Examinations, Special Reports, And Records - - CA Financial

Section § 2120

This law allows the commissioner to inspect any part of a money transmission business, whether it's located inside or outside of the state, to ensure everything is legal and accurately reported. People in charge, such as directors and employees, must show the commissioner any records and help with the inspection as much as they can.

(a) The commissioner may at any time and from time to time examine the business and any office, within or outside this state, of any licensee or any agent of a licensee in order to ascertain whether that business is being conducted in a lawful manner and whether all money transmission is properly accounted for.

(b) The directors, officers, and employees of any licensee or agent of a licensee being examined by the commissioner shall exhibit to the commissioner, on request, any or all of the licensee’s accounts, books, correspondence, memoranda, papers, and other records and shall otherwise facilitate the examination so far as it may be in their power to do so.

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(Added by Stats. 2011, Ch. 243, Sec. 4. (SB 664) Effective January 1, 2012.)

Section § 2121

This law allows the commissioner to work together with other state or federal regulators who oversee money transmissions. They can share responsibilities like conducting examinations and taking necessary actions to enforce the rules.

The commissioner may consult and cooperate with other state or federal money transmission regulators in enforcing and administering this division. They may jointly pursue examinations and take other official action that they are otherwise empowered to take.

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(Amended by Stats. 2012, Ch. 356, Sec. 23. (SB 979) Effective January 1, 2013.)

Section § 2122

If you're a licensee and any of these situations happen, you need to tell the commissioner within five business days:

1) You or others file for bankruptcy or reorganization; 2) You file for receivership, start a dissolution or reorganization process, or make a general creditor assignment; 3) There's a start to revoke or suspend your license in places you do business; 4) Your bond or security is canceled or impaired; 5) You're charged or convicted of a felony, or someone in charge at your company is; 6) Your agent gets charged or convicted of a felony.

A licensee shall file a report with the commissioner within five business days after the licensee has reason to know of the occurrence any of the following events:

(a) The filing of a petition by or against the licensee under the United States Bankruptcy Code (11 U.S.C. Secs. 101-110, incl.) for bankruptcy or reorganization.

(b) The filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors.

(c) The commencement of a proceeding to revoke or suspend its license in a state or country in which the licensee engages in business or is licensed.

(d) The cancellation or other impairment of the licensee’s bond or other security.

(e) A charge or conviction of the licensee or of an executive officer, manager, director, or person in control of the licensee for a felony.

(f) A charge or conviction of an agent for a felony.

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(Added by Stats. 2011, Ch. 243, Sec. 4. (SB 664) Effective January 1, 2012.)

Section § 2123

If a business or its agents offer money services, they must follow the rules set out under the United States Bank Secrecy Act regulations.

A licensee that is a money services business under the regulations adopted pursuant to the United States Bank Secrecy Act (31 C.F.R. Chapter X) and the agents of the licensee that are money services businesses shall comply with those regulations.

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(Amended by Stats. 2022, Ch. 452, Sec. 104. (SB 1498) Effective January 1, 2023.)

Section § 2124

This law section outlines the types of records that a financial licensee must keep for at least three years. These include records of payments or stored value obligations sold, a general ledger updated monthly, bank statements, and records of paid obligations. The licensee must also keep a list of agents' names and addresses, and any additional records required by the commissioner. Records should be maintained for six months when related to Section 2102 receipts or for a longer contractually specified period. Records can be stored in any format, even outside the state, but must be accessible within seven days upon request, and non-English records must be translated into English within that timeframe.

(a) A licensee shall maintain the following records for determining its compliance with this division for at least three years:

(1) A record of each payment instrument or stored value obligation sold.

(2) A general ledger posted at least monthly containing all asset, liability, capital, income, and expense accounts.

(3) Bank statements and bank reconciliation records.

(4) Records of outstanding payment instruments and stored value obligations.

(5) Records of each payment instrument and stored-value obligation paid within the three-year period.

(6) A list of the last known names and addresses of all of the licensee’s agents and their branch offices.

(7) Any other records the commissioner reasonably requires by order or regulation.

(b) A licensee or its agent shall maintain records of any receipts provided pursuant to Section 2102 for six months or a longer period of time specified in the contract between the licensee and its agent.

(d) Records may be maintained outside this state if they are made available to the commissioner on seven days’ notice that is sent in a record.

(e) If records not required to be maintained in English pursuant to Section 456 are in a language other than English, the licensee shall provide records translated into English within seven days’ notice that is sent in a record.

(f) Each licensee shall maintain any other records required by the commissioner.

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(Amended by Stats. 2014, Ch. 499, Sec. 15. (AB 2209) Effective January 1, 2015.)

Section § 2125

When a licensee adds or replaces a key individual (someone with significant influence or responsibility), they need to inform the commissioner within 15 days of the appointment. After this notification, the commissioner has 90 days to disapprove the appointment if the individual's background isn't suitable or beneficial for the public or customers.

If the commissioner doesn't disapprove within 90 days, the individual is automatically approved, unless Section 2035 applies. Additionally, the licensee must submit specific information required by other regulations within 45 days of the appointment.

A licensee adding or replacing a key individual shall do all of the following:

(a) Provide notice to the commissioner within 15 days after the effective date of the key individual’s appointment.

(1) Within 90 days of compliance with this subdivision, the commissioner may issue a notice of disapproval of a key individual if the competence, experience, character, or integrity of the individual supports a determination by the commissioner that it is not in the best interests of the public or the licensee’s customers to permit the individual to be a key individual of the licensee.

(2) If the notice provided pursuant to this subdivision is not disapproved within 90 days after the date on which the notice was provided, the key individual shall be deemed approved. This timeframe does not apply to applications filed pursuant to Section 2035.

(b) Provide information, as applicable, required by Sections 80.4105 and 80.4105.10 of Title 10 of the California Code of Regulations, as amended from time to time, within 45 days of the effective date.

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(Added by Stats. 2023, Ch. 463, Sec. 10. (AB 1116) Effective January 1, 2024.)

Section § 2127

This law states that until January 1, 2025, businesses licensed to do money transmission in California don't have to follow certain new rules if those rules conflict with laws that were in place as of December 31, 2023, or if they introduce new requirements that weren't there in the old law.

Before January 1, 2025, a person licensed under this division to engage in the business of money transmission shall not be subject to a provision of the act adding this section to the extent that the provision conflicts with the law in effect on December 31, 2023, or to the extent the provision establishes new requirements not imposed under the law in effect on December 31, 2023.

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(Added by Stats. 2023, Ch. 463, Sec. 11. (AB 1116) Effective January 1, 2024.)