SB747

Report Title:

Money Transmitters

Description:

Ensures that money transmission services are used for lawful purposes. Provides for the registration of persons who provide money transmission services.

THE SENATE	S.B. NO.	747
TWENTY-THIRD LEGISLATURE, 2005
STATE OF HAWAII

A BILL FOR AN ACT

RELATING TO MONEY TRANSMITTERS.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:

SECTION 1. This Act shall be known as the "Money Transmitters Registration Act of 2005".

SECTION 2. The business of international money transmission has recently received a great deal of attention from government regulators, law enforcement authorities, and the media. It is the intent of the legislature to establish a system of registration of money transmitters to help ensure that these businesses are used for lawful purposes.

SECTION 3. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:

"CHAPTER

MONEY TRANSMITTERS

§ -1 Short title. This chapter may be known and cited as the "Money Transmitters Registration Act of 2005".

§ -2 Definitions. As used in this chapter:

"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.

"Authorized delegate" means a person designated by a registrant to provide money transmission services on behalf of the registrant.

"Commissioner" means the commissioner of financial institutions of this State.

"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.

"Foreign bank" means any company organized under the laws of a foreign country, a territory of the United States, Puerto Rico, Guam, American Samoa, or the Virgin Islands, that engages directly in the business of banking. The term includes foreign commercial banks, foreign merchant banks, and other foreign institutions that engage in banking activities usual in connection with the business of banking in the countries where the foreign institutions are organized or operating.

"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.

"Money transmission" means receiving money or its equivalent value to transmit, deliver, or instruct to be delivered to another location, inside or outside the United States, by any means including but not limited to wire, facsimile, or electronic transfer. "Money transmission" does not include solely providing connection services to the internet, telecommunications services, or network access.

"Money transmitter" means a person that is engaged in money transmission.

"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.

"Person" means a natural person, entity, or organization, including without limitation an individual, corporation, limited liability company, joint venture, partnership, sole proprietorship, association, cooperative, estate, trust, or government unit.

"Registrant" means a person registering or registered under this chapter.

"Responsible individual" means a natural person who is employed by a registrant and has principal managerial authority over the provision of money transmission services by the registrant in this State.

"Service corporation" means a corporation or organization owned entirely by one or more state-chartered or federally chartered savings and loan associations, savings banks, or credit unions.

"State", whenever this word is used in its uncapitalized form, means any state of the United States, the District of Columbia, any territory of the United States, Puerto Rico, Guam, American Samoa, the Trust Territory of the Pacific Islands, the Virgin Islands, and the Northern Mariana Islands.

"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 issuer or its affiliates.

"Subsidiary" means a corporation, limited liability company, joint venture, partnership or other company of which another person:

(1) Owns or has the power to vote twenty-five per cent or more of any class of voting securities;

(2) Owns or has the power to exercise twenty-five per cent or more of the votes of an entity whose voting rights are not determined by voting securities;

(3) Owns or has the power to vote ten per cent or more of any class of voting securities if:

(A) The issuer of that class of securities has issued any class of securities under section 12 of the Securities Exchange Act of 1934, as amended; or

(B) Immediately after the acquisition of ownership, no other person will own a greater percentage of that class of voting securities; or

(4) Has the power to elect by any means a majority of the directors.

§ -3 Applicability of this chapter. This chapter shall not apply to:

(1) The United States or a department, agency, or instrumentality thereof;

(2) Money transmissions by the United States Postal Service or by a contractor on behalf of the United States Postal Service;

(3) Any state, county, city, or a department, agency, or instrumentality thereof;

(4) A financial institution or any of its subsidiaries or service corporations, a branch or agency of a foreign bank, a corporation or limited liability company organized pursuant to the Bank Service Company Act (12 U.S.C. sections 1861-1867), or a corporation organized under the Edge Act (12 U.S.C. sections 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. sections 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 futures commission merchant registered under federal commodities laws to the extent of its operation as such a merchant;

(8) A person registered as a clearing agency that provides clearance or settlement services or is exempt from registration requirements under the federal securities laws, to the extent of its operation as such a provider;

(9) An operator of a payment system 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 depository 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 depository, and is engaged in money transmission as an ancillary service to its insurance, title insurance, or escrow activity;

(12) A person who issues, sells, uses, redeems, or exchanges stored value or payment instruments; or

(13) An attorney, to the extent that the attorney is lawfully authorized to practice law in Hawaii and to the extent that the attorney engages in money transmission as an ancillary service to the practice of law.

§ -4 Annual registration required. No person shall engage in the business of money transmission services in this State, or advertise, solicit, or hold itself out as providing money transmission services in this State, unless the person is:

(1) Registered as a money transmitter or is an authorized delegate of a person registered as a money transmitter under this chapter; and

(2) Maintains an office in this State for the purpose of conducting a money transmission services business.

§ -5 Transfer of registration prohibited. No registration, including the rights, privileges, and obligations thereof, shall be assigned, sold, leased, encumbered, or otherwise transferred, voluntarily or involuntarily, directly or indirectly, including transfer of control of any money transmitter, whether by change in ownership or otherwise. Registration is terminated upon the transfer of control of any money transmitter, whether by change in ownership or otherwise.

§ -6 Registration statement. (a) Before engaging in the business of money transmission services under this chapter, a person shall submit to the commissioner a registration statement in a form prescribed by the commissioner. The registration statement shall include the following information, unless the information is not applicable or is waived by the commissioner:

(1) The legal name, business addresses, residential address, date of birth, and social security number of the registrant, and any fictitious or trade name used by the registrant in conducting business;

(2) The legal name, residential and business addresses, date of birth, and social security number of the proposed responsible individual;

(3) A list of the registrant's proposed authorized delegates, which shall include the legal name, business addresses, residential address, date of birth, and social security number of each authorized delegate, and any fictitious or trade name used by an authorized delegate in conducting business;

(4) Documentation providing proof that the registrant, proposed responsible individual, and authorized delegates who are individuals, are citizens of the United States or have obtained legal immigration status to work in the United States;

(5) A description of any money transmission services that the registrant seeks to provide in this State and the locations in this State where the registrant and its authorized delegates propose to engage in the provision of money transmission services; and

(6) Any other information the commissioner may require.

(b) Unless waived by the commissioner, if a registrant is a corporation, limited liability company, partnership, or other entity, the registrant shall also provide:

(1) The date of the registrant's incorporation or formation and state of incorporation or formation;

(2) A certificate of good standing from the business registration division of the department of commerce and consumer affairs of this State;

(3) A brief description of the structure or organization of the registrant, including any parent or subsidiaries of the registrant, and whether any parent or subsidiary is publicly traded; and

(4) Any other information that the commissioner may require.

(d) A current registration statement accompanied by an annual registration fee shall be due on or before September 30 of each year.

(e) If a registrant does not file a current registration statement and pay the annual registration fee by September 30 of each year, the registration shall expire on October 1 of that year.

§ -7 Confirmation of registration. The commissioner's duty to accept a registration statement filed under this chapter is ministerial. Upon the acceptance for filing of a completed registration statement that satisfies the requirements of section -6 and the payment of the registration fee, the commissioner shall issue a confirmation of the registration to the registrant to engage in the business of providing money transmission services.

§ -8 Voluntary termination of registration. A money transmitter that is registered under this chapter may terminate the registration by delivering the original confirmation of registration to the commissioner along with a written notice of termination.

§ -9 Fees. (a) The commissioner shall establish fees sufficient to cover the costs of administering this chapter. Fees shall include an initial registration fee of $100 and an annual registration fee of $100. The commissioner may increase, decrease, or repeal these fees when necessary pursuant to rules adopted in accordance with chapter 91.

(b) All moneys, fees, and penalties collected under this chapter shall be deposited into the compliance resolution fund established under section 26-9.

§ -10 Rules. The commissioner may adopt rules pursuant to chapter 91 necessary for purposes of this chapter.

§ -11 Civil sanctions for unregistered activity; fines; injunctive relief; damages. (a) Any person, who engages in an activity requiring registration under this chapter and who fails to register, or who uses any word, title, or representation to induce the false belief that the person is registered to engage in the activity, shall be subject to a fine of $1,000 for each day of violation which shall be deemed a separate offense for each day.

(b) The commissioner may maintain a suit to enjoin the performance or the continuance of any act or acts by a person who lacks the required registration. The commissioner may also seek the imposition of fines provided under subsection (a).

(c) This section shall not preclude the commissioner from seeking any relief or sanction from the courts that may otherwise be permitted by law."

SECTION 4. This Act shall take effect on October 1, 2005.

INTRODUCED BY:	_____________________________
	BY REQUEST