AN ACT CONCERNING CHECK CASHING SERVICES AND MONEY TRANSMISSION

This bill requires limited liability companies applying for check cashing or money transmission licenses to include certain information in their applications. It requires the banking commissioner, if he determines that a check filed with his office to pay license, application, or certain other fees has been dishonored, to suspend the license automatically and give the licensee notice and an opportunity for a hearing. It expands money transmission laws to apply to stored and monetary value, in addition to money. And it allows surety companies to cancel money transmitters' surety bonds at any time by giving notice to the licensee and the commissioner.

EFFECTIVE DATE: October 1, 2004, except for the provisions applying money transmission laws to stored and monetary value and allowing surety companies to cancel their bonds, which take effect upon passage.

The bill requires a limited liability company applying for a check cashing license to list on its application the names and addresses of each of its managers and authorized agents. It requires the commissioner to investigate whether each such manager and authorized agent is in all respects properly qualified and of good character as part of the licensing process.

The bill specifies that the application a licensee must file with the commissioner to change its location must be filed prior to the location change, and the licensee also must receive the commissioner's approval. Current law requires only that the licensee file the application and accompanying location transfer fee. The bill eliminates a requirement that a licensee file a new application and pay a fee when changing its type of facility. It requires applicants and licensees to notify the commissioner promptly, in writing, of any change in the information provided in their initial or renewal application for licensure or most recent license renewal.

The bill requires the commissioner, if he determines that a check filed with his office to pay an application or license fee has been dishonored, to suspend automatically a check cashing service's license or approval or a renewal license that has been issued but is not yet effective. He must give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on those actions. The bill also requires the commissioner, if he determines a check filed with his office to pay a location transfer fee has been dishonored, to suspend automatically the location transfer approval pending revocation of the approval and an opportunity for a hearing on that action.

The bill requires a limited liability company's application to engage in the business of money transmission to include the managers' (1) names, (2) home addresses, and (3) history of material litigation and criminal convictions for the five years prior to the application date. The application must also provide sufficient information about the managers' names and addresses, in addition to those of other required parties, as the commissioner deems necessary. The bill also requires all applicants and licensees, regardless of the type of entity, to notify the commissioner promptly, in writing, of any change in the information provided in their initial or renewal application for licensure or most recent license renewal.

The bill prohibits the commissioner from issuing a money transmission license to anyone who has not paid the required investigation and license fees. By law, an investigation fee is $ 500, and initial and renewal license fees are $ 1,000.

If the commissioner determines that a check filed with his office to pay an investigation or license fee has been dishonored, the bill requires him automatically to suspend a money transmission renewal license that has been issued but it not yet effective. He must give the licensee notice of the automatic suspension pending proceedings for refusal to renew the license and an opportunity for a hearing on those actions.

By law, money transmission licensees must file a surety bond with the commissioner. Current law allows the bond amount to be based on a licensee's average daily balance of outstanding Connecticut payment instruments or its average weekly amount of money or equivalent transmitted. The bill requires licensees to base the bond on whichever of those amounts is greater, and bases the average weekly transmission amount on the amount of money or monetary value sent. It defines "monetary value" as a medium of exchange, whether or not redeemable in money.

The bill also allows the surety company to cancel the bond at any time by written notice to the licensee stating the date the cancellation takes effect. The notice must be sent by certified mail at least 30 days before the cancellation date. The surety bond may not be cancelled unless the surety company also notifies the commissioner in writing at least 30 days before the cancellation date. The commissioner must automatically suspend the license on the cancellation date, unless the surety bond has been replaced or renewed, all of the bond principal has been invested, the bond has been replaced in part and the remainder of the principal has been invested, or the licensee has ceased business and voluntarily surrendered the license. The bill requires the commissioner to give the licensee notice of the automatic suspension pending proceedings for revocation or refusal to renew and an opportunity for a hearing on those actions.

By law, a money transmission licensee must maintain permissible investments with a value of at least the aggregate amount of its outstanding payment instruments. The bill requires these investments to equal at least the aggregate amount of the licensee's outstanding payment instruments plus its stored value. It defines "stored value" as monetary value evidenced by an electronic record.

The bill also requires the licensee's investments, which the law deems held in trust for the benefit of successful claimants against the licensee, to ensure the faithful performance of its obligations with respect to the receipt, handling, transmission, or payment of monetary value. The investments already must guarantee the licensee's faithful performance of its obligations with respect to money.

Currently, a money transmission licensee must have a net worth of at least $ 500,000. The bill allows the commissioner to set a higher amount, determined in accordance with generally accepted accounting principles, for licensees engaging in the business of money transmission by issuing stored value.

By law, the commissioner may enter into agreements with other state or federal supervisory agencies or affiliated organizations for examinations, examination fees, and supervision of people engaged in the business of money transmission. The bill allows the agreements to include provisions regarding the assessment or sharing of fees for such examination or supervision.

By law, money transmission licensees must file with the commissioner annual reports of their financial information, including a list of investments and the dollar amounts of their aggregate outstanding Connecticut payment instruments. The bill also requires them to disclose the dollar amounts of their stored value.

The law exempts from the money transmission statutes financial institutions that do not engage in the business of money transmission except with other financial institutions. The bill clarifies that this exemption applies to such financial institutions transmitting monetary value as well as money.

HB 5411, An Act Concerning Consumer Credit Licensees and Creditors' Collection Practices, requires the banking commissioner automatically to suspend the license of several regulated entities if their license or application fee checks are dishonored, and to give them notice and an opportunity for a hearing.

Yea

Nay