Cal. Fin. Code § 2040
Licenses
Redline — January 1, 2013 → current.View current text →
Current — January 1, 2023
As of January 1, 2013
(a) An applicant shall possess, and a licensee shall maintain at all times, tangible shareholder’s equity of two hundred fifty thousand dollars ($250,000) to five hundred thousand dollars ($500,000), depending on estimated or actual transaction volume, as determined by the commissioner based on the factors described in subdivision (c).
(b) The commissioner may increase the amount of net worth required of an applicant or licensee if the commissioner determines, with respect to the applicant or licensee, that a higher net worth is necessary to achieve the purposes of this division based on the factors described in subdivision (c).
(c) When making a determination pursuant to subdivision (a) or (b), the commissioner shall consider the following factors:
(1) The nature and volume of the projected or established business.
(2) The number of locations at or through which money transmission is or will be conducted.
(3) The amount, nature, quality, and liquidity of its assets.
(4) The amount and nature of its liabilities.
(5) The history of its operations and prospects for earning and retaining income.
(6) The quality of its operations.
(7) The quality of its management.
(8) The nature and quality of its principals.
(9) The nature and quality of the persons in control.
(10) The history of its compliance with applicable state and federal law.
(11) Any other factor the commissioner considers relevant.
(d) The commissioner at any time may require a licensee to write down any asset held by it to a valuation that will represent its then fair market value. Any receivable or debt due to a licensee that is past due and unpaid for the period of one year shall be charged off, unless it is well secured or is in process of collection.
(e) The aggregate value of a licensee’s accounts receivable, excluding money transmission receivables, loans or extensions of credit to any one person, or that person’s affiliates, cannot exceed 50 percent of the licensee’s tangible shareholders’ equity without the advanced written approval of the commissioner. Whenever such amount equals or exceeds 20 percent of the licensee’s tangible shareholders’ equity, the licensee shall maintain records evidencing such amount and any security or other source of payment for the amount owed, and such other records as the commissioner may require by order or regulation.
(f) The commissioner shall adopt regulations to carry out and implement the factors described in subdivision (c).
(a) Subject to subdivision (b), a licensee shall maintain at all times a tangible net worth of the greater of one hundred thousand dollars ($100,000) or 3 percent of total assets for the first one hundred million dollars ($100,000,000), 2 percent of additional assets for one hundred million dollars ($100,000,000) to one billion dollars ($1,000,000,000), and one-half of 1 percent of additional assets for over one billion dollars ($1,000,000,000).
(b) (1) The commissioner shall, pursuant to paragraph (2), have the authority to exempt, in part or in whole, an applicant or licensee from the requirements of this section.
(2) The commissioner, in determining whether to exempt, in part or in whole, an applicant or licensee from the requirements of this section, shall consider all of the following factors:
(A) Whether the applicant or licensee is licensed to engage in money transmission in other states and whether the applicant or licensee has been subject to any disciplinary actions, including license revocations or suspensions.
(B) Whether the applicant or licensee is licensed to engage in money transmission in other states and the tangible net worth requirements in those other states, if applicable.
(C) The nature and magnitude of short-term fluctuations in the total assets and money transmitter liabilities of the applicant or licensee, the risks associated with those fluctuations, and how those fluctuations affect the net worth requirements of this section.
(D) Any factors that suggest that the money transmission activities of the applicant or licensee function in such a manner that a waived or modified tangible net worth requirement would not compromise the interest of persons in this state who use money transmission services, including, but not limited to, both of the following:
(i) The manner in which the applicant or licensee holds actual possession of funds from persons in this state who use money transmission services.
(ii) Whether the applicant or licensee transmits funds described in clause (i) to the intended recipient as soon as practicable following receipt.
(E) Any other factors as the commissioner deems appropriate.
(c) If a licensee is subject to an order issued under Section 580 or 581, the commissioner may require a licensee to maintain tangible net worth greater than the amount required by subdivision (a) of this section.
Official source: California Legislative Information. Reproduced from public-domain California statutes; confirm against the official source for the current text. Not legal advice.