A.R.S. tit. 6 ch. 12 — Arizona Revised Statutes Title 6 Chapter 12 — Transmitters Of Money

6-1201. Definitions In this article, unless the context otherwise requires: 1. "Acting in concert" means persons knowingly acting together with a common goal of jointly acquiring control of a licensee whether or not pursuant to an express agreement. 2. "Authorized delegate" means a person that a licensee designates to engage in money transmission on behalf of the licensee. 3. "Average daily money transmission liability" means the amount of the licensee's outstanding money transmission obligations at the end of each day in quarters ending March 31, June 30, September 30 and December 31, added together and divided by the total number of days in each quarter. 4. "Closed loop stored value" means stored value that is redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value. 5. "Control" means: (a) The power to vote, directly or indirectly, at least twenty-five percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee. (b) The power to elect or appoint a majority of key individuals or executive officers, managers, directors, trustees or other persons exercising managerial authority of a person in control of a licensee. (c) The power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee. 6. "Eligible rating" means a credit rating of any of the three highest rating categories provided by an eligible rating service and each category may include rating category modifiers such as "plus" or "minus" for Standard and Poor's or the equivalent for any other eligible rating service. 7. "Eligible rating service" means any nationally recognized statistical rating organization as defined by the United States securities and exchange commission and any other organization designated by the director. 8. "Federally insured depository financial institution" means a bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank or industrial loan company organized under the laws of the United States or any state of the United States, when the bank, credit union, savings and loan association, trust company, savings association, savings bank, industrial bank or industrial loan company has federally insured deposits. 9. "Individual" means a natural person. 10. "In this state": (a) Means at a physical location within this state if a transaction is requested in person. (b) Includes any of the following if a person requests a transaction electronically or by telephone: (i) The location of the person's residential address if the person is an individual. (ii) A person's principal place of business or other physical address location within this state if the person is a business entity. (iii) Any address within this state that is associated with an account based on records that the money transmission provider has or information that the person provides. 11. "Key individual" means any individual ultimately responsible for establishing or directing policies and procedures of the licensee, such as an executive officer, manager, director or trustee. 12. "Licensee" means a person licensed under this article. 13. "Material litigation" means litigation that, according to United States generally accepted accounting principles, is significant to a person's financial health and would be required to be disclosed in the person's annual audited financial statements, report to shareholders or similar records. 14. "Monetary value" means a medium of exchange, whether or not redeemable in money. 15. "Money": (a) Means a medium of exchange that is authorized or adopted by the United States or a foreign government. (b) Includes a monetary unit of account established by an intergovernmental organization or by agreement between two or more governments. 16. "Money services business accredited state" means a state agency that is accredited by a conference of state bank supervisors and money transmitter regulators association for money transmission licensing and supervision. 17. "Money transmission": (a) Means any of the following: (i) Selling or issuing payment instruments to a person located in this state. (ii) Selling or issuing stored value to a person located in this state. (iii) Receiving money for transmission from a person located in this state. (b) Does not include providing solely online telecommunications services or network access. 18. "Multistate licensing process" means a procedure among state regulators relating to the coordinated processing of applications for money transmission licenses, applications for the acquisition of control of a licensee, control determinations or notice and information requirements for a change of key individuals. 19. "NMLS" means the nationwide multistate licensing system and registry that is developed by a conference of state bank supervisors and the American association of residential mortgage regulators and that is owned and operated by a state regulatory registry for the licensing and registration of persons in financial services industries. 20. "Outstanding money transmission obligation" means either of the following: (a) Any payment instrument or stored value issued or sold by the licensee to a person located in the United States or reported as sold by an authorized delegate of the licensee to a person that is located in the United States that has not yet been paid or refunded by or for the licensee or escheated in accordance with applicable abandoned property laws. (b) Any money received for transmission by the licensee or an authorized delegate in the United States from a person located in the United States that has not been received by the payee or refunded to the sender or escheated in accordance with applicable abandoned property laws. 21. "Passive investor" means a person that: (a) Does not have the power to elect a majority of key individuals or executive officers, managers, directors, trustees or other persons exercising managerial authority of a person in control of a licensee. (b) Is not employed by and does not have any managerial duties of the licensee or person in control of a licensee. (c) Does not have the power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or person in control of a licensee. (d) Does either of the following: (i) Attests to subdivisions (a), (b) and (c) of this paragraph in a form and in a medium prescribed by the director. (ii) Commits to the passivity characteristics of subdivisions (a), (b) and (c) of this paragraph in a written document. 22. "Payment instrument": (a) Means a written or electronic check, draft, money order, traveler's check or other written or electronic instrument for the transmission or payment of money or monetary value, whether or not negotiable. (b) Does not include stored value or any instrument that is either: (i) Redeemable by the issuer only for goods or services provided by the issuer or its affiliate or franchisees of the issuer or its affiliate, except to the extent required by applicable law to be redeemable in cash for its cash value. (ii) Not sold to the public but issued and distributed as part of a loyalty, rewards or promotional program. 23. "Person" means any individual, general partnership, limited partnership, limited liability company, corporation, trust, association, joint stock corporation or other corporate entity identified by the director. 24. "Receiving money for transmission" or "money received for transmission" means receiving money or monetary value in the United States for transmission within or outside the United States by electronic or other means. 25. "Stored value": (a) Means monetary value representing a claim against the issuer that is evidenced by an electronic or digital record and that is intended and accepted for use as a means of redemption for money or monetary value or payment for goods or services. (b) Includes prepaid access as defined in 31 Code of Federal Regulations section 1010.100. (c) Does not include a payment instrument or closed loop stored value or stored value not sold to the public but issued and distributed as part of a loyalty, rewards or promotional program. 26. "Tangible net worth" means the aggregate assets of a licensee excluding all intangible assets, minus liabilities, as determined in accordance with United States generally accepted accounting principles. 6-1202. Exemptions A. This article does not apply to any of the following: 1. An operator of a payment system that provides processing, clearing or settlement services between or among persons exempted by this section or licensees in connection with wire transfers, credit card transactions, debit card transactions, stored value transactions, automated clearinghouse transfers or similar transfers of money. 2. A person appointed as an agent of a payee to collect and process a payment from a payor to the payee for goods or services, other than money transmission, provided to the payor by the payee, if all of the following apply: (a) A written agreement exists between the payee and the agent directing the agent to collect and process payments from payors on the payee's behalf. (b) The payee holds the agent out to the public as accepting payments for goods or services on the payee's behalf. (c) Payment for the goods and services is treated as received by the payee on receipt by the agent so that the payor's obligation is extinguished and there is no risk of loss to the payor if the agent fails to remit the money to the payee. 3. A person that acts as an intermediary by processing payments between an entity that has directly incurred an outstanding money transmission obligation to a sender and the sender's designated recipient, if the entity meets all of the following criteria: (a) Is properly licensed or exempt from the licensing requirements under this article. (b) Provides a receipt, electronic record or other written confirmation to the sender identifying the entity as the provider of money transmission in the transaction. (c) Bears sole responsibility to satisfy the outstanding money transmission obligation to the sender, including the obligation to make the sender whole in connection with any failure to transmit the money to the sender's designated recipient. 4. The United States or a department, an agency or an instrumentality of the United States or its agent. 5. Money transmission by the United States postal service or by an agent of the United States postal service. 6. A state, county, city or town or any other governmental agency or governmental subdivision or instrumentality of a state or its agent. 7. A federally insured depository financial institution, bank holding company, office of an international banking corporation, foreign bank that establishes a federal branch pursuant to 12 United States Code section 3102, a corporation organized as a bank service company pursuant to 12 United States Code sections 1861 through 1867 or a corporation organized pursuant to 12 United States Code sections 611 through 633. 8. Electronic funds transfer of governmental benefits for a federal, state, county or governmental agency by a contractor on behalf of the United States or a department, agency or instrumentality of the United States or on behalf of a state or governmental subdivision, agency or instrumentality of a state. 9. A board of trade designated as a contract market under the commodity exchange act (7 United States Code sections 1 through 26) or a person that, in the ordinary course of business, provides clearance and settlement services for a board of trade to the extent of its operation as or for the board of trade. 10. A registered futures commission merchant under the federal commodities laws to the extent of its operation as a merchant. 11. A person registered as a securities broker or dealer under federal or state securities laws to the extent of the person's operation. 12. An individual employed by a licensee, an authorized delegate or any person exempt from the licensing requirements of this article when acting within the scope of employment and under the supervision of the licensee, authorized delegate or exempt person as an employee and not as an independent contractor. 13. A person expressly appointed as a third-party service provider to or agent of an entity exempt under paragraph 7 of this subsection solely to the extent that both: (a) The service provider or agent is engaging in money transmission on behalf of and pursuant to a written agreement with the exempt entity that sets forth the specific functions that the service provider or agent is to perform. (b) The exempt entity assumes all risk of loss and all legal responsibility for satisfying the outstanding money transmission obligations owed to purchasers and holders of the outstanding money transmission obligations on receipt of the purchaser's or holder's money or monetary value by the service provider or agent. 14. A person exempt by regulation or order if the director finds such exemption to be in the public interest and that regulating the person is not necessary for the purposes of this article. B. The director may require that any person claiming to be exempt from licensing pursuant to this section provide information and documentation to the director demonstrating that the person qualifies for any claimed exemption. 6-1203. Implementation; fees A. To implement this article, the director may: 1. Enter into agreements or relationships with other government officials or federal and state regulatory agencies and regulatory associations in order to improve efficiencies and reduce regulatory burden by standardizing methods or procedures, providing for licensure by reciprocity and sharing resources, records or related information obtained under this article. 2. Use, hire, contract for or employ analytical systems, methods or software to examine or investigate any person subject to this article. 3. Accept the following from other state or federal government agencies or officials: (a) Licensing, examination or investigation reports made by other state or federal government agencies or officials. (b) Audit reports made by an independent certified public accountant or other qualified third-party auditor for an applicant or licensee and incorporate the audit report in any report of examination or investigation. B. The director shall administer, interpret and enforce this article and may adopt rules to implement this article. The director may impose fees to administer and enforce this article. 6-1204. Examinations; investigations; records A. The director may conduct an examination or investigation and take action authorized by this title or by a rule adopted or order issued under this title to administer and enforce this article and other applicable law, including the bank secrecy act (P.L. 91-508; 84 Stat. 1114) and the patriot act (P.L. 107-56; 115 Stat. 272). B. Persons whose activity is regulated under this article shall provide, and the director shall have full and complete access to, all records the director may reasonably require to conduct a complete examination or investigation. The records must be provided at the location and in the format specified by the director. The director may use multistate record production standards and examination procedures when the standards reasonably achieve the requirements of this subsection. 6-1205. Multistate supervision A. The director may participate in multistate supervisory processes established between states for all licensees that hold licenses in this state and other states. As a participant in multistate supervision, the director shall: 1. Cooperate, coordinate and share information with other state and federal regulators in accordance with this title. 2. Enter into written cooperation, coordination or information-sharing contracts or agreements with organizations that have state or federal governmental agencies as members. 3. Cooperate, coordinate and share information with organizations that have state or federal governmental agencies as members if the organizations agree in writing to maintain the confidentiality and security of the shared information pursuant to section 6-129. B. The director may not waive and this section does not constitute a waiver of the director's authority to conduct an examination or investigation or otherwise take action authorized by this title or a rule adopted or order issued under this title to enforce compliance with an applicable state or federal law. C. A joint examination or investigation or acceptance of an examination or investigation report does not waive an examination assessment provided for in this title. 6-1206. Relationship to federal law A. If a state money transmission jurisdiction is conditioned on a federal law, any inconsistencies between this article and the federal law relating to money transmission shall be governed by the applicable federal law to the extent of the inconsistency. B. If there is an inconsistency between this article and a federal law that governs pursuant to subsection A of this section, the director may provide interpretive guidance that identifies both of the following: 1. The inconsistency. 2. The appropriate means of compliance with federal law. 6-1207. Licensure; prohibition; applicability A. A person may not engage in the business of money transmission or advertise, solicit or hold itself out as providing money transmission unless the person is licensed under this article. B. Subsection A of this section does not apply to either of the following: 1. A person that is an authorized delegate of a person licensed under this article that is acting within the scope of authority conferred by a written contract with the licensee. 2. A person that is exempt pursuant to section 6-1202 and does not engage in money transmission outside the scope of the exemption. C. A license issued under section 6-1211 is not transferable or assignable. 6-1208. Consistent licensure A. To establish consistent licensure between this state and other states, the director may do both of the following: 1. Implement all licensing provisions of this article in a manner that is consistent with other states that have adopted laws that are substantively similar to this article or multistate licensing processes. 2. Participate in nationwide protocols for licensing cooperation and coordination among state regulators if the protocols are consistent with this article. B. The director may establish relationships or contracts with NMLS or other entities designated by NMLS to enable the director to do all of the following: 1. Collect and maintain records. 2. Coordinate multistate licensing processes and supervision processes. 3. Process fees. 4. Facilitate communication between this state and licensees or other persons subject to this article. C. The director may use NMLS for all aspects of licensure pursuant to this article, including license applications, applications for acquisitions of control, surety bonds, reporting, criminal history background checks, credit checks, fee processing and examinations. D. The director may use NMLS forms, processes and functionalities pursuant to this article. If NMLS does not provide functionality, forms or processes for a provision of this article, the director may strive to implement the requirements in a manner that facilitates uniformity with respect to licensing, supervision, reporting and regulation of licensees that are licensed in multiple jurisdictions. E. For the purpose of participating in NMLS, the director may waive or modify, in whole or in part, by rule or order, any or all of the requirements and establish new requirements as reasonably necessary to participate in NMLS. 6-1209. Application for licensure A. An applicant for a license shall apply in a form prescribed by the director and pay all applicable nonrefundable fees as prescribed in section 6-126. The application must contain all of the following: 1. The legal name and residential and business addresses of the applicant and any fictitious or trade name used by the applicant in conducting the applicant's business. 2. A list of any criminal convictions of the applicant and any material litigation in which the applicant has been involved in the ten-year period preceding the submission of the application. 3. A description of any money transmission previously provided by the applicant and the money transmission that the applicant seeks to provide in this state. 4. A list of the applicant's proposed authorized delegates and the locations in this state where the applicant and its authorized delegates propose to engage in money transmission. 5. A list of other states in which the applicant is licensed to engage in money transmission and any license revocations or suspensions or other disciplinary action taken against the applicant in another state. 6. Information concerning any bankruptcy or receivership proceedings affecting the licensee or a person in control of the licensee. 7. A sample form of a contract for authorized delegates, if applicable. 8. A sample form of a payment instrument or stored value, as applicable. 9. The name and address of any federally insured depository financial institution through which the applicant plans to conduct money transmission. 10. Any other information the director reasonably requires with respect to the applicant. B. In addition to the requirements prescribed in subsection A of this section, if an applicant is a corporation, limited liability company, partnership or other legal entity, the applicant shall also provide all of the following: 1. The date of the applicant's incorporation or formation and the state or country of incorporation or formation. 2. If applicable, a certificate of good standing from the state or country in which the applicant is incorporated or formed. 3. A brief description of the structure or organization of the applicant, including any parents or subsidiaries of the applicant, and whether any parents or subsidiaries are publicly traded. 4. The legal name, any fictitious or trade name, all business and residential addresses and the employment, as applicable, in the ten-year period immediately preceding the submission of the application of each key individual and person in control of the applicant. 5. A list of any criminal convictions and material litigation in which a person in control of the applicant that is not an individual has been involved in the ten-year period immediately preceding the submission of the application. 6. A copy of audited financial statements of the applicant for the most recent fiscal year and for the two-year period immediately preceding the submission of the application or, if determined to be acceptable to the director, unaudited financial statements for the most recent fiscal year or other period acceptable to the director. 7. A copy of unaudited financial statements of the applicant for the most recent fiscal quarter. 8. If the applicant is a publicly traded corporation, a copy of the most recent report filed with the United States securities and exchange commission pursuant to 15 United States Code section 78m. 9. If the applicant is a wholly owned subsidiary of: (a) A corporation publicly traded in the United States, a copy of audited financial statements for the parent corporation for the most recent fiscal year or a copy of the parent corporation's most recent report filed pursuant to 15 United States Code section 78m. (b) A corporation publicly traded outside the United States, a copy of similar documentation filed with the regulator of the parent corporation's domicile outside the United States. 10. The name and address of the applicant's registered agent in this state. 11. Any other information the director reasonably requires. C. The director may waive one or more requirements of subsections A and B of this section or allow an applicant to submit other information in lieu of the required information. 6-1210. Information requirements for certain individuals A. Any individual in control of a licensee or applicant, any individual who seeks to acquire control of a licensee and each key individual shall submit both: 1. A full set of fingerprints pursuant to section 6-123.01. 2. The individual's personal history and experience to the director in a form prescribed by the director so the director may obtain the following: (a) An independent credit report from a consumer reporting agency if the individual has a social security number. (b) Information related to any criminal convictions or pending charges. (c) Information related to any regulatory or administrative action and any civil litigation involving claims of fraud, misrepresentation, conversion, mismanagement of funds, breach of fiduciary duty or breach of contract. B. A person is presumed to exercise a controlling influence when the person holds the power to vote, directly or indirectly, at least ten percent of the outstanding voting shares or voting interests of a licensee or person in control of a licensee. A person presumed to exercise a controlling influence may rebut the presumption of control if the person is a passive investor. C. If the individual has resided outside of the United States at any time in the last ten years, the individual shall also provide an investigative background report prepared by an independent search firm that meets the following requirements: 1. At a minimum, the search firm shall do both of the following: (a) Demonstrate that it has sufficient knowledge, resources and employs accepted and reasonable methodologies to conduct the research of the background report. (b) Not be affiliated with or have an interest in the individual it is researching. 2. At a minimum, the investigative background report shall be written in English and shall contain the following: (a) If available in the individual's current jurisdiction of residency, a comprehensive credit report or any equivalent information obtained or generated by the independent search firm to accomplish the report, including a search of the court data in the countries, provinces, states, cities, towns and contiguous areas where the individual resided and worked. (b) Criminal records information for the past ten years, including felonies, misdemeanors or similar convictions for violations of law in the countries, provinces, states, cities, towns and contiguous areas where the individual resided and worked. (c) Employment history. (d) Media history, including an electronic search of national and local publications, wire services and business applications. (e) Financial services-related regulatory history, including money transmission, securities, banking, insurance and mortgage-related industries. 6-1211. License issuance A. When an application for an original license under this article includes all of the required items and addresses, the application is complete and the director shall promptly notify the applicant in a record of the date on which the application is determined to be complete. The director shall approve or deny the application within one hundred twenty days after the completion date. If the application is not approved or denied within one hundred twenty days after the completion date, all of the following apply: 1. The application is approved. 2. The license takes effect as of the first business day after expiration of the one hundred twenty-day period. 3. The director for good cause may extend the application period. B. The director's determination that an application is complete and is accepted for processing means only that the application, on its face, appears to include all of the items, including the criminal background check response from the federal bureau of investigation, and to address all of the matters that are required, and is not an assessment of the substance of the application or of the sufficiency of the information provided. C. When an application is filed and considered complete under this section, the director shall investigate the applicant's financial condition and responsibility, financial and business experience, character and general fitness. The director may conduct an on-site investigation of the applicant, the reasonable cost of which the applicant must pay. The director shall issue a license to an applicant under this section if the director finds that all of the following conditions have been fulfilled: 1. The applicant has complied with sections 6-1209 and 6-1210. 2. The financial condition and responsibility, financial and business experience, competence, character and general fitness of the applicant and the competence, experience, character and general fitness of the key individuals and persons in control of the applicant indicate that it is in the interest of the public to allow the applicant to engage in money transmission. D. If an applicant avails itself or is otherwise subject to a multistate licensing process, either: 1. The director may accept the investigation results of a lead investigative state for the purpose of subsection C of this section if the lead investigative state has sufficient staffing, expertise and minimum standards. 2. If this state is a lead investigative state, the director may investigate the applicant pursuant to subsection C of this section and the time frames established by agreement through the multistate licensing process apply, except that the time frame must also comply with the application period in subsection A of this section. E. The director shall issue a formal written notice of the denial of a license application within thirty days after the decision is made to deny the application. The director shall set forth in the notice of denial the specific reasons for the denial of the application and inform the applicant of its right to appeal pursuant to title 41, chapter 6, article 10. F. The initial license term shall begin on the day the application is approved. The license shall expire on December 31 of the year in which the license term began except that if the initial license date is between November 1 and December 31, the initial license term shall run through December 31 of the following year. 6-1212. License renewal A. A license under this article shall be renewed annually. B. An applicant for license renewal shall pay all applicable fees as prescribed in section 6-126 not more than sixty days before the license expires. C. The renewal term shall be for a period of one year and shall begin on January 1 of each year after the initial license term and shall expire on December 31 of the year the renewal term begins. D. A licensee shall submit a renewal report with the renewal fee in a form prescribed by the director. The renewal report must specify information that is materially different from the information that the licensee submitted in the original license application if the licensee has not previously reported the information to the director. E. A licensee may renew an expired license not later than January 31 subject to a late fee of $500. F. The director may use NMLS to process license renewals if functionality is consistent with this section. 6-1213. License maintenance A. If a licensee does not continue to meet the qualifications or satisfy the requirements that apply to an applicant for a new money transmission license pursuant to this article, the director may suspend or revoke the licensee's license. B. An applicant for a money transmission license must demonstrate that the applicant meets or will meet the requirements prescribed in sections 6-1227, 6-1228 and 6-1229. 6-1214. Acquisition of control A. Any person or group of persons acting in concert, seeking to acquire control of a licensee, shall obtain the written approval of the director before acquiring control. An individual is not deemed to acquire control of a licensee and is not subject to this section when the individual becomes a key individual in the ordinary course of business. B. A person or group of persons acting in concert, seeking to acquire control of a licensee, in cooperation with the licensee shall: 1. Submit an application in a form prescribed by the director. 2. Submit a nonrefundable fee as prescribed in section 6-126. C. On request, the director may allow a licensee or the person or group of persons acting in concert to submit some or all information required by the director pursuant to subsection B, paragraph 1 of this section without using NMLS. D. The application required by subsection B, paragraph 1 of this section shall include information required by section 6-1210 for any new key individuals that have not previously completed the requirements of section 6-1210 for a licensee. E. When an application for acquisition of control under this section appears to include all of the items and address all of the matters that are required, the application shall be considered complete. The director shall promptly notify the applicant in a record of the date on which the application was determined to be complete and all of the following apply: 1. The director shall approve or deny the application within sixty days after the completion date. 2. If the application is not approved or denied within sixty days after the completion date: (a) The application is approved. (b) The person or group of persons acting in concert is not prohibited from acquiring control. 3. The director may extend the application period for good cause. F. A determination by the director that an application is complete and is accepted for processing means only that the application appears to include all of the items and address all of the matters that are required and is not an assessment of the substance of the application or of the sufficiency of the information provided. G. When an application is filed and considered complete under subsection E of this section, the director shall investigate the financial condition and responsibility, financial and business experience, character and general fitness of the person or group of persons acting in concert, seeking to acquire control. The director shall approve an acquisition of control pursuant to this section if the director finds that all of the following conditions have been fulfilled: 1. The requirements of subsections B and D of this section have been met, as applicable. 2. The financial condition and responsibility, financial and business experience, competence, character and general fitness of the person or group of persons acting in concert, seeking to acquire control and the competence, experience, character and general fitness of the key individuals and persons that would be in control of the licensee after the acquisition of control indicate that it is in the interest of the public to allow the person or group of persons acting in concert to control the licensee. H. If an applicant participates in a multistate licensing process: 1. The director may accept the investigation results of a lead investigative state for the purpose of subsection G of this section if the lead investigative state has sufficient staffing, expertise and minimum standards. 2. If this state is a lead investigative state, the director may investigate the applicant pursuant to subsection G of this section and the time frames established by agreement through the multistate licensing process apply. I. The director shall issue a formal written notice of the denial of an application to acquire control within thirty days after the decision is made to deny the application. The director shall set forth in the notice of denial the specific reasons for the denial of the application and inform the applicant of its right to appeal pursuant to title 41, chapter 6, article 10. J. The requirements of subsections A and B of this section do not apply to any of the following: 1. A person that acts as a proxy for the sole purpose of voting at a designated meeting of the shareholders or holders of voting shares or voting interests of a licensee or a person in control of a licensee. 2. A person that acquires control of a licensee by devise or descent. 3. A person that acquires control of a licensee as a personal representative, custodian, guardian, conservator or trustee or as an officer appointed by a court of competent jurisdiction or by operation of law. 4. A person that is exempt under section 6-1202, subsection A, paragraph 7. 5. A person that the director determines is not subject to subsection A of this section based on the public interest. 6. A public offering of securities of a licensee or a person in control of a licensee. 7. An internal reorganization of a person in control of the licensee in which the ultimate person in control of the licensee remains the same. K. Persons prescribed in subsection J, paragraphs 2, 3, 4, 6 and 7 of this section, in cooperation with the licensee, shall notify the director within fifteen days after the acquisition of control. L. The requirements of subsections A and B of this section do not apply to a person that receives approval to engage in money transmission under this article or is identified as a person in control in a prior application filed with and approved by the director or by a money services business accredited state pursuant to a multistate licensing process, if: 1. The person has not had a license revoked or suspended or controlled a licensee that has had a license revoked or suspended while the person was in control of the licensee in the previous five years. 2. The person is a licensee and well managed and receives at least a satisfactory rating for compliance at its most recent examination by an money services business accredited state if a rating was given. 3. The licensee to be acquired is projected to meet the requirements of sections 6-1227, 6-1228 and 6-1229 after the acquisition of control is completed and if the person acquiring control is a licensee, that licensee is also projected to meet the requirements of sections 6-1227, 6-1228 and 6-1229 after the acquisition of control is completed. 4. The licensee to be acquired will not implement any material changes to its business plan as a result of the acquisition of control and if the person acquiring control is a licensee, that licensee will not implement any material changes to its business plan as a result of the acquisition of control. 5. The person provides notice of the acquisition in cooperation with the licensee and attests to paragraphs 1 through 4 of this subsection in a form prescribed by the director. If the notice is not disapproved within thirty days after the date on which the notice was determined to be complete, the notice is deemed approved. M. Before filing an application for approval to acquire control of a licensee, a person may request in writing a determination from the director as to whether the person would be considered a person in control of a licensee on consummation of a proposed transaction. If the director determines that the person would not be a person in control of a licensee, the proposed person and transaction is not subject to the requirements of subsections A and B of this section. N. If a multistate licensing process includes a determination pursuant to subsection M of this section and an applicant is subject to the multistate licensing process: 1. The director may accept the control determination of a lead investigative state with sufficient staffing, expertise and minimum standards. 2. If this state is a lead investigative state, the director may investigate the applicant subject to the time frames established by agreement through the multistate licensing process. 6-1215. Notice and information requirements for a change of key individuals A. A licensee adding or replacing any key individual shall provide both of the following: 1. Notice in a manner prescribed by the director within fifteen days after the effective date of the key individual's addition or replacement. 2. Information as required by section 6-1210 within forty-five days after the effective date of the key individual's addition or replacement. B. Within ninety days after the date on which the notice provided pursuant to subsection A of this section is determined to be complete, the director may issue a notice of disapproval of a key individual if the competence or experience of the individual is not in the best interests of the public or the customers of the licensee to allow the individual to be a key individual of the licensee. C. A notice of disapproval shall contain a statement of the basis for disapproval and shall be sent to the licensee and the disapproved individual. A licensee may appeal a notice of disapproval pursuant to title 41, chapter 6, article 10. D. If the notice provided pursuant to subsection A of this section is not disapproved within ninety days after the date on which the notice is determined to be complete, the key individual is approved. E. If a multistate licensing process includes a key individual notice review and disapproval process pursuant to this section and the licensee is subject to the multistate licensing process: 1. The director may accept the determination of another state if the investigating state has sufficient staffing, expertise and minimum standards for the purposes of this section. 2. If this state is a lead investigative state, the director may investigate the applicant subject to the time frames established by agreement through the multistate licensing process. 6-1216. Report of condition A. Each licensee shall submit a report of condition within forty-five days after the end of the calendar quarter or within any extended time as the director prescribes. B. The report of condition shall include: 1. A consolidated financial statement, including a balance sheet and income and expense statements at the licensee level. 2. Nationwide and state-specific money transmission transaction information in every jurisdiction in the United States where the licensee is licensed to engage in money transmission. 3. A permissible investments report. 4. Transaction destination country reporting for money received for transmission. This paragraph applies only to a report of condition submitted within forty-five days after the end of the fourth calendar quarter. 5. Any other information the director reasonably requires with respect to the licensee. C. The director may use NMLS for the submission of the report required by this section and is authorized to change or update as necessary the requirements of this section to carry out the purposes of this article and maintain consistency with NMLS reporting. 6-1217. Audited financial statements; certificate of opinion A. Within ninety days after the end of each fiscal year or within any extended time as the director prescribes, each licensee shall file with the director both of the following: 1. An audited financial statement of the licensee for the fiscal year prepared in accordance with United States generally accepted accounting principles. 2. Any other information the director reasonably requires. B. The audited financial statements shall be prepared by an independent certified public accountant or independent public accountant who is satisfactory to the director. C. The audited financial statements shall include or be accompanied by a certificate of opinion of the independent certified public accountant or independent public accountant that is satisfactory in form and content to the director. If the certificate or opinion is qualified, the director may order the licensee to take any action as the director may find necessary to enable the independent certified public accountant or independent public accountant to remove the qualification. 6-1218. Authorized delegate reporting A. Each licensee shall submit a report of authorized delegates within forty-five days after the end of the calendar quarter. The director may use NMLS for the submission of the report required by this subsection if functionality complies with this section. B. The authorized delegate report shall include the following information for each authorized delegate: 1. The company legal name. 2. The taxpayer employer identification number. 3. The principal provider identifier. 4. The physical address, if any. 5. The mailing address. 6. Any business conducted in other states. 7. Any fictitious or trade name. 8. The contact person name, telephone number and email address. 9. The start date as the licensee's authorized delegate. 10. The end date as the licensee's authorized delegate, if applicable. 11. Any other information the director reasonably requires with respect to the authorized delegate. 6-1219. Reports A. A licensee shall file a report with the director within one business day after the licensee has reason to know of the occurrence of any of the following: 1. The filing of a petition by or against the licensee under the United States bankruptcy code (11 United States Code sections 101 through 112) for bankruptcy or reorganization. 2. The filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization or the making of a general assignment for the benefit of its creditors. 3. The commencement of a proceeding to revoke or suspend the licensee's license in a state or country in which the licensee engages in business or is licensed. B. A licensee shall file a report with the director within three business days after the licensee has reason to know of the occurrence of either of the following: 1. A felony charge or conviction of the licensee or of a key individual or person in control of the licensee. 2. A felony charge or conviction of an authorized delegate. 6-1220. Bank secrecy act reports A licensee and an authorized delegate shall file all reports required by federal currency reporting, recordkeeping and suspicious activity reporting requirements as set forth in the bank secrecy act (P.L. 91-508; 84 Stat. 1114) and other federal and state laws relating to money laundering. The timely filing of a complete and accurate report required under this section with the appropriate federal agency is deemed compliance with the requirements of this section. 6-1221. Records A. To help the director determine the licensee's compliance with this article, a licensee shall maintain the following records for at least five years: 1. A record of each outstanding money transmission obligation sold. 2. A general ledger posted at least monthly that contains all asset, liability, capital, income and expense accounts. 3. Bank statements and bank reconciliation records. 4. Records of outstanding money transmission obligations. 5. Records of each outstanding money transmission obligation paid during the five-year period. 6. A list of the last known names and addresses of all of the licensee's authorized delegates. 7. Any other records the director reasonably requires by rule. B. The items specified in subsection A of this section may be maintained in any form of record. C. Records specified in subsection A of this section may be maintained outside of this state if they are made accessible to the director with seven business days' notice that is sent in a record. 6-1222. Relationship between licensees and authorized delegates A. Before a licensee is authorized to conduct business through an authorized delegate or allows a person to act as the licensee's authorized delegate, the licensee must: 1. Adopt, and update as necessary, written policies and procedures reasonably designed to ensure that the licensee's authorized delegates comply with applicable state and federal law. 2. Enter into a written contract that complies with subsection C of this section. 3. Conduct a reasonable risk-based background investigation sufficient for the licensee to determine whether the authorized delegate complies with applicable state and federal law. B. An authorized delegate must comply with this article. C. The written contract required by subsection A of this section must be signed by the licensee and the authorized delegate and must: 1. Appoint the person signing the contract as the licensee's authorized delegate with the authority to conduct money transmission on behalf of the licensee. 2. Describe the nature and scope of the relationship between the licensee and the authorized delegate and the respective rights and responsibilities of the parties. 3. Require the authorized delegate to agree to fully comply with all applicable state and federal laws relating to money transmission. 4. Require the authorized delegate to remit and handle money and monetary value in accordance with the terms of the contract between the licensee and the authorized delegate. For the purposes of this paragraph, "remit" means to make direct payments of money to a licensee or the licensee's representative or to deposit money in a bank in an account specified by the licensee. 5. Impose a trust on money and monetary value net of fees received for money transmission for the benefit of the licensee. 6. Require the authorized delegate to prepare and maintain records as required by this article or as reasonably requested by the director. 7. Acknowledge that the authorized delegate consents to examination or investigation by the director. 8. State that the licensee is subject to regulation by the director and that the director may suspend or revoke an authorized delegate designation. 9. Acknowledge receipt of the written policies and procedures required under subsection A, paragraph 1 of this section. D. Within five business days after a licensee's license is suspended, revoked, surrendered or expired, the licensee must provide documentation to the director that the licensee has provided notice of the suspension, revocation, surrender or expiration to all applicable authorized delegates of the licensee whose names are in a record filed with the director. On suspension, revocation, surrender or expiration of a license, applicable authorized delegates shall immediately cease to provide money transmission as an authorized delegate of the licensee. E. An authorized delegate of a licensee holds in trust for the benefit of the licensee all money net of fees received from money transmission. If any authorized delegate commingles any money received from money transmission with any other money or property owned or controlled by the authorized delegate, all commingled money and other property shall be considered held in trust in favor of the licensee in an amount equal to the amount of money net of fees received from money transmission. F. An authorized delegate may not use a subdelegate to conduct money transmission on behalf of a licensee. 6-1223. Unauthorized activities A person may not engage in the business of money transmission on behalf of a person that is not licensed under this article or that is not exempt pursuant to section 6-1202. A person that engages in the activity in violation of this section is jointly and severally liable with the unlicensed or nonexempt person. 6-1224. Timely transmission A. Every licensee shall forward all money received for transmission in accordance with the terms of the agreement between the licensee and the sender unless the licensee has a reasonable belief or a reasonable basis to believe that the sender may be a victim of fraud or that a crime or violation of law has occurred, is occurring or may occur. B. If a licensee fails to forward money received for transmission pursuant to this section, the licensee must respond to inquiries by the sender with the reason for the failure unless providing a response would violate a state or federal law. 6-1225. Refunds; exceptions A. Except as provided in subsection B of this section, every licensee shall refund to the sender within ten days after receipt of the sender's written request for a refund of money received for transmission unless any of the following occurs: 1. The money is forwarded within ten days after the date on which the money is received for transmission. 2. Instructions have been given committing an equivalent amount of money to the person designated by the sender within ten days after the date on which the money is received for transmission. 3. The agreement between the licensee and the sender instructs the licensee to forward the money at a time that is more than ten days after the date on which the money is received for transmission. If monies have not yet been forwarded in accordance with the terms of the agreement between the licensee and the sender, this paragraph does not apply. 4. The refund is requested for a transaction that the licensee has not completed based on a reasonable belief that a crime or violation of law has occurred, is occurring or may occur. 5. The refund request does not enable the licensee to identify either: (a) The sender's name and address or telephone number. (b) The particular transaction to be refunded if the sender has multiple transactions outstanding. B. This section does not apply to: 1. Money received for transmission subject to the federal remittance rule (12 Code of Federal Regulations sections 1005.30 through 1005.36). 2. Money received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee. 6-1226. Receipts; requirements; exceptions; definition A. Except as provided in subsection C of this section, every licensee or its authorized delegate shall provide the sender a receipt for money received for transmission. For a transaction conducted in person, the receipt may be provided electronically if the sender requests or agrees to receive an electronic receipt. For a transaction conducted electronically or by telephone, a receipt may be provided electronically. All electronic receipts shall be provided in a retainable form. The receipt shall be in english and in the language principally used by the licensee or authorized delegate to advertise, solicit or negotiate, either orally or in writing, for a transaction conducted in person, electronically or by telephone, if other than english. The receipt shall contain the following information, as applicable: 1. The name of the sender to the extent the licensee or its authorized delegate is required to capture this information prior to transmission. 2. The name of the designated recipient unless the licensee can determine the recipient via the unique transaction or identification number as prescribed in paragraph 4 of this subsection, in which case the name of the recipient is not required. 3. The date of the transaction. 4. The unique transaction or identification number. 5. The name of the licensee or its authorized delegate, the NMLS unique identifier, the licensee's or its authorized delegate's business address and the licensee's or its authorized delegate's customer service telephone number. 6. The amount of the transaction in United States dollars. 7. Any fee charged by the licensee to the sender for the transaction. 8. Any taxes collected by the licensee from the sender for the transaction. B. Every licensee or authorized delegate shall include on a receipt or disclose on the licensee's website or mobile application the name and telephone number of the department and a statement that the licensee's customers can contact the department with questions or complaints about the licensee's money transmission services. C. This section does not apply to: 1. Money received for transmission subject to the federal remittance rule (12 Code of Federal Regulations sections 1005.30 through 1005.36). 2. Money received for transmission that is not primarily for personal, family or household purposes. 3. Money received for transmission pursuant to a written agreement between the licensee and payee to process payments for goods or services provided by the payee. D. For the purposes of this section, "receipt" means a paper receipt, electronic record or other written confirmation. 6-1227. Net worth requirements; exemption A. A licensee shall maintain at all times a tangible net worth as follows: 1. The greater of $100,000 or three percent of total assets for the first $100,000,000. 2. Two percent of additional assets for $100,000,000 to $1,000,000,000. 3. One-half percent of additional assets for over $1,000,000,000. B. Tangible net worth must be demonstrated at initial application by the applicant's most recent audited or unaudited financial statements pursuant to section 6-1209, subsection B, paragraph 6. C. The director may exempt, in part or in whole, an applicant or licensee from this section. 6-1228. Surety bond A. An applicant for a money transmission license must provide and a licensee at all times must maintain a surety bond in a form satisfactory to the director. B. Except as provided in subsection C of this section, the amount of the required security shall be the greater of $25,000 or an amount equal to one hundred percent of the licensee's average daily money transmission liability in this state calculated for the most recently completed three-month period, up to a maximum of $500,000. C. If a licensee's tangible net worth exceeds ten percent of total assets, the licensee may maintain a surety bond of $25,000. D. A licensee that maintains a bond in the maximum amount provided for in subsection B of this section is not required to calculate the licensee's average daily money transmission liability in this state for purposes of this section. E. A licensee may exceed the maximum required bond amount pursuant to section 6-1230, subsection A, paragraph 6. 6-1229. Maintenance of permissible investments A. A licensee shall maintain at all times permissible investments that have a market value computed in accordance with United States generally accepted accounting principles of not less than the aggregate amount of all of its outstanding money transmission obligations. B. Except for permissible investments enumerated in section 6-1230, subsection A, the director may limit the extent to which a specific investment maintained by a licensee within a class of permissible investments may be considered a permissible investment if the specific investment represents undue risk to customers not reflected in the market value of investments. C. Permissible investments, even if commingled with other assets of the licensee, are held in trust for the benefit of the purchasers and holders of the licensee's outstanding money transmission obligations in the event of insolvency, the filing of a petition by or against the licensee under the United States bankruptcy code (11 United States Code sections 101 through 112) for bankruptcy or reorganization, the filing of a petition by or against the licensee for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization or in an action by a creditor against the licensee that is not a beneficiary of this statutory trust. A permissible investment impressed with a trust pursuant to this subsection is not subject to attachment, levy of execution or sequestration by order of any court, except for a beneficiary of this statutory trust. D. On the establishment o