Financial institutions: Department of Financial Protection and Innovation: money transmissions.

(1) Previously existing law established the Department of Business Oversight in the Business, Consumer Services, and Housing Agency, headed by the Commissioner of Business Oversight. Under previous existing law, the department had the charge of the execution of specified laws relating to various financial institutions and financial services, including banks, trust companies, credit unions, finance lenders, and residential mortgage lenders. On September 25, 2020, the Governor approved AB 1864, which, among other things, renamed the "Department of Business Oversight" as the "Department of Financial Protection and Innovation" and the "Commissioner of Business Oversight" as the "Commissioner of Financial Protection and Innovation." This bill would update the references in various statutes from the "Department of Business Oversight" to the "Department of Financial Protection and Innovation," and from the "Commissioner of Business Oversight" to the "Commissioner of Financial Protection and Innovation." The bill would also make various related technical and conforming changes. (2) Existing law, the Money Transmission Act, prohibits a person from engaging in the business of money transmission in this state unless the person is licensed or exempt from licensure, as specified. Among other terms, the act defines "money transmission" for purposes of the act to mean selling or issuing payment instruments, selling or issuing stored value, or receiving money for transmission. The act also requires a licensee that is a money services business under specified federal regulations and the agents of the licensee that are money services businesses to comply with those regulations. Under existing law, it is a felony to make certain false statements, misrepresentations, or false certifications in a record filed or required to be maintained under the act or to knowingly engage in activity for which a license is required under the act without being licensed or exempt from licensure. This bill would specify that "money transmission," for purposes of the Money Transmission Act, means selling or issuing payment instruments or stored value, as described above, to a person located in this state or receiving money for transmission, as described above, from a person located in this state. The bill would also make a technical change to the cross-reference to the federal regulations governing money services businesses. By changing the scope of a crime under the Money Transmission Act, the bill would impose a state-mandated local program. (3) Existing law, the Banking Law, authorizes a commercial bank to hold obligations made by a person, subject to specified prohibitions. Existing law defines "obligations" to include, among other things, the total sums for the payment of which a person is obligated, primarily or secondarily, to a commercial bank. Existing law prohibits an obligation of any one person owing to a commercial bank from exceeding a specified percentage of the sum of the shareholders' equity, allowance for loan losses, capital notes, and debentures of the bank for both secured and unsecured loans. Existing federal law authorizes an institution supervised by the Federal Deposit Insurance Corporation (FDIC) that is not an advanced approaches FDIC-supervised institution to make a one-time election to opt out of the requirement to include all components of accumulated other comprehensive income (AOCI) , according to specific regulations. This bill would conform the prohibition on obligations to the federal authorization and would authorize a commercial bank to make a one-time election to opt out of the requirement to include all components of AOCI, as specified. (4) This bill would incorporate additional changes to Sections 201, 1001, 2601, 5122, 7122, 7813.5, 9122, 12302, and 12504 of the Corporations Code proposed by SB 1202 to be operative only if this bill and SB 1202 are enacted and this bill is enacted last. (5) The California Constitution requires the state to reimburse local agencies and school districts for certain costs mandated by the state. Statutory provisions establish procedures for making that reimbursement. This bill would provide that no reimbursement is required by this act for a specified reason.