Current through Register 2024 Notice Reg. No. 38, September 20, 2024
(a) The
Commissioner finds that exempting the persons and transactions specified in
subdivision (a) of this Section from the Money Transmission Act is in the
public interest and that the regulation of such persons and transactions is not
necessary for the purposes of the Money Transmission Act. Accordingly, in
addition to the persons exempt pursuant to Financial Code Section
2010, the
Commissioner exempts from the Money Transmission Act:
(1) The sale of a money transmission service
or product of a person exempt pursuant to Financial Code Section
2010;
(2) A public benefit nonprofit which has
received recognition of tax exemption under Internal Revenue Code Section
501(c)(3);
(3) An escrow agent licensed under the Escrow
Law (Financial Code Section
17000 et
seq.), only when acting as an escrow agent or Internet escrow agent as those
terms are defined in Financial Code Sections
17004 and
17004.5,
respectively; and
(4) a nonprofit
community service organization that meets all of the criteria in Financial Code
Section
12104 of
the Check Sellers, Bill Payers and Proraters Law.
(b) As an administrative standard, the
Commissioner may consider the following factors in determining whether a person
or transaction or class of persons or transactions is exempt from all or part
of the Money Transmission Act:
(1) Whether
the person is licensed by a government agency and is examined by that licensing
government agency in a manner satisfactory to the Commissioner for factors such
as:
(A) The nature and volume of the
projected or established business.
(B) The amount, nature, quality, and
liquidity of its assets.
(C) The
amount and nature of its liabilities.
(D) The amount of earnings and
income.
(E) The quality of its
operations.
(F) The quality of its
management.
(2) Whether
the transmission activity is necessary and incidental to the performance of the
person's business transactions.
(3)
The risk and potential harm of the proposed business activities to persons
located in California.
(4) The
actual or projected nature and volume of transactions with persons located in
California.
(5) Other factors as
may in the opinion of the Commissioner be relevant.
(c) To apply for an exemption under Financial
Code Section
2011, the
applicant shall submit a letter to the Commissioner in care of the Legal
Division, 1515 K Street, Suite 200, Sacramento, CA 95814, which shall state or
contain all of the following:
(1) Statement
that the letter is a request for an order of exemption pursuant to Financial
Code Section
2011.
(2) The legal name and business address of
the applicant and any fictitious or trade name used by the applicant in
conducting its business.
(3) A
description of the applicant's business.
(4) A description of the structure or
organization of the applicant, including any parent or subsidiary of the
applicant.
(5) A description of the
flow of funds, if applicable, among the sender of money or monetary value, the
recipient of money or monetary value, the applicant, and any other relevant
persons, and indicating whether such money or monetary value is held in
depository accounts; how such depository accounts are titled; and which
entities control the withdrawal of money or monetary value from such depository
accounts. Attach relevant documents such as copies of contracts with financial
institutions, terms of service, user agreements, and receipts which relate to
how money or monetary value is transferred among the sender, the recipient, the
applicant, and other relevant persons.
(6) The information called for in subdivision
(b), if applicable.
(7) An
objective legal analysis with a reasoned conclusion supporting a claim for an
exemption. Such analysis shall be based on applicable law and regulations, any
previous opinions issued by the Commissioner, state and federal court
decisions, and other similar documents.
(8) Any other information the Commissioner
requires with respect to the applicant.
(d) The commissioner may waive any of the
information required under subdivision (c) or permit an applicant to submit
other information instead of the required information.
1. Change
without regulatory effect amending section filed 8-19-97 pursuant to section
100, title 1, California Code of
Regulations (Register 97, No. 34).
2. Amendment of section and NOTE
filed 8-11-2015; operative 10-1-2015 (Register 2015, No.
33).
Note: Authority cited: Section
2011,
Financial Code. Reference: Section
2011,
Financial Code.
