1-1 By: Carona S.B. No. 711
1-2 (In the Senate - Filed February 14, 2001; February 15, 2001,
1-3 read first time and referred to Committee on Business and Commerce;
1-4 March 15, 2001, reported favorably by the following vote: Yeas 7,
1-5 Nays 0; March 15, 2001, sent to printer.)
1-6 A BILL TO BE ENTITLED
1-7 AN ACT
1-8 relating to regulation of the business of selling checks, including
1-9 electronic checks.
1-10 BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF TEXAS:
1-11 SECTION 1. Section 152.002, Finance Code, is amended to read
1-12 as follows:
1-13 Sec. 152.002. DEFINITIONS. In this chapter:
1-14 (1) "Business of selling checks" means the activity of
1-15 receiving money by any means from a purchaser for the purpose of
1-16 subsequently transferring the money in the form of a check payable
1-17 by the seller to a person designated by the purchaser, for direct
1-18 or indirect compensation, including earnings from money received
1-19 from the purchaser or the purchaser's agent and held pending
1-20 disbursement on a check sold to the purchaser, whether or not the
1-21 activity is conducted on a regular basis or as an organized
1-22 business concern.
1-23 (2) "Check" means an instrument, service, or device
1-24 for the transmission or payment of money, including a draft,
1-25 traveler's check, or money order, or an electronic equivalent to a
1-26 draft, traveler's check, or money order, including an automated
1-27 clearing house transfer. The term does not include an instrument,
1-28 service, or device that:
1-29 (A) transfers money directly from the purchaser
1-30 to a creditor of the purchaser or to an agent of the creditor;
1-31 (B) is redeemed by the issuer in goods or
1-32 services under circumstances not designed to evade the obligations
1-33 and responsibilities imposed by this chapter; or
1-34 (C) transfers money in the form of currency to
1-35 another person in a transmission or transportation transaction
1-36 subject to Chapter 153[. The term also includes an instrument for
1-37 the transmission or payment of money in which the purchaser or
1-38 remitter of the instrument appoints or purports to appoint the
1-39 seller as its agent for the receipt, transmission, or handling of
1-40 money, regardless of who signs the instrument].
1-41 (3) [(2)] "Commission" means the Finance Commission of
1-42 Texas.
1-43 (4) [(3)] "Commissioner" means the banking
1-44 commissioner of Texas.
1-45 (5) [(4)] "Deliver" means to deliver a check to the
1-46 first person who in payment for the check remits or purports to
1-47 remit the face amount of the check or makes a remittance or
1-48 purported remittance against the face amount, regardless of whether
1-49 the person who delivers the check:
1-50 (A) signs the check or is otherwise directly
1-51 liable for obligations evidenced by the check; or
1-52 (B) charges a fee in addition to the face
1-53 amount.
1-54 (6) [(5)] "Department" means the Texas Department of
1-55 Banking.
1-56 (7) "Financial institution" has the meaning assigned
1-57 by Section 201.101.
1-58 (8) "License holder" means a person holding a current
1-59 license issued under Section 152.209. The term includes a person
1-60 exempt from licensing under Section 152.202 to the extent the
1-61 obligations and responsibilities of a license holder under this
1-62 chapter are imposed on the person as a condition of exemption.
1-63 (9) "Money" means a medium of exchange authorized or
1-64 adopted by a domestic or foreign government and includes a monetary
2-1 unit of account established by an intergovernmental organization or
2-2 by agreement between two or more nations. The term also includes
2-3 money represented in digital electronic format, whether or not
2-4 specially encrypted, and stored or capable of storage on electronic
2-5 media in a manner that is retrievable and transferable
2-6 electronically.
2-7 (10) [(6)] "Permissible investment" means:
2-8 (A) cash in demand or interest-bearing accounts
2-9 with a federally insured financial institution, including
2-10 certificates of deposit;
2-11 (B) a marketable [an] investment security
2-12 consisting of [that is an obligation]:
2-13 (i) bonds and other legally created
2-14 general obligations of a state, an agency or political subdivision
2-15 of a state, the United States, or an instrumentality of the United
2-16 States; or
2-17 (ii) obligations that a state or an agency
2-18 or political subdivision [the principal and interest] of a state,
2-19 or [which are fully guaranteed by] the United States or an
2-20 instrumentality of the United States has unconditionally agreed to
2-21 purchase, insure, or guarantee; or
2-22 [(iii) of a state or a political
2-23 subdivision of a state; or]
2-24 (C) other assets or securities that may be
2-25 permitted by rule or [any other investment] approved by the
2-26 commissioner.
2-27 (11) "Principal," in connection with management of a
2-28 license holder or applicant, means a person who performs executive
2-29 functions or otherwise controls the executive affairs of a license
2-30 holder, including an owner, officer, director, partner, trustee, or
2-31 manager of the license holder.
2-32 (12) [(7) "Person" means an individual, partnership,
2-33 joint stock or other association, trust, or corporation. The term
2-34 does not include the United States or this state.]
2-35 [(8)] "Sell" includes issue, transmit, or deliver.
2-36 [(9) "Traveler's check" means a type of check that:]
2-37 [(A) is a multiple of a denomination;]
2-38 [(B) provides for the purchaser's signature to
2-39 be completed at the time the instrument is purchased; and]
2-40 [(C) provides for the purchaser's
2-41 countersignature to be completed when the instrument is
2-42 negotiated.]
2-43 SECTION 2. Subchapter B, Chapter 152, Finance Code, is
2-44 amended to read as follows:
2-45 SUBCHAPTER B. POWERS AND DUTIES OF DEPARTMENT AND COMMISSION
2-46 Sec. 152.101. ADMINISTRATION. The department shall
2-47 administer this chapter.
2-48 Sec. 152.102. RULES. [(a)] The commission may adopt rules
2-49 necessary to enforce and administer this chapter, including rules
2-50 [relating] to:
2-51 (1) implement and clarify this chapter;
2-52 (2) establish fees for applications, licenses,
2-53 notices, and examinations to defray the cost of administering this
2-54 chapter;
2-55 (3) create additional exemptions or reduced
2-56 requirements applicable to specific circumstances, if the exemption
2-57 or reduction is in the public interest and subject to appropriate
2-58 requirements or conditions;
2-59 (4) identify additional permissible investments
2-60 subject to appropriate investment limits; and
2-61 (5) protect the interests of check purchasers [an
2-62 application for a license].
2-63 [(b) The commissioner may adopt and enforce reasonable rules
2-64 to prevent unsafe and unsound practices with respect to a
2-65 permissible investment required by this chapter.]
2-66 Sec. 152.103. EXAMINATIONS [EXCEPTIONS TO REQUIREMENTS. The
2-67 commissioner by rule may exempt a person from this chapter or
2-68 reduce a requirement of Section 152.102(b), 152.104, 152.205,
2-69 152.206, 152.207, 152.208(a), 152.209, 152.304(b), 152.305,
3-1 152.403, 152.503, or 152.504 if:]
3-2 [(1) the person does not engage in the business of
3-3 selling checks to the public and the sale of checks by the person
3-4 is:]
3-5 [(A) ancillary to the person's business; and]
3-6 [(B) limited to commercial contracts in
3-7 interstate commerce; and]
3-8 [(2) the commissioner determines that the exemption or
3-9 reduced requirement is in the public interest.]
3-10 [Sec. 152.104. ANNUAL AUDIT]. (a) The commissioner shall
3-11 examine each license holder annually, on a periodic basis as
3-12 required by any rules adopted under this chapter, or more often as
3-13 the commissioner considers necessary to efficiently enforce this
3-14 chapter and other applicable law [shall conduct a financial audit
3-15 of each license holder at the cost of the license holder].
3-16 (b) The commissioner, in the exercise of discretion and as
3-17 necessary for the efficient enforcement of this chapter or other
3-18 applicable law, may:
3-19 (1) examine a license holder at its primary place of
3-20 business;
3-21 (2) examine off-site documents that the license holder
3-22 furnishes to the department; and
3-23 (3) defer a required examination for not more than six
3-24 months.
3-25 (c) Information in a report of an examination under this
3-26 section is confidential and may be disclosed only under the
3-27 circumstances provided by Section 152.105.
3-28 (d) Disclosure of information to the commissioner under an
3-29 examination request does not waive or otherwise affect or diminish
3-30 a privilege to which the information is otherwise subject [Instead
3-31 of conducting that audit, the commissioner may accept an annual
3-32 report and audit of the affairs of a license holder under this
3-33 chapter made by a nationally recognized certified public accounting
3-34 firm or by a bank commissioner or comparable officer of another
3-35 state].
3-36 Sec. 152.104. REGULATORY COOPERATION. (a) To efficiently
3-37 carry out the purposes of this chapter and reduce the regulatory
3-38 burden on license holders, the commissioner may:
3-39 (1) enter into cooperative, coordinating, or
3-40 information-sharing agreements with another federal, state, or
3-41 foreign governmental agency that regulates persons engaged in the
3-42 business of selling checks or that otherwise has concurrent
3-43 regulatory or supervisory jurisdiction with respect to license
3-44 holders under this chapter;
3-45 (2) with respect to periodic examination or other
3-46 supervision or investigation, accept reports of examination or
3-47 investigation by, and reports submitted to, an agency described by
3-48 Subdivision (1) instead of conducting examinations or
3-49 investigations or receiving reports as might otherwise be required
3-50 or permissible under this chapter;
3-51 (3) enter into contracts with an agency described by
3-52 Subdivision (1) to engage the services of the agency for reasonable
3-53 compensation to assist in connection with the commissioner's
3-54 performance of official duties under this chapter or other law, or
3-55 to provide services to the agency for reasonable compensation in
3-56 connection with the agency's performance of official duties under
3-57 law, except that Chapter 2254, Government Code, does not apply to
3-58 contracts under this subdivision; and
3-59 (4) enter into joint examinations or joint enforcement
3-60 actions with an agency described by Subdivision (1), provided that
3-61 the commissioner may not waive the ability to independently take
3-62 action under this chapter if the commissioner determines that the
3-63 action is necessary to carry out the commissioner's
3-64 responsibilities under this chapter or to enforce compliance with
3-65 the laws of this state.
3-66 (b) Supervisory or examination fees assessed in accordance
3-67 with this chapter may be shared with another federal, state, or
3-68 foreign governmental agency that regulates the activities described
3-69 in this chapter or that otherwise has concurrent regulatory or
4-1 supervisory jurisdiction with respect to license holders under this
4-2 chapter in accordance with an agreement between the commissioner
4-3 and the agency. The commissioner may also receive a portion of
4-4 supervisory or examination fees assessed by a federal, state, or
4-5 foreign governmental agency in accordance with an agreement between
4-6 the commissioner and the agency.
4-7 Sec. 152.105. CONFIDENTIAL INFORMATION; DISCLOSURE.
4-8 (a) Except as provided by Subsection (b), information obtained by
4-9 the commissioner [or the commission] under this chapter and any
4-10 [from a person who holds a license under this chapter or through an
4-11 examination or a] file or record of the department relating to that
4-12 information are [is] confidential and may not be disclosed if the
4-13 information, as determined by the commissioner:
4-14 (1) relates to the financial condition of the license
4-15 holder, a license applicant, a person exempt from licensing under
4-16 Section 152.202, or an affiliate or principal of a person exempt
4-17 from licensing under Section 152.202; [or]
4-18 (2) is proprietary information of the license holder;
4-19 or
4-20 (3) is personal or private information relating to a
4-21 specific purchaser that identifies or can otherwise be associated
4-22 with the purchaser[, as determined by the commissioner].
4-23 (b) The commissioner may release confidential information
4-24 if:
4-25 (1) the commissioner finds that immediate and
4-26 irreparable harm is threatened to a purchaser or potential
4-27 purchaser of a check, or to the public;
4-28 (2) the license holder consents to the release of
4-29 information, other than information described by Subsection (a)(3),
4-30 or has published the information contained in the release;
4-31 (3) the commissioner finds that release of the
4-32 information is required for an administrative hearing, in which
4-33 case the information may be released to the parties to the hearing
4-34 by an order of the hearings officer that requires the parties to
4-35 maintain confidentiality; or
4-36 (4) the commissioner finds that release of the
4-37 information is reasonably necessary to protect the public and is in
4-38 the interest of justice, in which case the information may be
4-39 released only to a representative of an agency, department, or
4-40 instrumentality of this or another state, [or] the United States,
4-41 or a foreign government with whom the United States currently
4-42 maintains diplomatic relations.
4-43 (c) Before releasing information the commissioner determines
4-44 is not proprietary under Subsection (a)(2), the commissioner shall
4-45 notify the license holder unless the notification is prohibited by
4-46 other law.
4-47 SECTION 3. Subchapter C, Chapter 152, Finance Code, is
4-48 amended to read as follows:
4-49 SUBCHAPTER C. APPLICATION FOR AND ISSUANCE OF LICENSE
4-50 Sec. 152.201. LICENSE REQUIRED. (a) Except as provided by
4-51 Section 152.202, a person must hold a license issued under this
4-52 chapter to[:]
4-53 [(1)] engage in the business of selling checks to
4-54 purchasers:
4-55 (1) located in this state[, as a service or for
4-56 consideration]; or
4-57 (2) wherever located if the seller is located in this
4-58 state.
4-59 (b) For purposes of this section, a seller is located in
4-60 this state if the seller:
4-61 (1) employs or otherwise uses an agent that is located
4-62 in this state; or
4-63 (2) maintains, uses [maintain, use], or otherwise
4-64 controls [control] an account at a financial institution office
4-65 located in this state for the purpose of engaging in the business
4-66 of selling checks.
4-67 Sec. 152.202. EXEMPTIONS FROM LICENSING. (a) Section
4-68 152.201 does not apply to:
4-69 (1) a federally insured financial institution[, as
5-1 that term is defined by Section 201.101, if the institution does
5-2 not sell checks, other than traveler's checks, through an agent who
5-3 is not directly or indirectly owned by the institution unless the
5-4 agent is also a federally insured financial institution];
5-5 (2) an agent [or subagent] of a license holder unless
5-6 the agent [or subagent sells the license holder's checks
5-7 over-the-counter to the public and in the regular conduct of that
5-8 business] receives or at any time has access to[:]
5-9 [(A)] a record [check] of the license holder
5-10 that contains information pertaining to [is returned after] payment
5-11 of the license holder's obligations under checks sold by the agent
5-12 for purposes of verification, reconciliation, or accounting; [or]
5-13 [(B) a bank statement relating to a returned
5-14 check;]
5-15 (3) a title company or attorney that issues an escrow
5-16 or trust fund check;
5-17 (4) a state, an agency, political subdivision, or
5-18 instrumentality of a state, the United States, or an agency or
5-19 instrumentality of the United States, including the United States
5-20 Postal Service; [or]
5-21 (5) with the commissioner's prior written consent, a
5-22 person that [who]:
5-23 (A) holds a license issued under Chapter 153;
5-24 (B) [has a net worth of at least $250,000 and]
5-25 meets the licensing requirements of this chapter, including a
5-26 demonstration of net worth as reflected by the financial statements
5-27 required by Section 152.205;
5-28 (C) maintains a bond payable to the commissioner
5-29 or an amount deposited with the commissioner, for the purposes
5-30 specified in both this chapter and Chapter 153, in an amount equal
5-31 to the greater of the amount of bond required by [under] Section
5-32 152.206 or Chapter 153; [in the minimum principal amount of
5-33 $350,000; and]
5-34 (D) sells checks only in conjunction with [a]
5-35 currency exchange or transmission transactions subject to
5-36 [transaction, as defined by] Chapter 153[,] and separately accounts
5-37 for [separates all] proceeds from transactions under Chapter 153
5-38 and this chapter; and
5-39 (E) complies with Subsection (b);
5-40 (6) with the commissioner's prior written
5-41 determination that the exemption is in the public interest, a
5-42 person that:
5-43 (A) incidentally engages in the sale of checks
5-44 only to the extent reasonable and necessary to accomplish a primary
5-45 business objective that is unrelated to the sale of checks;
5-46 (B) does not advertise or offer to sell checks
5-47 to the public except to the extent reasonable and necessary to
5-48 fairly advertise or offer its primary business services; and
5-49 (C) either:
5-50 (i) sells checks exclusively in connection
5-51 with commercial contracts in interstate commerce; or
5-52 (ii) does not charge a fee for the sale of
5-53 checks or sell checks without fee as an inducement for customer
5-54 participation in its primary business; or
5-55 (7) any other person exempted by rule [that
5-56 transaction from the sale of checks].
5-57 (b) A [Notwithstanding Subsection (a)(5), a] person who
5-58 meets the requirements of Subsection (a)(5) [that subsection] is
5-59 subject to:
5-60 (1) all provisions [any other provision] of this
5-61 chapter other than the license requirement of Section 152.201 to
5-62 the extent the person engages in the business of selling checks;
5-63 and
5-64 (2) rules adopted under this chapter [by the
5-65 commissioner] to administer and carry out that subsection,
5-66 including rules to:
5-67 (A) define a term used in that subsection; and
5-68 (B) establish limits or requirements on the
5-69 bonding and net worth of the person and the person's activities
6-1 relating to the sale of checks other than those specified by that
6-2 subsection.
6-3 Sec. 152.203. QUALIFICATIONS FOR LICENSE. (a) Subject to
6-4 Subsection (b), to [To] qualify for a license under this chapter, a
6-5 person:
6-6 (1) must have a net worth of at least $500,000,
6-7 computed according to generally accepted accounting principles, as
6-8 reflected by the financial statements required by Section 152.205;
6-9 (2) must be in a financial condition that will enable
6-10 the person to safely and soundly engage in the business of selling
6-11 checks;
6-12 (3) [if an individual, may not have been convicted of
6-13 a felony or a crime involving moral turpitude that is reasonably
6-14 related to the person's fitness to hold the license, regardless of
6-15 whether the punishment received was a suspended sentence, community
6-16 supervision, or nonadjudicated conviction;]
6-17 [(4) must respond truthfully and completely to any
6-18 request for information contained in the license application;]
6-19 [(5)] may not be indebted to any local, [this] state,
6-20 or federal government or political subdivision of the government
6-21 for delinquent taxes, fines, penalties, or fees [a fee or penalty
6-22 imposed under this chapter or a rule of the commission;]
6-23 [(6) if an individual, must have a good moral
6-24 character and reputation as a peaceful, law-abiding resident in the
6-25 community in which the person resides]; and
6-26 (4) [(7)] may not be engaged in an activity or
6-27 practice the commissioner finds adversely affects the person's
6-28 financial safety and soundness.
6-29 (b) A [To qualify for a] license may not be issued to an
6-30 applicant unless each person identified under Section
6-31 152.204(b)(1):
6-32 (1) possesses[,] the financial responsibility,
6-33 financial condition, business experience, character, and general
6-34 fitness that would [of the applicant must] reasonably warrant the
6-35 belief that issuance of the license will be in the public interest;
6-36 and
6-37 (2) has not been convicted during the preceding 10
6-38 years of an offense:
6-39 (A) under a state or federal law that involves
6-40 deception, dishonesty, or defalcation, or that relates to currency
6-41 exchange, transportation, or transmission, money laundering, or a
6-42 reporting requirement of the Bank Secrecy Act (12 U.S.C. Section
6-43 1951 et seq.); or
6-44 (B) under the laws of a foreign country that
6-45 involves deception, dishonesty, or defalcation, or that would be a
6-46 felony under state or federal law if committed in the United
6-47 States, unless the applicant demonstrates to the satisfaction of
6-48 the commissioner that the conviction was based on extenuating
6-49 circumstances unrelated to the person's reputation for honesty and
6-50 obedience to law.
6-51 Sec. 152.204. APPLICATION. (a) An application for a
6-52 license must be in writing, sworn to, and filed with the
6-53 commissioner in the form the commissioner prescribes.
6-54 (b) The application must:
6-55 (1) state the full legal name, federal taxpayer
6-56 identification number or social security number, and business
6-57 address of the applicant, and[: (1) the proprietor], if the
6-58 applicant is:
6-59 (A) an individual, the home address of the
6-60 applicant and the full legal name and federal taxpayer
6-61 identification number or social security number of the applicant's
6-62 spouse; or
6-63 (B) a person other than an individual, the full
6-64 legal name, federal taxpayer identification number or social
6-65 security number, and business address of:
6-66 (i) each individual who is a principal of
6-67 the applicant; and
6-68 (ii) each individual who is a principal of
6-69 any person that is a principal of the applicant;
7-1 (2) describe in detail the applicant's business plan
7-2 relating to the business of selling checks, including:
7-3 (A) method of operations;
7-4 (B) location of operations and outlets;
7-5 (C) projections regarding the anticipated growth
7-6 in volume of checks sold in dollars and in number of consumers
7-7 during the initial two-year period of operation; and
7-8 (D) other information sufficient to permit the
7-9 commissioner to evaluate the bonding requirements of Section
7-10 152.206 [each member, if the applicant is a partnership or
7-11 association other than an association described by Subdivision
7-12 (3)];
7-13 (3) include an undertaking to increase or supplement
7-14 the bond furnished with the application to equal the aggregate bond
7-15 required by the commissioner before the issuance of the license and
7-16 the start of operations [the association and each officer and
7-17 director of the association, if the applicant is a joint stock
7-18 association having at least 50 members]; and
7-19 (4) disclose any other information that may be
7-20 required by rule or reasonably requested by the commissioner [each
7-21 trustee and officer, if the applicant is a trust; and]
7-22 [(5) the corporation and each officer and director of
7-23 the corporation, if the applicant is a corporation].
7-24 Sec. 152.205. ACCOMPANYING FEE, STATEMENTS, AND BOND. An
7-25 application for a license must be accompanied by:
7-26 (1) a nonrefundable application [investigation] fee in
7-27 an amount established by rule [set by the commissioner] that is
7-28 sufficient to administer this chapter;
7-29 (2) audited financial statements of the applicant that
7-30 are reasonably satisfactory to the commissioner; and
7-31 (3) [a list of the locations at which the business is
7-32 to be conducted; and]
7-33 [(4)] a surety bond or deposit in the amount of
7-34 $100,000, subject to the additional bonding or deposit [that meets
7-35 the] requirements of Section 152.206 or 152.207.
7-36 Sec. 152.206. SURETY BOND. (a) Except as provided by
7-37 Section 152.207, a license holder shall post a surety bond issued
7-38 by a bonding company or insurance company authorized to do business
7-39 in this state that is acceptable to the commissioner.
7-40 (b) The commissioner shall, on application and otherwise
7-41 from time to time, determine the amount of the surety bond but may
7-42 not determine the amount to be less than $100,000 or greater than
7-43 $1 million. In making a determination under this subsection, the
7-44 commissioner shall consider:
7-45 (1) the nature and type of business the license holder
7-46 conducts;
7-47 (2) the license holder's financial condition in
7-48 relation to the dollar volume of the license holder's obligations
7-49 from time to time with respect to outstanding checks sold;
7-50 (3) the nature and degree of liquidity in assets
7-51 legally and beneficially owned by the license holder;
7-52 (4) the competence, character, general fitness, and
7-53 experience of management;
7-54 (5) the extent and adequacy of internal controls
7-55 maintained by the license holder;
7-56 (6) the presence or absence of annual unqualified
7-57 audits by an independent certified public accountant; and
7-58 (7) the existence and adequacy of other insurance
7-59 obtained or held by the license holder to protect its customers
7-60 [The surety bond must be:]
7-61 [(1) in an amount, except as provided by Subsection
7-62 (c), computed by adding:]
7-63 [(A) $100,000 for the first location at which
7-64 the applicant proposes to sell checks; and]
7-65 [(B) $50,000 for each additional location at
7-66 which the applicant proposes to sell checks, not to exceed
7-67 $400,000;]
7-68 [(2) in a form satisfactory to the commissioner; and]
7-69 [(3) issued by a bonding company or insurance company
8-1 authorized to do business in this state].
8-2 (c) [(b)] The bond represents money held in trust for the
8-3 benefit of check purchasers. The bond must be payable to the
8-4 commissioner [this state] on behalf of any claimants against the
8-5 license holder or the license holder's agent to secure the faithful
8-6 performance of the obligations of the license holder or agent with
8-7 respect to the receipt, handling, transmission, and payment of
8-8 money in connection with the sale of checks.
8-9 [(c) The commissioner may require a license holder to
8-10 provide the bond in an amount that exceeds the maximum but not more
8-11 than $1 million, taking into consideration the license holder's
8-12 financial condition in relation to the dollar volume of the license
8-13 holder's outstanding checks.]
8-14 (d) The aggregate liability of the bond's surety under this
8-15 chapter may not exceed the principal amount of the bond.
8-16 Sec. 152.207. ALTERNATIVE TO BOND. (a) Instead of
8-17 furnishing all or part of the amount of the surety bond required by
8-18 Section 152.206 [152.205(4)], an applicant or license holder may
8-19 deposit with the commissioner, or with a financial institution
8-20 possessing trust powers that is authorized to conduct a trust
8-21 business [bank, trust company, or national bank] in this state
8-22 [designated by the applicant] and is acceptable to [approved by]
8-23 the commissioner, an aggregate amount, including cash, certificates
8-24 of deposit, and interest-bearing securities, that equals the total
8-25 amount of the required bond or the remaining part of the bond. For
8-26 purposes of this subsection, the value of the securities is the
8-27 lesser of the principal amount or the market value of the
8-28 securities.
8-29 (b) The deposit shall be held in trust for the benefit of
8-30 check purchasers. The deposit secures the same obligations as the
8-31 surety bond. The license holder is entitled:
8-32 (1) to receive all income generated by the assets in
8-33 [interest and dividends on] the deposit; and
8-34 (2) with the commissioner's approval, to substitute
8-35 other permissible assets or securities for those deposited.
8-36 (c) On written order of the commissioner made for good cause
8-37 shown, the license holder shall substitute other assets or
8-38 securities for those deposited.
8-39 (d) In this section, "securities" means marketable
8-40 investment securities consisting of:
8-41 (1) [stocks,] bonds and[, notes, debentures, or] other
8-42 legally created general obligations of a state or an agency or
8-43 political subdivision of a state, or[:]
8-44 [(A) of] the United States or an instrumentality
8-45 of the United States;
8-46 [(B) of this state;]
8-47 [(C) of a municipality, county, school district,
8-48 or instrumentality of this state; or]
8-49 [(D) guaranteed by the United States or this
8-50 state; or]
8-51 (2) obligations that a state or an agency or political
8-52 subdivision of a state, or the United States or an instrumentality
8-53 of the United States, has unconditionally agreed to purchase,
8-54 insure, or guarantee; or
8-55 (3) other securities specified by rule [similar
8-56 security devices acceptable to the commissioner].
8-57 Sec. 152.208. INVESTIGATION OF APPLICATION. (a) On the
8-58 filing of an application that meets the requirements of Sections
8-59 152.204 and 152.205, the commissioner shall investigate to
8-60 determine whether the qualifications prescribed by Section 152.203
8-61 have been met.
8-62 (b) To the extent considered advisable by the commissioner,
8-63 the commissioner may investigate and consider the qualifications of
8-64 principals [officers and directors] of an applicant in determining
8-65 whether the qualifications [qualification] prescribed by Section
8-66 152.203(b) have [has] been met.
8-67 Sec. 152.209. ISSUANCE OF LICENSE. (a) The commissioner
8-68 shall issue a license to the applicant if the commissioner[:]
8-69 [(1)] finds that the qualifications prescribed by
9-1 Section 152.203 are met, based on the application and
9-2 investigation,[;]
9-3 [(2) approves the documents;] and receives an
9-4 acceptable
9-5 [(3) finds that the] bond or bonds and deposits
9-6 aggregating to [is in] the [prescribed] amount required by the
9-7 commissioner.
9-8 (b) The applicant on request is entitled to a hearing on the
9-9 denial of the application, to be held not later than the 60th day
9-10 after the date the commissioner receives the request.
9-11 [Sec. 152.210. DENIAL OF LICENSE; HEARING. (a) A hearing
9-12 must be held before a license may be denied.]
9-13 [(b) The commissioner shall give the applicant notice of the
9-14 hearing.]
9-15 SECTION 4. Subsections (b) and (c), Section 152.301, Finance
9-16 Code, are amended to read as follows:
9-17 (b) A surety bond or letter of credit required under
9-18 Subsection (a)(3) must be:
9-19 (1) in addition to any other bond or security required
9-20 by this chapter;
9-21 (2) issued by a bonding company or insurance company
9-22 authorized to do business in this state and acceptable to the
9-23 commissioner, in the case of a surety bond;
9-24 (3) issued by a federally insured financial
9-25 institution[, as that term is defined by Section 201.101,] that has
9-26 its main office or a branch in this state and is acceptable to the
9-27 commissioner, in the case of a letter of credit; and
9-28 (4) payable to the commissioner on behalf of any
9-29 claimants against the license holder to secure the faithful
9-30 performance of the obligations of the license holder with respect
9-31 to the receipt, handling, and payment of money in connection with
9-32 the sale of checks.
9-33 (c) The net worth of the license holder for purposes of
9-34 Subsection (a) [(a)(3)] is shown by an audited financial statement
9-35 reasonably satisfactory to the commissioner.
9-36 SECTION 5. Subsection (a), Section 152.304, Finance Code, is
9-37 amended to read as follows:
9-38 (a) Not later than June 30 [April 15] of each year, a
9-39 license holder shall pay to the commissioner a license renewal fee
9-40 in an amount established by rule [of $500].
9-41 SECTION 6. Section 152.305, Finance Code, is amended to read
9-42 as follows:
9-43 Sec. 152.305. FINANCIAL STATEMENTS AND REPORTS. (a) Unless
9-44 waived by the commissioner, not later than the 45th day after the
9-45 last day of each quarter of the license holder's fiscal year, a
9-46 license holder shall file with the commissioner a certification of
9-47 net worth and a report regarding maintaining permissible
9-48 investments under Section [Sections] 152.301 [and 152.3015] for the
9-49 preceding quarter submitted on forms furnished by the commissioner.
9-50 (b) Not later than June 30 [April 15] of each year, or a
9-51 later date the commissioner approves in writing for good cause
9-52 shown, a license holder shall file an annual audited unconsolidated
9-53 financial statement dated as of the last day of the license
9-54 holder's fiscal year that ended in the immediately preceding
9-55 calendar year.
9-56 SECTION 7. Subsection (a), Section 152.307, Finance Code, is
9-57 amended to read as follows:
9-58 (a) The commissioner shall give a license holder an
9-59 opportunity for a [A] hearing [must be held] before a license may
9-60 be revoked.
9-61 SECTION 8. Section 152.401, Finance Code, is amended to read
9-62 as follows:
9-63 Sec. 152.401. BUSINESS CONDUCTED BY AGENT [OR SUBAGENT].
9-64 (a) A license holder may conduct the [license holder's] business
9-65 of selling checks under this chapter from any location within or
9-66 outside of [at one or more locations in] this state, either
9-67 directly or through an agent [or subagent] appointed by the license
9-68 holder.
9-69 (b) A rule adopted under Section 152.102 [152.102(a)] may
10-1 not directly apply to a license holder's agent [or subagent].
10-2 SECTION 9. Section 152.402, Finance Code, is amended to read
10-3 as follows:
10-4 Sec. 152.402. DISCLOSURE OF RESPONSIBILITY. Each check sold
10-5 by a license holder, directly or through an agent, must:
10-6 (1) include the name and mailing address or telephone
10-7 number of the license holder clearly printed or displayed on or in
10-8 connection with sale of the check; or
10-9 (2) be accompanied by a written notice displayed or
10-10 delivered to the purchaser at the time of sale containing that
10-11 information.
10-12 SECTION 10. Subsection (b), Section 152.404, Finance Code,
10-13 is amended to read as follows:
10-14 (b) Notwithstanding Subsection (a), a license holder's agent
10-15 may remit to the license holder all money due from the sale of a
10-16 check at a later date if the agent maintains on deposit with an
10-17 office of a federally insured financial institution [bank, savings
10-18 and loan association, or savings bank] located in the United States
10-19 an amount that:
10-20 (1) is in an account solely in the name of the license
10-21 holder; and
10-22 (2) for each day by which the period before which the
10-23 remittance is made exceeds 10 business days, is not less than the
10-24 outstanding obligations of the license holder represented by
10-25 [aggregate face amount of] checks issued by the license holder that
10-26 the agent usually sells daily.
10-27 SECTION 11. Section 152.405, Finance Code, is amended to
10-28 read as follows:
10-29 Sec. 152.405. LIABILITY FOR PAYMENT OF CHECK. A license
10-30 holder that sells a check, directly or through an agent, is liable
10-31 for the payment of the check in the same manner as a [the] maker or
10-32 drawer of a negotiable instrument subject to Chapter 3, Business &
10-33 Commerce Code, regardless of whether the license holder signed or
10-34 assumed primary liability for obligations evidenced by the check
10-35 [as the maker or drawer].
10-36 SECTION 12. This Act takes effect September 1, 2001.
10-37 * * * * *