A N A C T
RELATING TO FINANCIAL INSTITUTIONS -- LICENSED ACTIVITIES
It is enacted by the General Assembly as follows:
SECTION 1. Sections 19-14-1 and 19-14-6 of the General Laws in Chapter 19-14 entitled "Licensed Activities" are hereby amended to read as follows:
19-14-1. Definitions -- For purposes of this chapter and chapters 14.1, 14.2, 14.3, and 14.4 and 14.5:
(1) "Check" means any check, draft, money order, personal money order, or other instrument for the transmission or payment of money. For the purposes of check cashing, travelers checks or foreign denomination instruments shall not be considered checks. "Check cashing" means providing currency for checks;
(2) "Deliver" means to deliver a check to the first person who in payment for the check makes or purports to make a remittance of or against the face amount of the check, whether or not the deliverer also charges a fee in addition to the face amount, and whether or not the deliverer signs the check;
(3) "Electronic money transfer" means receiving money for transmission within the United States or to locations abroad by any means including, but not limited to, wire, facsimile or other electronic transfer system;
(4) (i) "Lender" means any person who makes or funds a loan within this state with the person's own funds, regardless of whether the person is the nominal mortgagee or creditor on the instrument evidencing the loan;
(ii) A loan is made or funded within this state if any of the following conditions exist:
(A) The loan is secured by real property located in this state;
(B) An application for a loan is taken by an employee, agent, or representative of the lender within this state; or
(C) The loan closes within this state;
(iii) The term "lender" shall also include any person engaged in a transaction whereby the person makes or funds a loan within this state using the proceeds of an advance under a line of credit over which proceeds the person has dominion and control and for the repayment of which the person is unconditionally liable. This transaction is not a table funding transaction. A person is deemed to have dominion and control over the proceeds of an advance under a line of credit used to fund a loan regardless of whether:
(A) The person may, contemporaneously with or shortly following the funding of the loan, assign or deliver to the line of credit lender one or more loans funded by the proceeds of an advance to the person under the line of credit;
(B) The proceeds of an advance are delivered directly to the settlement agent by the line of credit lender, unless the settlement agent is the agent of the line of credit lender;
(C) One or more loans funded by the proceeds of an advance under the line of credit is purchased by the line of credit lender; or
(D) Under the circumstances as set forth in regulations adopted by the director or the director's designee pursuant to this chapter;
(5) "Licensee" means an entity licensed under this chapter;
(6) "Loan" means any advance of money or credit including, but not limited to:
(i) Loans secured by mortgages;
(ii) Insurance premium finance contracts;
(iii) The purchase or acquisition of retail installment contracts or advances to the holders of those contracts;
(iv) Educational loans; or
(v) Any other advance of money;
(7) "Loan broker" means any person who, for compensation or gain, or in the expectation of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places or sells a loan within this state for others in the primary market, or offers to do so. A loan broker shall also mean any person who is the nominal mortgagee or creditor in a table funding transaction. A loan is brokered within this state if any of the following conditions exist:
(i) The loan is secured by real property located in this state;
(ii) An application for a loan is taken by an employee, agent or representative of the loan broker within this state; or
(iii) The loan closes within this state;
(8) "Personal money order" means any instrument for the transmission or payment of money in relation to which the purchaser or remitter appoints or purports to appoint the seller as his or her agent for the receipt, transmission, or handling of money, whether the instrument is signed by the seller or by the purchaser or remitter or some other person;
(9) "Primary market" means the market in which loans are made to borrowers by lenders, whether or not through a loan broker or other conduit;
(10) "Principal owner" means any person who owns, controls, votes or has a beneficial interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock of a licensee;
(11) "Sell" means to sell, to issue, or to deliver a check;
(12) "Small loan" means a loan of less than five thousand dollars ($5,000), not secured by real estate, made pursuant to the provisions of chapter 14.2 of this title;
(13) "Small loan lender" means a lender engaged in the business of making small loans within this state; and
(14) "Table funding transaction" means a transaction in which there is a contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of the loan to the lender.
19-14-6. Bond of applicant -- (a) An applicant for any license shall file with the director or the director's designee a bond to be approved by him or her in which the applicant shall be the obligor.
(b) The amount of the bond shall be as follows:
(1) Small loan lenders, the sum of ten thousand dollars ($10,000);
(2) Loan brokers, the sum of ten thousand dollars ($10,000);
(3) Lenders, the sum of twenty-five thousand dollars ($25,000);
(4) Sale of checks and electronic money transfer licensees, the sum of fifty thousand dollars ($50,000) subject to a maximum of one hundred and fifty thousand dollars ($150,000) when aggregated with agent locations;
(5) Check cashing licensees who accept checks for collection with deferred payment, the sum of fifty thousand dollars ($50,000) subject to a maximum of one hundred and fifty thousand dollars ($150,000) when aggregated with agent locations;
(6) Foreign exchange licensees, the sum of ten thousand dollars ($10,000); or
(7) Each branch or agent location of a licensee, the sum of five thousand dollars ($5,000).
(c) The bond shall run to the state for the use of the state and of any person who may have cause of action against the obligor of the bond under the provisions of this title. The bond shall be conditioned upon the obligor faithfully conforming to and abiding by the provisions of this title and of all rules and regulations lawfully made, and the obligor will pay to the state and to any person any and all money that may become due or owing to the state or to the person from the obligor under and by virtue of the provisions of this title.
(d) The provisions of section 19-14-6(6) shall not apply to any foreign exchange business holding a valid electronic money transfer license issued pursuant to section 19-14-1 et. seq. that has filed with the division of banking the bond required by sections 19-14-6(4) and 19-14-6(7).
SECTION 2. Sections 19-14.5-1, 19-14.5-2, 19-14.5-3, 19-14.5-4, 19-14.5-5 and 19-14.5-6 of the General Laws in Chapter 19-14.5 entitled "Foreign Exchange Transactions" are hereby repealed.
19-14.5-1. Record of foreign exchange transactions -- Every person carrying on a foreign exchange business or the business of forwarding foreign drafts or of forwarding money or other credits to any country outside of the United States shall make and preserve a record of each transaction. The record shall contain all of the following information: the amount or value of the money or credit forwarded, the bank or depository from which the money or credit is purchased by that person, the date of the purchase, the names and addresses of the persons forwarding the money or credit, and the serial number or other symbol of any of the drafts or credits deposited with the person for forwarding. The record shall be kept in a separate book for that purpose and shall always be open to the inspection of the person who has forwarded any money or credit through the person upon his or her request. This person shall not fail, neglect, or refuse to submit or show the record or prevent a proper person as defined in this section to inspect the record.
19-14.5-2. Forwarding of documents to foreign correspondent -- Receipt for money or documents -- Every person, whether engaged in the foreign exchange brokerage business or not, to whom any money, draft, or credit is delivered to be forwarded to a foreign correspondent, shall forward the credit accompanied by draft credits, or any documents necessary and essential to carrying out the transaction, immediately after the receipt, sale, deposit, or other transaction by which the money, draft, or credit is delivered to the person for forwarding. That person shall also, upon delivery of any money, draft, or credit to be forwarded to a foreign correspondent, give a receipt, showing what the current rate of exchange of the foreign currency to which the money, draft, or credit is to be transferred is on the day of the transaction, and the amount expressed in the denomination of the foreign currency, according to the rate of exchange, which is to be forwarded as set out above.
19-14.5-3. Action on bond -- Every person who has delivered or deposited money or credit to be forwarded to a foreign correspondent, who has acquired any judgment, debt, claim, or demand relating to the transaction against any person named as principal in any bond filed in accordance with these provisions or the person's agents or employees, arising from defalcation, embezzlement, negligence, breach of contract, or violation of any duty required under this title, shall have a cause of action upon the bond for all damages sustained, and shall upon request be furnished with a certified copy of the bond by the director or the director's designee and may bring suit in the name of the obligee named in the bond for their use and benefit against the principal and surety or sureties named in the bond, and may prosecute the action to final judgment and execution; provided, that the action and its prosecution shall involve the obligee in no expense, and that every action shall be commenced and sued within six (6) years after the cause of action shall accrue and not after.
19-14.5-4. Companies exempt from provisions -- The provisions of this chapter shall not apply to duly incorporated financial institutions or credit unions.
19-14.5-5. Rules and regulations -- The director or the director's designee may adopt reasonable rules and regulations for the implementation and administration of the provisions of this chapter.
19-14.5-6. Severability -- If any provision of this chapter or the application of this chapter to any person or circumstances is held invalid or unconstitutional, the invalidity or unconstitutionality shall not affect other provisions or applications of this chapter which can be given effect without the invalid or unconstitutional provision or application, and to this end the provisions of this chapter are declared to be severable.
SECTION 3. Chapter 19-14.3 of the General Laws entitled "Sale of Checks and Electronic Money Transfers" is hereby amended by adding thereto the following section:
19-14.3-3.1. Record of foreign exchange transactions. -- Every person carrying on a foreign exchange business or the business of forwarding foreign drafts or of forwarding money or other credits to any country outside of the United States shall make and preserve a record of each transaction. The record shall contain all of the following information: the amount or value of the money or credit forwarded; the bank or depository from which the money or credit is purchased by the person; the date of the purchase; the names and addresses of the persons forwarding the money or credit; and the serial number or other symbol of any of the drafts or credits deposited with the person for forwarding. The record shall be kept in a separate book for that purpose and shall always be open to the inspection of the person who has forwarded any money or credit through the person upon his or her request. This person shall not fail, neglect, or refuse to submit or show the record or prevent a proper person as defined in this section to inspect the record.
19-14.3-3.2. Forwarding of documents to foreign correspondent - Receipt for money or documents. - Every person, whether engaged in the foreign exchange brokerage business or not, to whom any money, draft, or credit is delivered to be forwarded to a foreign correspondent, shall forward the credit accompanied by draft credits, or any documents necessary and essential to carrying out the transaction, immediately after the receipt, sale, deposit, or other transaction by which the money, draft, or credit is delivered to the person for forwarding. That person shall also, upon delivery of any money, draft, or credit to be forwarded to a foreign correspondent, give a receipt, showing what the current rate of exchange of the foreign currency to which the money, draft, or credit is to be transferred is on the day of the transaction, and the amount expressed in the denomination of the foreign currency, according to the rate of exchange, which is to be forwarded as set forth above.
19-14.3-3.3. Action on bond. - Every person who has delivered or deposited money or credit to be forwarded to a foreign correspondent, who has acquired any judgment, debt, claim, or demand relating to the transaction against any person named as principal in any bond filed in accordance with the provisions of this chapter or the person's agents or employees, arising from defalcation, embezzlement, negligence, breach of contract, or violation of any duty required under this title, shall have a cause of action upon the bond for all damages sustained, and shall upon request be furnished with a certified copy of the bond by the director or the director's designee and may bring suit in the name of the obligee named in the bond for their use and benefit against the principal and surety or sureties named in the bond, and may prosecute the action to final judgment and execution; provided, that the action and its prosecution shall involve the obligee in no expense, and that every action shall be commenced and sued within six (6) years after the cause of action shall accrue and not after.
19-14.3-3.4. Companies exempt from provisions. -- The provisions of sections 19-4.3-3.1 through 19-4.3-3.3 shall not apply to duly incorporated financial institutions or credit unions.
SECTION 4. This act shall take effect upon passage.