10VAC5-120 Security Required of Money Order Sellers and Money Transmitters

REGULATIONS

Vol. 26 Iss. 25 - August 16, 2010

TITLE 10. FINANCE AND FINANCIAL INSTITUTIONS

STATE CORPORATION COMMISSION

Chapter 120

Final Regulation

REGISTRAR'S NOTICE: The State Corporation Commission is exempt from the Administrative Process Act in accordance with § 2.2-4002 A 2 of the Code of Virginia, which exempts courts, any agency of the Supreme Court, and any agency that by the Constitution is expressly granted any of the powers of a court of record.

Title of Regulation: 10VAC5-120. Security Required of Money Order Sellers and Money Transmitters (adding 10VAC5-120-50).

Statutory Authority: §§ 6.1-378.1 and 12.1-13 of the Code of Virginia.

Effective Date: July 27, 2010.

Agency Contact: Gerald Fallen, Deputy Commissioner, State Corporation Commission, Bureau of Financial Institutions, P.O. Box 640, Richmond, VA 23218, telephone [phone], FAX [phone], or email [e-mail].

Summary:

The State Corporation Commission is adopting a regulation that establishes the schedule for the annual assessment to be paid by money order sellers and money transmitters licensed under Chapter 12 (§ 6.1-370 et seq.) of Title 6.1 of the Code of Virginia to defray the costs of their examination and supervision. Under the final regulation, licensees are required to pay an annual assessment of $0.000047 per dollar of money orders sold and money transmitted based on the dollar volume of business conducted by a licensee, either directly or through its authorized delegates, during the calendar year preceding the year of the assessment.

AT RICHMOND, JULY 21, 2010

COMMONWEALTH OF VIRGINIA, ex rel.

STATE CORPORATION COMMISSION

CASE NO. BFI-2010-00144

Ex Parte: In re: annual assessment
of licensed money order sellers and
money transmitters

ORDER ADOPTING A REGULATION

On May 17, 2010, the State Corporation Commission ("Commission") entered an Order to Take Notice of a proposal to adopt a regulation pursuant to § 6.1-373 B of the Code of Virginia. The proposed regulation, 10 VAC 5-120-50, prescribes an assessment schedule for money order sellers and money transmitters licensed under Chapter 12 of Title 6.1 of the Code of Virginia ("licensees") in order to defray the cost of their examination and supervision. The Order and proposed regulation were published in the Virginia Register of Regulations on June 7, 2010, posted on the Commission's website, and mailed to all licensees and other interested parties. Licensees and other interested parties were afforded the opportunity to file written comments or request a hearing on or before June 18, 2010.

Comments on the proposed regulation were filed by Mr. Randy Mersky on behalf of Global Express Money Orders, Inc.¹ In his comment letter, Mr. Mersky contended that the examination process has historically been more complicated, involved, and time consuming for money transmitters, and that the assessment rate for money orders should be much lower than the assessment rate for money transmission. Mr. Mersky also recommended that the assessment schedule take into account a licensee's overall size or net worth.² On June 22, 2010, the Commission entered an Order directing the Bureau of Financial Institutions ("Bureau") to file a written response to Mr. Mersky's comments.

On June 25, 2010, the Bureau filed a Response to Comments. The Bureau reported to the Commission that it had contacted regulators in several other states (California, Ohio, Texas, and Wyoming) that have substantial experience regulating and examining money order sellers and money transmitters, and that all of the state regulators uniformly indicated that (i) money order sellers must comply with the same laws as money transmitters, (ii) regulators use the same programs and procedures to examine both products, and (iii) the time allotted by regulators for examinations is identical. The Bureau also indicated that the complexity and length of a particular licensee's examination is already factored into the proposed assessment schedule, and that the overall size or net worth of a licensee is redundant and/or inapt as a proxy for the amount of regulatory resources that need to be devoted to an institution.

On July 8, 2010, the Bureau filed a Supplement to Response in which it requested leave to supplement its Response to Comments on the basis that it had inadvertently omitted certain germane information. Specifically, the states of Ohio, Texas, and Wyoming had all informed the Bureau that they apply the same assessment rate to money order sellers and money transmitters. The Bureau requested that this supplemental information be appended to its Response to Comments.

NOW THE COMMISSION, having considered the proposed regulation, the comments timely filed, the Bureau's Response to Comments, the record herein, and applicable law, finds that the Bureau's request for leave to supplement its Response to Comments should be granted, that a hearing is unnecessary, and that the regulation should be adopted as proposed.

Accordingly, IT IS ORDERED THAT:

(1) The proposed regulation, 10 VAC 5-120-50, attached hereto is adopted effective July 27, 2010.

(2) This Order and the attached regulation shall be posted on the Commission's website at http://www.scc.virginia.gov/case.

(3) The Commission's Division of Information Resources shall send a copy of this Order, including a copy of the attached regulation, to the Virginia Registrar of Regulations for publication in the Virginia Register of Regulations.

(4) This case is dismissed from the Commission's docket of active cases.

AN ATTESTED COPY hereof shall be sent by the Clerk of the Commission to: Randy Mersky, Global Express Money Orders, Inc., 8819 Monard Drive, Silver Spring, Maryland 20910; Ezra C. Levine, Howrey LLP, 1299 Pennsylvania Avenue, NW, Washington, DC 20004-2402; and to the Commissioner of Financial Institutions, who shall mail a copy of this Order and the attached regulation to all licensed money order sellers and money transmitters and such other interested parties as he may designate.

_____________________________

¹ After the comment period deadline, a comment letter was filed by Mr. Ezra C. Levine on behalf of The Money Services Round Table. The Money Services Round Table requested that the proposed regulation be amended to include a cap of $100,000 per licensee.

² In his comments, Mr. Mersky also "suggested" that a hearing be held to discuss this matter further.

CHAPTER 120
SECURITY REQUIRED OF MONEY ORDER SELLERS AND MONEY TRANSMITTERS

10VAC5-120-50. Assessment schedule for the examination and supervision of money order sellers and money transmitters.

Pursuant to subsection B of § 6.1-373 of the Code of Virginia, the commission sets the following schedule for the annual assessment to be paid by persons licensed under Chapter 12 (§ 6.1-370 et seq.) of Title 6.1 of the Code of Virginia. The assessment defrays the costs of the examination and supervision of licensees by the Bureau of Financial Institutions.

The annual assessment shall be $0.000047 per dollar of money orders sold and money transmitted by a licensee pursuant to Chapter 12 (§ 6.1-370 et seq.) of Title 6.1 of the Code of Virginia. The assessment shall be based on the dollar volume of business conducted by a licensee, either directly or through its authorized delegates, during the calendar year preceding the year of the assessment.

The amount calculated using the above schedule shall be rounded down to the nearest whole dollar.

Fees shall be assessed on or before August 1 for the current calendar year. The assessment shall be paid by licensees on or before September 1.

The annual report, due April 15 each year, of each licensee provides the basis for its assessment. In cases where a license has been granted between January 1 and April 15 of the year of the assessment, the licensee's initial annual assessment shall be $0.

Fees prescribed and assessed pursuant to this schedule are apart from, and do not include, the following: (i) the annual license renewal fee of $750 authorized by subsection A of § 6.1-373 of the Code of Virginia and (ii) the reimbursement for expenses authorized by subsection C of § 6.1-373 of the Code of Virginia.

VA.R. Doc. No. R10-2418; Filed July 21, 2010, 3:37 p.m.