Registration of Money Transmitters
Creates a new chapter in the Hawaii Revised Statutes to register and regulate persons providing money transmission services.
HOUSE OF REPRESENTATIVES
TWENTY-SECOND LEGISLATURE, 2004
STATE OF HAWAII
A BILL FOR AN ACT
RELATING TO REGISTRATION OF MONEY TRANSMITTERS.
BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF HAWAII:
SECTION 1. 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 and provide legal recourse for consumers.
SECTION 2. The Hawaii Revised Statutes is amended by adding a new chapter to be appropriately designated and to read as follows:
§ -1 Short title.This chapter may be known and cited as the "Money Transmitters Registration Act".
§ -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 a Hawaii financial institution, and unless the context indicates otherwise, a federal financial institution or foreign financial institution.
"Hawaii financial institution" means a corporation or credit union which holds a charter or license under chapter 412 authorizing it to accept deposits.
"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 by 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, joint venture, partnership, sole proprietorship, association, cooperative, estate, trust, or government unit.
"Record" means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium, and is retrievable in legible form.
"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.
"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.
§ -3 Applicability of this chapter. This chapter shall not apply to:
(1) The United States or a department, agency, or instrumentality thereof;
(2) Money transmission 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 its subsidiaries, affiliates, and service corporations, any office of an international banking corporation, branch and agency offices of a foreign bank, or corporation organized pursuant to the Bank Service Corporation Act (12 U.S.C. §§1861-1867) or a corporation organized under the Edge Act (12 U.S.C. §§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. §§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 registered futures commission merchant under the federal commodities laws to the extent of its operation as such a merchant;
(8) A person that provides clearance or settlement services under a registration as a clearing agency, or an exemption from that registration granted under the federal securities laws, to the extent of its operation as such a provider;
(9) An operator of a payment system only 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 company 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 company and to the extent that they engage in money transmission as an ancillary service when conducting 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 this State 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) Has and 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 by transfer of control of any money transmitter, whether by change in ownership or otherwise. Registration is terminated upon 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. Unless waived by the commissioner and to the extent each is applicable, the registration statement shall include:
(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 its business;
(2) The legal name, residential and business addresses, date of birth, and social security number of the proposed responsible individual;
(3) Documentation that the registrant and proposed responsible individual are citizens of the United States or have obtained legal immigration status to work in the United States;
(4) A description of any money transmission services that the registrant seeks to provide in this State;
(5) A list of the registrant's proposed authorized delegates 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 state in which the registrant is incorporated or formed;
(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.
(c) A nonrefundable initial registration fee shall accompany the registration statement as provided in section -9.
(d) A current registration statement accompanied by an annual registration fee shall be due on or before September 30 of each calendar year.
(e) If a registrant does not file a current registration statement and pay the annual registration fee by September 30 of each calendar year, the registration expires as of 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 registration by delivering the original confirmation of registration to the commissioner along with a written notice of termination. The notice shall include the location where the records of the registrant will be stored and the name, address, telephone number, and other contact information of a responsible party who is authorized to provide access to the records. The termination of a registration does not reduce or eliminate the registrant's liability arising from acts or omissions occurring prior to the termination of the registration.
§ -9 Fees. (a) The commissioner shall establish fees sufficient to cover the costs of administering this chapter. Fees 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 pursuant to section 26-9.
§ -10 Rules. The commissioner may adopt rules pursuant to chapter 91 necessary to administer and enforce 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 not more than $1,000, and each day's violation shall be deemed a separate offense.
(b) The commissioner may maintain a suit to enjoin the performance or the continuance of any act or acts by a person acting without a registration where a registration is required by law. The commissioner may also seek the imposition of fines provided by subsection (a).
(c) Nothing in this section shall preclude the commissioner at any time from seeking any relief or sanction from the courts that may otherwise be permitted by law.
§ -12 Money laundering reports. Every money transmitter and its authorized delegates shall file with the appropriate federal agency all reports required by federal currency reporting, recordkeeping, and suspicious transaction reporting requirements as set forth in title 31 United States Code sections 5311-5332 and title 31 Code of Federal Regulations part 103, and other federal and state laws pertaining to money laundering. Every money transmitter shall maintain copies of these reports.
§ -13 Money transmitter delivery, receipts, and refunds. (a) Every money transmitter and its authorized delegates shall transmit the monetary equivalent of all money or equivalent value received from a customer for transmission, net of any fees, or issue instructions committing the money or its monetary equivalent, to the person designated by the customer within ten business days after receiving the money or equivalent value, unless otherwise ordered by the customer or unless the money transmitter or its authorized delegate has reason to believe that a crime has occurred, is occurring, or may occur as a result of transmitting the money. For purposes of this subsection, money is considered to have been transmitted when it is available to the person designated by the customer and a reasonable effort has been made to inform this designated person that the money is available, whether or not the designated person has taken possession of the money. As used in this subsection, "monetary equivalent," when used in connection with a money transmission in which the customer provides the money transmitter or its authorized delegate with the money of one government, and the designated recipient is to receive the money of another government, means the amount of money, in the currency of the government that the designated recipient is to receive, as converted at the exchange rate offered by the money transmitter or its authorized delegate to the customer in connection with the transaction.
(b) Every money transmitter and its authorized delegates shall provide a written receipt to the customer that clearly states the amount of money presented for transmission and the total of any fees charged by the money transmitter. If the rate of exchange for a money transmission to be paid in the currency of another country is fixed by the money transmitter for that transaction at the time the money transmission is initiated, then the receipt provided to the customer shall disclose the rate of exchange for that transaction, and the duration, if any, for the payment to be made at the fixed rate of exchange so specified. If the rate of exchange for a money transmission to be paid in the currency of another country is not fixed at the time the money transmission is sent, the receipt provided to the customer shall disclose that the rate of exchange for that transaction will be set at the time the recipient of the money transmission picks up the funds in the foreign country. As used in this section, "fees" does not include revenue that a money transmitter or its authorized delegate generates, in connection with a money transmission, in the conversion of the money of one government into the money of another government.
(c) Every money transmitter and its authorized delegates shall refund to the customer all moneys received for transmittal within ten days of receipt of a written request for a refund unless any of the following occurs:
(1) The moneys have been transmitted and delivered to the person designated by the customer prior to receipt of the written request for a refund;
(2) Instructions have been given committing an equivalent amount of money to the person designated by the customer prior to receipt of a written request for a refund; or
(3) The money transmitter or its authorized delegate has reason to believe that a crime has occurred, is occurring, or may potentially occur as a result of transmitting the money as requested by the customer or refunding the money as requested by the customer.
(d) Every money transmitter shall maintain copies of written receipts issued to a customer, written requests from a customer, and records of all money transmissions.
(e) Any person may maintain a suit to enjoin the performance or the continuance of any act, acts, or omission by a money transmitter in violation of this section, and if injured thereby, for the recovery of damages. The plaintiff or petitioner in a suit for an injunction need not allege or prove actual damages to prevail. Reasonable attorney fees and costs shall be allowed by the court to the plaintiff as the prevailing party.
§ -14 Records. (a) A money transmitter shall maintain the following records at its place of business in this State for at least six years:
(1) Financial institution deposit account statements and reconciliation records;
(2) A list of the last known names and addresses of all of the money transmitter’s authorized delegates;
(3) Copies of all currency transaction reports and suspicious activity reports filed in compliance with section -12; and
(4) Copies of all written receipts issued to a customer, written requests from a customer, and records of all money transmissions.
(b) The items specified in subsection (a) shall be maintained in the English language."
SECTION 3. This Act shall take effect on October 1, 2004.