Chapter 169

2003 -- H 6004 SUBSTITUTE A

Enacted 07/10/03

A N A C T

RELATING TO FINANCIAL INSTITUTIONS -- LICENSED ACTIVITIES AND

REGULATING OVERSIGHT

Introduced By: Representative Robert A. Watson

Date Introduced: February 12, 2003

It is enacted by the General Assembly as follows:

SECTION 1. Section 19-4-17 of the General Laws in Chapter 19-4 entitled "Regulatory

Oversight" is hereby amended to read as follows:

19-4-17. Unauthorized banking business. -- (a) No person, except regulated institutions

or other ~~insured-deposit-taking institutions~~ banks or credit unions organized under the laws of the

United States, or of any other state within the United States shall use any sign at the place where

its business is transacted, having on it any name containing the word or words "bank", "savings

bank", "loan and investment bank", "trust company", "credit union", or other word or words,

indicating, in the opinion of the director or the director's designee, that the place or office is the

place or office of a regulated institution or other ~~insured-deposit-taking institution~~ bank or credit

union duly organized under the laws of the United States or of any other state within the United

States. The secretary of state shall not accept for filing any articles of association or

incorporation, or amendment thereof, containing the word or words without the approval of the

director or the director's designee.

(b) No person, except regulated institutions or other ~~insured-deposit-taking institutions~~

banks or credit unions duly organized under the laws of the United States, or of any other state

within the United States, shall use or circulate any written or printed or partly written and partly

printed paper whatsoever, having on it any name or other word or words indicating that its

business is the business of a regulated institution or other ~~insured-deposit-taking institution~~ bank

or credit union duly organized under the laws of the United States, or of any other state within the

United States. No bank or credit unions organized under the laws of any other state within the

United States shall establish an office within this state or otherwise have a physical presence

within this state for the purpose of receiving deposits, paying checks, lending money or

exercising trust powers within this state unless such bank or credit union has received approval

from the director or the director’s designee for the establishment of an interstate branch office

pursuant to chapter 19-7 of the general laws. ~~nor shall any person, receive deposits and transact~~

~~business in the way or manner of a regulated institution other insured-deposit-taking institution~~

~~duly organized under the laws of the United States, or~~ No person except regulated institutions,

banks or credit unions organized under the laws of the United States or of any other state within

the United States shall transact business in this state in any way or manner as to lead the public to

believe, or as, in the opinion of the director or the director's designee might lead the public to

believe, that its business is that of a regulated institution or other ~~insured-deposit-taking~~

~~institution~~ bank or credit union duly organized under the laws of the United States or of any other

state within the United States.

SECTION 2. Section 19-14-2 of the General Laws in Chapter 19-14 entitled "Licensed

Activities" is hereby amended to read as follows:

19-14-2. Licenses required. -- ~~Other than regulated institutions and other insured deposit~~

~~taking institutions duly organized under the laws of the United States, which shall not be subject~~

~~to this chapter, no~~ No person shall engage within this state in the business of: (1) making or

funding loans or acting as a lender or small loan lender; (2) brokering loans or acting as a loan

broker; (3) selling checks for a fee or other consideration; (4) cashing checks for a fee or other

consideration which includes any premium charged for the sale of goods in excess of the cash

price of the goods; or (5) providing electronic money transfers for a fee or other consideration

without first obtaining a license from the director or the director's designee. Special exemptions

from licensing for each activity are contained in other chapters in this title. ~~Any natural person~~

~~who is employed by a licensee is exempt from the licensing requirement of this chapter when~~

~~acting on the licensee's behalf.~~

SECTION 3. Section 19-14.1-10 of the General Laws in Chapter 19-14.1 entitled

"Lenders and Loan Brokers" is hereby amended to read as follows:

19-14.1-10. Special exemptions. -- (a) The licensing provisions of chapter 14 shall not

apply to:

(1) Nonprofit charitable, educational, or religious corporations or associations;

(2) Any person who makes less than six (6) loans in this state in any consecutive twelve

(12) month period; there is no similar exemption from licensing for loan brokers for brokering

loans or acting as a loan broker; or

(3) Person(s) acting as an agent for a licensee for the purpose of conducting closings at a

location other than that stipulated in the license.;

(4) Regulated institution and bank or credit unions organized under the laws of the United

States, or subject to written notice with a designated Rhode Island agent for service of process in

the form prescribed by the director or the director’s designee, of any other state within the United

States if the laws of the other state in which such bank or credit union is organized authorizes

under conditions not substantially more restrictive than those imposed by the laws of this state, as

determined by the director or the director’s designee, a financial institution or credit union to

engage in the business of originating or brokering loans in the other state; no bank or credit union

duly organized under the laws of any other state within the United States may receive deposits,

pay checks or lend money from any location within this state unless such bank or credit union has

received approval from the director or the director’s designee for the establishment of an

interstate branch office pursuant to chapter 19-7 of the general laws; or

(5) Any natural person employee who is employed by a licensee when acting on the

licensee’s behalf.

(b) The provisions of chapter 14 and chapter 14.1 shall not apply to:

(1) Loans to corporations, joint ventures, partnerships, limited liability companies or

other business entities;

(2) Loans over twenty-five thousand dollars ($25,000) in amount to individuals for

business or commercial, as opposed to personal, family or household purposes;

(3) Loans principally secured by accounts receivable and/or business inventory;

(4) Loans made by a life insurance company wholly secured by the cash surrender value

of a life insurance policy;

(5) Education-purpose loans made by the Rhode Island health and educational building

corporation as vested in chapter 38.1 of title 45 of the Rhode Island student loan authority as

vested in chapter 62 of title 16;

(6) The acquisition of retail or loan installment contracts by an entity whose sole

business in this state is acquiring them from federal banks receivers or liquidators;

(7) Notes evidencing the indebtedness of a retail buyer to a retail seller of goods,

services or insurance for a part or all of the purchase price; or

(8) Any state or federal agency which makes, brokers, or funds loans or acts as a lender

or a loan broker. This exemption includes exclusive agents or exclusive contractors of the agency

specifically designated by the agency to perform those functions on behalf of the agency and

which has notified the director, in writing, of the exclusive agency or contract.

required of any person who engages in deferred deposit transactions (commonly known as "pay-

day advance") while holding a valid license to cash checks pursuant to chapter 14 of this title.

SECTION 4. Section 19-14.3-1 of the General Laws in Chapter 19-14.3 entitled "Sale of

Checks and Electronic Money Transfers" is hereby amended to read as follows:

19-14.3-1. Exemption from licensing. -- No license to sell checks or engage in the

business of electronic money transfers shall be required of any:

(1) regulated institution, bank or credit union organized under the laws of the United

States, or subject to written notice with a designated Rhode Island agent for service of process in

the form prescribed by the director or the director’s designee, of any other state within the United

States if the laws of the other state in which such bank or credit union is organized authorizes

under conditions not substantially more restrictive than those imposed by the laws of this state, as

determined by the director or the director’s designee, a financial institution or credit union to

engage in the business of selling checks or electronic money transfers in the other state; no bank

or credit union duly organized under the laws of any other state within the United States may

receive deposits, pay checks or lend money from any location within this state unless such bank

or credit union has received approval from the director or the director's designee for the

establishment of an interstate branch office pursuant to chapter 19-7 of the general laws;

(2) natural person employee who is employed by a licensee when acting on the licensee's

behalf; or

(3) agents any licensee shall designate or appoint. No ~~license to sell checks or engage in~~

~~the business of electronic money transfers~~ sale of check or electronic money transfer licensee

shall be required to obtain a branch office license pursuant to section 19-14-12 or shall be subject

to the provisions of section 19-14-24 or shall be required to obtain a license pursuant to chapter

14.4 of this title for check cashing services incidental to the sale of checks and electronic money

transfers. and the person charges not more than fifty cents ($.50) per check cashed.

SECTION 5. Section 19-14.4-1 of the General Laws in Chapter 19-14.4 entitled "Check

Cashing" is hereby amended to read as follows:

19-14.4-1. Exemptions from licensing. -- No license to cash checks shall be required of

any:

(1) regulated institution, bank or credit union organized under the laws of the United

States, or subject to written notice with a designated Rhode Island agent for service of process in

the form prescribed by the director or the director’s designee, of any other state within the United

States if the laws of the other state in which such bank or credit union is organized authorizes

under conditions not substantially more restrictive than those imposed by the laws of this state, as

determined by the director or the director’s designee, a financial institution or credit union to

engage in the business of cashing checks in the other state; no bank or credit union duly

organized under the laws of any other state within the United States may receive deposits, pay

checks or lend money from any location within this state unless such bank or credit union has

received approval from the director or the director’s designee for the establishment of an

interstate branch office pursuant to chapter 19-7 of the general laws.

(2) natural person employee who is employed by a licensee when acting on the licensee's

behalf; or

(3) persons engaged in the business of cashing checks where that business is incidental to

the person's retail sale of goods or services and the person charges not more than fifty cents ($.50)

per check cashed.

SECTION 6. This act shall take effect upon passage.

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LC02210/SUB A/2

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