DAR File No. 39370

Financial Institutions, Administration

Rule R331-14

Rule Governing Parties Who Engage in the Business of Issuing and Selling Money Orders, Traveler's Checks, and Other Instruments for the Purpose of Effecting Third-Party Payments

Notice of Proposed Rule

(Repeal)

DAR File No.: 39370
Filed: 05/14/2015 04:32:13 PM

RULE ANALYSIS

Purpose of the rule or reason for the change:

With the passage of S.B. 24, during the 2015 General Session, the provisions of Rule R331-14 are now found in Chapter 25 of Title 7. Therefore, the rule is no longer needed.

Summary of the rule or change:

The rule is being repealed in its entirety.

State statutory or constitutional authorization for this rule:

• Section 7-25-101

Anticipated cost or savings to:

the state budget:

Any anticipated cost will be to those parties that needed to be licensed under Rule R331-14 and will now be licensed under Title 7, Chapter 25, not the state.

local governments:

Local governments are not involved in the regulation of money transmitters.

small businesses:

Those parties that needed to be licensed under Rule R331-14 will be licensed under Title 7, Chapter 25. The costs for conducting business as a money transmitter, for those who have not previously registered with the nationwide database, will increase. Money transmitters that register with the nationwide database for the first time will have to pay any fees that are required by the nationwide database.

persons other than small businesses, businesses, or local governmental entities:

Those parties that needed to be licensed under Rule R331-14 will be licensed under Title 7, Chapter 25. The costs for conducting business as a money transmitter, for those who have not previously registered with the nationwide database, will increase. Money transmitters that register with the nationwide database for the first time will have to pay any fees that are required by the nationwide database.

Compliance costs for affected persons:

Those parties that needed to be licensed under Rule R331-14 will be licensed under Title 7, Chapter 25. The costs for conducting business as a money transmitter, for those who have not previously registered with the nationwide database, will increase. Money transmitters that register with the nationwide database for the first time will have to pay any fees that are required by the nationwide database.

Comments by the department head on the fiscal impact the rule may have on businesses:

Those parties that needed to be licensed under Rule R331-14 will be licensed under Title 7, Chapter 25. The costs for conducting business as a money transmitter, for those who have not previously registered with the nationwide database, will increase. Money transmitters that register with the nationwide database for the first time will have to pay any fees that are required by the nationwide database.

Edward Leary, Commissioner

The full text of this rule may be inspected, during regular business hours, at the Division of Administrative Rules, or at:

Financial Institutions
AdministrationRoom 201
324 S STATE ST
SALT LAKE CITY, UT 84111-2393

Direct questions regarding this rule to:

• Paul Allred at the above address, by phone at 801-538-8854, by FAX at 801-538-8894, or by Internet E-mail at pallred@utah.gov

Interested persons may present their views on this rule by submitting written comments to the address above no later than 5:00 p.m. on:

07/01/2015

This rule may become effective on:

07/08/2015

Authorized by:

Edward Leary, Commissioner

R331. Financial Institutions, Administration.

[R331-14. Rule Governing Parties Who Engage in the Business of Issuing and Selling Money Orders, Traveler's Checks, and Other Instruments for the Purpose of Effecting Third-Party Payments.

R331-14-1. Authority, Scope, and Purpose.

(1) This rule is issued pursuant to Section 7-1-301, 7-1-501(2)(h)(iii) and 7-1-505.

(2) This rule applies to any individual or other party who issues, sells or offers to sell within the state any instrument for the purpose of effecting payments to third parties, including, but not limited to, money orders, traveler's checks, and the wire transmission of money. Excluded from this rule are:

(a) any party chartered and regulated by the United States or the state as a depository institution which is currently operating as a depository institution, and

(b) the U.S. Post Office.

(3) The purpose of this rule is to require licensing and prescribe standards with regard to the financial condition and capability of all parties who issue instruments payable to third parties, such as money orders and traveler's checks, for the benefit and protection of the purchasers of such instruments.

 

R331-14-2. Definitions.

(1) "Department" means the Department of Financial Institutions.

(2) "Payment instrument" means a check, money order, traveler's check, draft, or other instrument for the transmission or payment of money to third parties.

(3) "Party" means an individual, corporation, partnership, trust, association, joint venture, pool, syndicate, sole proprietorship, unincorporated organization, or any form of business entity.

 

R331-14-3. License Required.

No party subject to this rule shall issue any kind of payment instrument to be offered for sale or sold in the state unless the issuer first obtains a license to do so from the department. No party subject to this rule may offer for sale or sell payment instruments of any kind in the state which are issued by any party not holding a current license to issue payment instruments in accordance with this rule, unless the issuer is exempt from the requirement to hold such a license.

 

R331-14-4. Requirements for a License.

To qualify for a license to issue payment instruments for sale in Utah, an applicant shall provide or pay to the department:

(1)(a) Proof satisfactory to the department that the applicant is a depository institution chartered and regulated by a state in the United States other than Utah and is currently operating as a depository institution; or

(b) A certified financial statement satisfactory to the department for the most recent fiscal year showing the applicant has a net worth of at least one million dollars ($1,000,000).

(B) A surety bond satisfactory to the department in the minimum sum of $50,000 to reimburse the state for any expenses of any kind or nature that it may incur in connection with any administrative or judicial proceedings against a licensee, former licensee or seller relating to the issuance and/or sale of payment instruments in Utah.

(3) Additional information as may be specified by the department.

(4) A non-refundable filing fee in the sum of $100.00.

 

R331-14-5. Renewal.

Unless previously revoked by the department, each license shall expire on July 31 of each year if before that date the licensee fails to deliver or pay to the department:

(1) Proof that the party continues to operate as a regulated depository institution or a certified financial statement for the licensee's last fiscal year showing that it continues to have a net worth of at least $1,000,000, proof of renewal of the surety bond described in part 4B hereof, and any other information the department may request, all in a form acceptable to the department.

(2) A non-refundable renewal fee in the sum of $100.00.

 

R331-14-6. Revocation of License.

The department, with or without a hearing, may for cause revoke or suspend a license to issue payment instruments at any time. If the department revokes a license, it shall not be obligated to refund any portion of the licensee's filing or renewal fee for the remainder of the period for which the fee was paid.

 

R331-14-7. Required Deposits.

If the department finds any reasonable cause to believe that a licensee is in an unsafe or unsound condition or is unwilling or unable to pay its payment instruments when they come due, it may require the licensee to deposit funds in a financial institution(s) acceptable to the department in such amounts, for such period, and upon such conditions as the department may specify, and may prohibit the licensee from issuing payment instruments for sale in Utah in an aggregate unpaid amount exceeding the amount of any such required deposit or the amount actually deposited pursuant to such a requirement, whichever is less.

 

R331-14-8. Instruments to Bear Name of Licensee.

Every payment instrument issued by a licensee for sale in Utah, or which is sold in Utah, shall state on its face the name of the licensee issuer.

 

KEY: financial institutions

Date of Enactment or Last Substantive Amendment: October 3, 1997

Notice of Continuation: July 20, 2012

Authorizing, and Implemented or Interpreted Law: 7-1-301; 7-1-501(8)(c); 7-1-505]