February 9, 2005, Introduced by Senator SCOTT and referred to the Committee on Banking and Financial Institutions.
A bill to regulate the money transmission services business;
to require the licensing of persons engaged in providing money
transmission services; to prescribe powers and duties of certain
state agencies and officials; to prescribe penalties and provide
remedies; and to repeal acts and parts of acts.
THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
Sec. 1. This act shall be known and may be cited as the "money
transmission services act".
Sec. 2. As used in this act:
(a) "Agency" means the office of financial and insurance
services in the department of labor and economic growth.
(b) "Applicant" means a person that files an application for a
license under this act.
(c) "Authorized delegate" means a person that a licensee
designates to provide money transmission services in this state on
behalf of the licensee.
(d) "Commissioner" means the commissioner of the office of
financial and insurance services.
(e) "Control" means any of the following:
(i) Ownership of, or the power to vote, directly or indirectly,
at least 25% of a class of voting securities or voting interests of
a licensee or person in control of a licensee.
(ii) Power to elect a majority of executive officers, managers,
directors, trustees, or other persons exercising managerial
authority of a licensee or person in control of a licensee.
(iii) The power to exercise directly or indirectly a controlling
influence over the management or policies of a licensee or person
in control of a licensee.
(f) "Control person" means a director, manager, or executive
officer of a licensee or a natural person who has the authority to
participate in the direction, directly or indirectly through 1 or
more other natural persons, of the management or policies of a
licensee.
(g) "Depository financial institution" means a bank, national
bank, savings and loan association, savings bank, or credit union
organized under the laws of this state, another state, the District
of Columbia, the United States, or a territory or protectorate of
the United States whose deposits are insured by an agency of the
federal government.
(h) "Executive officer" means an officer, member, or partner
of a licensee, including, but not limited to, a chief executive
officer, president, vice president, chief financial officer,
controller, compliance officer, or any other similar position.
(i) "Financial licensing act" means any of the financial
services acts, as that term is defined in section 2 of the consumer
financial services act, 1988 PA 161, MCL 487.2052.
(j) "Licensee" means a person licensed or required to be
licensed under this act.
(k) "Location" means a place of business at which activities
regulated by this act occur.
Sec. 3. As used in this act:
(a) "Material litigation" means litigation that, according to
generally accepted accounting principles, is significant to an
applicant's or a licensee's financial health and must be disclosed
in the applicant's or licensee's audited financial statements,
report to shareholders, or similar records.
(b) "Money" means a medium of exchange authorized or adopted
by the United States or a foreign government as a part of its
currency that is customarily used and accepted as a medium of
exchange in the country of issuance. The term includes a monetary
unit of account established by an intergovernmental organization or
by agreement between 2 or more governments.
(c) "Money transmission services" means any of the following:
(i) Selling or issuing payment instruments for a fee,
commission, or other consideration.
(ii) Receiving money in an amount of at least $3,000.00 in any
period of 7 consecutive calendar days for transmission or
transmitting money within the United States or to locations abroad
by any means, including, but not limited to, payment instrument,
wire transfer, electronic transfer, stored value device, facsimile,
or otherwise, for a fee, commission, or other consideration.
(d) "Outstanding payment instrument" means any check, draft,
money order, travelers check, other written instrument, electronic
or wire transfer, stored value device, or facsimile issued by a
licensee that has been sold in the United States directly by the
licensee or any payment instrument issued by the licensee that has
been sold by an agency, office, or representative of the licensee
in the United States, that has been reported to the licensee as
having been sold, and that has not yet been paid by or for the
licensee.
(e) "Payment instrument" means any electronic or written
check, draft, money order, travelers check, or other wire,
electronic, or written instrument or order for the transmission or
payment of money, sold or issued to 1 or more persons, whether or
not the instrument is negotiable. The term includes any stored
value device or facsimile. The term does not include any credit
card voucher, letter of credit, or tangible object redeemable by
the issuer in goods or services.
(f) "Person" means an individual, partnership, association,
corporation, limited liability company, trust, estate, joint
venture, government, governmental subdivision, agency or
instrumentality, public corporation, or any other legal entity.
(g) "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.
(h) "State" means a state of the United States, the District
of Columbia, Puerto Rico, the United States Virgin Islands, or any
territory or protectorate of the United States.
(i) "Stored value device" means a card or other tangible
object used for the transmission or payment of money that contains
a microprocessor chip, magnetic stripe, or other means for the
storage of information; that is prefunded; and the value of which
is reduced after each use. The term does not include a tangible
object the value of which is redeemable in the issuer's goods and
services.
(j) "Travelers check" means an instrument for the payment of
money or a foreign currency instrument in any denomination that
provides for both of the following:
(i) A specimen signature of the purchaser to be completed at
the time of purchase of the instrument.
(ii) A countersignature of the purchaser to be completed when
the instrument is negotiated.
Sec. 4. This act does not apply to any of the following:
(a) The United States or a department, agency, or
instrumentality of the United States.
(b) Money transmission services provided by the United States
postal service or by a contractor on behalf of the United States
postal service.
(c) A state, county, city, or any other governmental
subdivision of a state.
(d) A depository financial institution, bank holding company,
office of an international banking corporation, or branch of a
foreign bank; a bank service company organized under the bank
service company act, 12 USC 1861 to 1867; or a corporation
organized under the Edge act, 12 USC 611 to 633.
(e) Electronic funds transfer of governmental benefits for a
federal, state, county, or governmental agency by a contractor on
behalf of the United States or a department, agency, or
instrumentality of the United States or a state or governmental
subdivision, agency, or instrumentality of a state.
(f) A board of trade designated as a contract market under the
commodity exchange act, 7 USC 1 to 27f, or a person that in the
ordinary course of business provides clearance and settlement
services for a board of trade, to the extent of its operation as or
for that board.
(g) A registered futures commission merchant under the federal
commodities laws, to the extent of its operation as a merchant.
(h) A person that provides clearance or settlement services
under a registration as a clearing agency or an exemption from
registration granted under the federal securities laws, to the
extent of its operation as a provider under this subdivision.
(i) An operator of a payment system, to the extent that it
provides processing, clearing, or settlement services between or
among persons excluded by this section in connection with wire
transfers, credit card transactions, debit card transactions,
stored value transactions, automated clearinghouse transfers, or
similar funds transfers.
(j) A person registered as a securities broker-dealer under
federal or state securities laws, to the extent of its operation as
a registered broker-dealer.
Sec. 11. (1) Except as otherwise provided in this section and
subject to section 4, a person shall not provide money transmission
services in this state on or after the effective date of this act
without a license under this act.
(2) A person licensed under the sale of checks act, 1960 PA
136, MCL 487.901 to 487.916, on the effective date of this act may
continue to provide money transmission services under that license
until December 31, 2006 if the person meets all of the following:
(a) The person files an application for a license under
section 12 within 90 days after the effective date of this act.
(b) The person meets the requirements of sections 12, 13, 14,
and 15 in conducting its money transmission business before January
1, 2007.
(c) The person only provides money transmission services
authorized under the sale of checks act, 1960 PA 136, MCL 487.901
to 487.916.
(3) A person described in subsection (2) shall not provide
money transmission services after December 31, 2006 without a
license under this act.
(4) A license under this act is not required for a person to
act as an authorized delegate of a person licensed under this act.
Sec. 12. (1) A person applying for a license under this act
shall apply on a form and in a medium prescribed by the
commissioner. The application shall include all of the following
information:
(a) The legal name and residential and business addresses of
the applicant and any assumed or trade name used by the applicant
in conducting its business.
(b) A list of any criminal convictions of the applicant and
any material litigation in which the applicant was involved in the
10-year period preceding the submission of the application.
(c) A description of any money transmission services
previously provided by the applicant and the money transmission
services that the applicant intends to provide in this state.
(d) A list of the applicant's proposed authorized delegates
and the locations in this state where the applicant and its
authorized delegates propose to engage in providing money
transmission services.
(e) A list of all other states in which the applicant is
licensed to engage in providing money transmission services and any
license revocations, suspensions, or other disciplinary action
taken against the applicant in any other state.
(f) Information concerning any bankruptcy or receivership
proceedings affecting the applicant.
(g) The name and address of any depository financial
institution through which the applicant's payment instrument will
be paid.
(h) A description of the source of money and credit to be used
by the applicant to provide money transmission services.
(i) Any other information the commissioner reasonably requires
with respect to the applicant.
(2) If an applicant is not a natural person, the applicant
shall also provide all of the following information with the
application:
(a) The date of the applicant's incorporation or formation and
state or country of incorporation or formation.
(b) A brief description of the structure or organization of
the applicant, including any parent or subsidiary of the applicant,
and whether the applicant or a parent or subsidiary of the
applicant is publicly traded.
(c) The name, all assumed or trade names, and all business
addresses of the applicant.
(d) The name, all assumed or trade names, all business and
residential addresses, and the employment history for the 10-year
period preceding the submission of the application of each control
person of the applicant.
(e) A list of any criminal convictions and material litigation
in which any control person of the applicant has been involved in
the 10-year period preceding the submission of the application.
(f) If the applicant is publicly traded, a copy of the most
recent report filed with the securities and exchange commission
under section 13 of the federal securities exchange act of 1934, 15
USC 78m.
(g) If the applicant is a wholly owned subsidiary of a
corporation publicly traded in the United States, a copy of
financial statements for the parent corporation for the most recent
fiscal year or a copy of the parent corporation's most recent
report filed under section 13 of the federal securities exchange
act of 1934, 15 USC 78m.
(h) If the applicant is a wholly owned subsidiary of a
corporation publicly traded outside the United States, a copy of
any documentation similar to that described in subdivision (g) that
is filed with the regulator of the parent corporation's domicile
outside the United States.
(i) If the applicant has a registered agent in this state, the
name and address of that registered agent.
(j) Any other information the commissioner reasonably requires
with respect to the applicant.
Sec. 13. (1) At the time of filing an application for a
license under this act, an applicant shall provide the commissioner
with copies of the applicant's financial statements for the most
recent fiscal year and, if available, for the 2-year period
preceding the submission of the application. The financial
statements shall meet all of the following:
(a) If subdivision (b) does not apply, show that the
applicant's net worth exceeds $100,000.00.
(b) If the applicant intends to engage in providing money
transmission services in this state at more than 1 location or
through authorized delegates, show that the applicant has a net
worth that equals or exceeds either the sum of $100,000.00 plus an
additional $25,000.00 for each location or authorized delegate, as
applicable, or $1,000,000.00, whichever is less.
(c) Are in the form prescribed by the commissioner, except
that financial statements prepared by or reviewed by an independent
certified public accountant may be in the form prescribed by that
accountant.
(d) Are prepared in accordance with generally accepted
accounting principles.
(2) A licensee shall at all times maintain a net worth that
meets the amounts described in subsection (1) for its money
transmission services business.
(3) At the time of the filing of an application and at all
times after a license is issued, an applicant shall be registered
or qualified to do business in this state.
(4) An applicant shall include with an application for a
license under this act a nonrefundable application fee established
by the commissioner under section 15.
(5) An applicant shall include with an application for a
license under this act a surety bond that meets all of the
following:
(a) Is issued by a bonding company or insurance company
authorized to do business in this state and expires no earlier than
the date the license expires.
(b) Is in a principal amount of $1,500,000.00.
(c) Is in a form satisfactory to the commissioner, is payable
to the commissioner for the benefit of any individuals who are
Michigan residents and who are creditors or claimants of the
applicant and its authorized delegates through purchase of a
payment instrument from the applicant or an authorized delegate
located in this state, and secures the faithful performance of the
obligations of the applicant and its authorized delegates with
respect to the receipt of money in connection with the conduct of
its money transmission services business.
(6) The aggregate liability of a surety under a bond issued
for purposes of subsection (5) shall not exceed the principal
amount of the bond.
Sec. 14. (1) When the commissioner receives a completed
application for a license under this act, the commissioner shall
investigate the financial condition and responsibility, financial
and business experience, character, and general fitness of the
applicant and each shareholder, if any, and control person of the
applicant. The commissioner may conduct an on-site investigation of
the applicant.
(2) When the commissioner determines that an application for a
license under this act is complete, the commissioner shall promptly
notify the applicant in writing of the date on which he or she
determined that the application was complete and shall approve or
deny the application within 120 days after that date. Subject to
subsection (5), if the commissioner does not approve or deny an
application within that 120-day period, the commissioner shall
issue the license.
(3) The commissioner shall issue a license to an applicant
under this act if the commissioner determines all of the following:
(a) That the applicant has complied with sections 12, 13, and
16.
(b) That the financial condition and responsibility, financial
and business experience, character, and general fitness of the
applicant and the experience, character, and general fitness of
each control person and any shareholders of the applicant meet the
requirements of this act.
(c) That it is in the interest of the public to permit the
applicant to engage in providing money transmission services in
this state.
(d) That the applicant has paid the license fee under
subsection (4).
(4) If an application for a license is approved under this
section, the licensee shall pay a license fee in an amount
established by the commissioner under section 15 within 30 days
after the date of approval.
(5) The commissioner may for good cause extend the 120-day
time period described in subsection (2).
(6) An applicant whose application is denied by the
commissioner under this act may appeal within 30 days after the
date of the notice of the denial and request a hearing on the
denial.
Sec. 15. (1) By December 31 of each year, the commissioner
shall establish a schedule of fees to be paid by applicants and
licensees during the next calendar year. In establishing license
fees, the commissioner shall consider each licensee's business
volume and number of locations and any other business factors he or
she considers reasonable in order to generate funds sufficient to
pay, but not to exceed, the office's reasonably anticipated costs
of administering this act.
(2) A license issued under this act expires on December 31 of
each year unless earlier suspended, surrendered, or revoked under
this act. A licensee may renew a license by filing an application
for a license renewal, in the form and medium prescribed by the
commissioner, and paying the license fee for the renewal year, on
or before the December 1 preceding the renewal year. The
commissioner shall not renew a license if the license fee for the
renewal term is not paid.
Sec. 16. (1) In addition to any fees established by the
commissioner, a licensee shall pay the actual travel, lodging, and
meal expenses incurred by any agency employee who travels outside
of this state to examine the records of the licensee or investigate
the licensee.
(2) If any fees or fines provided for in this act are not paid
when required, the commissioner may maintain an action against the
licensee for the recovery of the fees or fines, interest, costs,
and reasonable legal fees.
(3) The fees and civil and administrative fines collected
under this act shall be paid into the state treasury to the credit
of the agency and used only for the operation of the agency.
Sec. 21. The commissioner may conduct an examination or
investigation of a licensee or any of its authorized delegates.
Except as provided in section 27, the commissioner and the agency
shall not disclose information obtained in an examination or
investigation.
Sec. 22. (1) The commissioner may conduct an on-site
examination or investigation of records maintained under section
25, including a joint examination or investigation conducted with
representatives of other departments or agencies of this state, 1
or more agencies of another state, or of the federal government.
(2) The commissioner may accept an examination or
investigation report of a department or agency of this state or of
another state or of the federal government or a report prepared by
a certified public accountant instead of conducting an examination
or investigation.
(3) A joint examination or investigation or an acceptance of
an examination or investigation report under this section does not
preclude the commissioner from conducting his or her own
examination or investigation.
(4) The report of a joint investigation or an examination
report accepted by the commissioner under this section is an
official report of the commissioner for all purposes.
Sec. 23. (1) If there is a change in any information provided
in a licensee's initial or renewal application, the licensee shall
file the changed information with the commissioner before the
change occurs, as prescribed by the commissioner.
(2) A licensee shall file with the commissioner within 45 days
after the end of each fiscal quarter a current list of each
authorized delegate, control person, and location in this state
where the licensee or an authorized delegate of the licensee
provides money transmission services. The licensee shall include
the name and street address of each location and authorized
delegate in the filing.
(3) A licensee shall file a report with the agency within 1
business day after the licensee has reason to know of the
occurrence of any of the following events:
(a) The filing of a petition by or against the licensee under
the bankruptcy code, 11 USC 101 to 1330, 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 the licensee's 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 a
license of the licensee in this state, another state, or a country
in which the licensee engages in business or is licensed.
(d) A charge or conviction of the licensee or of an executive
officer, manager, director, or control person of the licensee for a
felony.
(e) A charge or conviction of an authorized delegate for a
felony.
Sec. 24. (1) If there is a proposed change of control of a
licensee, the licensee shall do all of the following:
(a) Give the commissioner written notice of a proposed change
of control 30 days or more before the proposed change of control.
(b) Request approval of the proposed change of control.
(c) Pay a nonrefundable fee with the notice, in an amount
prescribed by the commissioner.
(2) After review of a request for approval under subsection
(1), the commissioner may require the licensee to provide
additional information concerning each proposed control person of
the licensee. However, the commissioner shall only require that the
licensee provide additional information of the same type required
of the licensee or any control person of the licensee as part of
the licensee's original license or renewal application.
(3) The commissioner shall approve a request for change of
control under subsection (1) if, after investigation, the
commissioner determines that the person or group of persons
requesting approval has the experience, character, and general
fitness to operate the licensee in a lawful and proper manner and
that the public interest will not be jeopardized by the change of
control.
(4) Subsection (1) does not apply to a public offering of
securities.
Sec. 25. (1) A licensee or any person subject to this act
shall maintain all of the following records for at least 3 years:
(a) A record of each payment instrument from the date it was
created.
(b) A general ledger posted at least monthly containing all
asset, liability, capital, income, and expense accounts.
(c) Bank statements and bank reconciliation records.
(d) Records of outstanding payment instruments.
(e) Records of each payment instrument paid within the 3-year
period.
(f) A list of the last known names and addresses of all of the
licensee's authorized delegates.
(g) Any other records the commissioner reasonably requires.
(2) The records described in subsection (1) may be stored on
any tangible medium or in any electronic or other medium that is
immediately retrievable in perceivable form.
(3) A licensee or other person may maintain the records
described in subsection (1) outside of this state if they are made
accessible to the commissioner.
Sec. 26. (1) If a licensee or authorized delegate files a
suspicious activity report with an agency of the federal
government, the licensee or authorized delegate shall also, within
24 hours, file a copy of the suspicious activity report with the
department of state police.
(2) A licensee or authorized delegate may file the suspicious
activity report with the department of state police under
subsection (1) in any manner allowed by federal law or regulation
or in any other manner acceptable to the department of state
police.
(3) Except for a violation of 31 USC 5318(g), a licensee or
authorized delegate or a director, officer, employee, or agent of
the licensee or authorized delegate is not liable in any civil or
governmental action for filing a copy of a suspicious activity
report under this section or failing to notify a customer or any
other person of the filing.
Sec. 27. (1) The commissioner, each former commissioner, and
each current and former deputy, agent, and employee of the agency
shall keep secret all facts and information obtained in the course
of their duties, unless that person is required under law to report
on, take official action concerning, or testify in any proceedings
regarding a licensee or the activities of a licensee.
(2) This section does not apply to, and does not prohibit the
furnishing of information or documents to, any federal, foreign, or
out-of-state regulatory agency with jurisdiction over a licensee
and is not applicable to any disclosure made in the public interest
by the commissioner, at his or her discretion.
Sec. 31. (1) A licensee shall maintain at all times
permissible investments that have a market value computed in
accordance with generally accepted accounting principles of not
less than the aggregate amount of all of its outstanding payment
instruments issued or sold and money transmitted by the licensee or
its authorized delegates.
(2) The commissioner may limit the extent to which a type of
investment within a class of permissible investments is considered
a permissible investment by any licensee, except for money and
certificates of deposit issued by a depository financial
institution. The commissioner by order or declaratory ruling may
allow other types of investments that the commissioner determines
to have a safety substantially equivalent to other permissible
investments.
(3) Even if commingled with other assets of a licensee,
permissible investments are held in trust for the benefit of the
purchasers and holders of the licensee's outstanding payment
instruments in the event of bankruptcy or receivership of the
licensee.
(4) As used in this section, "permissible investments" means
the investments described in section 32 or allowed by the
commissioner under subsection (2).
Sec. 32. (1) Except to the extent otherwise limited by the
commissioner under section 31(2), each of the following investments
is permissible under section 31:
(a) Cash, a certificate of deposit, or a senior debt
obligation of a federally insured depository financial institution.
(b) A banker's acceptance or bill of exchange that is eligible
for purchase upon endorsement by a member bank of the federal
reserve system and is eligible for purchase by a federal reserve
bank.
(c) An investment bearing a rating of 1 of the 3 highest
grades as defined by a nationally recognized organization that
rates securities.
(d) An investment security that is an obligation of the United
States or a department, agency, or instrumentality of the United
States; an investment in an obligation that is guaranteed fully as
to principal and interest by the United States; or an investment in
an obligation of a state or a governmental subdivision, agency, or
instrumentality of a state.
(e) A receivable that is payable to a licensee from its
authorized delegate, in the ordinary course of business, pursuant
to contracts that are not past due or doubtful of collection, if
the aggregate amount of receivables under this subdivision does not
exceed 20% of the total permissible investments of a licensee and
the licensee does not hold at 1 time receivables under this
subdivision in any 1 person aggregating more than 10% of the
licensee's total permissible investments.
(f) A share or a certificate issued by an open-end management
investment company that is registered with the United States
securities and exchange commission under the investment company act
of 1940, 15 USC 80a-1 to 80a-64, and whose portfolio is restricted
by the management company's investment policy to investments
specified in subdivisions (a) to (d).
(2) Subject to subsection (3), the following investments are
permissible under section 31, but only to the extent specified:
(a) An interest-bearing bill, note, bond, or debenture of a
person whose equity shares are traded on a national securities
exchange or on a national over-the-counter market, if the aggregate
of investments under this subdivision does not exceed 20% of the
total permissible investments of a licensee and the licensee does
not at 1 time hold investments under this subdivision in any 1
person aggregating more than 10% of the licensee's total
permissible investments.
(b) A share of a person traded on a national securities
exchange or a national over-the-counter market or a share or a
certificate issued by an open-end management investment company
that is registered with the United States securities and exchange
commission under the investment company act of 1940, 15 USC 80a-1
to 80a-64, and whose portfolio is restricted by the management
company's investment policy to shares of a person traded on a
national securities exchange or a national over-the-counter market,
if the aggregate of investments under this subdivision does not
exceed 20% of the total permissible investments of a licensee and
the licensee does not at 1 time hold investments in any 1 person
aggregating more than 10% of the licensee's total permissible
investments.
(c) A demand-borrowing agreement made to a corporation or a
subsidiary of a corporation whose securities are traded on a
national securities exchange, if the aggregate of the amount of
principal and interest outstanding under demand-borrowing
agreements under this subdivision does not exceed 20% of the total
permissible investments of a licensee and the licensee does not at
1 time hold principal and interest outstanding under demand-
borrowing agreements under this subdivision with any 1 person
aggregating more than 10% of the licensee's total permissible
investments.
(d) Any other investment the commissioner designates by order
or declaratory ruling, to the extent specified by the commissioner.
(3) The aggregate of investments under subsection (2) may not
exceed 50% of the total permissible investments of a licensee
calculated under section 31.
Sec. 33. (1) An agreement between a licensee and an authorized
delegate shall be in writing and require the authorized delegate to
operate in compliance with this act and other applicable law. The
licensee shall furnish in writing to each authorized delegate
policies and procedures sufficient for compliance with this act and
other applicable law.
(2) An authorized delegate shall remit all money owing to the
licensee in accordance with the terms of the agreement between the
licensee and the authorized delegate.
(3) If a license is suspended or revoked, the commissioner
shall notify the licensee and order the licensee to send a notice
to its authorized delegates directing them to cease providing money
transmission services on behalf of the licensee, and the authorized
delegate shall immediately cease providing money transmission
services as an authorized delegate of the licensee.
(4) An authorized delegate shall not provide money
transmission services outside the scope of activity permissible
under the agreement between the authorized delegate and the
licensee, except activity in which the authorized delegate is
otherwise authorized to engage. An authorized delegate of a
licensee holds all money received from providing money transmission
services, reduced by any fees owed to the authorized delegate by
the licensee, in escrow for the benefit of the licensee.
(5) As used 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 depository financial
institution in an account specified by the licensee.
Sec. 34. (1) An authorized delegate shall not make any
fraudulent or false statement or misrepresentation to a customer or
licensee or to the commissioner.
(2) An authorized delegate shall perform money transmission
services lawfully and in accordance with the licensee's operating
policies and procedures provided to the authorized delegate.
(3) All funds received by an authorized delegate from the sale
of a payment instrument, less fees, shall be held in escrow for the
licensee from the time the funds are received by the authorized
delegate until the time the funds are remitted to the licensee.
(4) If an authorized delegate commingles any of the funds
received with any other funds or property owned or controlled by
the authorized delegate, all commingled funds and other property
are held in escrow for the licensee in an amount equal to the
amount of the funds due the licensee.
(5) An authorized delegate shall report to the licensee the
theft or loss of a payment instrument within 24 hours after the
theft or loss.
Sec. 41. (1) The commissioner may deny, suspend, not renew, or
revoke a license, place a licensee in receivership, or order a
licensee to revoke the designation of an authorized delegate if any
of the following occur:
(a) The licensee violates this act, a rule promulgated under
this act, an order or declaratory ruling issued under this act, or
any applicable state or federal law.
(b) The licensee does not grant access to its books and
records during the course of an examination or investigation by the
commissioner.
(c) The licensee engages in fraud, intentional
misrepresentation, or gross negligence.
(d) An authorized delegate of the licensee is convicted of a
violation of a state or federal anti-money-laundering statute or
violates a rule promulgated or an order or ruling issued under this
act, as a result of the licensee's knowing or willful misconduct.
(e) The experience, character, or general fitness of the
licensee, authorized delegate, or control person indicates that it
is not in the public interest to permit the person to provide money
transmission services.
(f) Subject to subsection (2), the licensee engages in an
unsafe or unsound practice.
(g) The licensee fails to maintain the minimum net worth
required under section 13(1) or is insolvent, suspends payment of
its obligations, or makes a general assignment for the benefit of
its creditors.
(h) The licensee does not remove an authorized delegate after
the commissioner issues and serves upon the licensee an order that
includes a finding that the authorized delegate has violated this
act.
(2) 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 money transmission services business,
the magnitude of the loss, the gravity of the violation of this
act, the previous conduct of the person involved, and other factors
the commissioner considers relevant.
Sec. 42. (1) A person that intentionally makes a false
statement, misrepresentation, or false certification in any record
or document filed or required to be maintained under this act or
that intentionally makes a false entry or omits a material entry in
a record is guilty of a felony punishable by imprisonment for not
more than 5 years or a fine of not more than $100,000.00, or both.
(2) A person that engages in criminal fraud in the conduct of
its money transmission services business is guilty of a felony
punishable by imprisonment for not more than 5 years or a fine of
not more than $100,000.00, or both.
(3) A person that knowingly engages in an activity for which a
license is required under this act, is not licensed under this act,
and receives more than $500.00 in compensation within a 30-day
period from that activity is guilty of a misdemeanor punishable by
imprisonment for not more than 93 days or a fine of not more than
$500.00, or both. A court shall order a person convicted of
violating subsection (1) or (2) to pay restitution as provided in
section 1a of chapter IX of the code of criminal procedure, 1927 PA
175, MCL 769.1a, and the crime victim's rights act, 1985 PA 87, MCL
780.751 to 780.834.
Sec. 43. (1) After conducting an investigation or examination,
the commissioner may issue an order summarily suspending a license
under section 92 of the administrative procedures act of 1969, 1969
PA 306, MCL 24.292, based on an affidavit by a person familiar with
the facts set forth in the affidavit stating that, on information
and belief, an imminent threat of financial loss or imminent threat
to the public welfare exists.
(2) If the commissioner issues a summary suspension order
under section 92 of the administrative procedures act of 1969, 1969
PA 306, MCL 24.292, an administrative law hearings examiner shall
grant a request to dissolve a summary suspension order unless the
examiner finds that an imminent threat of financial loss or
imminent threat to the public welfare exists that requires an
emergency action and continuation of the summary suspension order.
(3) The record created at a hearing on a summary suspension is
part of the record of the complaint at any subsequent hearing in a
contested case.
Sec. 44. (1) If in the opinion of the commissioner a licensee
is, has, or is about to engage in a practice that poses a threat of
financial loss or threat to the public welfare or is, has, or is
about to violate a law, rule, or order, the commissioner may issue
and serve on the licensee a cease and desist order under this
section.
(2) A cease and desist order issued under this section shall
contain a statement of the facts constituting the alleged practice
or violation and shall fix a time and place for a hearing to
determine if the commissioner should issue an order to cease and
desist against the licensee.
(3) A licensee may consent to issuance of a cease and desist
order under this section. A licensee also consents to the issuance
of the cease and desist order if the licensee or a duly authorized
representative of the licensee fails to appear at a hearing
described in subsection (2).
(4) If a licensee consents under subsection (3), or if the
commissioner finds based on the record made at the hearing that the
practice or violation specified in the order is established, the
cease and desist order becomes final. The order may require the
licensee and its officers, directors, members, partners, trustees,
employees, agents, or control persons to cease and desist from the
practice or violation and to take affirmative action to correct the
conditions resulting from the practice or violation.
(5) Except as provided in subsection (6) or to the extent it
is stayed, modified, terminated, or set aside by the commissioner
or a court, a cease and desist order is effective on the date of
service.
(6) A cease and desist order issued with a licensee's consent
is effective at the time specified in the order and remains
effective and enforceable as provided in the order.
Sec. 45. The commissioner may promulgate rules under the
administrative procedures act of 1969, 1969 PA 306, MCL 24.201 to
24.328, that he or she considers necessary to implement and enforce
this act.
Sec. 46. The commissioner may assess a civil fine against a
person that violates this act, a rule promulgated or an order or
ruling issued by the commissioner under this act, or any other
applicable state or federal law in an amount that does not exceed
$10,000.00 per day for each day the violation continues, plus this
state's costs and expenses for the investigation and prosecution of
the matter, including reasonable attorney fees.
Sec. 47. (1) If in the opinion of the commissioner a person
has engaged in fraud or has been convicted of a criminal violation
involving money laundering, the commissioner may serve upon that
person a written notice of intention to prohibit that person from
being employed by, an agent of, or a control person of a licensee
under this act, or a licensee or registrant under a financial
licensing act. As used in this subsection, "fraud" includes
actionable fraud, actual or constructive fraud, criminal fraud,
extrinsic or intrinsic fraud, fraud in the execution, in the
inducement, in fact, or in law, or any other form of fraud.
(2) A notice issued under subsection (1) shall contain a
statement of the facts supporting the prohibition and, except as
provided under subsection (7), set a time and date for a hearing,
within 60 days after the date of the notice. If the person does not
appear at the hearing, he or she consents to the issuance of an
order in accordance with the notice.
(3) If, after a hearing held under subsection (2), the
commissioner finds that any of the grounds specified in the notice
have been established, the commissioner may issue an order of
suspension or prohibition from being a licensee or registrant or
from being employed by, an agent of, or a control person of any
licensee under this act or a licensee or registrant under any
financial licensing act.
(4) An order issued under subsection (2) or (3) is effective
when served on the person subject to the order. The commissioner
shall also serve a copy of the order upon the licensee of which the
person is an employee, agent, or control person. The order remains
in effect until it is stayed, modified, terminated, or set aside by
the commissioner or a reviewing court.
(5) After 5 years from the date of an order issued under
subsection (2) or (3), the person subject to the order may apply to
the commissioner to terminate the order.
(6) If the commissioner considers that a person served a
notice under subsection (1) poses an imminent threat of financial
loss to purchasers of payment instruments from a licensee, the
commissioner may serve upon the person an order of suspension from
being employed by, an agent of, or a control person of any
licensee. The suspension is effective on the date the order is
issued and, unless stayed by a court, remains in effect pending the
completion of a review as provided under this section and until the
commissioner has dismissed the charges specified in the order.
(7) Unless otherwise agreed to by the commissioner and the
person served with an order issued under subsection (6), the
commissioner shall hold the hearing required under subsection (2)
to review a suspension not earlier than 5 days or later than 20
days after the date of the notice.
(8) If a person is convicted of a felony involving fraud,
dishonesty, breach of trust, or money laundering, the commissioner
may issue an order suspending or prohibiting that person from being
a licensee and from being employed by, an agent of, or a control
person of any licensee under this act or a licensee or registrant
under a financial licensing act. After 5 years from the date of the
order, the person subject to the order may apply to the
commissioner to terminate the order.
(9) The commissioner shall mail a copy of any notice or order
issued under this section to the licensee of which the person
subject to the notice or order is an employee, agent, or control
person.
Enacting section 1. The sale of checks act, 1960 PA 136, MCL
487.901 to 487.916, is repealed effective January 1, 2007.
Enacting section 2. This act takes effect 90 days after the
date it is enacted.