citation: FIN § 2039

text:
(a) The commissioner may, by order or regulation, grant exemptions from this section in cases in which the commissioner finds that the requirements of this section are not necessary or may be duplicative.

(b) In addition to any other reports as may be required pursuant to Sections 453, 454, and 455, each licensee shall, within 90 days after the end of each fiscal year, or within any extended time as the commissioner may prescribe, file with the commissioner an audit report for the fiscal year that shall comply with all of the following provisions:

(1) The audit report shall contain audited financial statements of the licensee for or as of the end of the fiscal year prepared in accordance with United States generally accepted accounting principles and any other information as the commissioner may require.

(2) The audit report shall be based upon an audit of the licensee conducted in accordance with United States generally accepted auditing standards and any other requirements as the commissioner prescribes.

(3) The audit report shall be prepared by an independent certified public accountant or independent public accountant who is not unsatisfactory to the commissioner.

(4) The audit report shall include or be accompanied by a certificate of opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the commissioner. If the certificate or opinion is qualified, the commissioner may order the licensee to take any action as the commissioner finds necessary to enable the independent or certified public accountant or independent public accountant to remove the qualification.

(c) Each licensee shall, not more than 45 days after the end of each calendar year quarter, or within a longer period as the commissioner, by regulation or order, specifies, file with the commissioner a report containing all of the following:

(1) Financial statements, including balance sheet, income statement, statement of changes in shareholders’ equity, and statement of cashflows, for, or as of the end of, that calendar year quarter, verified by two of the licensee’s principal officers. The verification shall state that each of the officers making the verification has a personal knowledge of the matters in the report and that each of them believes that each statement on the report is true.

(2) For issuers and sellers of payment instruments and stored value, a schedule of eligible securities owned by the licensee pursuant to Section 2081.

(3) Other information as the commissioner, by regulation or order, requires.

(d) Each licensee, not more than 45 days after the end of each calendar year quarter, shall file through the NMLS a report containing all of the following:

(1) The current address of each branch office of the licensee in this state. If a branch office was opened or closed during the calendar year quarter, the date it was opened or closed. If a branch office was relocated during the calendar year quarter, the addresses of the old and new locations and the date of relocation.

(2) All of the following information related to each agent who acted, in this state, as an agent of the licensee during the calendar year quarter:

(A) The agent’s name, telephone number, and email address.

(B) The agent’s taxpayer employer identification number.

(C) The agent’s principal provider identifier.

(D) The agent’s physical address.

(E) The agent’s mailing address.

(F) Any business conducted in other states by the agent on behalf of the licensee.

(G) Any fictitious or trade name used by the agent.

(H) The date of appointment or termination of the agent in the calendar year, if applicable.

(I) The addresses for the old and new locations and the date of relocation of any agent that relocated during the calendar year quarter, if applicable.

(3) The total volume of activities, number of transactions conducted, and outstanding money transmission obligations in California under this division and in the United States in the calendar year quarter categorized by type of money transmission, and, if feasible whether the transmission was conducted via a mobile application or an internet website. For money received for transmission, a report of the average daily outstanding transmission liabilities in California, and, if applicable, a schedule of each foreign country to which money was sent, along with the total amount of money sent to that foreign country in that calendar year quarter. For payment instruments and stored value, a report of the average daily outstanding payment instruments and stored value liabilities in California in that calendar year quarter.

(4) Other information as the commissioner, by regulation or order, requires.

(e) Each licensee shall file with the commissioner other reports as and when the commissioner, by regulation or order, requires.

history: (History: Amended by Stats. 2023, Ch. 463, Sec. 4. (AB 1116) Effective January 1, 2024.)


kind: section

code: FIN

citation: FIN § 2040

text:
(a) Subject to subdivision (b), a licensee shall maintain at all times a tangible net worth of the greater of one hundred thousand dollars ($100,000) or 3 percent of total assets for the first one hundred million dollars ($100,000,000), 2 percent of additional assets for one hundred million dollars ($100,000,000) to one billion dollars ($1,000,000,000), and one-half of 1 percent of additional assets for over one billion dollars ($1,000,000,000).

(b) (1) The commissioner shall, pursuant to paragraph (2), have the authority to exempt, in part or in whole, an applicant or licensee from the requirements of this section.

(2) The commissioner, in determining whether to exempt, in part or in whole, an applicant or licensee from the requirements of this section, shall consider all of the following factors:

(A) Whether the applicant or licensee is licensed to engage in money transmission in other states and whether the applicant or licensee has been subject to any disciplinary actions, including license revocations or suspensions.

(B) Whether the applicant or licensee is licensed to engage in money transmission in other states and the tangible net worth requirements in those other states, if applicable.

(C) The nature and magnitude of short-term fluctuations in the total assets and money transmitter liabilities of the applicant or licensee, the risks associated with those fluctuations, and how those fluctuations affect the net worth requirements of this section.

(D) Any factors that suggest that the money transmission activities of the applicant or licensee function in such a manner that a waived or modified tangible net worth requirement would not compromise the interest of persons in this state who use money transmission services, including, but not limited to, both of the following:

(i) The manner in which the applicant or licensee holds actual possession of funds from persons in this state who use money transmission services.

(ii) Whether the applicant or licensee transmits funds described in clause (i) to the intended recipient as soon as practicable following receipt.

(E) Any other factors as the commissioner deems appropriate.

(c) If a licensee is subject to an order issued under Section 580 or 581, the commissioner may require a licensee to maintain tangible net worth greater than the amount required by subdivision (a) of this section.

history: (History: Repealed and added by Stats. 2023, Ch. 463, Sec. 6. (AB 1116) Effective January 1, 2024.)

division: 1.2. MONEY TRANSMISSION ACT

chapter: 3. Licenses

path: 1.2. MONEY TRANSMISSION ACT > 3. Licenses


citation: FIN § 2041

text:
(a) A licensee shall conduct money transmission in California under its true name unless it has complied with Chapter 5 (commencing with Section 17900) of Part 3 of Division 7 of the Business and Professions Code.

(b) A licensee may only conduct money transmission in California under its true name unless it has provided 30-day advance written notice to the commissioner. A licensee may also use a trade name or logo, so long as there is reasonable disclosure of its true name.

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


citation: FIN § 2042

text:
(a) In addition to the fees provided in Section 2038, the commissioner shall levy an assessment each fiscal year, on a pro rata basis, on those licensees that at any time during the preceding calendar year engaged in the business of money transmission in California in an amount that is, in his or her judgment, sufficient to meet the commissioner’s expenses in administering the provisions of this division and to provide a reasonable reserve for contingencies.

(b) For licensees that sell or issue payment instruments or stored value, the amount of the annual assessment on any licensee shall not exceed the sum of the products determined by multiplying (1) increments of the aggregate face amount of payment instruments and stored value issued or sold in California by the licensee, directly or indirectly through agents, in the calendar year next preceding the date of such assessment, by (2) percentages of the base assessment rate, according to the following table:Aggregate face amount of payment instruments and stored value sold (in millions)Percentage of base assessment rateFirst $1100.0Next $925.0Next $4012.5Next $506.0Next $4003Next $5002Excess over $1,0001

The base assessment rate shall be fixed from time to time by the commissioner but shall not exceed one dollar ($1) per one thousand dollars ($1,000) face amount of payment instruments and stored value sold.

(c) For licensees receiving money for transmission, the basis of the apportionment of the assessment among the licensees assessed shall be the proportion that the total amount of money received for transmission by the licensee in California bears in relation to the total amount of money received for transmission by all licensees in California, as shown by the reports of licensees to the commissioner for the preceding calendar year. The assessment rate shall be fixed from time to time by the commissioner but shall not exceed one dollar ($1) per one thousand dollars ($1,000) of money received for transmission in California by the licensee.

(d) The commissioner shall notify each licensee by mail of the amount levied against it. The licensee shall pay the amount levied within 20 days. If payment is not made to the commissioner within that time, the commissioner shall assess and collect, in addition to the annual assessment, a penalty of 5 percent of the assessment for each month or part thereof that the payment is delinquent.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 15. (SB 979) Effective January 1, 2013.)


citation: FIN § 2043

text:
(a) On or before April 1, 2013, and annually thereafter, each licensee shall provide its agents under contract with training materials on recognizing elder or dependent adult financial abuse, and how to appropriately respond if the agent suspects that he or she is being asked to engage in money transmission for a fraudulent transaction involving an elder or dependent adult.

(b) To ensure that agents that are newly appointed by licensees pursuant to Section 2060 receive the training materials described in subdivision (a) in a timely manner, each licensee shall provide those materials to any newly appointed agent no later than one month following the appointment of that agent.

(c) This section shall not apply to licensees that are engaged solely in selling or issuing stored value pursuant to paragraph (2) of subdivision (q) of Section 2003. Licensees that engage in money transmission activities pursuant to paragraph (1) or (3) of that subdivision, shall be subject to this section only with respect to their agents under contract for activities described in those paragraphs. Additionally, this section shall not apply to licensees who exclusively offer their services via an Internet Web site, a mobile application, or both.

history: (History: Amended by Stats. 2014, Ch. 499, Sec. 9. (AB 2209) Effective January 1, 2015.)


citation: FIN § 2060

text:
(a) In this section, “remit” means to make direct payments of money to a licensee or its representative authorized to receive money or to deposit money in a bank in an account specified by the licensee.

(b) No licensee shall appoint or continue any person as agent, unless the licensee and the person have made a written contract. A written contract between a licensee and an agent shall require the agent to operate in full compliance with this division.

(c) The written contract shall contain each of the following provisions:

(1) That the licensee appoints the person as its agent with authority to conduct money transmission on behalf of the licensee.

(2) That the agent shall make and keep accounts, correspondence, memoranda, papers, books, and other records as the commissioner by regulation or order requires and preserve the records for the time specified by the regulation or order.

(3) That all money or monetary value, less fees due agents provided for and expressly set forth in the written agreement, received by the agent for money transmission on behalf of the licensee shall be trust funds owned by and belonging to the licensee until the time when the money or an equivalent amount are remitted by the agent to the licensee in accordance with this section.

(4) That the money must be remitted in accordance with the provisions of this division.

(5) Any other provisions that the commissioner may by regulation or order find to be necessary to carry out the provisions and purposes of this division.

(d) An agent shall remit all money owing to the licensee in accordance with the terms of the contract between the licensee and the agent.

(e) An agent of a licensee shall remit any money, less fees, received on behalf of the licensee for money transmission as follows:

(1) Within three business days of receipt.

(2) In case the aggregate face amount of the money, less fees, does not in any calendar week exceed ten thousand dollars ($10,000), within 10 business days of receipt.

(3) Within a period longer than three business days of receipt, if the agent has previously deposited with, and during such period maintains on deposit with, an office of an insured bank or of an insured savings and loan association located in the United States in an account that is in the sole and exclusive name of the licensee an amount that, for each day by which such period exceeds three business days, is not less than the aggregate face amount of money received on behalf of the licensee for money transmission that the agent usually sells per day.

(4) Within such shorter period as the licensee may provide.

(f) An agent may not provide money transmission outside the scope of activity permissible under the contract between the agent and the licensee. All money or monetary value, less fees, received by an agent of a licensee shall, from the time when the money is received by the agent until the time when the money or an equivalent amount is remitted by the agent to the licensee, constitute trust funds owned by and belonging to the licensee.

(g) An agent may not use a subagent to conduct money transmissions on behalf of a licensee.

(h) Each licensee shall exercise reasonable supervision over its agents to ensure compliance with applicable laws, rules, and regulations with respect to money transmission.

(i) No agent of a licensee shall, nor shall any licensee cause or knowingly permit any of its agents to, conduct money transmission on behalf of the licensee without concurrently receiving money, monetary value or its equivalent, credit card, or payment instrument, or a combination of same believed to be valid in an amount not less than the amount of the money transmission being provided. In the case of a sale of payment instruments or stored value to an insured bank, an insured savings and loan association, or an insured credit union, the licensee or agents of the licensee may receive such amounts the next business day after the sale.

(j) If any agent of a licensee shall commingle any money or monetary value, less fees, received on behalf of the licensee for money transmission with any other property owned or controlled by the agent, all such property shall be impressed with a trust in favor of the licensee in an amount equal to the aggregate amount of such money so commingled. No money or monetary value, less fees, received by any agent on behalf of the licensee for money transmission, while held by such agent, nor any property impressed with a trust pursuant to this subdivision, shall be subject to attachment, levy of execution, or sequestration by order of any court, except for the benefit of the licensee.

(k) Each licensee shall be liable as a principal for the money or monetary value from the time when the money or monetary value is received by the agent. Each licensee shall be liable as the maker or drawer on each payment instrument issued or sold by such licensee.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 16. (SB 979) Effective January 1, 2013.)

chapter: 4. Agents

path: 1.2. MONEY TRANSMISSION ACT > 4. Agents


citation: FIN § 2061

text:
(a) No licensee shall appoint any person as an agent unless it has conducted a review of the proposed agent’s fitness to act as an agent and has determined that the proposed agent and any persons who control the proposed agent are of good character and sound financial standing.

(b) A licensee shall maintain records of this review for each agent while the agent is providing money transmission on behalf of the licensee, and for three years after the relationship with the agent has terminated.


citation: FIN § 2062

text: A person may not provide money transmissions on behalf of a person not licensed or not exempt from licensure under this division. A person that engages in that activity provides money transmissions services to the same extent as if the person was a licensee, and shall be jointly and severally liable with the unlicensed or nonexempt person.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 17. (SB 979) Effective January 1, 2013.)


citation: FIN § 2063

text:
(a) No agent of a licensee who has actual notice that the commissioner has suspended or revoked the license of the licensee or that the commissioner has issued an order taking possession of the property and business of the licensee shall conduct money transmission on behalf of the licensee.

(b) If any agent of a licensee, after first having actual notice that the commissioner has suspended or revoked the license of the licensee or that the commissioner has issued an order taking possession of the property and business of the licensee, conducts money transmission on behalf of the licensee, the agent shall be jointly and severally liable with the licensee for payment of the money transmission.


citation: FIN § 2081

text:
(a) A licensee shall at all times own eligible securities having an aggregate market value computed in accordance with United States generally accepted accounting principles of not less than the aggregate amount of all of its outstanding payment instruments and stored value obligations issued or sold in the United States and all outstanding money received for transmission in the United States.

(b) If the commissioner finds that the financial condition of a licensee is impaired, or that the financial condition of a licensee is such that its business is being conducted in an unsafe and unsound manner, the commissioner, to protect the public interest, may issue an order, subject to the procedures set forth in Section 2148, doing one or both of the following:

(1) Increasing the amount of eligible securities that the licensee must maintain.

(2) Requiring the licensee to obtain, as security for the payment of outstanding money transmission obligations, additional security in the form of financial guarantees.

(c) Eligible securities, even if commingled with other assets of the licensee, are deemed to be held in trust for the benefit of the purchasers and holders of the licensee’s outstanding payment instrument and stored value obligations, and all senders of outstanding money received for transmission, in the event of bankruptcy or receivership of the licensee, or in the event of an action by a creditor against the licensee who is not a beneficiary of this statutory trust. No eligible securities impressed with a trust pursuant to this subdivision shall be subject to attachment, levy of execution, or sequestration by order of any court, except for a beneficiary of this statutory trust.

(d) All outstanding payment instruments and stored value issued or sold by a licensee or its agent, and all outstanding money received for transmission by a licensee or its agent, shall remain a liability of the licensee from the time money or monetary value is received by the licensee or its agent until the licensee receives confirmation that such money or monetary value was received by the beneficiary, or until the outstanding payment instrument or stored value obligation has been paid, or until the money is refunded to the customer.

(e) A licensee shall maintain a record in the United States of proof of receipt by the beneficiary or refund to the customer of money received for transmission.

chapter: 5. Eligible Securities

path: 1.2. MONEY TRANSMISSION ACT > 5. Eligible Securities


citation: FIN § 2082

text:
(a) “Eligible security” means any United States currency eligible security or foreign currency eligible security.

(b) For the purposes of this division, the following are United States currency eligible securities:

(1) Cash, cash in transit via armored car, cash in smart safes, and cash in licensee-owned locations.

(2) Any deposit in an insured bank, an insured savings and loan association, or an insured credit union, including any deposit in an insured bank, an insured savings and loan association, or an insured credit union that is in an account held for the benefit of the licensee’s customers that is titled “(name of licensee) FBO Its (licensee’s customers or specific group of licensee’s customers).”

(3) Any bond, note, or other obligation that is issued or is guaranteed by the United States or any agency of the United States.

(4) Any bond, note, or other obligation that is issued or guaranteed by any state of the United States or by any governmental agency of or within any state of the United States and that is assigned an eligible rating by an eligible securities rating service.

(5) Any bankers acceptance that is eligible for discount by a federal reserve bank.

(6) Any commercial paper that is assigned an eligible rating by an eligible rating securities service.

(7) Any bond, note, or other obligation that is assigned an eligible rating by an eligible securities rating service.

(8) Any share of an investment company that is an open-end management company, that is registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), that holds itself out to investors as a money market fund, and that operates in accordance with all provisions of the Investment Company Act of 1940, and the regulations of the Securities and Exchange Commission applicable to money market funds, including Section 270.2a-7 of the regulations of the Securities and Exchange Commission (17 C.F.R. 270.2a-7).

For purposes of this paragraph and paragraph (9), “investment company,” “management company,” and “open-end” have the meanings set forth in Sections 3, 4, and 5, respectively, of the Investment Company Act of 1940 (15 U.S.C. Secs. 80a-4 and 80a-5, respectively).

(9) Any share of an investment company that is an open-end management company, that is registered under the Investment Company Act of 1940 (15 U.S.C. Sec. 80a-1 et seq.), and that invests exclusively in securities that constitute eligible securities that comply with the valuation requirements of this division.

(10) Any account due to any licensee from any agent in the United States on account of the receipt of money on behalf of the licensee for money transmission by the agent, if the account is current and not past due or otherwise doubtful of collection.

(11) Any other security or class of securities that the commissioner has by regulation or order declared to be eligible securities.

(12) Any receivable owed by a bank and resulting from a debit card- or credit card-funded transmission, automated clearinghouse items in transit to the licensee, and automated clearinghouse items or international wires in transit to a payee.

(13) The full drawable amount of an irrevocable standby letter of credit for which the stated beneficiary is the commissioner that stipulates that the beneficiary need only draw a sight draft under the letter of credit and present it to obtain funds up to the letter of credit amount within seven days of presentation of the items required by subparagraph (B).

(A) The letter of credit described by this paragraph shall meet all of the following criteria:

(i) The letter of credit is issued by an insured depository financial institution, a foreign bank that is authorized under federal law to maintain a federal agency or federal branch office in any state, or a foreign bank that is authorized under state law to maintain a branch in a state that bears an eligible rating or whose parent company bears an eligible rating and that is regulated, supervised, and examined by United States federal or state authorities having regulatory authority over banks, credit unions, and trust companies.

(ii) The letter of credit is irrevocable, unconditional, and indicates that it is not subject to any condition or qualifications outside of the letter of credit.

(iii) The letter of credit does not contain reference to any other agreements, documents, or entities, or otherwise provide for any security interest in the licensee.

(iv) (I) The letter of credit contains an issue date and expiration date and expressly provides for automatic extension, without a written amendment, for an additional period of one year from the present or each future expiration date, unless the issuer of the letter of credit notifies the commissioner in writing by certified or registered mail or courier mail or other receipted means, at least 60 days before any expiration date, that the irrevocable letter of credit will not be extended.

(II) If the issuer notifies, pursuant to subclause (I), the commissioner that a letter of credit will not be extended, the licensee shall demonstrate to the satisfaction of the commissioner at least 15 days before expiration that the licensee maintains, and will maintain, permissible investments in accordance with Section 2081 upon the expiration of the letter of credit. If the licensee is not able to do so, the commissioner may draw on the letter of credit in an amount up to the amount necessary to meet the licensee’s requirements to maintain permissible investments in accordance with Section 2081. Any such draw shall be offset against the licensee’s outstanding money transmission obligations. The drawn funds shall be held in trust by the commissioner or the commissioner’s designated agent, to the extent authorized by law, as agent for the benefit of the purchasers and holders of the licensee’s outstanding money transmission obligations.

(B) The letter of credit shall provide that the issuer of the letter of credit will honor, at sight, a presentation made, on or before the expiration date of the letter of credit, by the beneficiary to the issuer of both of the following documents:

(i) The original letter of credit, including any amendments.

(ii) A written statement from the beneficiary stating that any of the following events have occurred:

(I) The filing of a petition by or against the licensee under Sections 101 to 110, inclusive, of Title 11 of the United States Code, as amended or recodified from time to time, for bankruptcy or reorganization.

(II) The filing of a petition by or against the licensee for receivership or the commencement of any other judicial or administrative proceeding for its dissolution or reorganization.

(III) The seizure of assets of a licensee by a commissioner pursuant to an emergency order issued in accordance with applicable law on the basis of an action, violation, or condition that has caused, or is likely to cause, the insolvency of the licensee.

(IV) The beneficiary has received notice of expiration or non-extension of a letter of credit, and the licensee failed to demonstrate to the satisfaction of the beneficiary that the licensee will maintain permissible investments in accordance with Section 2081 upon the expiration or non-extension of the letter of credit.

(C) (i) The letter of credit shall authorize the commissioner to designate an agent to serve on the commissioner’s behalf as beneficiary to a letter of credit if the agent and letter of credit meet requirements established by the commissioner.

(ii) An agent designated pursuant to this subparagraph may serve as agent for multiple licensing authorities for a single irrevocable letter of credit if the proceeds of the drawable amount for the purposes of this section are assigned to the commissioner.

(c) “Foreign currency eligible security” means any of the following that is denominated in a foreign currency:

(1) Cash.

(2) Any deposit, made with the prior approval of the commissioner, in an office of a bank that is located in a foreign country, if the licensee has received a satisfactory rating in its most recent examination, and the foreign depository institution meets all of the following criteria:

(A) The foreign depository institution has an eligible rating.

(B) The foreign depository institution is registered under the federal Foreign Account Tax Compliance Act.

(C) The foreign depository institution is not located in a country subject to sanctions from the federal Office of Foreign Asset Control.

(D) The foreign depository institution is not located in a high-risk or non-cooperative jurisdiction as designated by the Financial Action Task Force.

(3) Any other security or class of securities that the commissioner has by regulation or order declared to be eligible securities pursuant to Section 2086.

(d) For the purposes of this division, “value” means the following:

(1) When used with respect to an eligible security owned by a licensee of the type described in paragraph (10) of subdivision (b), net carrying value as determined in conformity with United States generally accepted accounting principles. However, in computing the value of the account, any amount that consists of money that has not been remitted to the licensee or refunded within 45 business days of receipt by the agent shall be excluded from the value of the account and shall be excluded from the calculation of eligible securities.

(2) Market value when used with respect to any other eligible security owned by a licensee.

history: (History: Amended by Stats. 2023, Ch. 463, Sec. 7. (AB 1116) Effective January 1, 2024.)


citation: FIN § 2083

text:
(a) In computing, for purposes of Section 2082, the aggregate value of eligible securities owned by a licensee, all of the following shall be excluded:

(1) The value of any eligible security if and to the extent that the value of the eligible security, when combined with the aggregate value of all other eligible securities owned by the licensee that are issued or guaranteed by the same person or by any affiliate of the same person by whom the eligible security is issued or guaranteed, exceeds 10 percent of the aggregate value of all eligible securities owned by the licensee.

(2) (A) Subject to subparagraph (B), the portion of the aggregate value of all eligible securities of the type described in paragraph (10) of subdivision (b) of Section 2082 that exceeds 25 percent of the aggregate value of all eligible securities owned by the licensee; and that portion of the aggregate value of agent receivables from any one person that exceeds 10 percent of the aggregate value of all eligible securities owned by the licensee, or any higher percentage that the commissioner may approve for the licensee, up to a maximum of 20 percent.

(B) If the receivable due from an agent is less than seven days old, then that portion of the aggregate value of all eligible securities of the type described in paragraph (10) of subdivision (b) of Section 2082 that exceeds 50 percent of the aggregate value of all eligible securities owned by the licensee.

(3) The portion of the aggregate value of all eligible securities of the type described in paragraph (6) of subdivision (b) of Section 2082 that exceeds 20 percent of the aggregate value of all eligible securities owned by the licensee.

(4) The portion of the aggregate value of all eligible securities of the type described in paragraph (7) of subdivision (b) of Section 2082 that exceeds 20 percent of the aggregate value of all eligible securities owned by the licensee.

(5) (A) The portion of the aggregate value of all eligible securities of the type described in paragraph (8) of subdivision (b) of Section 2082 that exceeds 20 percent of the aggregate value of all eligible securities owned by the licensee.

(B) This paragraph does not apply to either of the following:

(i) A money market fund that invests exclusively in obligations issued or guaranteed by the United States or any agency of the United States.

(ii) A money market fund rated AAA by Standard & Poor’s Corporation or the equivalent rating from any eligible rating service.

(6) The portion of the aggregate value of all eligible securities of the type described in paragraphs (6), (7), and (8) of subdivision (b) of Section 2082 that exceeds 50 percent of the aggregate value of all eligible securities owned by the licensee.

(7) The portion of the aggregate value of all eligible securities of the type described in paragraph (2) of subdivision (c) of Section 2082 that exceeds 10 percent of the aggregate value of all eligible securities owned by the licensee.

(b) Subdivision (a) shall not be deemed to require the exclusion of the value of any of the following eligible securities, and each of the following eligible securities shall be exempted from the limitations of subdivision (a):

(1) The following eligible securities:

(A) Cash.

(B) Any deposit in an insured bank, insured savings and loan association, or insured credit union.

(C) Any bond, note, or other obligation for the payment of which the full faith and credit of the United States are pledged.

(2) Any eligible security that the commissioner, in view of the financial condition of the obligor or issuer and such other factors as may in the opinion of the commissioner be relevant, finds to be of such quality that exclusion of the value of such eligible security pursuant to subdivision (a) is not necessary for the purposes of this division and which the commissioner by regulation or order exempts, in whole or in part, from the limitations of subdivision (a).

history: (History: Amended by Stats. 2023, Ch. 463, Sec. 8. (AB 1116) Effective January 1, 2024.)


citation: FIN § 2084

text:
(a) A licensee shall be deemed to own an eligible security only if the following apply:

(1) (A) The licensee owns the eligible security solely and exclusively in its own right, both of record and beneficially.

(B) Notwithstanding subparagraph (A), a licensee shall be deemed to own accounts held for the benefit of the licensee’s customers that otherwise meet the requirements of paragraph (2) of subdivision (b) of Section 2082.

(2) The eligible security is not subject to any pledge, lien, or security interest.

(3) The licensee can freely negotiate, assign, or otherwise transfer the eligible security.

(b) Notwithstanding subdivision (a), a licensee shall not be deemed not to own an eligible security solely on account of either of the following facts, provided that, but for that fact, the licensee would be deemed to own the eligible security under the provisions of subdivision (a):

(1) The fact that the eligible security is owned of record by a documented nominee of the licensee or by a securities depository.

(2) The fact that the licensee has pledged the eligible security with the United States or any state of the United States to secure payment by the licensee of transmission money.

history: (History: Amended by Stats. 2023, Ch. 463, Sec. 9. (AB 1116) Effective January 1, 2024.)


citation: FIN § 2085

text: If the commissioner finds that any eligible security or class of eligible securities is not of sufficient liquidity or quality to be eligible securities, the commissioner may by regulation or order declare the security or class of securities to be ineligible.


citation: FIN § 2086

text: If the commissioner finds that any security or class of securities that is not an eligible security is of sufficient liquidity and quality to be an eligible security, the commissioner may by regulation or order declare the security or class of securities to be eligible securities.


citation: FIN § 2087

text:
(a) If the commissioner finds that a rating assigned to a class of securities by an eligible securities rating service indicates that the class of securities is of sufficient quality to be eligible securities, the commissioner may by regulation or order declare the rating to be an eligible rating.

(b) With respect to this division “eligible rating” means any rating assigned to such security or class of securities by such eligible securities rating service which the commissioner has by regulation or order declared to be an eligible rating.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 20. (SB 979) Effective January 1, 2013.)


citation: FIN § 2088

text:
(a) The commissioner may by regulation or order declare a credit rating agency to be an eligible securities rating service if the commissioner finds the following with respect to the securities rating service:

(1) It has been continuously engaged in the business of rating securities for a period of not less than three years.

(2) It is competent to rate securities and is nationally recognized for rating securities in a competent manner.

(3) It publishes its ratings of securities on a nationwide basis.

(b) With respect to this division “eligible securities rating service” means any credit rating agency that the commissioner by regulation or order declared to be an eligible securities ratings service.

history: (History: Amended by Stats. 2014, Ch. 499, Sec. 11. (AB 2209) Effective January 1, 2015.)


citation: FIN § 2089

text: A licensee shall maintain eligible securities that are adequately diversified, predominantly of a duration commensurate with the licensee’s outstanding money transmission obligations, and of sufficient liquidity and quality to promptly pay the outstanding money transmission obligations of the licensee.


citation: FIN § 2100

text:
(a) (1) Each licensee shall file with the commissioner a certified copy of every receipt form used by it or by its agent for receiving money for transmission prior to its first use. No licensee or its agent shall use any receipt, a certified copy of which has not been filed with the commissioner, or use a receipt that the commissioner has deemed not to be in compliance pursuant to paragraph (2).

(2) If the commissioner determines, within 30 business days of the filing date of a receipt, that the receipt does not comply with the requirements of this section or Sections 2102 and 2103, the commissioner shall notify the licensee in writing that the receipt is not in compliance with those requirements.

(b) Notwithstanding subdivision (a), before a new licensee issues its first receipt to a customer, it shall file with the commissioner a certified copy of the receipt forms to be used by it or its agents for receiving money for transmission. The new licensee shall not use the receipt forms until approved by the commissioner. For purposes of this subdivision, a new licensee is a licensee that has not been previously licensed by the commissioner as a money transmitter or has not previously received money for transmission in California.

(c) If a receipt is required by this division to be in English and another language, the English version of the receipt shall govern any dispute concerning the terms of the receipt. However, any discrepancies between the English version and any other version due to the translation of the receipt from English to another language including errors or ambiguities shall be construed against the licensee or its agent and the licensee or its agent shall be liable for any damages caused by these discrepancies.

(d) Any licensee violating the requirements of this section shall be subject to a fine of fifty dollars ($50) for each violation. This provision is in addition to any other enforcement provisions that may apply to such a violation.

(e) If any licensee or its agent uses a receipt form, a certified copy of which has not been filed with the commissioner, the licensee shall be liable for the acts of its agent whether or not the licensee authorized the agent to use that form.

(f) The receipt form shall comply with the requirements of Sections 2102 and 2103.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 22. (SB 979) Effective January 1, 2013.)

chapter: 6. Consumer Disclosures

path: 1.2. MONEY TRANSMISSION ACT > 6. Consumer Disclosures


citation: FIN § 2101

text: Every licensee or its agent shall forward all money received for transmission or give instructions committing equivalent money to the person designated by the customer. Unless the transmission is for the payment of goods or services or unless otherwise ordered by his or her customer, this requirement shall be satisfied within 10 days after receiving that money.

history: (History: Amended by Stats. 2013, Ch. 533, Sec. 7. (AB 786) Effective January 1, 2014.)


citation: FIN § 2102

text:
(a) Every licensee or its agent shall refund to the customer within 10 days of receipt of the customer’s written request for a refund any and all money received for transmission unless any of the following occurs:

(1) The money has been forwarded within 10 days of the date of receipt.

(2) Instructions have been given committing an equivalent amount of money to the person designated by the customer within 10 days of the date of the receipt of the money from the customer.

(3) The customer instructs the licensee to transmit the money at a time beyond 10 days. If the customer gives instructions as to when the money shall be forwarded or transmitted and the moneys have not yet been forwarded or transmitted, the licensee or its agent shall refund the customer’s money within 10 days of receipt of the customer’s written request for a refund.

(4) The refund would violate law.

(b) If a customer’s instructions as to when the money shall be forwarded or transmitted are not complied with and the money has not yet been forwarded or transmitted, the customer has a right to a refund of his or her money. A cause of action under this section may be brought in small claims court if it does not exceed the jurisdiction of that court, or in any other appropriate court. The customer shall be entitled to recover each of the following:

(1) Any and all money received for transmission, plus any fees and charges paid by the customer.

(2) A penalty in an amount not to exceed one thousand dollars ($1,000). The court shall award the prevailing party costs and attorney’s fees.

history: (History: Amended by Stats. 2014, Ch. 499, Sec. 12. (AB 2209) Effective January 1, 2015.)


citation: FIN § 2103

text:
(a) In the case of money received for transmission, the licensee or its agent shall give the customer a receipt at the time of the transaction.

(1) The receipt shall contain the following information, as applicable:

(A) The name of the sender.

(B) The name of the designated recipient.

(C) The date of the transaction, which is the day the customer funds the money transmission.

(D) The name of the licensee.

(E) The amount to be transferred to the designated recipient, in the currency in which the money transmission is funded, using the term “Transfer Amount” or a substantially similar term.

(F) Any fees and taxes imposed on the money transmission by the licensee or its agent that are payable or have been paid by the sender, in the currency in which the money transmission is funded, using the terms “transfer fees” for fees and “transfer taxes” for taxes, or substantially similar terms.

(G) The total amount of the transaction, which is the sum of subparagraphs (E) and (F), in the currency in which the money transmission is funded, using the term “total” or a substantially similar term.

(H) The exchange rate, if any, used by the licensee or its agent for the money transmission, rounded consistently for each currency to no fewer than two decimal places and no more than four decimal places, using the term “exchange rate” or a substantially similar term.

(I) For all transmissions, other than transmissions related to e-commerce transactions, the amount that will be received by the designated recipient, in the currency in which the funds will be received, using the term “total to recipient” or a substantially similar term. For transmissions related to e-commerce transactions, the amount that will be received by the designated recipient before any fees, taxes, or other amounts payable by the designated recipient are deducted, using the term “total to recipient” or a substantially similar term. These fees, taxes, or other amounts shall be disclosed to the designated recipient. The disclosure of fees, taxes, or other amounts payable by the designated recipient, which need not be disclosed to the sender, shall be disclosed as part of a separate written agreement between the licensee and the designated recipient.

(J) For receipts issued on or after July 1, 2022, a telephone number through which the customer may contact the licensee pursuant to Section 2107.

(2) (A) In addition to the disclosures set forth in paragraph (1), the receipt shall either include or have attached a conspicuous statement as follows: “RIGHT TO REFUNDYou, the customer, are entitled to a refund of the money to be transmitted as the result of this agreement if _____ (name of licensee) does not forward the money received from you within 10 days of the date of its receipt, or does not give instructions committing an equivalent amount of money to the person designated by you within 10 days of the date of the receipt of the funds from you unless otherwise instructed by you.If your instructions as to when the moneys shall be forwarded or transmitted are not complied with and the money has not yet been forwarded or transmitted, you have a right to a refund of your money.If you want a refund, you must mail or deliver your written request to _____ (name of licensee) at _____ (mailing address of licensee). If you do not receive your refund, you may be entitled to your money back plus a penalty of up to $1,000 and attorney’s fees pursuant to Section 2102 of the California Financial Code.” (B) The right to refund statement set forth in subparagraph (A) is not required to be included on receipts involving e-commerce transactions where the customer sends a payment for goods or services.

(3) The receipt required by this section shall be made in English and in the language principally used by that licensee or that agent to advertise, solicit, or negotiate, either orally or in writing, at that branch office, if other than English. For transactions that do not occur in a branch office, the receipt shall be made in English and in the language principally used by that licensee or that agent to advertise, solicit, or negotiate money transmission, either orally or in writing.

(4) The receipt required by this subdivision may be provided electronically for transactions that are initiated electronically or in which a customer agrees to receive an electronic receipt.

(5) Disclosures in the receipt required by this subdivision shall be in a minimum 8-point type, except for receipts provided via mobile phone or text message.

(b) If window and exterior signs concerning the rates of exchange for money received for transmission are used, they shall clearly state in English and in the same language principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate, either orally or in writing, at that branch office if other than English, the rate of exchange for exchanging the currency of the United States for foreign currency. If an interior sign or any advertising is used that quotes exchange rates, it shall, in addition to clearly stating the rates of exchange for exchanging the currency of the United States for foreign currency, also state all commissions and fees charged on all such transactions.

(c) At each branch office, there shall be disclosed the exchange rates, fees, and commissions charged in English and in the same language principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate, either orally or in writing, with respect to money received for transmission at that branch office. At each branch office, there shall be signage clearly identifying the name of the licensee as well as any trade names used by the licensee at that branch office. In the event that a licensee or agent conducts money transmission activity via an internet website or mobile application that is not in a branch office, the commissioner may authorize an alternative disclosure meeting the requirements of this section. Any internet website through which a licensee conducts money transmission shall clearly identify the name of the licensee as well as any trade names used by the licensee on the internet website.

(d) If the customer does not specify at the time the money is presented to the licensee or its agent the country to which the money is to be transmitted, the rate of exchange for the transaction is not required to be set forth on the receipt. If the customer does specify at the time the money is presented to the licensee or its agent the country to which the money is to be transmitted but the specified country’s laws require the rate of exchange for the transaction to be determined at the time the transaction is paid out to the intended recipient, the rate of exchange for the transaction is not required to be set forth on the receipt.

history: (History: Amended by Stats. 2022, Ch. 28, Sec. 46. (SB 1380) Effective January 1, 2023.)


citation: FIN § 2104

text: Each licensee or agent shall prominently post on the premises of each branch office that issues or sells payment instruments, and at machines located in this state and operated by the licensee or agent that issues or sells payment instruments, a notice clearly stating that payment instruments are not insured by the federal government, the state government, or any other public or private entity. This notice shall be printed in English and in the same language principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate, either orally or in writing, with respect to the purchase of payment instruments. The information required in this notice shall be clear, legible, and in letters not less than one-half inch in height. The notice shall be posted in a conspicuous location in the unobstructed view of the public within the premises. The licensee shall provide to each of its agents the notice required by this section. In those locations operated by an agent, the agent, not the licensee, shall be responsible for the failure to properly post the required notice.


citation: FIN § 2105

text:
(a) Each licensee or agent shall prominently post on the premises of each branch office that conducts money transmission a notice stating that:“If you have complaints with respect to any aspect of the money transmission activities conducted at this location, you may contact the California Department of Financial Protection and Innovation at its toll-free telephone number, 1-866-275-2677, by email at consumer.services@dfpi.ca.gov, or by mail at the Department of Financial Protection and Innovation, Consumer Services, 651 Bannon Street, Suite 300, Sacramento, CA 95811.”

(b) The commissioner may by order or regulation modify the content of the notice required by this section. This notice shall be printed in English and in the same language principally used by the licensee or any agent of the licensee to advertise, solicit, or negotiate either orally or in writing, with respect to money transmission at that branch office. The information required in this notice shall be clear, legible, and in letters not less than one-half inch in height. The notice shall be posted in a conspicuous location in the unobstructed view of the public within the premises. The licensee shall provide to each of its agents the notice required by this section. In those locations operated by an agent, the agent, and not the licensee, shall be responsible for the failure to properly post the required notice.

(c) In the event that a licensee or agent conducts money transmission activity via an internet website or a mobile application that is not in a branch office, the commissioner may authorize an alternative form of the notice required in subdivision (a).

history: (History: Amended by Stats. 2025, Ch. 71, Sec. 1. (AB 1507) Effective January 1, 2026.)


citation: FIN § 2106

text:
(a) No licensee shall sell or issue any form of payment instrument in California unless a certified copy of the payment instrument has first been filed with the commissioner. The payment instrument shall clearly identify the licensee as the issuer.

(b) The commissioner may by order or regulation declare that a form of payment instrument is prohibited if it is misleading in any material respect or otherwise does not comply with applicable law.

(c) A payment instrument that identifies the agent through which the licensee sells the payment instrument shall identify the agent as such and shall identify the licensee at least as conspicuously as it does the agent.


citation: FIN § 2107

text:
(a) A licensee shall prominently display on its internet website a toll-free telephone number through which a customer may contact the licensee for customer service issues and receive live customer assistance.

(b) The telephone line shall be operative at least 10 hours per day, Monday through Friday, excluding federal holidays.

(c) This section shall become operative on July 1, 2022.

history: (History: Added by Stats. 2021, Ch. 453, Sec. 2. (AB 1320) Effective January 1, 2022. Operative July 1, 2022, by its own provisions.)


citation: FIN § 2120

text:
(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.

path: 1.2. MONEY TRANSMISSION ACT > 7. Examinations, Special Reports, and Records


citation: FIN § 2121

text: 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.

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

chapter: 7. Examinations, Special Reports, and Records


citation: FIN § 2122

text:
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.

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


citation: FIN § 2123

text: 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.

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


citation: FIN § 2124

text:
(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.

(c) The items specified in subdivisions (a) and (b) may be maintained in any form of record.

(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.

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


citation: FIN § 2125

text:
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.

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


citation: FIN § 2127

text: 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.

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


citation: FIN § 2148

text:
(a) If it appears to the commissioner that a licensee is violating or has violated, or is failing or has failed to comply with any law of this state, the commissioner may direct the licensee to comply with the law by an order issued under the commissioner’s official seal, or if it appears to the commissioner that any licensee is conducting or has conducted its business in an unsafe or injurious manner, the commissioner may in like manner direct it to discontinue the unsafe or injurious practices. The order shall require the licensee to show cause before the commissioner, at a time and place to be fixed by the commissioner, as to why the order should not be observed.

(b) If, upon any hearing held pursuant to subdivision (a), the commissioner finds that the licensee is violating or has violated, or is failing or has failed to comply with any law of this state or is conducting or has conducted its business in an unsafe or injurious manner, the commissioner may make a final order directing it to comply with the law or to discontinue the unsafe or injurious practices. A licensee shall comply with the final order unless, within 10 days after the issuance of the order, its enforcement is restrained in a proceeding brought by the licensee.

history: (History: Amended by Stats. 2022, Ch. 188, Sec. 7. (AB 2433) Effective January 1, 2023.)

chapter: 8. Additional Enforcement Provisions

path: 1.2. MONEY TRANSMISSION ACT > 8. Additional Enforcement Provisions


citation: FIN § 2149

text:
(a) The commissioner may issue an order suspending or revoking a license, or taking possession of and placing a licensee in receivership, if after notice and an opportunity for hearing, the commissioner finds that:

(1) The licensee is violating this division or a regulation adopted or an order issued under this division, or a condition of approval issued under this division.

(2) The licensee does not cooperate with an examination or investigation by the commissioner.

(3) The licensee engages in fraud, intentional misrepresentation, or gross negligence.

(4) The competence, experience, character, or general fitness of the licensee, or any director, officer, employee, or person in control of a licensee, indicates that it is not in the public interest to permit the person to provide money transmission services.

(5) The licensee engages in an unsafe or unsound practice.

(6) The licensee is insolvent, suspends payment of its obligations, or makes a general assignment for the benefit of its creditors.

(7) The licensee does not remove an agent after the commissioner issues and serves upon the licensee a final order including a finding that the agent has violated this division.

(8) The licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under any bankruptcy, reorganization, insolvency, or moratorium law, or any person has applied for any such relief under that law against the licensee and the licensee has by any affirmative act approved of or consented to the action or the relief has been granted.

(9) Any fact or condition exists that, if it had existed at the time when the licensee applied for its license, would have been grounds for denying the application.

(b) In determining whether a licensee is engaging in an unsafe or unsound practice, the commissioner may consider the size and condition of the licensee’s provision of money transmission services, the magnitude of the loss, the gravity of the violation of this division, and the previous conduct of the person involved.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 25. (SB 979) Effective January 1, 2013.)


citation: FIN § 2150

text:
(a) The commissioner may issue an order suspending or revoking the designation of an agent if, after notice and an opportunity for hearing, the commissioner finds that:

(1) The agent violated this division or a regulation adopted or an order issued under this division.

(2) The agent did not cooperate with an examination or investigation by the commissioner.

(3) The agent engaged in fraud, intentional misrepresentation, or gross negligence.

(4) The agent is convicted of a violation of a state or federal anti-money laundering statute.

(5) The competence, experience, character, or general fitness of the agent, or any director, officer, employee, or person in control of the agent, indicates that it is not in the public interest to permit the agent to provide money transmissions.

(6) The agent is engaging in an unsafe or unsound practice.

(7) The agent has made or caused to be made in any application or report filed with the commissioner or in any proceeding before the commissioner, any statement that was at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, or has omitted to state in any of those applications, reports, or proceedings any material fact which is required to be stated therein.

(8) The agent is an agent of a licensee who, because of its operations and financial condition, is not competent to supervise and monitor the agent.

(9) The agent will not comply with all applicable provisions of this division and of any regulation or order issued under this division.

(b) In determining whether an agent is engaging in an unsafe or unsound practice, the commissioner may consider the size and condition of the agent’s provision of money transmission services, the magnitude of the loss, the gravity of the violation of this division or a rule adopted or order issued under this division, and the previous conduct of the agent.

(c) No licensee shall appoint as an agent any person with respect to whom an order issued under this section is in effect.

(d) No person with respect to whom an order issued under this section is in effect shall become or continue to be an agent of any licensee.

(e) If applicable, the commissioner may disclose to the licensee criminal history information upon which an order is based.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 26. (SB 979) Effective January 1, 2013.)


text:
(a) Every order, decision, or other official act of the commissioner is subject to review in accordance with law.

(b) Whenever the commissioner has taken possession of the property and business of any licensee, the licensee, within 10 days after that taking, if it deems itself aggrieved thereby, may apply to the superior court in the county in which the head office of the licensee is located to enjoin further proceedings. The court, after citing the commissioner to show cause why further proceedings should not be enjoined and after a hearing and a determination of the facts upon the merits, may dismiss the application or enjoin the commissioner from further proceedings and direct the commissioner to surrender the property and business to the licensee.


text:
(a) If the commissioner finds that any of the factors set forth in Section 2149 is true with respect to any licensee and that it is necessary for the protection of the public interest, the commissioner may issue an order immediately suspending or revoking the licensee’s license.

(b) Within 30 days after the license is suspended or revoked pursuant to subdivision (a), the licensee may file with the commissioner an application for a hearing on the suspension or revocation.

(c) If the commissioner fails to commence a hearing within 15 business days after the application is filed with the commissioner pursuant to subdivision (b) or within a longer period of time agreed to by the licensee, the suspension or revocation shall be deemed rescinded.

(d) Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the suspension or revocation. Otherwise, the suspension or revocation shall be deemed rescinded.

(e) The right of the licensee to petition for judicial review of the suspension or revocation shall not be affected by the failure of the licensee to apply to the commissioner for a hearing on the suspension or revocation pursuant to subdivision (b).


citation: FIN § 2151

text:
(a) If the commissioner finds that any of the factors set forth in Section 2150 is true with respect to any agent and that it is necessary for the protection of the public interest, the commissioner may issue an order immediately suspending or barring that agent from continuing to be or becoming an agent of any licensee during the period for which that order is in effect.

(b) Within 30 days after an order is issued pursuant to subdivision (a), the licensee or the agent or former agent with respect to whom the order was issued may file with the commissioner an application for a hearing on the order.

(c) If the commissioner fails to commence a hearing within 20 business days after the application is filed with the commissioner pursuant to subdivision (b) or within a longer period of time agreed to by the parties, the suspension or revocation shall be deemed rescinded.

(d) Within 30 days after the hearing, the commissioner shall affirm, modify, or rescind the order.

(e) The right of the licensee or agent or former agent to petition for judicial review of the order shall not be affected by the failure of that person to apply to the commissioner for a hearing on the order pursuant to subdivision (b).


text: The commissioner may assess a civil penalty against a person that violates this division or a regulation adopted or an order issued under this division in an amount not to exceed one thousand dollars ($1,000) for each violation or, in the case of a continuing violation, one thousand dollars ($1,000) for each day or part thereof during which the violation continues, plus this state’s costs and expenses for the investigation and prosecution of the matter, including reasonable attorney’s fees.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 27. (SB 979) Effective January 1, 2013.)


citation: FIN § 2152

text:
(a) A person that intentionally makes a false statement, misrepresentation, or false certification in a record filed or required to be maintained under this division or that intentionally makes a false entry or omits a material entry in such a record is guilty of a felony.

(b) A person that knowingly engages in an activity for which a license is required under this division without being licensed or exempt from licensure under this division is guilty of a felony.

(c) Nothing in this division limits the power of the state to punish any person for any act that constitutes a crime under any statute.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 28. (SB 979) Effective January 1, 2013.)


citation: FIN § 2153

text: The enforcement provisions of this division are in addition to any other enforcement powers that the commissioner may have under law.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 29. (SB 979) Effective January 1, 2013.)


citation: FIN § 2170

text: Any licensee may surrender its license by filing with the commissioner the license and a report with any information as the commissioner requires. The voluntary surrender of the license shall become effective at the time and upon the conditions as the commissioner specifies by order.

chapter: 9. Miscellaneous Provisions

path: 1.2. MONEY TRANSMISSION ACT > 9. Miscellaneous Provisions


citation: FIN § 2171

text: If any provision of this division or the application thereof to any person or circumstances is held invalid, illegal, or unenforceable, that invalidity, illegality, or unenforceability shall not affect other provisions or applications of this division that can be given effect without the invalid, illegal, or unenforceable provision or application, and to this end, the provisions of this division are declared to be severable.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 30. (SB 979) Effective January 1, 2013.)


citation: FIN § 2172

text:
(a) A license issued under the former Chapter 14 (commencing with Section 1800), Chapter 14A (commencing with Section 1851), or the former Division 16 (commencing with Section 33000) that is in effect immediately before January 1, 2011, shall remain in effect as a valid license under this division.

(b) Any person that, prior to January 1, 2011, was not required to obtain a license under the former Chapter 14 (commencing with Section 1800), Chapter 14A (commencing with Section 1851), or Division 16 (commencing with Section 33000), but is required to have a license under this division, shall file an application for a license pursuant to this division by July 1, 2011, in order to continue conducting money transmission in this state directly or through agents. If the application is timely filed and pending with the commissioner, that person may continue to conduct money transmission in this state, until the application has been approved, abandoned, or denied.

history: (History: Amended by Stats. 2012, Ch. 356, Sec. 31. (SB 979) Effective January 1, 2013.)


citation: FIN § 2174

text:
(a) The commissioner may prepare written decisions, opinion letters, and other formal written guidance to be issued to persons seeking clarification regarding the requirements of this division.

(b) The commissioner shall make public on the commissioner’s Internet Web site all written decisions, opinion letters, and other formal written guidance issued to persons seeking clarification regarding the requirements of this division. The commissioner may, at his or her discretion or upon request by an applicant or licensee, redact proprietary or other confidential information regarding an applicant or licensee from any decision, letter, or other written guidance issued in connection with an applicant or licensee.

history: (History: Added by Stats. 2013, Ch. 533, Sec. 9. (AB 786) Effective January 1, 2014.)


citation: FIN § 2175

text: The commissioner may offer informal guidance to any prospective applicant for a license under this division, regarding the conditions of licensure that may be applied to that person. The commissioner shall inform any applicant that requests that guidance of the minimum net worth, and other licensing requirements, that will be required of that applicant, based on the information provided by the applicant concerning its plan to conduct business under this division, and the factors used to make that determination as described in Section 2040.

history: (History: Amended by Stats. 2014, Ch. 499, Sec. 16. (AB 2209) Effective January 1, 2015.)


citation: FIN § 2176

text: At any time, if the commissioner deems it necessary for the general welfare of the public, he or she may exercise any power set forth in this division with respect to a money transmission business, regardless of whether an application for a license has been filed with the commissioner, a license has been issued, or, if issued, the license has been surrendered, suspended, or revoked.

history: (History: Added by Stats. 2014, Ch. 499, Sec. 17. (AB 2209) Effective January 1, 2015.)


citation: FIN § 3101

text: This division shall be known as the Digital Financial Assets Law.

history: (History: Added by Stats. 2023, Ch. 792, Sec. 1. (AB 39) Effective January 1, 2024.)

chapter: 1. General Provisions

path: 1.25. DIGITAL FINANCIAL ASSETS BUSINESSES > 1. General Provisions


citation: FIN § 3102

text:
For purposes of this division:

(a) “Applicant” means a person that applies for a license under this division.

(b) “Bank” means a bank, savings bank, savings and loan association, savings association, or industrial loan company chartered under the laws of this state or any other state or under the laws of the United States.

(c) “Control” means both of the following:

(1) When used in reference to a transaction or relationship involving a digital financial asset, power to execute unilaterally or prevent indefinitely a digital financial asset transaction, unless the power to prevent indefinitely is limited to the ability to terminate, suspend, or interrupt a transaction solely in response to unauthorized or fraudulent activity.

(2) When used in reference to a person, the direct or indirect power to do either of the following:

(A) Vote 25 percent or more of any class of the voting securities issued by a person.

(B) Direct or cause the direction of the management and policies of a person, whether through the ownership of voting securities, by contract, other than a commercial contract for goods or nonmanagement services, or otherwise, if no individual is deemed to control a person solely on account of being a director, officer, or employee of such person.

(d) “Covered person” means a person required to obtain a license pursuant to this division.

(e) “Credit union” means a credit union licensed under the laws of this state, or any other state, or a federal credit union chartered under the laws of the United States.

(f) “Department” means the Department of Financial Protection and Innovation.

(g) (1) “Digital financial asset” means a digital representation of value that is used as a medium of exchange, unit of account, or store of value, and that is not legal tender, whether or not denominated in legal tender.

(2) “Digital financial asset” does not include any of the following:

(A) A transaction in which a merchant grants, as part of an affinity or rewards program, digital representations of value that primarily relate to the affinity or rewards program and cannot be taken from or exchanged with the merchant for legal tender, bank or credit union credit, or a digital financial asset.

(B) A digital representation of value issued by or on behalf of a publisher and used primarily within online games or game platforms and that is not otherwise a digital financial asset.

(C) A security registered with or exempt from registration with the United States Securities and Exchange Commission or a security qualified with or exempt from qualifications with the department.

(D) A digital record of ownership, or equivalent thereto, of tangible or intangible goods, including, but not limited to, any of the following:

(i) Works of art, musical compositions, literary works, and similar intellectual property.

(ii) Collectibles, merchandise, virtual land, and in-game assets.

(iii) Digital affinity, loyalty, or rewards points granted by a merchant or a network of participating merchants if all of the following are true:

(I) The points cannot be redeemed with a participating merchant in exchange for legal tender, bank or credit union credit, or a digital financial asset.

(II) The points can only be redeemed by participating merchants as part of the purchase of goods or services, which does not include digital financial assets.

(III) The points are granted or redeemed by participating merchants pursuant to a formal loyalty program intended to reward frequent customers.

(iv) Licenses, tickets, and similar rights to attend events or participate in activities.

(h) “Digital financial asset business activity” means either of the following:

(1) Exchanging, transferring, or storing a digital financial asset.

(2) Holding electronic precious metals or electronic certificates representing interests in precious metals on behalf of another person or issuing shares or electronic certificates representing interests in precious metals.

(i) “Exchange,” when used as a verb, means to assume control of a digital financial asset from, or on behalf of, a resident, at least momentarily, to sell, trade, or convert either of the following:

(1) A digital financial asset for legal tender, bank or credit union credit, or one or more forms of digital financial assets.

(2) Legal tender or bank or credit union credit for one or more forms of digital financial assets.

(j) “Executive officer” includes, but is not limited to, an individual who is a director, officer, manager, managing member, partner, or trustee of a person that is not an individual, or any other person who performs similar policymaking or policy implementation functions.

(k) “Insolvent” means any of the following:

(1) Having generally ceased to pay debts in the ordinary course of business other than as a result of a bona fide dispute.

(2) Being unable to pay debts as they become due.

(3) Being insolvent within the meaning of federal bankruptcy law.

(l) “Legal tender” means a medium of exchange or unit of value, including the coin or paper money of the United States, issued by the United States or by another government.

(m) “Licensee” means a person licensed or conditionally licensed under this division.

(n) (1) “Person” means an individual, partnership, estate, business or nonprofit entity, or other legal entity.

(2) “Person” does not include a government-sponsored enterprise, government, or governmental subdivision, agency, or instrumentality.

(o) “Record” means information that is inscribed on a tangible medium or that is stored in an electronic or other medium and is retrievable in perceivable form.

(p) (1) “Resident” means any of the following:

(A) A person who is domiciled in this state.

(B) A person who is physically located in this state for more than 183 days of the previous 365 days.

(C) A person who has a place of business in this state.

(D) A legal representative of a person that is domiciled in this state.

(2) Notwithstanding paragraph (1), “resident” does not include a licensee or an affiliate, as defined in subdivision (a) of Section 90005, of a licensee.

(q) “Responsible individual” means an individual who has direct control over, or significant management policy and decisionmaking authority with respect to, a licensee’s digital financial asset business activity in this state.

(r) “SAFE Act” means the federal Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (Public Law 110-289).

(s) “Sign” means, with present intent to authenticate or adopt a record, either of the following:

(1) To execute or adopt a tangible symbol.

(2) To attach to, or logically associate with, the record an electronic symbol, sound, or process.

(t) “State” means a state of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession subject to the jurisdiction of the United States.

(u) “Store,” except in the phrase “store of value,” means to maintain control of a digital financial asset on behalf of a resident by a person other than the resident. “Storage” and “storing” have corresponding meanings.

(v) “Transfer” means to assume control of a digital financial asset from, or on behalf of, a resident and to subsequently do any of the following:

(1) Credit the digital financial asset to the account of another person.

(2) Move the digital financial asset from one account of a resident to another account of the same resident.

(3) Relinquish control of a digital financial asset to another person.

(w) “United States dollar equivalent of digital financial assets” means the equivalent value of a particular digital financial asset in United States dollars shown on a digital financial asset exchange based in the United States for a particular date or period specified in this division.

history: (History: Amended by Stats. 2026, Ch. 52, Sec. 1. (SB 97) Effective June 30, 2026.)

division: 1.25. DIGITAL FINANCIAL ASSETS BUSINESSES


citation: FIN § 3103

text:
(a) Except as otherwise provided in subdivision (b), this division governs the digital financial asset business activity of a person doing business in this state or, wherever located, who engages in or holds itself out as engaging in the activity with, or on behalf of, a resident.

(b) This division does not apply to activity by any of the following:

(1) The United States, a state, political subdivision of a state, agency, or instrumentality of federal, state, or local government, or a foreign government or a subdivision, department, agency, or instrumentality of a foreign government.

(2) A bank that is one of the following:

(A) A commercial bank or industrial bank, the deposits of which are insured by the Federal Deposit Insurance Corporation or its successor.

(B) A foreign (other nation) bank that is licensed under Chapter 20 (commencing with Section 1750) of Division 1.1 or that is authorized under federal law to maintain a federal agency or federal branch office in this state.

(C) An association or federal association, as defined in Section 5102, the deposits of which are insured by the Federal Deposit Insurance Corporation or its successor.

(3) A trust company licensed pursuant to Section 1042 or a national association authorized under federal law to engage in a trust banking business.

(4) A federally chartered or state-chartered credit union, with an office in California, the member accounts of which are insured or guaranteed as provided in Section 14858.

(5) A person whose participation in a payment system is limited to providing processing, clearing, or performing settlement services solely for transactions between or among persons that are exempt from the licensing requirements of this division.

(6) A person engaged in the business of dealing in foreign exchange to the extent the person’s activity meets the definition in Section 1010.605(f)(1)(iv) of Title 31 of the Code of Federal Regulations.

(7) A person that is any of the following:

(A) A person that contributes only connectivity software or computing power to securing a network that records digital financial asset transactions or to a protocol governing transfer of the digital representation of value.

(B) A person that provides only data storage or security services for a business engaged in digital financial asset business activity and does not otherwise engage in digital financial asset business activity on behalf of another person.

(C) A person that provides only to a person otherwise exempt from this division a digital financial asset as one or more enterprise solutions used solely among each other and that does not have an agreement or a relationship with a resident that is an end user of a digital financial asset.

(8) A person using a digital financial asset, including creating, investing, buying or selling, or obtaining a digital financial asset as payment for the purchase or sale of goods or services, solely on the person’s own behalf for personal, family, or household purposes or for academic purposes.

(9) A person whose digital financial asset business activity with, or on behalf of, residents is reasonably expected to be valued, in the aggregate, on an annual basis at fifty thousand dollars ($50,000) or less, measured by the United States dollar equivalent of digital financial assets.

(10) An attorney to the extent of providing escrow services to a resident.

(11) A title insurance company to the extent of providing escrow services to a resident.

(12) A secured creditor under Division 9 (commencing with Section 9101) of the Commercial Code or a creditor with a judicial lien, or lien arising by operation of law, on collateral that is a digital financial asset, if the digital financial asset business activity of the creditor is limited to enforcement of the security interest in compliance with Division 9 (commencing with Section 9101) of the Commercial Code or lien in compliance with the law applicable to the lien.

(13) A person that does not receive compensation, either directly or indirectly, for providing digital financial asset products or services or for conducting digital financial asset business activity, including a person who merely retains the ability to terminate, suspend, or interrupt a digital financial transaction solely to prevent unauthorized or fraudulent activity and who is not compensated for that service, or that is engaged in testing products or services with the person’s own funds.

(14) Any entity or futures commission merchant, swap dealer, or introducing broker registered under the federal Commodity Exchange Act (7 U.S.C. Sec. 1, et seq.) to the extent those activities are conducted under authority of that act, are actually regulated by the Commodity Futures Trading Commission, and are entitled to preemption.

(15) A person registered as a securities broker-dealer under federal or state securities laws to the extent of its operation as a broker-dealer.

(16) A person that provides clearance or settlement services pursuant to a registration as a clearing agency or an exemption from registration granted under the federal securities laws to the extent of its operation as such a provider.

(17) A merchant that accepts a digital financial asset as payment for the purchase or sale of goods or services, which does not include digital financial assets.

(c) (1) The commissioner may, by regulation or order, either unconditionally or upon specified terms and conditions or for specified periods, exempt from all or part of this division any person or transaction, or class of persons or transactions, if the commissioner finds such action to be in the public interest and that the regulation of such persons or transactions is not necessary for the purposes of this division.

(2) The commissioner shall post on the commissioner’s internet website a list of all persons, transactions, or classes of person or transactions exempt pursuant to this section, and the part or parts of this division from which they are exempt.

(3) The commissioner may, by regulation or order, amend or rescind any exemption made pursuant to this subdivision.

history: (History: Amended by Stats. 2026, Ch. 52, Sec. 2. (SB 97) Effective June 30, 2026.)


citation: FIN § 3201

text:
On or after July 1, 2026, a person shall not engage in digital financial asset business activity, or hold itself out as being able to engage in digital financial asset business activity, with or on behalf of a resident unless any of the following is true:

(a) The person is licensed in this state by the department under Section 3203.

(b) The person submits a completed application on or before July 1, 2026, and is awaiting approval or denial of that application.

(c) The person is exempt from licensure under this division pursuant to Section 3103.

history: (History: Amended by Stats. 2026, Ch. 52, Sec. 3. (SB 97) Effective June 30, 2026.)

chapter: 2. Licensure

path: 1.25. DIGITAL FINANCIAL ASSETS BUSINESSES > 2. Licensure