AN ACT CONCERNING CHECK CASHERS, MONEY TRANSMITTERS AND OTHER NONMORTGAGE LICENSEES.

AN ACT CONCERNING CHECK CASHERS, MONEY TRANSMITTERS AND OTHER NONMORTGAGE LICENSEES.

1. extends the period for which money transmitter and check casher licenses are valid from one year to two and prohibits them from using any name other than the one on their license;

2. increases the commissioner's authority to impose penalties on check cashers;

3. changes bonding requirements for money transmitters and debt adjusters; and

4. requires consumer collection agency license applicants to provide, within 10 days, written notification to the banking commissioner of any changes in information contained in their initial or most recent renewal application.

*Senate Amendment “A” eliminates provisions making 10 business days the uniform time period for sales finance company, small loan lender, check casher, money transmitter, and debt adjuster license applicants to provide written notification to the banking commissioner of any changes in their initial or most recent renewal application.

EFFECTIVE DATE: October 1, 2006 for the provisions on check casher and money transmitter licensing procedures and consumer collection agencies. Upon passage for the sections on small loan licensees, the check casher license exemption for Connecticut credit unions, violations of check cashing laws, investments in lieu of bonds for money transmitters, and debt adjusters.

Under current law, a small loan licensee must give written notice before changing his place of business. After investigating the facts and making certain findings, the commissioner must either enter an order approving the change and amend the license accordingly or enter an order denying the change. The bill requires a small loan licensee to apply to the banking commissioner before changing his place of business and gives the commissioner the authority to approve or deny the application rather than enter an order. Small loan licensees are generally those licensed to make loans of less than $ 15,000, but excluding certain entities like banks and credit unions.

Application Fees. The bill raises current law's initial nonrefundable (1) license renewal fee from $ 1,000 to $ 2,000 and (2) location fees from $ 100 to $ 200. If the application is filed less than one year before the license expiration date, the initial license fee remains $ 1,000 and the location fee $ 100 for each location.

License Period and Renewal. Under current law, check cashing licenses are valid for one year, running from July 1 to June 30. The bill (1) increases the license period from one year to two and (2) changes the beginning and end dates of the license period to October 1 and September 30 respectively, of the odd-numbered year following issuance.

The bill changes, from each June 20 to September 1 of the license expiration year, the date by which a licensee must pay the license and location renewal fees and doubles those fees from $ 750 to $ 1,500 and from $ 50 to $ 100, respectively, to reflect the extended licensing period.

The bill provides that any license renewed effective July 1, 2007 will expire on September 30 unless renewed. For licenses under the existing expiration period expiring July 30, 2007, the bill requires the licensee to pay a renewal license fee of $ 1,688 and a renewal location fee of $ 113 by July 1, 2007. Finally, the bill imposes a $ 100 application renewal late fee for applications filed after September 1, or July 1, 2007 for licenses expiring June 30, 2007. The bill deems applications filed with the late fee to be timely and sufficient.

Liquid Assets. The bill requires licensees to file a report with the commissioner, by September 1 of each even-numbered year, specifying liquid assets available for each check cashing location. A licensee must have at least $ 10,000 for each general facility location and at least $ 2,500 for each limited facility location.

The bill exempts Connecticut-chartered credit unions from check casher licensing laws. The law already exempts any institution subject to and under the general supervision of, a federal agency and any Connecticut bank.

The bill gives the commissioner the authority to impose a civil penalty or issue a cease and desist order whenever it appears to him that a person is violating, has violated, or is about to violate the check cashing laws and any regulations adopted under those laws. Current law specifically gives him such authority only for actual statutory violations.

License Period. Under current law, money transmitter licenses are valid for one year, running from July 1 to June 30. The bill (1) increases the license period from one year to two and (2) changes the beginning and end dates of the license period to October 1 and September 30 respectively, of the odd-numbered year following issuance. For licenses renewed effective July 1, 2007, the bill sets the expiration date at September 30, 2009.

The bill sets the same license renewal dates and late fee provisions as described above for check cashers.

Fees. The bill raises the original license fee from $ 1,000 to $ 2,000. If the application is filed less than one year before the license expiration date the fee is $ 1,000 and the existing nonrefundable $ 500 investigation fee remains the same. The bill raises the renewal application fee from $ 1,000 to $ 2,000, except that, for licenses expiring on June 30, 2007, the fee is $ 2,250.

Generally, money transmitters must file a surety bond with the commissioner as a condition of getting or keeping a license. The law allows money transmitters to invest the bond amount in lieu of all or part of the principal surety bond. The bill requires applicants or licensees to keep the investment funds with banks or Connecticut or federal credit unions they designate and the commissioner approves. The bill also requires that investments be kept subject to the conditions the commissioner deems necessary to protect consumers and in the public interest. It requires that the investments be held at the designated bank or credit union to cover claims during the license period and for a period of two years after the license has been surrendered, revoked, terminated, or expired.

Finally, it includes dollar deposits within current law's definition of “investments,” which already includes interest-bearing bills, notes, bonds, debentures, and certain other obligations.

The bill changes the period for calculating the amount of the surety bond debt adjusters must file from March 31 to July 31 of each year. By law the principal amount of the bond must be the greater of $ 40,000 or twice the amount of the highest total payments received by the applicant from Connecticut debtors in relation to debt-adjustment activity in the preceding 12-month period. Debt adjustment means receiving, as agent of a debtor, money or evidences thereof for the purpose of distributing it among creditors in full or partial payment of the debtor's obligations.

Yea

Nay

(03/09/2006)