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PAG LIN
1 1 Section 1. Section 533B.1, Code 2001, is amended by
1 2 striking the section and inserting in lieu thereof the
1 3 following:
1 4 533B.1 SHORT TITLE.
1 5 This Act shall be known and may be cited as the "Iowa
1 6 Financial Services Business Licensing and Regulation Act".
1 7 Sec. 2. Section 533B.2, Code 2001, is amended by striking
1 8 the section and inserting in lieu thereof the following:
1 9 533B.2 LEGISLATIVE FINDINGS.
1 10 The general assembly finds and declares as follows:
1 11 1. Criminal activity and the networks that characterize
1 12 criminal industries divert millions of dollars from the
1 13 legitimate commerce of this state each year through the
1 14 provision of illicit goods and services, force, fraud, and
1 15 corruption.
1 16 2. Individuals and groups associated together to conduct
1 17 criminal activity pose an additional threat to the integrity
1 18 of legitimate commerce by obtaining control of legitimate
1 19 enterprises through criminal means, by force or fraud, and by
1 20 manipulating those enterprises for criminal purposes.
1 21 3. Money and power generated by criminal activity are
1 22 being used to obtain control of legitimate enterprises, to
1 23 invest in legitimate commerce, and to control the resources
1 24 needed to facilitate ongoing criminal activity.
1 25 4. Criminal activity and proceeds of criminal activity
1 26 subvert the basic goals of a free democracy by expropriating
1 27 the government's monopoly of the legitimate use of force, by
1 28 undermining the monetary medium of exchange and by subverting
1 29 the judicial and law enforcement processes that are necessary
1 30 for the preservation of social justice and equal opportunity.
1 31 5. Criminal activity impedes free competition, weakens the
1 32 economy, harms in-state and out-of-state investors, diverts
1 33 taxable funds, threatens the domestic security, endangers the
1 34 health, safety, and welfare of the public and debases the
1 35 quality of life of the citizens of this state.
2 1 6. Criminal activity becomes entrenched and powerful when
2 2 the social sanctions employed to combat it are unnecessarily
2 3 limited in their vision of the goals that may be achieved, in
2 4 their legal tools, or in their procedural approach.
2 5 7. Societal strategies and techniques that emphasize
2 6 bringing criminal remedies to bear on individual offenders for
2 7 the commission of specific offenses are inadequate to reach
2 8 the economic incentive supporting the criminal network, are
2 9 expensive to implement, and are costly in terms of the loss of
2 10 personal freedom of low-level participants in criminal
2 11 networks. Comprehensive remedial strategies are required to
2 12 complement the criminal enforcement strategies by focusing on
2 13 the financial components and motivations of criminal networks;
2 14 enlisting the assistance of private victims; empowering courts
2 15 with financially oriented compensatory tools; and developing
2 16 new substantive, procedural, and evidentiary laws creating
2 17 effective remedial financial remedies for criminal activity.
2 18 Sec. 3. Section 533B.3, Code 2001, is amended by striking
2 19 the section and inserting in lieu thereof the following:
2 20 533B.3 PURPOSES.
2 21 The purposes of this Act are to do all of the following:
2 22 1. Defend legitimate commerce from criminal activity.
2 23 2. Provide economic disincentives for criminal activity.
2 24 3. Remedy the economic effects of criminal activity.
2 25 4. Lessen the economic and political power of criminal
2 26 networks in this state by providing to the people and to the
2 27 victims of criminal activity new criminal sanctions and new
2 28 remedial preventive measures through civil remedies.
2 29 Sec. 4. Section 533B.4, Code 2001, is amended by striking
2 30 the section and inserting in lieu thereof the following:
2 31 533B.4 DEFINITIONS.
2 32 In this chapter, unless the context otherwise requires:
2 33 1. "Authorized delegate" means a person contractually
2 34 designated by the licensee to conduct the business of the
2 35 licensee regulated under this chapter at one or more locations
3 1 within this state, pursuant to section 533B.10.
3 2 2. "Check cashing" means exchanging for compensation a
3 3 check, draft, money order, traveler's check, or a payment
3 4 instrument of a licensee for money or monetary value delivered
3 5 to the presenter at the time and place of the presentation.
3 6 3. "Compensation" means any fee, commission, or other
3 7 benefit.
3 8 4. "Conduct the business" means engaging in activities
3 9 regulated under this chapter for compensation more than ten
3 10 times in any twelve-consecutive-month period.
3 11 5. "Control" means ownership of fifteen percent or more of
3 12 a licensee or controlling person, or the power to vote fifteen
3 13 percent or more of the outstanding voting securities of a
3 14 licensee or controlling persons. For the purpose of
3 15 determining the percentage controlled by any person, that
3 16 person's interest shall be aggregated with the interest of any
3 17 other person controlled by that person or by any officer,
3 18 partner, or authorized delegate of that person, or by a
3 19 spouse, parent, or child of that person.
3 20 6. "Controlling person" means a person directly or
3 21 indirectly in control of a licensee.
3 22 7. "Financial services business" means a person who is
3 23 located or doing business in this state, including a check
3 24 casher and a foreign money exchanger, and who does any of the
3 25 following:
3 26 a. Sells or issues payment instruments.
3 27 b. Conducts the business of receiving money or monetary
3 28 value for the transmission of or transmitting money or
3 29 monetary value.
3 30 c. Conducts the business of exchanging payment
3 31 instruments, money, or monetary value into any form of money,
3 32 monetary value, or payment instrument.
3 33 d. Conducts the business of receiving money or monetary
3 34 value for obligors for the purpose of paying that obligor's
3 35 bills, invoices, or accounts.
4 1 e. Meets the definition of a bank, financial agency, or
4 2 financial institution as prescribed by 31 U.S.C. } 5312 or 31
4 3 C.F.R. } 103.11, or any successor provisions.
4 4 f. Meets the definition of money services business as
4 5 prescribed by 31 U.S.C. } 5312 or 31 C.F.R. } 103.11, or any
4 6 successor provisions.
4 7 8. "Foreign money exchange" means exchanging for
4 8 compensation money of the United States government or a
4 9 foreign government to or from money of another government at a
4 10 conspicuously posted exchange rate at the time and place of
4 11 the presentation of the money to be exchanged.
4 12 9. "Licensee" means a person licensed under this chapter.
4 13 10. "Location" means a place of business at which activity
4 14 regulated by this chapter occurs.
4 15 11. "Monetary value" means a medium of exchange, whether
4 16 or not redeemable in money.
4 17 12. "Money" means a medium of exchange authorized or
4 18 adopted by a domestic or foreign government as a part of its
4 19 currency and that is customarily used and accepted as a medium
4 20 of exchange in the country of issuance.
4 21 13. "Outstanding payment instruments" means unpaid payment
4 22 instruments whose sale has been reported to a licensee.
4 23 14. "Payment instrument" means a check, draft, money
4 24 order, traveler's check, stored value, or other instrument or
4 25 order for the transmission or payment of money or monetary
4 26 value, sold to one or more persons, whether or not that
4 27 instrument or order is negotiable. "Payment instrument" does
4 28 not include an instrument that is redeemable by the issuer in
4 29 merchandise or service, a credit card voucher, or a letter of
4 30 credit.
4 31 15. "Permissible investment" means any of the following:
4 32 a. Money on hand or on deposit in the name of the
4 33 licensee.
4 34 b. Certificates of deposit or other debt instruments of a
4 35 bank, savings and loan association, or credit union.
5 1 c. Bills of exchange or time drafts drawn on and accepted
5 2 by a bank, otherwise known as bankers acceptances, that are
5 3 eligible for purchase by member banks of the federal reserve
5 4 system.
5 5 d. Commercial paper bearing a rating of one of the three
5 6 highest grades as defined by a nationally recognized
5 7 organization that rates these securities.
5 8 e. Securities, obligations, or other instruments, whose
5 9 payment is guaranteed by the general taxing authority of the
5 10 issuer, of the United States, of any state or by any other
5 11 local government entity or any political subdivision or
5 12 instrumentality of a government entity that bear a rating of
5 13 one of the three highest grades by a nationally recognized
5 14 investment service organization that has been engaged
5 15 regularly in rating state and municipal issues for at least
5 16 five years.
5 17 f. Stocks, bonds, or other obligations of a corporation
5 18 organized in any state of the United States, the District of
5 19 Columbia, the Commonwealth of Puerto Rico, or the several
5 20 territories organized by Congress that bear a rating of one of
5 21 the three highest grades by a nationally recognized investment
5 22 service organization that has been engaged regularly in rating
5 23 corporate securities for at least five years.
5 24 g. Any receivable that is due to a licensee from its
5 25 authorized delegate pursuant to a contract between the
5 26 licensee and the authorized delegate as described in section
5 27 533B.10 if the amount of investment in those receivables does
5 28 not exceed eighty percent of the total amount of those
5 29 receivables that are past due or doubtful of collection.
5 30 h. Other investments approved by the superintendent by
5 31 rule.
5 32 16. "Property" means anything of value, and includes any
5 33 interest in property, including any benefit, privilege, claim
5 34 or right with respect to anything of value, whether real or
5 35 personal, tangible or intangible, without reduction for
6 1 expenses incurred for acquisition, maintenance, production, or
6 2 any other purpose.
6 3 17. "Responsible individual" means a person employed by a
6 4 licensee, with principal active management authority over the
6 5 business of the licensee in this state, that is regulated
6 6 under this chapter.
6 7 18. "Stored value" means monetary value that is evidenced
6 8 by an electronic record.
6 9 19. "Superintendent" means the superintendent of banking.
6 10 20. "Transaction" includes a purchase, sale, trade, loan,
6 11 pledge, investment, gift, transfer, transmission, delivery,
6 12 deposit, withdrawal, payment, transfer between accounts,
6 13 exchange of currency or monetary value, extension of credit,
6 14 purchase or sale of any monetary instrument, use of a safe
6 15 deposit box, or any other acquisition or disposition of
6 16 property by whatever means effected.
6 17 21. "Transmitting money" includes the transmission of
6 18 money or monetary value by any means including transmission
6 19 within this country or to or from locations abroad by payment
6 20 instrument, wire, facsimile, or electronic transfer, courier,
6 21 or otherwise.
6 22 22. "Traveler's check" means an instrument identified as a
6 23 traveler's check on its face or commonly recognized as a
6 24 traveler's check and issued in a money multiple of United
6 25 States or foreign currency with a provision for a specimen
6 26 signature of the purchaser to be completed at the time of
6 27 purchase and a countersignature of the purchaser to be
6 28 completed at the time of negotiation.
6 29 Sec. 5. Section 533B.5, Code 2001, is amended by striking
6 30 the section and inserting in lieu thereof the following:
6 31 533B.5 LICENSE REQUIRED.
6 32 1. A person shall not sell or issue payment instruments,
6 33 conduct the business of receiving money or monetary value for
6 34 transmission or transmitting money or monetary value, conduct
6 35 the business of exchanging payment instruments, money, or
7 1 monetary value into any form of money, monetary value, or
7 2 payment instrument, or conduct the business of receiving money
7 3 or monetary value for obligors for the purpose of paying that
7 4 obligor's bills, invoices, or accounts, advertise, solicit, or
7 5 hold the person out as conducting the business of selling or
7 6 issuing payment instruments, or of receiving money or monetary
7 7 value for transmission or transmitting money or monetary
7 8 value, or of exchanging payment instruments or money into any
7 9 form of money, monetary value, or payment instrument, or of
7 10 receiving money or monetary value for obligors for the purpose
7 11 of paying that obligor's bills, invoices, or accounts without
7 12 first obtaining a license as provided in this chapter or
7 13 becoming an authorized delegate of a licensee with respect to
7 14 those activities.
7 15 2. A licensee is under the jurisdiction of the
7 16 superintendent of banking.
7 17 3. Only a corporation organized and in good standing under
7 18 the laws of the state of its incorporation or a corporation
7 19 organized under the laws of a country other than the United
7 20 States and in good standing under the laws of the country of
7 21 its incorporation and authorized to do business in this state
7 22 may apply for and be issued a license as provided in this
7 23 chapter.
7 24 4. A person conducts business activity regulated in this
7 25 state by this chapter if any of the following occurs:
7 26 a. Conduct constituting any element of the regulated
7 27 business activity occurs in this state.
7 28 b. Conduct occurs outside this state and constitutes an
7 29 attempt, offer, or conspiracy to engage in the business
7 30 activity within this state, and an act in furtherance of the
7 31 attempt, offer, or conspiracy occurs within this state.
7 32 c. As part of a business activity described by this
7 33 chapter, a person knowingly transmits money into this state or
7 34 makes payments in this state without disclosing the identity
7 35 of each person on whose behalf the money was transmitted or
8 1 the payment was made.
8 2 Sec. 6. Section 533B.6, Code 2001, is amended by striking
8 3 the section and inserting in lieu thereof the following:
8 4 533B.6 EXEMPTIONS.
8 5 1. This chapter shall not apply to any of the following:
8 6 a. The United States, or any department or agency of the
8 7 United States.
8 8 b. This state, including any political subdivision of this
8 9 state.
8 10 2. This chapter shall not apply to any of the following
8 11 when engaged in the regular course of their respective
8 12 businesses, except that each shall otherwise be subject to the
8 13 requirements of this chapter:
8 14 a. A bank, financial institution, holding company, credit
8 15 union, savings and loan association, building and loan
8 16 association, mutual bank, or savings bank, whether organized
8 17 under the laws of any state or of the United States; provided,
8 18 however, that the entity does not engage in business regulated
8 19 under this chapter through authorized delegates.
8 20 b. A person who is registered as a money services business
8 21 with the United States department of the treasury pursuant to
8 22 31 U.S.C. } 5312 or 31 C.F.R. } 103, or any successor
8 23 provisions as a check casher, and does not engage in other
8 24 activity regulated under this chapter except as authorized
8 25 under this chapter.
8 26 c. A person who is registered as a money services business
8 27 with the United States department of the treasury pursuant to
8 28 31 U.S.C. } 5312 or 31 C.F.R. } 103, or any successor
8 29 provisions as a money exchanger, and does not engage in other
8 30 activity regulated under this chapter except as authorized
8 31 under this chapter.
8 32 d. A person who engages in activity regulated under this
8 33 chapter only as an authorized delegate of a licensee acting
8 34 within the scope of the contract between the authorized
8 35 delegate and the licensee.
9 1 e. A person who provides clearance or settlement services
9 2 pursuant to a registration as a clearing agency or an
9 3 exemption from such registration granted under the federal
9 4 securities laws to the extent of its operation as such a
9 5 service provider.
9 6 f. An operator of a payment system to the extent that it
9 7 provides processing, clearing, or settlement services, between
9 8 or among persons excluded by this section, in connection with
9 9 wire transfers, credit card transactions, debit card
9 10 transactions, stored-value transactions, automated
9 11 clearinghouse transfers, or similar funds transfers.
9 12 g. A person licensed to conduct the business of consumer
9 13 loans.
9 14 h. A person licensed to conduct business as a debt
9 15 management company.
9 16 i. A person licensed to conduct business as an escrow
9 17 company.
9 18 j. A person licensed to conduct business as a trust
9 19 company.
9 20 k. A person licensed to conduct business as a mortgage
9 21 banker.
9 22 l. A person licensed to conduct business as a collection
9 23 agency.
9 24 m. A person registered as a securities broker-dealer under
9 25 federal or state securities laws to the extent of its
9 26 operation as such a broker-dealer.
9 27 Sec. 7. Section 533B.7, Code 2001, is amended by striking
9 28 the section and inserting in lieu thereof the following:
9 29 533B.7 APPLICATION FOR A LICENSE.
9 30 Each application for a license shall be made in writing,
9 31 under oath, and in the form prescribed by the superintendent.
9 32 The application shall at least contain all of the following:
9 33 1. The exact, full name of the applicant, the date of
9 34 incorporation and the state where incorporated, copies of the
9 35 articles of incorporation for the applicant, the name and
10 1 address of the statutory agent, and any fictitious or trade
10 2 name used for the applicant.
10 3 2. The address of the applicant's principal place of
10 4 business, the address of each location where the applicant
10 5 intends to transact business in this state, including any
10 6 branch offices, and the name and address of each location of
10 7 any authorized delegates.
10 8 3. For each executive officer and director and each branch
10 9 manager of the applicant or individual controlling person, and
10 10 for each officer and director of any controlling person,
10 11 unless the controlling person is a publicly traded company on
10 12 a recognized national exchange and has assets in excess of
10 13 five hundred million dollars, the application shall include
10 14 all of the following:
10 15 a. A statement of personal history, including but not
10 16 limited to the person's name and any aliases or previous names
10 17 used, date and place of birth, employment history and
10 18 residence addresses for the preceding fifteen years, social
10 19 security number, record of any criminal convictions excluding
10 20 traffic offenses, litigation history deemed significant under
10 21 generally accepted accounting principles for the past ten
10 22 years, and report of any bankruptcies filed individually or by
10 23 any entity controlled by that person.
10 24 b. Alien registration information, if applicable.
10 25 c. Photographs and fingerprints taken by a county or
10 26 municipal law enforcement agency.
10 27 d. Copies of the most recent tax returns filed and signed
10 28 waivers for verifying submitted tax returns with the internal
10 29 revenue service.
10 30 4. An identification statement for each branch manager and
10 31 responsible individual including all of the following:
10 32 a. Name and any aliases or previous names used.
10 33 b. Date and place of birth.
10 34 c. Social security number.
10 35 d. Record of criminal convictions, excluding traffic
11 1 offenses.
11 2 e. Alien registration information, if applicable.
11 3 f. Employment history and residence addresses for the
11 4 preceding fifteen years.
11 5 5. The name and address of each authorized delegate, and a
11 6 written authorization for a criminal history check accompanied
11 7 with the applicable fee.
11 8 6. The identity of any account in any financial
11 9 institution through which the applicant intends to conduct any
11 10 business regulated under this chapter, including the account
11 11 name, the account number, and the name and address of the
11 12 financial institution.
11 13 7. A financial statement audited by a licensed independent
11 14 certified public accountant.
11 15 8. A list of all other states in which the applicant is
11 16 licensed to conduct money transmission and any license
11 17 revocations, suspensions, or other disciplinary action taken
11 18 against the applicant in any other state.
11 19 9. A description of the sources of money and credit the
11 20 applicant will use.
11 21 Sec. 8. NEW SECTION. 533B.8 FEE – FINANCIAL STATEMENT
11 22 AND BOND.
11 23 1. Each application for a licensee shall be accompanied by
11 24 all of the following:
11 25 a. An application fee of one thousand dollars and a
11 26 license fee of three thousand dollars. The license fee shall
11 27 be refunded if the application is denied. An application fee
11 28 shall not be refunded. All application and license fees
11 29 collected by the department under this chapter shall be
11 30 transmitted to the state treasurer for deposit in the
11 31 financial services licensing fund established in section
11 32 533B.28.
11 33 b. A financial statement, audited by a licensed
11 34 independent certified public accountant, showing the
11 35 applicant's net worth is not less than one hundred thousand
12 1 dollars plus ten thousand dollars for each location or
12 2 authorized delegate, to a maximum of five hundred thousand
12 3 dollars, calculated in accordance with generally accepted
12 4 accounting principles.
12 5 c. Copies of any financial statements that the applicant
12 6 has filed with the securities exchange commission within the
12 7 past three years.
12 8 d. If the applicant is a wholly owned subsidiary of a
12 9 corporation that has filed financial statements with the
12 10 securities exchange commission in any of the past three years,
12 11 copies of those filings.
12 12 e. A bond executed by the licensee as principal and a
12 13 surety company authorized to do business in this state as a
12 14 surety, except that an applicant or licensee who engages in no
12 15 business regulated by this chapter other than check cashing or
12 16 foreign money exchange need not post the bond required by this
12 17 paragraph. The bond shall be in the amount of three hundred
12 18 thousand dollars, with that amount to be increased by twenty-
12 19 five thousand dollars for each authorized delegate, to a
12 20 maximum of one million dollars. The bond shall be conditioned
12 21 on the faithful compliance of the licensee, including its
12 22 directors, officers, authorized delegates, and employees, with
12 23 this chapter. The bond shall be payable to any person injured
12 24 by the wrongful act, default, fraud, or misrepresentation of
12 25 the licensee, or the licensee's authorized delegates or
12 26 employees, or to the state for the benefit of the person
12 27 injured. Only one bond is required for any licensee
12 28 irrespective of the number of officers, directors, employees,
12 29 locations, or authorized delegates of that licensee. The bond
12 30 shall remain in effect until canceled by the surety, which
12 31 cancellation may be had only after thirty days' written notice
12 32 to the superintendent. The cancellation does not affect any
12 33 liability incurred or accrued prior to the termination of that
12 34 thirty-day period.
12 35 f. A sample of the contract that the applicant proposes to
13 1 use in its creation of authorized delegates, if any.
13 2 g. A sample of the payment instrument that the applicant
13 3 proposes to issue, if any.
13 4 h. A statement identifying each clearing bank that the
13 5 applicant intends to use in business regulated under this
13 6 chapter.
13 7 2. A licensee shall maintain a net worth that satisfies
13 8 the requirements of subsection 1.
13 9 3. If a person injured by the wrongful act, default,
13 10 fraud, or misrepresentation of the licensee, or the licensee's
13 11 authorized delegates or employees commences an action for a
13 12 judgment to collect from the bond, the person shall notify the
13 13 superintendent of the action in writing at the time of the
13 14 commencement of the action and shall provide copies of all
13 15 documents relating to the action to the superintendent on
13 16 request.
13 17 4. In lieu of the surety bond prescribed in this section,
13 18 an applicant for a license or a licensee may deposit with the
13 19 superintendent cash or alternatives to cash in the amount of
13 20 the required bond.
13 21 5. In lieu of the surety bond prescribed in this section,
13 22 the applicant or a licensee may make deposits with any
13 23 federally insured banking institution or savings and loan
13 24 association in this state designated by the applicant and
13 25 approved by the superintendent. These deposits may include,
13 26 subject to the approval of the superintendent, cash,
13 27 securities, interest-bearing stocks and bonds, notes,
13 28 debentures or other obligations of the United States or agency
13 29 or instrumentality of the United States or guaranteed by the
13 30 United States or of this state or any subdivision of this
13 31 state, of an aggregate amount at all times of not less than
13 32 the amount of the required surety bond, based upon principal
13 33 amount or market value, whichever is lower.
13 34 6. The superintendent shall transmit the cash received
13 35 under this section to the state treasurer. The state
14 1 treasurer shall hold the cash in the name of this state to
14 2 guarantee the faithful performance of all legal obligations of
14 3 the person required to post bond pursuant to this section.
14 4 The person is entitled to receive any accrued interest earned.
14 5 The state treasurer may impose a fee to reimburse the state
14 6 treasurer for its administrative expenses. The fee shall not
14 7 exceed one hundred dollars for each cash deposit and shall be
14 8 paid by the applicant or licensee.
14 9 7. In addition to any other terms and conditions that the
14 10 superintendent prescribes by rule or order, the principal
14 11 amount of the deposits made under subsection 4 or 5 shall be
14 12 released only on written authorization of the superintendent
14 13 or on the order of a court of competent jurisdiction. The
14 14 principal amount of the deposit shall not be released to the
14 15 licensee before the expiration of five years from the first to
14 16 occur of the following:
14 17 a. The date of substitution of a bond for an alternative
14 18 deposit unless the superintendent determines in the
14 19 superintendent's discretion that the bond constitutes adequate
14 20 security for all past, present, or future obligations of the
14 21 licensee. After that determination the cash alternative may
14 22 be immediately released.
14 23 b. The surrender of the license.
14 24 c. The revocation of the license.
14 25 d. The expiration of the license.
14 26 8. Notwithstanding subsections 1 through 7, if the
14 27 required amount of the bond is reduced, whether by change in
14 28 the number of authorized delegates or by legislative action, a
14 29 cash deposit in lieu of that bond shall not be correspondingly
14 30 reduced but shall be maintained at the higher amount until the
14 31 expiration of five years from the effective date of the
14 32 reduction in the required amount of bond, unless the
14 33 superintendent in the superintendent's discretion determines
14 34 otherwise.
14 35 Sec. 9. NEW SECTION. 533B.9 ISSUANCE OF LICENSE –
15 1 RENEWAL – BRANCH OFFICE LICENSES – CHANGE IN LOCATION.
15 2 1. Upon the filing of a complete application, the
15 3 superintendent shall investigate the financial condition and
15 4 responsibility, financial and business experience, character,
15 5 and general fitness of the applicant. In the superintendent's
15 6 discretion, the superintendent may conduct an on-site
15 7 investigation of the applicant, the reasonable cost of which
15 8 shall be borne by the applicant. The superintendent shall
15 9 issue a license to an applicant if the superintendent finds
15 10 all of the following:
15 11 a. The applicant has fulfilled the requirements of
15 12 sections 533B.7 and 533B.8.
15 13 b. The applicant has not been convicted of a felony within
15 14 the past ten years.
15 15 c. An officer, director, or controlling person has not
15 16 been convicted of a felony within the past ten years.
15 17 d. The competence, experience, and integrity of the
15 18 officers, directors, controlling persons, and any proposed
15 19 management personnel indicate that it would be in the interest
15 20 of the public to permit such persons to participate in the
15 21 affairs of a licensee.
15 22 e. The applicant has paid the required license fee, and a
15 23 separate fee as set by the department of public safety to pay
15 24 for a state and a national criminal record check.
15 25 2. The superintendent shall submit to the department of
15 26 public safety the name, fingerprints, and photograph of any
15 27 applicant or licensee and the name, fingerprints, and
15 28 photograph of any incorporator, director, officer, member, or
15 29 individual controlling person of any applicant within fourteen
15 30 days after receipt of any application. The department of
15 31 public safety shall report to the superintendent the state
15 32 criminal record, if any, of that person within ninety days of
15 33 receipt of the request of the superintendent and the national
15 34 criminal record, if any, of that person within five days of
15 35 the receipt of the record by the department of public safety.
16 1 3. a. The superintendent shall approve or deny every
16 2 application for an original license within one hundred twenty
16 3 days after the date an application is complete, which period
16 4 may be extended by the written consent of the applicant.
16 5 b. The superintendent shall notify the applicant of the
16 6 date when the application is determined to be complete.
16 7 c. In the absence of approval or denial of the
16 8 application, or the applicant's consent to the extension of
16 9 the one-hundred-twenty-day period, the application is deemed
16 10 approved and the superintendent shall issue the license
16 11 effective as of the first business day after that one-hundred-
16 12 twenty-day period or any extended period.
16 13 d. If the superintendent denies the application, the
16 14 superintendent shall issue an order stating the reasons for
16 15 the denial, pursuant to section 533.12. The applicant may
16 16 request a hearing pursuant to section 533.12.
16 17 4. a. Licensees shall pay a renewal fee of one thousand
16 18 five hundred dollars on or before the first day of January of
16 19 each year. The renewal fee shall be accompanied by a renewal
16 20 application in the form prescribed by the superintendent.
16 21 b. A license for which an application and renewal fee has
16 22 not been received by the first of January shall be suspended.
16 23 c. A licensee may renew a suspended license no later than
16 24 February 1 of the year of expiration by paying the renewal fee
16 25 plus one hundred dollars for each day past January 1 that the
16 26 licensee is late with payment of the renewal fee.
16 27 d. A license expires on February 1 of each year, unless
16 28 earlier renewed, surrendered, or revoked.
16 29 e. A license shall not be granted to the holder of an
16 30 expired license or to an incorporator, director, or officer of
16 31 that licensee except upon compliance with the requirements
16 32 provided in this chapter for an original license, including
16 33 the payment of the fee.
16 34 f. All license renewal fees paid under this subsection,
16 35 including fees paid pursuant to paragraph "c", shall be
17 1 transmitted to the state treasurer for deposit in the
17 2 financial services licensing fund established in section
17 3 533B.28.
17 4 5. A licensee shall designate and maintain a principal
17 5 place of business for the transaction of business regulated by
17 6 this chapter. If the licensee maintains one or more places of
17 7 business in this state, the licensee shall designate a place
17 8 of business in this state as its principal place of business
17 9 for the purposes of this chapter. The license shall specify
17 10 the address of the principal place of business. The licensee
17 11 shall designate a responsible individual for its principal
17 12 place of business.
17 13 6. a. If a licensee maintains one or more locations in
17 14 this state in addition to a principal place of business, and
17 15 those locations are to be under the control of the licensee
17 16 and not under the control of authorized delegates pursuant to
17 17 section 533B.10, the licensee shall obtain a branch office
17 18 license from the superintendent for each additional location
17 19 by filing an application as required by the superintendent at
17 20 the time the licensee files its license application.
17 21 b. If the licensee adds branch offices from time to time,
17 22 the licensee shall file an application for a branch office
17 23 license with the superintendent with the licensee's next
17 24 quarterly fiscal report, as required in section 533B.13. If
17 25 the superintendent determines that it would be in the interest
17 26 of the public, the superintendent shall issue a branch office
17 27 license.
17 28 c. The license shall indicate on its face the address of
17 29 the branch office and shall designate a manager for each
17 30 branch office to oversee that office.
17 31 d. The superintendent may disapprove the designated
17 32 manager then or at any later time if the superintendent finds
17 33 that the competence, experience, and integrity of the branch
17 34 manager warrants disapproval.
17 35 e. An individual may be designated as the manager for more
18 1 than one branch.
18 2 f. The licensee shall submit a fee of one thousand five
18 3 hundred dollars for each branch office license. This fee
18 4 shall be transmitted to the state treasurer for deposit in the
18 5 financial services licensing fund established in section
18 6 533B.28.
18 7 7. A licensee shall prominently display the financial
18 8 services business license in its principal place of business
18 9 and the branch office license in each branch office. Each
18 10 authorized delegate shall prominently display at each location
18 11 a notice, in a form prescribed by the superintendent, that the
18 12 authorized delegate is an authorized delegate of a licensee
18 13 under this chapter.
18 14 8. If the address of the principal place of business or
18 15 any branch office is changed, the licensee shall immediately
18 16 notify the superintendent in writing of the change.
18 17 Sec. 10. NEW SECTION. 533B.10 AUTHORIZED DELEGATES OF
18 18 LICENSEES.
18 19 1. A licensee may conduct the business regulated under
18 20 this chapter at one or more locations within this state
18 21 through authorized delegates designated by the licensee from
18 22 time to time, if the licensee has a net worth of at least five
18 23 hundred thousand dollars plus twenty-five thousand dollars for
18 24 each authorized delegate, not to exceed one million dollars
18 25 according to financial statements calculated in accordance
18 26 with generally accepted accounting principles audited by a
18 27 licensed independent certified public accountant.
18 28 2. Each contract between a licensee and an authorized
18 29 delegate shall require the authorized delegate to operate in
18 30 full compliance with the law and shall contain as an appendix
18 31 a current copy of this chapter. The licensee shall provide
18 32 each authorized delegate with operating policies and
18 33 procedures sufficient to permit compliance by the delegate
18 34 with all applicable laws, rules, regulations, and orders.
18 35 Unless the parties provide otherwise in their contract, the
19 1 licensee shall update the policies and procedures no later
19 2 than sixty days prior to the effective date of a new or
19 3 amended law, rule, regulation, or order to permit compliance
19 4 with the law, rule, regulation, or order, or as soon as
19 5 practicable if less than sixty days' notice is given to the
19 6 licensee of the new or amended law, rule, regulation, or
19 7 order.
19 8 3. The superintendent may issue an order to cease and
19 9 desist against a licensee or its authorized delegate,
19 10 including an order requiring the licensee to cease conducting
19 11 its business through an authorized delegate and to take
19 12 appropriate affirmative action if the superintendent finds any
19 13 of the following:
19 14 a. The authorized delegate has violated, is violating, or
19 15 is about to violate any applicable law, rule, regulation, or
19 16 any order of the superintendent.
19 17 b. The authorized delegate has failed to cooperate with
19 18 any examination or investigation by the superintendent or the
19 19 attorney general as authorized by this chapter.
19 20 c. The competence, experience, or integrity of the
19 21 authorized delegate or any controlling person of the
19 22 authorized delegate indicates that it would not be in the
19 23 interest of the public to permit that person to participate in
19 24 business regulated under this chapter.
19 25 d. The financial condition of the authorized delegate
19 26 might jeopardize the interests of the public in the conduct of
19 27 business regulated under this chapter.
19 28 e. The authorized delegate has engaged, is engaging, or is
19 29 about to engage in any unsafe or unsound act or practice or
19 30 transaction or any act, practice, or transaction that
19 31 constitutes a violation of this chapter or of any rule,
19 32 regulation, or order of the superintendent.
19 33 4. Any business for which a license is required by this
19 34 chapter that is conducted by an authorized delegate outside
19 35 the scope of authority conferred in the contract between the
20 1 authorized delegate and the licensee is unlicensed activity.
20 2 5. An authorized delegate of a licensee holds in trust for
20 3 the benefit of the licensee all moneys received from the sale
20 4 or delivery of the licensee's payment instruments or moneys
20 5 received for transmission. If an authorized delegate
20 6 commingles any of those moneys with any moneys or other
20 7 property owned or controlled by the authorized delegate, a
20 8 trust against all commingled proceeds and other moneys or
20 9 property controlled by the authorized delegate is imposed in
20 10 favor of the licensee in an amount equal to the amount of the
20 11 proceeds due the licensee.
20 12 6. An authorized delegate is subject to examination by the
20 13 superintendent at the discretion of the superintendent, as if
20 14 the authorized delegate were a state bank, pursuant to section
20 15 524.217. The licensee is responsible for the payment of an
20 16 assessment for the examination of its authorized delegates
20 17 only to the extent that the examination relates to the
20 18 activities conducted by the authorized delegate on behalf of
20 19 the licensee. The assessment and payment of that assessment
20 20 shall be made in accordance with the requirements of section
20 21 524.219. Fees paid pursuant to this section shall be
20 22 transmitted to the state treasurer for deposit in the
20 23 financial services licensing fund established in section
20 24 533B.28.
20 25 Sec. 11. NEW SECTION. 533B.11 SUSPENSION OR REVOCATION
20 26 OF LICENSES.
20 27 The superintendent may suspend or revoke a license and may
20 28 order a licensee to revoke the designation of an authorized
20 29 delegate whose conduct has contributed to the event if the
20 30 superintendent finds any of the following has occurred:
20 31 1. The licensee has made a material misstatement or
20 32 suppressed or withheld information on the application for
20 33 license or any document required to be filed with the
20 34 superintendent.
20 35 2. Any fact or condition exists that, if it had existed or
21 1 had been known at the time when the licensee had applied for
21 2 its license, would have been grounds for denying the
21 3 application.
21 4 3. The licensee's net worth becomes inadequate and the
21 5 licensee after ten days' written notice from the
21 6 superintendent fails to furnish the capital required by this
21 7 chapter.
21 8 4. The licensee is insolvent or the licensee has suspended
21 9 payment of its obligations, has made an assignment for the
21 10 benefit of its creditors, or has admitted in writing its
21 11 inability to pay its debts as they become due.
21 12 5. The licensee has violated any provision of chapter
21 13 706B, regarding money laundering; or has violated any
21 14 provision of chapter 529, regarding financial transaction
21 15 reporting; or requirements imposed by 31 U.S.C. } 5311 through
21 16 5326, and 31 C.F.R } 102 or 12 C.F.R. } 21.11; or has violated
21 17 any rule or regulation adopted pursuant to this chapter, or
21 18 any order of the superintendent.
21 19 6. An authorized delegate of the licensee has violated any
21 20 provision of chapter 706B, regarding money laundering; or has
21 21 violated any provision of chapter 529, regarding financial
21 22 transaction reporting; or requirements imposed by 31 U.S.C. }
21 23 5311 through 5326, and 31 C.F.R. } 102 or 12 C.F.R. } 21.11;
21 24 or has violated any rule or regulation adopted pursuant to
21 25 this chapter, or any order of the superintendent as a result
21 26 of a course of negligent failure to supervise or as a result
21 27 of the willful misconduct of the licensee. If a compliance
21 28 program previously qualified by the superintendent was in
21 29 place for the licensee at the time of the violation, the
21 30 superintendent shall consider the compliance program of the
21 31 licensee in determining whether there has been a course of
21 32 negligent failure to supervise, and may not revoke a license
21 33 on the basis of a course of negligent failure to supervise
21 34 unless the licensee has previously been suspended pursuant to
21 35 this section.
22 1 7. The licensee or any authorized delegate of the licensee
22 2 refuses to permit the superintendent or the attorney general
22 3 to make any examination or investigation authorized by this
22 4 chapter.
22 5 8. The licensee or any authorized delegate of the licensee
22 6 knowingly fails to make any report required by this chapter.
22 7 9. The licensee fails to pay a judgment entered in favor
22 8 of a claimant, plaintiff, or creditor in an action arising out
22 9 of the licensee's business regulated under this chapter,
22 10 within thirty days after expiration or termination of a stay
22 11 of execution or other stay of proceedings, whichever is later.
22 12 If execution on the judgment is stayed by court order,
22 13 operation of law, or otherwise, proceedings to suspend or
22 14 revoke the license for failure of the licensee to pay that
22 15 judgment shall not be commenced by the superintendent under
22 16 this subsection until thirty days after that stay.
22 17 10. The licensee has been convicted in any state of a
22 18 felony or of any crime of breach of trust or dishonesty.
22 19 11. The licensee has exhibited a pattern of failure or
22 20 refusal promptly to pay lawful and enforceable obligations on
22 21 payment instruments or transmissions of money.
22 22 Sec. 12. NEW SECTION. 533B.12 HEARINGS.
22 23 1. a. A license shall not be suspended or revoked except
22 24 after a hearing held by the superintendent.
22 25 b. The superintendent shall also hold a hearing when
22 26 requested by an applicant whose application for a license has
22 27 been denied.
22 28 2. The superintendent shall give the licensee or applicant
22 29 at least ten days' written notice of the time and place of the
22 30 hearing by certified mail or restricted certified mail
22 31 addressed to the licensee or applicant at its last known
22 32 address.
22 33 3. Any order of the superintendent suspending, revoking,
22 34 or denying a license shall state the grounds it is based on
22 35 and shall not be effective until ten days after written notice
23 1 of the order has been sent by certified mail or restricted
23 2 certified mail to the licensee or applicant at its last known
23 3 address.
23 4 4. a. Any hearing required by this section shall be
23 5 conducted on the record.
23 6 b. Witnesses shall be sworn and evidence presented to the
23 7 superintendent shall be appropriately identified and
23 8 preserved.
23 9 c. The superintendent may issue subpoenas to compel the
23 10 production of physical items and the attendance of witnesses.
23 11 5. Any notice required under this section shall be
23 12 considered served on the third business day after the
23 13 superintendent mails the notice.
23 14 6. A licensee or applicant may seek judicial review of the
23 15 superintendent's findings and order pursuant to chapter 17A.
23 16 Sec. 13. NEW SECTION. 533B.13 REPORTS.
23 17 1. The superintendent may require any licensee or
23 18 authorized delegate, under penalty of perjury or otherwise, to
23 19 file reports concerning the licensee's or authorized
23 20 delegate's business conducted pursuant to the license issued
23 21 under this chapter, as the superintendent may deem necessary
23 22 for the enforcement of this chapter.
23 23 2. Each licensee shall file with the superintendent within
23 24 forty-five days after the end of each fiscal quarter, a
23 25 financial statement, including a balance sheet, income and
23 26 expense statements, and a current list of all authorized
23 27 delegates, branch managers, responsible individuals, and
23 28 locations within this state that have been added or terminated
23 29 by the licensee within the fiscal quarter. Information
23 30 regarding branch managers and responsible individuals shall
23 31 include the information required by section 533B.7,
23 32 subsections 3 and 4. For locations and authorized delegates,
23 33 the licensee shall include the name and street address of each
23 34 location and authorized delegate. The superintendent may
23 35 extend the forty-five-day period on application of the
24 1 licensee.
24 2 3. a. A licensee who fails to file any report required by
24 3 this section on or before the day designated for making the
24 4 report, or fails to include any prescribed matter in the
24 5 report, shall pay a civil penalty of one hundred dollars for
24 6 every day that the report is delayed or incomplete, unless the
24 7 superintendent, for good cause shown, reduces the amount to be
24 8 paid, or unless the time to file the report was extended in
24 9 writing by the superintendent.
24 10 b. Any civil penalty paid under this subsection shall be
24 11 transmitted to the state treasurer for deposit in the
24 12 financial services licensing fund established in section
24 13 533B.28.
24 14 4. a. The superintendent may, in the superintendent's
24 15 discretion, conduct an on-site examination of a licensee to
24 16 determine compliance with this chapter. The licensee shall
24 17 pay the reasonable costs of the on-site examination, pursuant
24 18 to the provisions of section 524.219. The examination payment
24 19 shall be transmitted to the state treasurer for deposit in the
24 20 financial services licensing fund established in section
24 21 533B.28.
24 22 If the superintendent finds, based on the licensee's
24 23 financial statements and past history of operations in this
24 24 state, that an on-site examination is unnecessary, the
24 25 superintendent may waive the on-site examination.
24 26 b. The on-site examination may be conducted in conjunction
24 27 with examinations performed by representatives of agencies of
24 28 this state or of another state or of the federal government.
24 29 c. The superintendent, in lieu of an on-site examination,
24 30 may accept the examination report of an agency of this state
24 31 or of another state or of the federal government or a report
24 32 prepared by an independent certified public accountant, and
24 33 reports so accepted are considered for all purposes as an
24 34 official report of the banking division for all purposes.
24 35 5. Each licensee shall file with the superintendent within
25 1 fifteen days of its occurrence, a report of any of the
25 2 following:
25 3 a. Filing for bankruptcy or reorganization, the filing of
25 4 a petition by or against the licensee for receivership, the
25 5 commencement of any other judicial or administrative
25 6 proceeding for its dissolution or reorganization, or the
25 7 making of a general assignment for the benefit of its
25 8 creditors, or the cancellation or other impairment of the
25 9 licensee's bond or other security.
25 10 b. Institution of license revocation proceedings.
25 11 c. A felony indictment or conviction of a licensee or of
25 12 an officer, director, controlling person, branch manager,
25 13 responsible individual, or authorized delegate related to
25 14 licensed activity, or involving conduct defined as money
25 15 laundering including any violation of chapter 706B, or a
25 16 violation of chapter 529, regarding financial transaction
25 17 reporting.
25 18 Sec. 14. NEW SECTION. 533B.14 INVESTMENTS.
25 19 1. Every licensee shall maintain at all times permissible
25 20 investments that comply with either of the following:
25 21 a. A market value, computed in accordance with generally
25 22 accepted accounting principles, of not less than the aggregate
25 23 amount of all of its outstanding payment instruments.
25 24 b. A net carrying value, computed in accordance with
25 25 generally accepted accounting principles, of not less than the
25 26 aggregate amount of all of its outstanding payment
25 27 instruments, provided the market value of these permissible
25 28 investments is at least ninety-five percent of the net
25 29 carrying value.
25 30 2. Notwithstanding any provision of this chapter to the
25 31 contrary, the superintendent shall have, with respect to any
25 32 particular licensee or all licensees, the authority to limit
25 33 the extent to which any class of investments defined as
25 34 permissible in section 533B.4 may be considered a permissible
25 35 investment, except for money and certificates of deposit. The
26 1 superintendent may by rule prescribe other types of
26 2 investments that may be considered permissible investments
26 3 under this chapter.
26 4 3. Permissible investments, even if commingled with other
26 5 assets of the licensee, shall be deemed by operation of law to
26 6 be held in trust for the benefit of the purchasers and holders
26 7 of the licensee's outstanding payment instruments in the event
26 8 of the bankruptcy of the licensee.
26 9 Sec. 15. NEW SECTION. 533B.15 RECORDS.
26 10 1. A licensee shall keep and use in its business books,
26 11 accounts and records in accordance with generally accepted
26 12 accounting principles that will enable the superintendent to
26 13 determine whether that licensee is complying with the
26 14 provisions of this chapter. A licensee and an authorized
26 15 delegate shall each preserve its records for at least five
26 16 years after making the final entry on any transaction. An
26 17 authorized delegate shall keep records as required by the
26 18 superintendent.
26 19 2. For an authorized delegate, the licensee shall maintain
26 20 records that demonstrate that the licensee conducted a
26 21 reasonable background investigation of the authorized
26 22 delegate. A licensee shall preserve those records for at
26 23 least five years after the most recent designation of that
26 24 authorized delegate by the licensee.
26 25 3. The records of the licensee regarding business
26 26 regulated under this chapter shall be maintained at its
26 27 principal place of business or, with notice to the
26 28 superintendent, at another location designated by the
26 29 licensee. If the records are maintained outside this state,
26 30 the superintendent may require that the licensee make those
26 31 records available to the superintendent at the
26 32 superintendent's office not more than five business days after
26 33 demand. The superintendent may further require that those
26 34 records be accompanied by an individual who will be available
26 35 to answer questions regarding those records and the business
27 1 regulated under this chapter. The superintendent may require
27 2 the appearance of a specific individual, or request the
27 3 licensee to designate an individual knowledgeable with regard
27 4 to the records and the business. The individual appearing
27 5 with the records shall be available to the superintendent for
27 6 up to three business days.
27 7 4. For the purpose of enforcing this chapter, the
27 8 superintendent or a designated representative, and the
27 9 attorney general, shall have and shall be given free access to
27 10 the offices and places of business, files, safes, and vaults
27 11 of any licensee or authorized delegate and may require the
27 12 attendance of any person and examine the person under oath
27 13 about that business or the subject matter of any examination,
27 14 investigation, or hearing.
27 15 Sec. 16. NEW SECTION. 533B.16 LIABILITY OF LICENSEES.
27 16 A licensee is liable for the payment of all moneys covered
27 17 by payment instruments that the licensee sells or issues in
27 18 any form in this state, whether directly or through an
27 19 authorized delegate and whether as a maker or drawer, and is
27 20 liable for the payment of money or monetary value received for
27 21 obligors or for transmission by any means, whether or not that
27 22 instrument is a negotiable instrument under the laws of this
27 23 state.
27 24 Sec. 17. NEW SECTION. 533B.17 NOTICE OF SOURCE OF
27 25 INSTRUMENT – TRANSACTION RECORDS.
27 26 1. Every tangible payment instrument sold by a licensee
27 27 directly or through an authorized delegate shall bear the name
27 28 of the licensee and a unique consecutive number clearly
27 29 stamped or imprinted on it.
27 30 2. For every transaction involving the receipt of money or
27 31 monetary value from a customer, the licensee or authorized
27 32 delegate who receives the money or monetary value shall
27 33 maintain written records of the transaction. The records may
27 34 be reduced to computer or other electronic medium. The
27 35 records collectively shall contain the name of the licensee,
28 1 the street address of the location where the money or monetary
28 2 value was received, the name and street address of the
28 3 customer if reported to the licensee or authorized delegate,
28 4 the approximate date of the transaction, the name or other
28 5 information from which, together with other contemporaneous
28 6 records, the superintendent can determine the identity of
28 7 those employees of the licensee or authorized delegate who
28 8 conducted the transaction, and the amount of the transaction.
28 9 The information required by this section shall be available
28 10 through the licensee or authorized delegate who received the
28 11 money for at least five years from the date of the
28 12 transaction.
28 13 Sec. 18. NEW SECTION. 533B.18 ACQUISITION OF CONTROL.
28 14 1. A person shall not directly or indirectly acquire
28 15 control of a licensee or controlling person without the prior
28 16 written approval of the superintendent, except as otherwise
28 17 provided by this section.
28 18 2. a. An application for approval to acquire control of a
28 19 licensee shall be in writing in a form prescribed by the
28 20 superintendent and shall be accompanied by any information,
28 21 data, and records the superintendent requires.
28 22 b. A nonrefundable application fee of five hundred dollars
28 23 shall accompany the application. The fee shall be transmitted
28 24 to the state treasurer for deposit in the financial services
28 25 licensing fund established in section 533B.28.
28 26 c. The superintendent shall approve or deny every
28 27 application for approval to acquire control of a licensee
28 28 within one hundred twenty days after the date on which the
28 29 application is complete, unless the applicant consents in
28 30 writing to an extended period. The superintendent shall
28 31 notify the applicant of the date when the application is
28 32 determined to be complete. Any application not denied or
28 33 approved within this period shall be deemed approved as of the
28 34 first business day after the expiration of that period.
28 35 3. The superintendent shall deny the application to
29 1 acquire control of a licensee if the superintendent finds the
29 2 acquisition of control is contrary to law or determines that
29 3 disapproval is reasonably necessary to protect the interest of
29 4 the public. In making that determination, the superintendent
29 5 shall consider all of the following:
29 6 a. Whether the financial condition of the person seeking
29 7 to control the licensee might jeopardize the financial
29 8 condition of the licensee or the interests of the public in
29 9 the conduct of the business regulated under this chapter.
29 10 b. Whether the competence, experience, and integrity of
29 11 the person who seeks to control the licensee, or the officers,
29 12 directors, and controlling persons of the person who seeks to
29 13 control the licensee, indicate that it would not be in the
29 14 interest of the public to permit that person to control the
29 15 licensee.
29 16 4. This section does not prohibit a person from
29 17 negotiating or entering into agreements subject to the
29 18 condition that the acquisition of control will not be
29 19 effective until approval of the superintendent is obtained.
29 20 5. This section does not apply to any of the following:
29 21 a. A registered dealer who acts as an underwriter or
29 22 member of a selling group in a public offering of the voting
29 23 securities of a licensee or controlling person of a licensee.
29 24 b. A person who acts as proxy for the sole purpose of
29 25 voting at a designated meeting of the security holders of a
29 26 licensee or controlling person of a licensee.
29 27 c. A person who acquires control of a licensee or
29 28 controlling person of a licensee by devise or descent.
29 29 d. A person who acquires control of a licensee or
29 30 controlling person as a personal representative, custodian,
29 31 guardian, conservator, trustee, or other officer appointed by
29 32 a court of competent jurisdiction or by operation of law.
29 33 e. A pledgee of a voting security of a licensee or
29 34 controlling person who does not have the right, as pledgee, to
29 35 vote that security.
30 1 f. A person or transaction that the superintendent by rule
30 2 or order exempts in the public interest.
30 3 6. Before filing an application for approval to acquire
30 4 control, a person may request in writing a determination from
30 5 the superintendent regarding whether that person will be
30 6 considered in control, upon consummation of a proposed
30 7 transaction. If the superintendent determines in response to
30 8 that request that the person will not be in control within the
30 9 meaning of this chapter, the superintendent shall enter an
30 10 order to that effect and the proposed transaction is not
30 11 subject to the requirements of this section.
30 12 Sec. 19. NEW SECTION. 533B.19 INJUNCTIONS.
30 13 1. If it appears to the superintendent that any person has
30 14 committed or is about to commit a violation of any provision
30 15 of the chapter or of any rule, regulation, or order of the
30 16 superintendent, the superintendent may apply to the district
30 17 court for an order enjoining that person from violating or
30 18 continuing to violate this chapter or any rule, regulation, or
30 19 order and for injunctive or other relief as the nature of the
30 20 case may require.
30 21 2. The superintendent may issue an order to cease and
30 22 desist against a licensee or its authorized delegate,
30 23 including an order requiring the licensee or authorized
30 24 delegate to cease conducting its business and to take
30 25 appropriate affirmative action if the superintendent finds any
30 26 of the following:
30 27 a. The licensee has violated, is violating or is about to
30 28 violate any applicable law, rule, regulation, or any order of
30 29 the superintendent.
30 30 b. The licensee has failed to cooperate with any
30 31 examination or investigation by the superintendent or the
30 32 attorney general as authorized by this chapter.
30 33 c. The competence, experience, or integrity of the
30 34 licensee or any controlling person of the licensee indicates
30 35 that it would not be in the interest of the public to permit
31 1 that person to participate in business regulated under this
31 2 chapter.
31 3 Sec. 20. NEW SECTION. 533B.20 APPOINTMENT OF
31 4 SUPERINTENDENT AS AGENT FOR SERVICE OF PROCESS – FORWARDING
31 5 OF PROCESS – CONSENT TO JURISDICTION.
31 6 1. A licensee, an authorized delegate, or a person who
31 7 knowingly engages in business activities that are regulated
31 8 under this chapter with or without filing an application is
31 9 deemed to have done both of the following:
31 10 a. Consented to the jurisdiction of the courts of this
31 11 state for all actions arising under this chapter.
31 12 b. Appointed the superintendent as the lawful agent for
31 13 the purpose of accepting service of process in any action,
31 14 suit, or proceeding that may arise under this chapter.
31 15 2. Within three business days after service of process on
31 16 the superintendent, the superintendent shall transmit by
31 17 certified mail or restricted certified mail copies of all
31 18 lawful process accepted by the superintendent as an agent to
31 19 that person at its last known address. Service of process
31 20 shall be considered complete three business days after the
31 21 superintendent deposits the copies in the United States mail.
31 22 Sec. 21. NEW SECTION. 533B.21 PROHIBITED TRANSACTIONS.
31 23 A person shall not engage in conduct requiring a license
31 24 under this chapter as an authorized delegate of a principal if
31 25 that principal is not licensed under this chapter. A person
31 26 who does so shall be deemed to be the principal seller,
31 27 issuer, or actor, and not merely an authorized delegate, and
31 28 is liable to the holder, remitter, or customer as the
31 29 principal.
31 30 Sec. 22. NEW SECTION. 533B.22 CRIMINAL PENALTIES.
31 31 1. A person is guilty of a class "D" felony who knowingly
31 32 does any of the following:
31 33 a. Makes any false statement, misrepresentation, or false
31 34 certification in any application, financial statement, account
31 35 record, customer receipt, report, or other document filed or
32 1 required to be maintained or filed under this chapter or who
32 2 knowingly makes any false entry or omits a material entry in
32 3 any such document.
32 4 b. Evades or attempts to evade any reporting requirement
32 5 of this chapter; or that imposed by 31 U.S.C. } 5311 through
32 6 5326 and 31 C.F.R. } 102 or 12 C.F.R. } 21.11; or by chapter
32 7 529, the Iowa financial transaction reporting Act; whether by
32 8 structuring transactions as described in 31 C.F.R. } 103, by
32 9 causing any financial institution, financial services
32 10 business, trade, or business to fail to file such report, by
32 11 failing to file a required report or document, or otherwise.
32 12 c. Provides any false information or omits to disclose
32 13 information, which causes any financial institution, financial
32 14 services business, trade, or business to do any of the
32 15 following:
32 16 (1) Fail to file any report or record required of this
32 17 chapter or imposed by 31 U.S.C. } 5311 through 5326 and 31
32 18 C.F.R. } 102 or 12 C.F.R. } 21.11 or chapter 529, regarding
32 19 financial transaction reporting.
32 20 (2) File any such report or record containing a material
32 21 omission or misstatement of fact.
32 22 d. Falsifies, conceals, covers up, or misrepresents, or
32 23 attempts to falsify, conceal, cover up, or misrepresent the
32 24 identity of any person in connection with any transaction with
32 25 a financial institution or financial services business.
32 26 e. Makes, uses, offers, or presents, or attempts to make,
32 27 use, offer, or present, whether accepted or not, in connection
32 28 with a transaction with a financial institution or financial
32 29 services business, a forged instrument, a falsely altered or
32 30 completed writing, or a writing that contains any materially
32 31 false personal identification information.
32 32 f. Being a financial services business, an authorized
32 33 delegate, a person engaged in a trade or business, or any
32 34 employee of a financial services business, an authorized
32 35 delegate, or a person engaged in a trade or business, the
33 1 person knowingly accepts false personal identification
33 2 information from any person or otherwise knowingly
33 3 incorporates false personal identifying information into any
33 4 report required by this chapter or imposed by 31 U.S.C. } 5311
33 5 through 5326 and 31 C.F.R. } 102 or 12 C.F.R. } 21.11 or
33 6 chapter 529, regarding financial transaction reporting.
33 7 g. Conducts, controls, manages, supervises, directs, or
33 8 owns all or part of a money transmitting business, unless the
33 9 business complies with the licensing requirements of this
33 10 chapter and money transmitting business registration
33 11 requirements of 31 U.S.C. } 5330.
33 12 2. A person is guilty of an aggravated misdemeanor who
33 13 knowingly:
33 14 a. Offers, confers, or agrees to confer any material
33 15 benefit upon a financial services business, an authorized
33 16 delegate, or any employee of a financial services business or
33 17 authorized delegate, in the course of a transaction
33 18 transmitting money, other than transaction fees authorized by
33 19 the licensee and accounted for in records made available to
33 20 the licensee.
33 21 b. Being a financial services business, an authorized
33 22 delegate, or any employee of a financial services business or
33 23 an authorized delegate, solicits, accepts, or agrees to accept
33 24 any material benefit from a customer in the course of a
33 25 transaction transmitting money, other than transaction fees
33 26 authorized by the licensee and accounted for in records made
33 27 available to the licensee.
33 28 c. Being a licensee, the person solicits or accepts, or
33 29 permits an authorized delegate of the licensee to solicit or
33 30 accept, in the course of a transaction transmitting money, any
33 31 benefit, other than transaction fees authorized by the
33 32 license.
33 33 3. A person who refuses to permit any lawful investigation
33 34 by the superintendent or attorney general shall be guilty of a
33 35 serious misdemeanor.
34 1 4. A person who directly or through another violates or
34 2 attempts to violate any provision of this chapter for which a
34 3 different penalty is not specifically provided is guilty of an
34 4 aggravated misdemeanor.
34 5 5. Each transaction in violation of this chapter and each
34 6 day that a violation continues shall be a separate offense.
34 7 6. In this section, "writing" and "identification
34 8 information" have the same meaning as prescribed in sections
34 9 715A.1 and 715A.8.
34 10 Sec. 23. NEW SECTION. 533B.23 CIVIL PENALTIES.
34 11 1. Any person who knowingly violates any provision of this
34 12 chapter shall be assessed a civil penalty in an amount equal
34 13 to the value of the gross business conducted in connection
34 14 with the violation plus the state's costs and expenses of the
34 15 investigation and prosecution of the matter, including
34 16 reasonable attorney fees.
34 17 2. A person who violates section 533B.22, subsection 1, as
34 18 part of a pattern of violations involving a total of more than
34 19 one hundred thousand dollars in any twelve-month period shall,
34 20 in addition to any other criminal or civil remedy, be subject
34 21 to a civil penalty of three times the amount involved in the
34 22 pattern of violations, including conduct before and after the
34 23 twelve-month period.
34 24 3. The attorney general or the superintendent may bring an
34 25 action in the district court of the county in which a
34 26 violation of this section is alleged to have occurred or in
34 27 any other county in which venue is permitted under Iowa law in
34 28 the same manner as the filing of other actions.
34 29 Sec. 24. NEW SECTION. 533B.24 RECORDS – DISCLOSURE.
34 30 1. Except as otherwise provided by this chapter, the
34 31 records of the banking division relating to financial
34 32 institutions are not public documents and are not open for
34 33 inspection by the public and neither the superintendent nor
34 34 any member of the superintendent's staff shall disclose any
34 35 information obtained in the discharge of these official duties
35 1 to any person not connected with the banking division, except
35 2 that the superintendent may disclose the information to any of
35 3 the following:
35 4 a. To representatives of federal agencies insuring
35 5 accounts in the financial institution.
35 6 b. To representatives of state or federal agencies and
35 7 foreign countries having regulatory or supervisory authority
35 8 over the activities of the financial institution or similar
35 9 financial institutions if those representatives are permitted
35 10 to and do, upon request of the superintendent, disclose
35 11 similar information respecting those financial institutions
35 12 under their regulation or supervision or to those
35 13 representatives who state in writing under oath that they will
35 14 maintain the confidentiality of that information.
35 15 c. To the attorney general of this state.
35 16 d. To a federal or state grand jury in response to a
35 17 lawful subpoena.
35 18 e. To the auditor of this state for the purpose of
35 19 conducting audits authorized by law.
35 20 2. The superintendent may make any of the following
35 21 disclosures:
35 22 a. Disclose the fact of filing of applications with the
35 23 banking division pursuant to this chapter, give notice of a
35 24 hearing, if any, regarding those applications, and announce
35 25 any action related to the applications.
35 26 b. Disclose final decisions in connection with proceedings
35 27 for the suspension or revocation of licenses issued pursuant
35 28 to this chapter.
35 29 c. Prepare and circulate reports reflecting the assets and
35 30 liabilities of financial institutions, including other
35 31 information considered pertinent to the purpose of each report
35 32 for general statistical information.
35 33 d. Prepare and circulate reports required to be provided
35 34 by law.
35 35 3. Every official report of the banking division is prima
36 1 facie evidence of the facts stated in any action or proceeding
36 2 in which the superintendent is a party.
36 3 4. This section shall not be construed to prevent the
36 4 disclosure of information that is admissible in evidence in
36 5 any civil or criminal proceeding brought by or at the request
36 6 of the superintendent or this state to enforce or prosecute
36 7 violations of this chapter or the rules, regulations, or
36 8 orders issued or adopted pursuant to this chapter.
36 9 Sec. 25. NEW SECTION. 533B.25 RULES.
36 10 The superintendent may adopt rules pursuant to chapter 17A
36 11 as necessary to administer this chapter.
36 12 Sec. 26. NEW SECTION. 533B.26 UNIFORMITY OF CONSTRUCTION
36 13 AND APPLICATION.
36 14 1. The provisions of this chapter shall be liberally
36 15 construed to effectuate its remedial purposes. Civil remedies
36 16 under this chapter shall be supplemental and not mutually
36 17 exclusive. The civil remedies under this chapter do not
36 18 preclude and are not precluded by other provision of law.
36 19 2. The provisions of this chapter shall be applied and
36 20 construed to effectuate its general purpose to make uniform
36 21 the law with respect to the subject of this chapter among
36 22 states enacting it.
36 23 3. The attorney general is authorized to enter into
36 24 reciprocal agreements with the attorney general or chief
36 25 prosecuting attorney of any state to effectuate the purposes
36 26 of this chapter.
36 27 Sec. 27. NEW SECTION. 533B.27 SEVERABILITY.
36 28 If any provision of this chapter or application to any
36 29 person or circumstance is held invalid, the invalidity does
36 30 not affect other provisions or applications of this chapter
36 31 that can be given effect without the invalid provisions or
36 32 application.
36 33 Sec. 28. NEW SECTION. 533B.28 FINANCIAL SERVICES
36 34 LICENSING FUND.
36 35 1. A financial services licensing fund is established as a
37 1 separate fund in the state treasury under the authority of the
37 2 banking division of the department of commerce. Moneys
37 3 deposited in the fund shall be used to pay for staffing
37 4 necessary to perform examinations, audits, and other duties
37 5 required of the superintendent and the banking division under
37 6 this chapter.
37 7 2. The fund may receive moneys including, but not limited
37 8 to, the following:
37 9 a. Moneys appropriated to the fund by the general
37 10 assembly.
37 11 b. Moneys credited to the fund from application fees and
37 12 license fees under section 533B.8.
37 13 c. Moneys credited to the fund from license renewal fees
37 14 and late fees under section 533B.9.
37 15 d. Moneys credited to the fund from branch license
37 16 application fees under section 533B.9.
37 17 e. Moneys credited to the fund from examination fees under
37 18 section 533B.10.
37 19 f. Moneys credited to the fund from penalties assessed
37 20 under section 533B.13.
37 21 g. Moneys credited to the fund from examination payments
37 22 assessed under section 533B.13.
37 23 h. Moneys credited to the funds from applications for
37 24 approval to acquire control of a licensee under section
37 25 533B.18.
37 26 Notwithstanding section 8.33, moneys appropriated to the
37 27 fund and other moneys credited to the fund shall not revert at
37 28 the close of the fiscal year but shall remain in the financial
37 29 services licensing fund and shall remain available for
37 30 expenditure for the purposes designated.
37 31 Sec. 29. NEW SECTION. 533B.29 EFFECTIVE DATE.
37 32 This chapter shall be effective on January 1, 2003. All
37 33 persons engaged in activities within this state encompassed by
37 34 this chapter on the date it becomes effective shall file
37 35 applications in accordance with sections 533B.7 and 533B.8 by
38 1 January 1, 2003. A person shall not be considered in
38 2 violation of any provision of this chapter if the application
38 3 of that person is timely filed unless and until the
38 4 application is denied.
38 5 Sec. 30. EFFECTIVE DATE. This Act takes effect January 1,
38 6 2003.
38 7 EXPLANATION
38 8 This bill rewrites current Code chapter 533B, regarding the
38 9 sale of certain instruments for payment of money, and
38 10 implements new Code chapter 533B, the Iowa financial services
38 11 business licensing and regulation Act.
38 12 Code section 533B.2 provides legislative findings on the
38 13 economics of ongoing criminal activity and provides an
38 14 economic-based rationale for financial remedies, and Code
38 15 section 533B.3 sets out the purposes of the Act, which are
38 16 defending legitimate commerce from criminal activity and
38 17 remedying the economic effects of crime.
38 18 Code section 533B.4 provides definitions for terms used in
38 19 the chapter, including "authorized delegate", "conduct the
38 20 business" and "financial services business", "payment
38 21 instrument", "money", "responsible individual", "transaction",
38 22 and "transmitting money".
38 23 Code section 533B.5 requires a license for covered activity
38 24 and establishes jurisdiction over activity occurring in the
38 25 state.
38 26 Code section 533B.6 exempts from licensing governmental
38 27 entities, banks, bank holding companies, credit unions,
38 28 savings and loans, savings banks and other financial
38 29 businesses licensed under state law.
38 30 Code section 533B.7 creates an application process similar
38 31 to that for other licensed financial businesses. It requires
38 32 certain information about the background and personal history
38 33 of the applicant, including photograph, fingerprints, and
38 34 financial background.
38 35 Code section 533B.8 requires a licensee to submit a
39 1 financial statement showing net worth, and to maintain a bond
39 2 for the protection of people injured by the licensee's default
39 3 or fraud. The licensee may also post certain alternatives to
39 4 a bond.
39 5 Code section 533B.9 requires licenses to be granted or
39 6 denied within 120 days of application, or the application is
39 7 deemed approved. Licensees may do business through branch
39 8 offices.
39 9 Code section 533B.10 permits licensees to do business
39 10 through delegates, called "authorized delegates". The
39 11 superintendent of banking has the power to do examinations and
39 12 issue orders to prevent abuses by delegates similar to powers
39 13 over similar financial businesses. Licensees are assured some
39 14 protection against wrongdoing or default by their delegates,
39 15 but are responsible to the public for the acts of their
39 16 delegates. The superintendent may issue cease and desist
39 17 orders in connection with conduct of authorized delegates.
39 18 Code section 533B.11 gives the superintendent suspension
39 19 and revocation powers. These powers include suspension or
39 20 revocation of a license if the licensee's authorized delegate
39 21 has violated money laundering prohibitions or failed to make
39 22 required financial transaction reports if done "as a result of
39 23 a course of negligent failure to supervise or as a result of
39 24 the willful misconduct of the licensee".
39 25 Code section 533B.12 requires a hearing prior to suspension
39 26 or revocation, as well upon request after the denial of
39 27 license application. Notice is provided for, and the
39 28 superintendent's authority to subpoena witnesses and physical
39 29 items is made explicit.
39 30 Code section 533B.13 requires submission of quarterly and
39 31 yearly financial reports. The superintendent is given
39 32 authority to make on-site examinations, and impose civil
39 33 penalties for late or insufficient reports. The examinations
39 34 may be made with representatives of other agencies, states, or
39 35 the federal government. The superintendent may accept
40 1 examination reports of other agencies, states, or federal
40 2 agencies in lieu of on-site examination.
40 3 Code section 533B.14 requires that licensees be able to
40 4 cover liabilities representing amounts that their customers
40 5 have entrusted to them through secure investments.
40 6 Code section 533B.15 requires regular records to be kept
40 7 and made available for examinations. The records must
40 8 demonstrate that any authorized delegate was subjected to a
40 9 reasonable background investigation. All records must be kept
40 10 for at least five years, must be maintained at a designated
40 11 place, and must be made available at the superintendent's
40 12 office on five business days' notice if kept out-of-state.
40 13 Code section 533B.16 requires a licensee to stand behind
40 14 its payment instruments. If an authorized delegate becomes
40 15 insolvent, the licensee must make good on the payment
40 16 instruments the authorized delegate sold to customers.
40 17 Code section 533B.17 requires the keeping of transaction
40 18 records for five years.
40 19 Code section 533B.18 prevents a person from buying control
40 20 of a licensee if that person could not have obtained a
40 21 license.
40 22 Code section 533B.19 gives the superintendent specific
40 23 authority to seek injunctions.
40 24 Code section 533B.20 provides jurisdiction and service of
40 25 process for state courts and the superintendent whether or not
40 26 the person obtains a license.
40 27 Code section 533B.21 provides that persons who engage in
40 28 conduct requiring a license as an authorized delegate of a
40 29 principal who is unlicensed will be deemed to be the principal
40 30 seller, and not just a delegate.
40 31 Code section 533B.22 provides criminal penalties, ranging
40 32 from a class "D" felony to a serious misdemeanor. A false
40 33 statement in connection with licenses is a class "D" felony
40 34 violation and failure to permit lawful investigation is a
40 35 serious misdemeanor.
41 1 All violations of the Act for which a different penalty is
41 2 not specifically provided are made aggravated misdemeanors.
41 3 Code section 533B.23 creates civil penalties, with the
41 4 general liability set at the amount equal to the value of the
41 5 gross business conducted in connection with the violation.
41 6 The attorney general is given authority to bring such actions.
41 7 Code section 533B.24 provides that records of the
41 8 superintendent are not public but may be disclosed in certain
41 9 circumstances.
41 10 Code section 533B.25 provides that the superintendent may
41 11 adopt rules to administer the Code chapter.
41 12 Code section 533B.26 provides for uniformity in the
41 13 application, liberal construction and interstate employment of
41 14 the Code chapter.
41 15 Code section 533B.27 states that the provisions of the Code
41 16 chapter are severable so the invalidity of one does not affect
41 17 the validity of the others.
41 18 Code section 533B.28 creates the financial services
41 19 licensing fund, to be administered by the banking division of
41 20 the department of commerce. The fund is primarily composed of
41 21 application fees, license fees, examination fees, and
41 22 penalties assessed under Code chapter 533B. The moneys
41 23 transmitted to the fund do not revert, but remain available to
41 24 pay for staffing necessary to perform examinations, audits,
41 25 and other duties required of the banking division under Code
41 26 chapter 533B.
41 27 Code section 533B.29 provides that the newly rewritten Code
41 28 chapter is effective on January 1, 2003.
41 29 The bill itself takes effect on the same date.
41 30 LSB 5274DP 79
41 31 jj/sh/8.1
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