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Money Transmitters, Title 12, Article 52 - ARTICLE 106

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Money Transmitters, Title 12, Article 52 - ARTICLE 106

    TITLE 12

    Professions and Occupations

    ARTICLE 52

    Money Transmitters

12-52-101. Short title

    12-52-102. Legislative declaration

    12-52-103. Definitions

    12-52-103.5. Applicability of powers of banking board and bank commissioner to money orders

    12-52-104. License required

    12-52-105. Exemptions

    12-52-106. Application for license

    12-52-107. Bond condition amount 12-52-108. Issuance of license

    12-52-109. Issuance of license renewal fee 12-52-110. Examination fee financial statements and reports to commissioner

    12-52-110.5. Compliance with federal law 12-52-111. Multiple locations

    12-52-112. Revocation or surrender of license 12-52-113. Rules and regulations

    12-52-114. Review

    12-52-115. Penalty for violations

    12-52-115.5. Civil remedies restraining orders injunctions

    12-52-116. Notice banking board consumers 12-52-117. Repeal of article review of functions

    12-52-101. Short title. This article shall be known and may be cited as the “Money Transmitters Act”.

    12-52-102. Legislative declaration. It is declared to be the policy of this state that checks, drafts, money orders, or other instruments for the transmission or payment of credit or money are widely used by

    the people of this state as a process of settling accounts or debts and that sellers and issuers of such

    instruments receive, in the aggregate, large sums of money from the people of this state and it is therefore

    imperative that the integrity, experience, and financial responsibility and reliability of those engaged in

    the various types of businesses dealing in such instruments be above reproach. In order that the people of

    this state may be safeguarded from default in the payment of these instruments, it is necessary that proper

    regulatory authority be established through the banking board. Any person who sells or issues such

    instruments without complying with the provisions of this article endangers the public interest.

    12-52-103. Definitions. As used in this article, unless the context otherwise requires:

    (1) “Banking Board” or “board” means the banking board created in section 11-102-103, C.R.S.

    (1.5) "Commissioner" means the state bank commissioner appointed and serving pursuant to

    section 11-102-101 (2), C.R.S.

    (1.7) "Engagement letter" means a letter that sets the scope and terms of an independent audit.

    (2) "Exchange" means any check, draft, money order, or other instrument for the transmission or

    payment of money or credit. It does not mean money or currency of any nation.

    (3) "Issuing" means the act of drawing any instrument of exchange by a person who engages in

    the business of drawing such instruments as a service or for a fee or other consideration.

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    (4) "Licensee" means any person duly licensed by the banking board pursuant to the provisions of this article.

    (4.1) "Management letter" means a letter, written by the auditor to the management of a licensee, reporting the auditor's findings and suggestions resulting from an independent audit.

    (4.2) "Managing official" means a person who has significant oversight duties over a licensee or applicant as determined by the board.

    (4.3) "Money transmission" means the sale or issuance of exchange or engaging in the business of receiving money for transmission or transmitting money within the United States or to locations abroad

    by any and all means including but not limited to payment instrument, wire, facsimile, or electronic

    transfer.

    (4.5) "Outstanding payment instrument" means any exchange sold or issued by a licensee or any exchange issued by the licensee which has been sold by an agent of the licensee in the United States,

    which has been reported to the licensee as having been sold and which has not yet been paid by or for the

    licensee.

    (4.7) "Owner" means a person with an ownership interest in a licensee or applicant that is a sole proprietorship or partnership.

    (5) "Person" means any natural person, firm, association, partnership, registered limited liability partnership, syndicate, joint stock company, unincorporated company or association, limited liability

    company, common law trust, or any corporation organized under the laws of the United States or of any

    state or territory of the United States or of any foreign country.

    (6) "Principal member" means a person who has a significant ownership interest in a licensee or applicant that is an association, trust, or limited liability company or similar entity, as determined by the

    board.

    (7) "Principal shareholder" means a person who has a significant ownership interest in a corporate licensee or applicant.

    (8) "Significant ownership interest" means an ownership interest that causes the owner to have significant control of a licensee or applicant as determined by the board.

    12-52-103.5. Applicability of powers of banking board and bank commissioner to money orders. The powers, duties, and functions of the banking board and the commissioner contained in article 102 of title 11, C.R.S., and the declaration of policy contained in section 11-101-102, C.R.S., shall apply

    to the provisions of this article. For the purposes of this section and section 11-102-104, C.R.S., the

    banking board shall have the same powers, duties, and functions concerning a violation of this article or a

    rule issued pursuant to this article as the board has concerning a violation of the "Colorado Banking

    Code", a statute, or a rule issued pursuant to that code.

    12-52-104. License required. A person shall not engage in the business of selling or issuing

    exchange or in the business of money transmission without first procuring a license from the banking

    board; except that no license under this article shall be required of any agent, subagent, or representative

    of a licensee or employee of such agent, subagent, or representative who acts on behalf of such licensee in

    the sale of exchange issued by the licensee.

    12-52-105. Exemptions. Nothing in this article shall apply to: Departments or agencies of the

    United States of America, or to any state or municipal government, or to corporations organized under the

    general banking, savings and loan, or credit union laws of this state or of the United States, or to the

    receipt of money by an incorporated telegraph or cable company at any office or agency thereof for

    immediate transmission by telegraph or cable.

    12-52-106. Application for license. (1) Application for a license shall be made in writing, under

    oath, to the banking board on such form as it may prescribe. The application shall:

    (a) State the name of the applicant and the address of his principal office;

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    (b) Contain evidence that the applicant possesses qualifications and experience as required by the

    banking board pursuant to rule. If the applicant is a joint stock association, common law trust, unincorporated company or association, limited liability company, or corporation, the secretary or any assistant secretary thereof shall certify the name and address of each of the officers, directors, trustees, or other managing officials together with a designation of the office or offices held by each and evidence that each such individual possesses the qualifications and experience required by the banking board pursuant to rule and shall submit such certificate to the banking board with the application.

    (c) State the date and place of incorporation;

    (d) If the applicant has one or more branches, subsidiaries, affiliates, agents, or other locations at

    or through which the applicant proposes to engage in the business of issuing checks, drafts, money orders, or other instruments for the transmission or payment of money or credit, state the name and address of each such location;

    (d.5) Contain a set of fingerprints for each of the owners, principal shareholders, principal

    members, directors, trustees, officers, or other managing officials. The commissioner shall forward the fingerprints to the Colorado bureau of investigation for the purpose of obtaining a fingerprint-based criminal history record check. Upon receipt of fingerprints and payment for the costs, the Colorado bureau of investigation shall conduct a state and national fingerprint-based criminal history record check utilizing records of the Colorado bureau of investigation and the federal bureau of investigation. The board shall be the authorized agency to receive information regarding the result of any national criminal history record check. Only the actual costs of such record check shall be borne by the applicant.

    (e) Contain such other data, financial statements, and pertinent information as the banking board

    may require from time to time with respect to the applicant or its directors, trustees, officers, members, branches, subsidiaries, affiliates, or agents.

    (2) Each application for a license shall be accompanied by financial statements of the applicant

    and a bond in the form and the amount specified in this article.

    12-52-107. Bond condition amount. (1) (a) Each approved applicant shall furnish a

    corporate surety bond in the principal sum of one million dollars, except as otherwise provided in this subsection (1), by a bonding company or insurance company authorized to do business in this state, in which the applicant is named as obligor, to be approved by the banking board, which shall run to the state of Colorado for the use and benefit of the state and of any creditor of the licensee for any liability incurred on any exchange issued by the licensee. The bond shall be conditioned that the obligor will faithfully conform to and abide by the provisions of this article and will honestly and faithfully apply all funds received for the performance of all obligations and undertakings for exchange issued and sold under this article and will pay to the state and to any person all money that becomes due and owing to the state or to such person under the provisions of this article because of any exchange sold or issued by such licensee. The bond shall remain in force and effect until the surety is released from liability by the banking board or until the bond is cancelled by the surety, which cancellation may be had only upon ninety days' written notice to the banking board. Such cancellation shall not affect any liability incurred or accrued prior to the termination of the ninety-day period. If the banking board finds, at any time, any bond to be exhausted, a replacement bond in an equal amount shall be filed by the licensee within thirty days after written demand therefor.

    (b) The banking board shall by rule establish financial standards by which to evaluate the

    financial condition or solvency of licensees and for the bond amount set under paragraph (a) of this subsection (1) to be decreased to not less than two hundred fifty thousand dollars, following application by the licensee and an opportunity for hearing before the banking board, in such amounts as necessary up to the amount provided in paragraph (a) of this subsection (1) to protect purchasers of exchange.

    (c) The banking board shall by rule establish financial standards by which to evaluate the

    financial condition or solvency of licensees and for the bond amount to be increased above the amount provided in paragraph (a) of this subsection (1) if the banking board determines, following notice to the licensee and an opportunity for hearing before the banking board, that the customers of such licensees are

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at undue risks, but in no case shall the total bond required of a licensee be greater than two million dollars.

    In promulgating such rules, the banking board shall utilize and adopt generally accepted accounting

    principles for the evaluation and determination of the financial condition of licensees.

    (2) In lieu of such surety bond, the licensee may deposit with the banking board securities with a par value equal to the amount of any such surety bond. Such securities shall consist of: General

    obligations of, or securities fully guaranteed by, the United States of America or any agency or

    instrumentality of or corporation wholly owned by the United States of America directly or indirectly; or

    direct general obligations of the state of Colorado, or of any county, town, city, village, school district, or

    other political subdivision or municipal corporation of the state of Colorado. Such securities shall be held

    by the banking board to secure the same obligations as would any surety bond required by this article.

    The securities so deposited may be exchanged from time to time for other securities which qualify as

    aforesaid. All said securities shall be subject to sale and transfer and the disposal of the proceeds by said

    banking board only on the order of a court of competent jurisdiction. Such licensee shall be permitted to

    receive the interest or dividends on such securities unless prohibited by a court of competent jurisdiction.

    The banking board may provide for custody of such securities by any qualified trust company or bank

    located in the state of Colorado. The compensation of any custodian for acting as such under this section

    shall be paid by the depositing licensee.

    (3) In addition to the bond required under subsection (1) of this section, the commissioner, pursuant to rules promulgated by the banking board, may require a licensee to possess investments having

    an aggregate market value at least equal to the amount of outstanding payment instruments issued or sold

    by the licensee. For the purposes of this subsection (3), permissible investments shall be:

    (a) Cash;

    (b) Certificates of deposit or other debt obligations of a financial institution, either domestic or foreign;

    (c) Bills of exchange or time drafts drawn on and accepted by federally insured financial depository institutions;

    (d) Any investment bearing a rating of one of the three highest grades as defined by a nationally recognized organization that rates such securities;

    (e) Investment securities that are obligations of the United States, its agencies or instrumentalities, or obligations that are guaranteed fully as to principal and interest of the United States, or any obligations

    of any state, municipality, or any political subdivision thereof;

    (f) Shares in a money market mutual fund, interest-bearing bills or notes or bonds, debentures, or stock traded on any national securities exchange or on a national over-the-counter market;

    (g) Such other investments as may be approved by the banking board.

    (4) It is the intent of the general assembly that in applying the provisions of this section the purpose of the required bond and permissible investments is to protect the Colorado purchasers of

    exchange, and the amount of the bond and investments that are required of any licensee should not be

    more than is necessary to afford such protection given the financial condition of the licensee as

    determined under generally accepted accounting principles.

    (5) Permissible investments, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of the purchasers and holders of the

    licensee's outstanding payment instruments in the event of the bankruptcy of the licensee.

    12-52-108. Issuance of license. (1) Upon the filing of an application, the commissioner shall

    investigate the applicant. If the banking board finds that the applicant is of good moral character and

    financially responsible and can comply with this article, the banking board shall approve the application

    and notify the applicant in writing, who shall within ninety days post the required bond and pay the

    license fee, whereupon the banking board shall issue to the applicant a license to engage in the business of

    selling or issuing exchange subject to the provisions of this article.

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    (2) No license shall be issued to an applicant, if a natural person, unless he is over twenty-one years of age; or if a partnership or syndicate, unless each of the partners is over twenty-one years of age;

    or if a joint stock association, common law trust, unincorporated company or association, or corporation,

    unless each of the officers, directors, trustees, or other managing officials is over twenty-one years of age.

    (3) No application shall be denied unless the applicant has had notice of a hearing on said application and an opportunity to be heard thereon. If the application is denied, the banking board shall,

    within thirty days thereafter, prepare and file in its office a written order of denial which shall contain the

    banking board's findings and reasons supporting the denial and, within ten days after the filing of such

    order, shall notify the applicant and send him a copy of such order.

    (4) A license shall not be issued to an applicant if an owner, principal shareholder, principal member, director, trustee, officer, or other managing official:

    (a) Submitted a license application under this article that was false or misleading as a result of an untrue statement of a material fact or an omission to state a material fact unless the applicant did not

    know, and in the exercise of reasonable care should not have known, of the untruth or omission;

    (b) Willfully violated or willfully failed to comply with this article or a rule promulgated or order issued under this article;

    (c) Within the past ten years, entered a plea of guilty or nolo contendere to, or was convicted of, a felony or misdemeanor involving a breach of fiduciary duty or fraud; or

    (d) Is subject to a temporary or permanent injunction for violating a state or federal law regulating the financial services industry, including, but not limited to, federal provisions regarding money

    laundering, record-keeping, and registration.

    12-52-109. Issuance of license renewal fee. (1) Before any license is issued, and annually

    thereafter on or before January 1 of each succeeding year, the applicant or licensee shall pay to the

    banking board a license fee in an amount set by the banking board pursuant to section 11-102-104 (11),

    C.R.S. For each license originally issued between July 1 and December 31 of any year, the applicant shall

    pay one-half the annual fee required in this section. Each license shall expire on January 1 unless the

    annual fee for the year has been paid prior to such date.

    (2) Beginning July 1, 1977, before any license may be renewed, the licensee shall be required to provide the same amount of bond coverage or securities for deposit as an initial applicant under section

    12-52-107.

    12-52-110. Examination fee financial statements and reports to commissioner. (1) (a) The

    commissioner may examine the books and records of a licensee using risk-based criteria and considering

    other available regulatory mechanisms as directed by the banking board; shall make and file in the office

    of the commissioner a correct report in detail disclosing the results of such examination; and shall mail a

    copy of such report to the licensee examined. If the licensee's records are located outside this state, the

    licensee shall, at the option of such licensee, either make them available to the commissioner at a

    convenient location within this state or pay the reasonable and necessary expenses for the commissioner

    or the commissioner's representative to examine them at the place where they are maintained. The

    commissioner may designate representatives, including comparable officials of the state in which the

    records are located, to inspect them on behalf of the commissioner. For such examination, the

    commissioner shall charge a fee in an amount set by the banking board pursuant to section 11-102-104

    (11), C.R.S. If any licensee refuses to permit the commissioner to make an examination, such licensee

    shall be subject to such penalty as the commissioner may assess, not in excess of one hundred dollars for

    each day any such refusal shall continue.

    (b) In lieu of any examination required by this section to be made by the commissioner, the commissioner may accept the audit of an independent certified public accountant or an independent

    registered accountant, but the cost of such audit shall be borne by the licensee.

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    (2) (a) Every licensee shall file an annual financial statement with the commissioner, audited by an independent certified public accountant or an independent registered accountant, within one hundred

    fifty days following the close of the licensee's fiscal year. Such financial statements shall include a

    balance sheet, a profit and loss statement, and a statement of retained earnings of the licensee and the

    licensee's agents and subagents resulting from selling or issuing exchange under this article. The financial

    statements shall be accompanied by copies of the engagement and management letters issued by the

    independent auditor.

    (b) Every licensee shall make and file with the commissioner not less than three reports during each calendar year according to the form which may be prescribed by the commissioner. Each such report

    shall exhibit in detail, as may be required by the commissioner, the resources and liabilities of the licensee

    at the close of business on the day past to be specified by said commissioner in writing.

    (c) If any licensee fails to submit any statement or report to the commissioner as required by this subsection (2), such licensee shall pay to the commissioner a penalty of two hundred fifty dollars for each

    additional day of delinquency as set by the banking board pursuant to section 11-102-104 (11), C.R.S.;

    except that, if in the opinion of the banking board the delay is excusable for good cause shown, no penalty

    shall be paid.

    12-52-110.5. Compliance with federal law. Each licensee shall comply with state and federal

    money laundering laws, including, but not limited to, the federal "Bank Secrecy Act", 12 U.S.C. sec. 1951

    et seq.

    12-52-111. Multiple locations. (1) Each licensee may conduct business at such locations within

    this state as such licensee may desire and through such agents and subagents as such licensee may from

    time to time appoint. Each licensee shall notify the banking board within ten days, by certified mail, of

    any increase in the number of locations at which it conducts its business and shall provide proof that the

    bond or securities required have been increased accordingly.

    (2) Each licensee may, without violating section 5-2-212, C.R.S., notwithstanding whether or not a facility or mode only accepts credit cards, conduct business through physical and electronic facilities,

    including by telephone and internet, and may charge a different price for the provision of services based

    upon the type of facility or mode of services used in such transaction so long as the price for such service

    within a single such facility or mode is not greater for a credit card than for other forms of payment.

    12-52-112. Revocation or surrender of license. (1) The banking board may, upon ten days'

    notice served personally upon the licensee stating the contemplated action and the grounds therefor, hold

    a hearing at which the licensee shall have a reasonable opportunity to be heard, for the purpose of

    determining whether a license should be revoked.

    (2) After such hearing the banking board may revoke any license issued under this article if it finds that:

    (a) The licensee has failed to maintain the required bond; or

    (b) The licensee has failed to comply with any order, decision, or finding of the banking board or the commissioner made pursuant to this article; or

    (c) The licensee has violated any provision of this article; or

    (d) Facts exist which would have warranted the banking board’s refusal to issue the original license; or

    (e) The licensee is engaged in a business a substantial portion of which involves the processing, manufacture, or purchase and sale of commodities or articles of tangible personal property and such

    licensee has failed to maintain constantly a separate bank deposit account or accounts for the exclusive

    payment of exchange issued by such licensee; or

    (f) The licensee has sold or issued exchange without receiving payment for the face value of the exchange prior to the time of such sale or issuance.

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    (3) A licensee may surrender any license by delivering to the banking board written notice that he surrenders such license, but such surrender shall not affect the licensee's civil or criminal liability for acts

    committed prior to the surrender, or affect the liability on any bond, or entitle the licensee to a return of

    any part of any license fee.

    12-52-113. Rules and regulations. The banking board may make, promulgate, alter, amend, or

    revise reasonable rules and regulations as may be necessary for the enforcement and execution of this

    article.

    12-52-114. Review. Any person aggrieved and directly affected by an order of the banking board

    issued under this article may seek a review in the district court of Colorado in and for the county in which

    the principal place of business of the licensee or applicant is located. The filing of such a petition for

    review shall not, of itself, stay enforcement of an order, but the court may order a stay upon such terms as

    it deems proper.

    12-52-115. Penalty for violations. Any person who violates any provision of this article is guilty

    of a misdemeanor and, upon conviction thereof, shall be punished by a fine of not more than ten thousand

    dollars. Each such violation shall constitute a separate offense.

    12-52-115.5. Civil remedies restraining orders injunctions. (1) (a) If the board has cause to

    believe that a person has sold or issued exchange or transmitted money without a license issued under this

    article 52, the board may obtain from the district court of the city and county of Denver a temporary

    restraining order or a preliminary or permanent injunction prohibiting the person from violating this

    article. In such action, the board shall not be required to plead or prove irreparable injury or the

    inadequacy of the remedy at law.

    (b) The court shall not require the board to post a bond.

    (c) The district court may issue any orders or judgments necessary to prevent a violation of this article. The district court may award to the board the costs and attorney fees incurred in enforcing this

    article.

    (2) A person who violates a district court order or injunction entered pursuant to this section shall be subject to the contempt powers of the district court and shall pay a civil penalty of not more than ten

    thousand dollars for each such violation. Each day a person continues to violate the district court order

    shall be a separate violation; except that the aggregate total of civil penalties shall not exceed one hundred

    thousand dollars for a related series of violations.

    (3) The civil remedies imposed by this section shall be in addition to any other penalty or remedy for a violation of this article.

    12-52-116. Notice banking board consumers. (1) The licensee or such licensee's agents or

    subagents shall give notice to the banking board, by certified mail, of any legal action which shall be

    brought against the licensee and of any judgment which shall be entered against such licensee, by any

    creditor or claimant, relating to selling or issuing exchange or transmitting money under this article,

    together with details sufficient to identify the action or judgment, within ten days after the

    commencement of any such action or notice to the licensee of entry of any such judgment. Within ten

    days after it pays any claim of judgment to any such creditor or such claimant, the corporate surety shall

    give notice to the banking board, by certified mail, of such payment, together with details sufficient to

    identify the claimant or creditor and the claim or judgment so paid.

    (2) The licensee or such licensee's affiliates, agents, or subagents shall immediately give notice to the banking board, by certified mail, of any information in their possession with regard to money orders

    issued by them that have been returned to purchasers unpaid.

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    (3) (a) Except for a money exchange or transmission conducted at a branch of a federally insured depository institution, a licensee shall post and maintain at its establishment a notice advising the

    customer that the selling or issuing of exchange is regulated by the division of banking and that the

    customer may report alleged violations of the law to the division of banking. Such notice shall be created

    and furnished to the licensee by the commissioner.

    (b) Such notice shall be posted conspicuously in a well-lighted place visible to customers.

    12-52-117. Repeal of article review of functions. (1) This article is repealed, effective July 1,

    2013.

    (2) Prior to such repeal, the licensing functions of the commissioner and the banking board shall be reviewed as provided for in section 24-34-104, C.R.S.

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