Chapter
251
2007 -- S 0369 AS AMENDED
Enacted 07/03/07
A N A C T
RELATING
TO FINANCIAL INSTITUTIONS -- LICENSED ACTIVITIES
Introduced
By: Senator William A. Walaska
Date
Introduced: February 13, 2007
It is enacted by the General Assembly as
follows:
SECTION 1. General
assembly intent. – (a) The general assembly finds that a uniform
multi-state administration of an automated
licensing system for persons seeking a license under
the provisions of chapter 14 of title 19 of the
general laws of Rhode Island or for persons holding
a license under the provisions of chapter 14 of
title 19 of the general laws of Rhode Island is
consistent with both the public interest and the
purposes of this chapter; therefore, for the sole
purpose of participating in the establishment
and implementation of a multi-state automated
licensing system the director is authorized:
(1) To establish
such new requirements as are necessary for the state of Rhode Island to
participate in a multi-state automated licensing
system upon the director's finding that each new
requirement is consistent with both the public
interest and the purposes of this chapter; and
(2) To require a
background investigation of each applicant and the principal owners,
members or officers of an applicant for a
license by means of fingerprint checks by an agency
authorized pursuant to the provisions of this
act to perform state and national criminal history
record checks, commencing at such time as Rhode
Island joins a multi-state automated licensing
system. The information obtained thereby may be
used by the director to determine the
applicant's eligibility for licensing under this
chapter. The fee, if so required, to perform the
criminal history record check shall be borne by
the license applicant. Information obtained or
held by the director pursuant to this subsection
shall be considered confidential personal
information and shall be exempt from disclosure
pursuant to chapter 2 of title 38 of the general
laws of Rhode Island.
(b) The applicant
for a license under the provisions of chapter 14 of title 19 of the general
laws of Rhode Island or a person holding a
license under the provisions of chapter 14 of title 19
of the general laws of Rhode Island may be
required to pay an additional fee for a license or other
participation in such multi-state licensing
system.
SECTION 2.
Sections 19-14-1, 19-14-3 and 19-14-4 of the General Laws in Chapter 19-
14 entitled "Licensed Activities" are
hereby amended to read as follows:
19-14-1.
Definitions. [Effective March 31, 2007.] -- For purposes of this
chapter and
chapters 14.1, 14.2, 14.3, 14.4, 14.6 and 14.7
of this title:
(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;
(C) The loan
closes within this state; or
(D) The loan
solicitation is done by an individual with a physical presence in 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 agreements;
(iii) The
purchase or acquisition of retail installment contracts or advances to the
holders
of those contracts;
(iv) Educational
loans;
(v) Any other
advance of money; or
(vi) Any
transaction such as those commonly known as "pay day loans,"
"pay day
advances," or "deferred presentment
loans," in which a cash advance is made to a customer in
exchange for the customer's personal check, or
in exchange for the customer's authorization to
debit the customer's deposit account, and where
the parties agree either that the check will not be
cashed or deposited, or that customer's deposit
account will not be debited, until a designated
future date.
(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;
(iii) The loan
closes within this state; or
(iv) The loan
solicitation is done by an individual with a physical presence in 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;
(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;
(15) "Check
casher" means a person or entity that, for compensation, engages, in whole
or in part, in the business of cashing checks;
(16)
"Deferred deposit transaction" means any transaction such as those
commonly
known as "pay-day loans,"
"pay-day advances," or "deferred presentment loans" in
which a cash
advance is made to a customer in exchange for
the customer's personal check or in exchange for
the customer's authorization to debit the
customer's deposit account and where the parties agree
either that the check will not be cashed or
deposited, or that the customer's deposit account will
not be debited until a designated future date;
(17)
"Insurance premium finance agreement" means an agreement by which an
insured,
or prospective insured, promises to pay to an
insurance premium finance company the amount
advanced or to be advanced, under the agreement
to an insurer or to an insurance producer, in
payment of a premium or premiums on an insurance
contract or contracts, together with interest
and a service charge, as authorized and limited
by this title;
(18)
"Insurance premium finance company" means a person engaged in the
business of
making insurance premium finance agreements or
acquiring insurance premium finance
agreements from other insurance premium finance
companies;
(19) "Simple
interest" means interest computed on the principal balance outstanding
immediately prior to a payment for the actual
number of days between payments made on a loan
over the life of a loan;
(20)
"Nonprofit organization" means a corporation qualifying as a 26
U.S.C. section
501(c)(3) nonprofit organization, in the
operation of which no member, director, officer, partner,
employee, agent, or other affiliated person
profits financially other than receiving reasonable
salaries if applicable.;
(32)
"Multi-state licensing system" a system involving one or more states,
the District of
Columbia, or the Commonwealth of Puerto Rico
established to facilitate the sharing of regulatory
information and the licensing, application,
reporting and payment processes, by electronic or
other means, for mortgage lenders and loan
brokers, and other licensees required to be licensed
under this chapter.
19-14-3.
Application for license. [Effective March 31, 2007.] -- (a) Application
for a
license shall be made in writing under oath in a
form to be provided by the director or the
director's designee. The application for
a license shall be in the form prescribed by the director
and shall contain the name and address or
addresses where the business of the applicant is located
and if the applicant is a partnership,
association, corporation or other form of business
organization, the names and addresses of each
member, director and principal officer thereof or
any individual acting in the capacity of the
manager of an office location. Such application shall
also include a description of the activities of
the applicant, in such detail and for such periods as
the director may require, as well as such
further information as the director may require. The
director may require a background investigation
of each applicant for a license by means of
fingerprint checks pursuant to Rhode Island
general laws sections 19-14-7 and 42-14-14, utilizing
the federal bureau of investigation, or other
agency as determined by the director for state and
national criminal history record checks. If the
applicant is a partnership, association, corporation
or other form of business organization, the
director may require a background investigation by
means of fingerprint checks on each member,
director or principal officer of such applicant or any
individual acting in the capacity of the manager
of an office location. The director will determine
by rule those items of information appearing on
a criminal records check that will constitute
disqualifying information and therefore render
the applicant ineligible for licensing under this
chapter in accordance with the provisions of
section 19-14-7. Receipt of criminal history record
information by a private entity is prohibited.
Each application for a license shall be accompanied
by an investigation fee. The applicant at the
time of making application shall pay to the director
or the director's designee the sum of one half
(1/2) of the annual license fee as a fee for
investigating the application. If the
application for license is approved, the applicant shall pay a
fee equal to the annual license fee as provided
in this chapter. The license shall be continuous and
the license fee shall cover the period through March
December 31 of each year. Any application
approved after January October 1
of any given year shall pay one half (1/2) of the annual license
fee for the period ending March December
31 of that year. as well as a full annual license fee for
the succeeding calendar year ending December
31st. The director or the director's designee is
authorized to participate in a multi-state
licensing system for licensees. The director may
establish requirements for participation by an
applicant for a license or a person licensed under
this chapter. Any such requirements that may be
established by the director shall be published on
the website of the department of business
regulation. Upon implementation, participation by an
applicant for a license or by a person licensed
under the provisions of this chapter shall be
mandatory. The applicant may be required to an
additional fee for a license or other participation
in such multi-state licensing system.
(b) [Reserved].
(c) [Reserved].
(d) Any license
issued under the provisions of former section 5-66-2 shall remain in full
force and effect until its expiration and shall
be subject to the provisions of this chapter.
19-14-4.
Annual fee. [Effective March 31, 2007.] -- (a) Each licensee shall pay
an
annual license fee as follows:
(1) Each small
loan lender license and each branch certificate, the sum of five hundred
fifty dollars ($550);
(2) Each loan
broker license and each branch certificate, the sum of five hundred fifty
dollars ($550);
(3) Each lender
license and each branch certificate, the sum of one thousand one hundred
dollars ($1,100);
(4) Each sale of
checks license, the sum of three hundred dollars ($300);
(5) Each check
cashing license, the sum of three hundred dollars ($300);
(6) Each
electronic money transfer license, the sum of three hundred dollars ($300); and
(7) Each
registration to provide debt-management services, the sum of two hundred
dollars ($200).
(b) Any licensee
who shall not pay the annual fee by March December 31 of each
year
shall be subject to a daily penalty of
twenty-five dollars ($25) per day, subject to a maximum of
seven hundred fifty dollars ($750). The penalty
shall be paid to the director to and for the use of
the state. The penalty may be waived for good
cause by the director or the director's designee,
upon written request.
SECTION 3. This
act shall take effect on December 31, 2008 or at such other date after
December 31, 2008 pursuant to a notice as
published on the department's website at least sixty
(60) days prior to December 31, 2008; however,
upon passage of this act all licensees shall insure
that all aspects of the licensees' business are
conducted in compliance with all applicable state
and/or federal statutes and/or regulations and
should take reasonable steps to conduct business
consistent with the provisions of this act.
Should the effective date of this act change pursuant to
the provisions of this section, the annual
license fee that is due on December 31, 2008 pursuant to
this act shall be amended to a date no later
than June 30, 2009.
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LC01337
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