n.

"Qualified public depository" and "depository". Section 36a-330.

"Records". Section 36a-17.

"Relocate". Section 36a-145.

"Residential property". Section 36a-485.

"Retail buyer". Sections 36a-535 and 36a-770.

"Retail credit transaction". Section 42-100b.

"Retail deposits". Section 36a-70.

"Retail installment contract". Sections 36a-535 and 36a-770.

"Retail installment sale". Sections 36a-535 and 36a-770.

"Retail seller". Sections 36a-535 and 36a-770.

"Reverse annuity mortgage loan". Section 36a-265.

"Sales finance company". Sections 36a-535 and 36a-770.

"Savings department". Section 36a-285.

"Savings deposit". Section 36a-316.

"Secondary mortgage loan". Section 36a-510.

"Security convertible into a voting security". Section 36a-184.

"Share". Section 36a-435.

"Simulated check". Sections 36a-485 and 36a-510.

"Single common bond membership". Section 36a-435.

"Social purpose investment". Section 36a-277.

"Standard mortgage loan". Section 36a-265.

"Tax and loan account". Sections 36a-301 and 36a-445.

"The Savings Bank Life Insurance Company". Section 36a-285.

"Time account". Section 36a-316.

"Transaction". Section 36a-215.

"Travelers check". Section 36a-596, as amended by this act.

"Troubled financial institution". Section 36a-215.

"Uninsured bank". Section 36a-70.

"Unsecured loan". Section 36a-615.

Sec. 2. Section 36a-595 of the general statutes is repealed and the following is substituted in lieu thereof:

Sections 36a-595 to 36a-610, inclusive, as amended by this act, shall be known and may be cited as the ["Money Order and Travelers Check Licensees Act"] "Money Transmission Act".

Sec. 3. Section 36a-596 of the general statutes is repealed and the following is substituted in lieu thereof:

As used in sections 36a-595 to 36a-610, inclusive, as amended by this act:

(1) "Electronic payment instrument" means a card or other tangible object for the transmission or payment of money which contains a microprocessor chip, magnetic stripe, or other means for the storage of information, that is prefunded and for which the value is decremented upon each use, but does not include a card or other tangible object that is redeemable by the issuer in the issuer's goods or services.

(2) "Holder" means a person, other than a purchaser, who is either in possession of a Connecticut payment instrument and is the named payee thereon or in possession of a Connecticut payment instrument issued or endorsed to [him] such person or bearer or in blank. "Holder" does not include any person who is in possession of a lost, stolen or forged Connecticut payment instrument.

[(3) "Instrument" means a money order, travelers check or electronic payment instrument that evidences either an obligation for the transmission or payment of money, or the purchase or the deposit of funds for the purchase of such money order, travelers check or electronic payment instrument. An instrument is a "Connecticut instrument" if it is sold in this state.]

[(4)] (3) "Licensee" means any person licensed pursuant to sections 36a-595 to 36a-610, inclusive, as amended by this act.

(4) "Material litigation" means any litigation that, according to generally accepted accounting principles, is deemed significant to a person's financial health and would be required to be referenced in a person's annual audited financial statements, report to shareholders or similar documents.

(5) "Money order" means any check, draft, money order or other payment instrument. [for the transmission or payment of money.] "Money order" does not include a travelers check or electronic payment instrument.

(6) "Money transmission" means engaging in the business of receiving money for transmission or the business of transmitting money within the United States or to locations outside the United States by any and all means including, but not limited to, payment instrument, wire, facsimile or electronic transfer.

[(6)] (7) "Net worth" means the excess of assets over liabilities as determined by generally accepted accounting principles.

[(7) A money order, travelers check or electronic payment instrument is "outstanding" if:]

(8) "Outstanding" means, in the case of a money order, travelers check or electronic payment instrument, that: (A) It is sold in the United States; (B) a report of it has been received by a licensee from its agents or subagents; and (C) it has not yet been paid by the issuer.

(9) "Payment instrument" means a money order, travelers check or electronic payment instrument that evidences either an obligation for the transmission or payment of money, or the purchase or the deposit of funds for the purchase of such money order, travelers check or electronic payment instrument. A payment instrument is a "Connecticut payment instrument" if it is sold in this state.

[(8)] (10) "Permissible investment" means: (A) Cash in United States currency; (B) time deposits, as defined in subdivision (63) of section 36a-2, or other debt instruments of a bank; (C) bills of exchange or bankers acceptances which are eligible for purchase by member banks of the Federal Reserve System; (D) commercial paper of prime quality; (E) interest-bearing bills, notes, bonds, debentures or other obligations issued or guaranteed by: (i) The United States or any of its agencies or instrumentalities, or (ii) any state, or any agency, instrumentality, political subdivision, school district or legally constituted authority of any state if such investment is of prime quality; (F) interest-bearing bills or notes, or bonds, debentures or preferred stocks, traded on any national securities exchange or on a national over-the-counter market, if such debt or equity investments are of prime quality; (G) receivables due from selling agents consisting of the proceeds of the sale of payment instruments which are not past due or doubtful of collection; (H) gold; and (I) any other investments approved by the commissioner. Notwithstanding the provisions of this subdivision, if the commissioner at any time finds that an investment of a licensee is unsatisfactory for investment purposes, the investment shall not qualify as a permissible investment.

[(9) An investment is of "prime quality" if]

(11) "Prime quality" of an investment means that it is within the top four rating categories in any rating service recognized by the commissioner unless the commissioner determines for any licensee that only those investments in the top three rating categories qualify as "prime quality".

[(10)] (12) "Purchaser" means a person who buys or has bought a Connecticut payment instrument.

[(11)] (13) "Travelers check" means [an] a payment instrument for the payment of money that contains a provision for a specimen signature of the purchaser to be completed at the time of a purchase of the instrument and a provision for a countersignature of the purchaser to be completed at the time of negotiation.

Sec. 4. Section 36a-597 of the general statutes is repealed and the following is substituted in lieu thereof:

No person shall engage in the business of issuing Connecticut payment instruments, or engage in the business of [receiving money for transmitting the same] money transmission, without first obtaining a license from the commissioner as provided in section 36a-600, as amended by this act. No person shall engage in such business or in the business of selling Connecticut payment instruments as an agent or subagent, except as an agent or subagent of a licensee as provided in section 36a-607, as amended by this act.

Sec. 5. Section 36a-598 of the general statutes is repealed and the following is substituted in lieu thereof:

Each application for an original or renewal license required under sections 36a-595 to 36a-610, inclusive, as amended by this act, shall be made in writing and under oath to the commissioner in such form as the commissioner may prescribe. The application shall [state] include:

(1) The exact name of the applicant and, if incorporated, the date of incorporation and the state where incorporated;

(2) The complete address of the principal office from which the business is to be conducted, and of the office where the books and records of the applicant are maintained and to be maintained, including the street and number, if any, and the municipality and county of such offices;

(3) The complete name and address of each of the applicant's branches, subsidiaries, affiliates and agents and subagents, if any, engaging in this state in the business of selling or issuing Connecticut payment instruments, or [of receiving money for transmitting the same] engaging in the business of money transmission;

(4) The name, title, address and telephone number of the person to whom notice of the commissioner's approval or disapproval of the application shall be sent and to whom any inquiries by the commissioner concerning the application shall be directed;

(5) The name and residence address of (A) [of] the [applicant, if] individual, if the applicant is an individual; (B) [if a partnership, of its partners] the partners, if the applicant is a partnership; or (C) [if a corporation or association, of its] the directors, trustees, principal officers, and any shareholder owning [twenty] ten per cent or more of each class of its [stock] securities, if the applicant is a corporation or association, and sufficient information pertaining to the name and address, in a form acceptable to the commissioner, on such partners, directors, trustees, principal officers, and any shareholder owning ten per cent or more of each class of its securities, as the commissioner deems necessary to make the findings under section 36a-600, as amended by this act;

(6) The most recently audited unconsolidated financial statement of the applicant, including its balance sheet and receipts and disbursements for the preceding year, prepared by an independent certified public accountant acceptable to the commissioner;

(7) A list of the applicant's permissible investments, the book and market values of such investments, and the dollar amount of the applicant's aggregate outstanding payment instruments (A) as of the date of the financial statement filed in accordance with [subsection] subdivision (6) of this section; and (B) as of a date no earlier than thirty business days prior to the filing of the application;

(8) The history of material litigation and criminal convictions for the five-year period prior to the date of the application of (A) the individual, if the applicant is an individual; (B) the partners, if the applicant is a partnership; or (C) the directors, trustees, principal officers and any shareholder owning ten per cent or more of each class of its securities, if the applicant is a corporation or association, and sufficient information pertaining to the history of material litigation and criminal convictions, in a form acceptable to the commissioner, on such partners, directors, trustees, principal officers and any share holder owning ten per cent or more of each class of its securities.

[(8)] (9) (A) The surety bond required by subsection (a) of section 36a-602, as amended by this act, if applicable;

(B) A list of the investments maintained in accordance with subsection (b) of section 36a-602, as amended by this act, if applicable, and the book and market values of any such investments (i) as of the date of the financial statement filed in accordance with subdivision (6) of this section; and (ii) as of a date no earlier than thirty business days prior to the filing of the application;

(C) The commissioner may defer compliance with the provisions of this [subsection] subdivision until after the commissioner rules on the application, but the commissioner shall not issue a license until an applicant complies with the provisions of this subdivision;

[(9)] (10) A statement of whether the applicant will engage in the [money order, travelers check or electronic payment instrument business, or any two or all of such businesses,] business of issuing money orders, travelers checks, electronic payment instruments or engage in the business of money transmission in this state;

[(10)] (11) Any other information the commissioner may require.

Sec. 6. Section 36a-599 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Each application for an original [or renewal] license shall be accompanied by a nonrefundable investigation fee of five hundred dollars and a license fee of one thousand dollars. Each application for a renewal license shall be accompanied by a license fee of one thousand dollars. The license fee shall be refunded if the application for an original license is denied, [or] the commissioner refuses to issue a renewal license or an application for a license or renewal license is withdrawn prior to issuance of a license or renewal license by the commissioner.

(b) A license issued pursuant to sections 36a-595 to 36a-610, inclusive, as amended by this act, shall remain in full force and effect through the thirtieth day of June following its date of issuance, unless earlier surrendered, suspended or revoked pursuant to said sections.

Sec. 7. Section 36a-600 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Upon the filing of an application for an original license, and the payment of the fees for investigation and license, the commissioner shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the applicant. The commissioner shall approve conditionally any application, if the commissioner finds that:

(1) The applicant's financial condition is sound;

(2) The applicant's business will be conducted honestly, fairly, equitably, carefully and efficiently within the purposes and intent of sections 36a-595 to 36a-610, inclusive, as amended by this act, and in a manner commanding the confidence and trust of the community;

(3) (A) If the applicant is an individual, such individual is in all respects properly qualified and of good character, (B) if the applicant is a partnership, each partner is in all respects properly qualified and of good character, (C) if the applicant is a corporation or association, each president, chairperson of the executive committee, senior officer responsible for the corporation's business, chief financial officer or any other person who performs similar functions as determined by the commissioner, director, trustee and each shareholder owning ten per cent or more of each class of the securities of such corporation is in all respects properly qualified and of good character;

[(3)] (4) The applicant is in compliance with the provisions of sections 36a-603, as amended by this act, and 36a-604, as amended by this act;

[(4)] (5) No person on behalf of the applicant knowingly has made any incorrect statement of a material fact in the application, or in any report or statement made pursuant to sections 36a-595 to 36a-610, inclusive, as amended by this act;

[(5)] (6) No person on behalf of the applicant knowingly has omitted to state any material fact necessary to give the commissioner any information lawfully required by the commissioner.

(b) If the commissioner conditionally approves an application, the applicant shall have thirty days, which the commissioner may extend for cause, to comply with the requirements of section 36a-602, as amended by this act. Upon such compliance, the commissioner's conditional approval shall become final, and the commissioner shall issue a license to the applicant. The commissioner shall not issue a license to any applicant unless the applicant is in compliance with all the requirements of subsection (a) of this section and section 36a-602, as amended by this act.

Sec. 8. Section 36a-601 of the general statutes is repealed and the following is substituted in lieu thereof:

A license may be renewed for the ensuing twelve-month period upon the filing of an application containing all information required by section 36a-598, as amended by this act, including the information required by subdivisions (6), (7), [and] (8) and (9) of said section if not previously filed with the commissioner. Such renewal application shall be filed no later than a date specified each year by the commissioner in writing to the licensee. [No investigation fee shall be payable to the commissioner in connection with such renewal application.] If an application for a renewal license has been filed with the commissioner on or before the date the commissioner has specified, the license sought to be renewed shall continue in full force and effect until the issuance by the commissioner of the renewal license applied for or until the commissioner has notified the licensee in writing of the commissioner's refusal to issue such renewal license together with the grounds upon which such refusal is based. The commissioner may refuse to issue a renewal license on any ground on which the commissioner might refuse to issue an original license.

Sec. 9. Section 36a-602 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) As a condition for the issuance and retention of the license, applicants for a license and licensees shall file with the commissioner a corporate surety bond in a form satisfactory to the commissioner and issued by a bonding company or insurance company authorized to do business in this state. The bond shall be in favor of the commissioner, shall remain in place for two years after such licensee ceases to engage in business in this state, and shall be in the principal sum of (1) three hundred thousand dollars for any applicant and any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters of three hundred thousand dollars or less or any licensee that engages in the business of [receiving money for transmitting the same] money transmission with an average weekly amount of money or equivalent thereof transmitted during the two previous reporting quarters of one hundred fifty thousand dollars or less; (2) five hundred thousand dollars for any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters of greater than three hundred thousand dollars but less than five hundred thousand dollars or any licensee that engages in the business of [receiving money for transmitting the same] money transmission with an average weekly amount of money equivalent thereof transmitted during the two previous reporting quarters of greater than one hundred fifty thousand dollars but less than two hundred fifty thousand dollars; and (3) one million dollars for any licensee that engages in the business of issuing Connecticut payment instruments with an average daily balance of outstanding Connecticut payment instruments during the two previous reporting quarters equal to or greater than five hundred thousand dollars or any licensee that engages in the business of [receiving money for transmitting the same] money transmission with an average weekly amount of money or equivalent thereof transmitted during the two previous reporting quarters of two hundred fifty thousand dollars or greater. The proceeds of the bond, [shall constitute a trust fund for the exclusive benefit of the purchasers and holders of Connecticut instruments issued by such licensee] even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of any claimants against the licensee to serve the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission or payment of money in connection with the sale and issuance of payment instruments or transmission of money in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.

(b) In lieu of all or part of the principal sum of such corporate surety bonds, applicants for a license and licensees may invest such sum as provided in this subsection. The book or market value, whichever is lower, of such investments shall be equal to the amount of the bond required by subsection (a) of this section less the amount of the bond filed with the commissioner by the applicant or licensee. Such investments may be:

(1) Deposits with such banks as such applicants or licensees may designate and the commissioner may approve, and in accordance with such regulations as the commissioner may adopt; or

(2) Interest-bearing bills, notes, bonds, debentures or other obligations issued or guaranteed by (A) the United States or any of its agencies or instrumentalities, or (B) any state, or any agency, instrumentality, political subdivision, school district or legally constituted authority of any state if such investment is of prime quality.

(c) The investments provided for in subsection (b) of this section shall secure the same obligation as would a corporate surety bond filed under this section. As long as a licensee continues business in the ordinary course, it shall be permitted to collect interest on such investments and at any time to exchange, examine, and compare such investments. The investments made pursuant to this section, [shall be maintained in trust for the exclusive benefit of the purchasers and holders of Connecticut instruments issued by such licensee] even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of any claimants against the licensee to serve the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission or payment of money in connection with the sale and issuance of payment instruments or transmission of money in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.

Sec. 10. Section 36a-603 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Each licensee shall at all times maintain permissible investments having a value, computed in accordance with generally accepted accounting principles, at least equal to the aggregate amount of its outstanding payment instruments.

(b) As used in subsection (a) of this section, "value" means the lower of book or market value, except that with regard to debt obligations which the licensee as a matter of policy retains until maturity, "value" means the greater of book or market value unless the commissioner orders that for some or all investments of a particular licensee, "value" means the lower of book or market value.

(c) Permissible investments, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of any claimants against the licensee to serve the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission or payment of money in connection with the sale and issuance of payment instruments or transmission of money in the event of the bankruptcy of the licensee, and shall be immune from attachment by creditors or judgment creditors.

Sec. 11. Section 36a-604 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) Each licensee which issues Connecticut payment instruments which are money orders shall at all times have a net worth of at least one hundred thousand dollars.

(b) Each licensee which issues Connecticut payment instruments which are travelers checks or electronic payment instruments shall at all times have a net worth of at least one million dollars.

(c) Each licensee that engages in the business of [receiving money for transmitting the same] money transmission shall at all times have a net worth of at least five hundred thousand dollars.

Sec. 12. Section 36a-605 of the general statutes is repealed and the following is substituted in lieu thereof:

[At least once each year, the commissioner shall visit each licensee and examine its books, accounts, records, files and other papers to ascertain whether it is in sound financial condition and whether its business has been and is being carried on pursuant to law. In lieu of or in addition to any examination required by this section, the commissioner may require a licensee to file a report certified to by an independent certified public accountant containing such information and in such form as the commissioner may require.]

(a) In connection with the examination of a licensee under section 36a-17, the commissioner may also examine the agents and subagents of such licensee. The commissioner, in lieu of conducting an examination, may accept the report of examination of any other state or federal supervisory agency or any organization affiliated with or representing such supervisory agency with respect to the examination or other supervision of any person subject to the provisions of sections 36a-595 to 36a-610, inclusive, as amended by this act, or a report prepared by an independent accounting firm, and reports so accepted are considered for purposes of sections 36a-595 to 36a-610, inclusive, as amended by this act, as an official examination report of the commissioner.

(b) The commissioner may enter into cooperative, coordinating and information sharing agreements with any other state or federal supervisory agency or any organization affiliated with or representing such supervisory agency with respect to the examination, examination fees or other supervision of any person subject to the provisions of sections 36a-595 to 36a-610, inclusive, as amended by this act.

Sec. 13. Section 36a-606 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) On or before the thirtieth day of April each year, each licensee shall file with the commissioner:

(1) Its most recently audited unconsolidated financial statement, including its balance sheet and receipts and disbursements for the preceding year, prepared by an independent certified public accountant acceptable to the commissioner;

(2) A list of permissible investments, the book and market value of such investments, and the dollar amount of the licensee's aggregate outstanding payment instruments; and

(3) A list of investments maintained in accordance with subsection (b) of section 36a-602, as amended by this act, if applicable, the book and market values of such investments and the dollar amount of the licensee's aggregate outstanding Connecticut payment instruments.

(b) The lists and other information filed as provided in subdivisions (2) and (3) of subsection (a) of this section shall be as of the same date as the financial statement filed in accordance with subdivision (1) of subsection (a) of this section.

(c) The commissioner may require of any licensee such additional reports, under oath, certified, or otherwise, concerning such licensee's business in this state as the commissioner may consider necessary for the enforcement of sections 36a-595 to 36a-610, inclusive, as amended by this act.

Sec. 14. Section 36a-607 of the general statutes is repealed and the following is substituted in lieu thereof:

A licensee may conduct its business at one or more locations within this state as follows:

(1) The business may be conducted by the licensee or through or by means of such agents and subagents as the licensee may periodically designate or appoint.

(2) No license under sections 36a-595 to 36a-610, inclusive, as amended by this act, shall be required of any agent or subagent of a licensee.

(3) Each agent and subagent shall, from the moment of receipt, hold the proceeds of a sale or delivery of a licensee's Connecticut payment instruments in trust for the benefit of such licensee or of an agent of the licensee on behalf of such licensee.

(4) A licensee shall be liable for the loss caused to any purchaser or holder of the licensee's Connecticut payment instruments by the failure of an agent or subagent of the licensee to forward to the licensee the amount due from the proceeds of a sale or delivery of the licensee's Connecticut payment instruments, or money received for transmission.

Sec. 15. Section 36a-608 of the general statutes is repealed and the following is substituted in lieu thereof:

(a) The commissioner shall make such investigations and conduct such hearings as the commissioner considers necessary to determine whether any licensee or any other person has violated or is about to violate any of the provisions of sections 36a-595 to 36a-610, inclusive, as amended by this act, or whether any licensee has acted in such manner as otherwise would justify the suspension or revocation of the license. The provisions of section 36a-17 shall apply to such investigation.

(b) The commissioner may suspend or revoke a license, in accordance with section 36a-51, on any ground on which the commissioner might refuse to issue an original license, for any [wilful] violation of sections 36a-595 to 36a-610, inclusive, as amended by this act, or of any regulation adopted under said sections, for noncompliance with an order which the commissioner may issue under said sections to a licensee, or for failure of the licensee to pay a judgment ordered by any court within or outside this state within thirty days after the judgment becomes final or within thirty days after expiration or termination of a stay of execution of the judgment.

(c) Whenever it appears to the commissioner that any person has violated, is violating or is about to violate any provision of sections 36a-595 to 36a-610, inclusive, as amended by this act, or any regulation adopted under said sections, the commissioner may take action against such person in accordance with section 36a-50.

(d) The commissioner may order a licensee to terminate its agency relationship with any agent or subagent who refuses to allow an examination of its books and records regarding the business of such licensee as provided in section 36a-605, as amended by this act.

Sec. 16. Section 36a-609 of the general statutes is repealed and the following is substituted in lieu thereof:

The provisions of sections 36a-595 to 36a-610, inclusive, as amended by this act, shall not apply to:

(1) Except in its capacity as an agent of a licensee, any [bank the insurable deposits in which are insured by the Federal Deposit Insurance Corporation] federally insured bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union, provided such institution does not issue or sell Connecticut payment instruments or transmit money through an agent or subagent which is not a federally insured bank, out-of-state bank, Connecticut credit union, federal credit union or out-of-state credit union;

(2) The United States Postal Service; and

[(3) The receipt of money by an incorporated telegraph or cable company at any office or agency of such company for immediate transmission by telegraph or cable.]

(3) A person whose activity is limited to the electronic funds transfer of governmental benefits for or on behalf of a federal, state or other governmental agency, quasi-governmental agency or government sponsored enterprise.

Sec. 17. Section 36a-610 of the general statutes is repealed and the following is substituted in lieu thereof:

The commissioner may adopt regulations, in accordance with chapter 54, which are necessary or appropriate for the [enforcement] administration of sections 36a-595 to 36a-609, inclusive, as amended by this act.

Approved May 31, 2001