Chapter 251

2007 -- S 0369 AS AMENDED

Enacted 07/03/07

 

A N A C T

RELATING TO FINANCIAL INSTITUTIONS -- LICENSED ACTIVITIES

          

     Introduced By: Senator William A. Walaska

     Date Introduced: February 13, 2007

 

It is enacted by the General Assembly as follows:

 

     SECTION 1. General assembly intent. (a) The general assembly finds that a uniform

multi-state administration of an automated licensing system for persons seeking a license under

the provisions of chapter 14 of title 19 of the general laws of Rhode Island or for persons holding

a license under the provisions of chapter 14 of title 19 of the general laws of Rhode Island is

consistent with both the public interest and the purposes of this chapter; therefore, for the sole

purpose of participating in the establishment and implementation of a multi-state automated

licensing system the director is authorized:

     (1) To establish such new requirements as are necessary for the state of Rhode Island to

participate in a multi-state automated licensing system upon the director's finding that each new

requirement is consistent with both the public interest and the purposes of this chapter; and

     (2) To require a background investigation of each applicant and the principal owners,

members or officers of an applicant for a license by means of fingerprint checks by an agency

authorized pursuant to the provisions of this act to perform state and national criminal history

record checks, commencing at such time as Rhode Island joins a multi-state automated licensing

system. The information obtained thereby may be used by the director to determine the

applicant's eligibility for licensing under this chapter. The fee, if so required, to perform the

criminal history record check shall be borne by the license applicant. Information obtained or

held by the director pursuant to this subsection shall be considered confidential personal

information and shall be exempt from disclosure pursuant to chapter 2 of title 38 of the general

laws of Rhode Island.

     (b) The applicant for a license under the provisions of chapter 14 of title 19 of the general

laws of Rhode Island or a person holding a license under the provisions of chapter 14 of title 19

of the general laws of Rhode Island may be required to pay an additional fee for a license or other

participation in such multi-state licensing system.

 

     SECTION 2. Sections 19-14-1, 19-14-3 and 19-14-4 of the General Laws in Chapter 19-

14 entitled "Licensed Activities" are hereby amended to read as follows:

 

     19-14-1. Definitions. [Effective March 31, 2007.] -- For purposes of this chapter and

chapters 14.1, 14.2, 14.3, 14.4, 14.6 and 14.7 of this title:

      (1) "Check" means any check, draft, money order, personal money order, or other

instrument for the transmission or payment of money. For the purposes of check cashing,

travelers checks or foreign denomination instruments shall not be considered checks. "Check

cashing" means providing currency for checks;

      (2) "Deliver" means to deliver a check to the first person who in payment for the check

makes or purports to make a remittance of or against the face amount of the check, whether or not

the deliverer also charges a fee in addition to the face amount, and whether or not the deliverer

signs the check;

      (3) "Electronic money transfer" means receiving money for transmission within the

United States or to locations abroad by any means including, but not limited to, wire, facsimile or

other electronic transfer system;

      (4) (i) "Lender" means any person who makes or funds a loan within this state with the

person's own funds, regardless of whether the person is the nominal mortgagee or creditor on the

instrument evidencing the loan;

      (ii) A loan is made or funded within this state if any of the following conditions exist:

      (A) The loan is secured by real property located in this state;

      (B) An application for a loan is taken by an employee, agent, or representative of the

lender within this state;

      (C) The loan closes within this state; or

      (D) The loan solicitation is done by an individual with a physical presence in this state.

      (iii) The term "lender" shall also include any person engaged in a transaction whereby

the person makes or funds a loan within this state using the proceeds of an advance under a line

of credit over which proceeds the person has dominion and control and for the repayment of

which the person is unconditionally liable. This transaction is not a table funding transaction. A

person is deemed to have dominion and control over the proceeds of an advance under a line of

credit used to fund a loan regardless of whether:

      (A) The person may, contemporaneously with or shortly following the funding of the

loan, assign or deliver to the line of credit lender one or more loans funded by the proceeds of an

advance to the person under the line of credit;

      (B) The proceeds of an advance are delivered directly to the settlement agent by the line

of credit lender, unless the settlement agent is the agent of the line of credit lender;

      (C) One or more loans funded by the proceeds of an advance under the line of credit is

purchased by the line of credit lender; or

      (D) Under the circumstances as set forth in regulations adopted by the director or the

director's designee pursuant to this chapter;

      (5) "Licensee" means an entity licensed under this chapter;

      (6) "Loan" means any advance of money or credit including, but not limited to:

      (i) Loans secured by mortgages;

      (ii) Insurance premium finance agreements;

      (iii) The purchase or acquisition of retail installment contracts or advances to the holders

of those contracts;

      (iv) Educational loans;

      (v) Any other advance of money; or

      (vi) Any transaction such as those commonly known as "pay day loans," "pay day

advances," or "deferred presentment loans," in which a cash advance is made to a customer in

exchange for the customer's personal check, or in exchange for the customer's authorization to

debit the customer's deposit account, and where the parties agree either that the check will not be

cashed or deposited, or that customer's deposit account will not be debited, until a designated

future date.

      (7) "Loan broker" means any person who, for compensation or gain, or in the expectation

of compensation or gain, either directly or indirectly, solicits, processes, negotiates, places or sells

a loan within this state for others in the primary market, or offers to do so. A loan broker shall

also mean any person who is the nominal mortgagee or creditor in a table funding transaction. A

loan is brokered within this state if any of the following conditions exist:

      (i) The loan is secured by real property located in this state;

      (ii) An application for a loan is taken by an employee, agent or representative of the loan

broker within this state;

      (iii) The loan closes within this state; or

      (iv) The loan solicitation is done by an individual with a physical presence in this state.

      (8) "Personal money order" means any instrument for the transmission or payment of

money in relation to which the purchaser or remitter appoints or purports to appoint the seller as

his or her agent for the receipt, transmission, or handling of money, whether the instrument is

signed by the seller or by the purchaser or remitter or some other person;

      (9) "Primary market" means the market in which loans are made to borrowers by lenders,

whether or not through a loan broker or other conduit;

      (10) "Principal owner" means any person who owns, controls, votes or has a beneficial

interest in, directly or indirectly, ten percent (10%) or more of the outstanding capital stock of a

licensee;

      (11) "Sell" means to sell, to issue, or to deliver a check;

      (12) "Small loan" means a loan of less than five thousand dollars ($5,000), not secured

by real estate, made pursuant to the provisions of chapter 14.2 of this title;

      (13) "Small loan lender" means a lender engaged in the business of making small loans

within this state;

      (14) "Table funding transaction" means a transaction in which there is a

contemporaneous advance of funds by a lender and an assignment by the mortgagee or creditor of

the loan to the lender;

      (15) "Check casher" means a person or entity that, for compensation, engages, in whole

or in part, in the business of cashing checks;

      (16) "Deferred deposit transaction" means any transaction such as those commonly

known as "pay-day loans," "pay-day advances," or "deferred presentment loans" in which a cash

advance is made to a customer in exchange for the customer's personal check or in exchange for

the customer's authorization to debit the customer's deposit account and where the parties agree

either that the check will not be cashed or deposited, or that the customer's deposit account will

not be debited until a designated future date;

      (17) "Insurance premium finance agreement" means an agreement by which an insured,

or prospective insured, promises to pay to an insurance premium finance company the amount

advanced or to be advanced, under the agreement to an insurer or to an insurance producer, in

payment of a premium or premiums on an insurance contract or contracts, together with interest

and a service charge, as authorized and limited by this title;

      (18) "Insurance premium finance company" means a person engaged in the business of

making insurance premium finance agreements or acquiring insurance premium finance

agreements from other insurance premium finance companies;

      (19) "Simple interest" means interest computed on the principal balance outstanding

immediately prior to a payment for the actual number of days between payments made on a loan

over the life of a loan;

      (20) "Nonprofit organization" means a corporation qualifying as a 26 U.S.C. section

501(c)(3) nonprofit organization, in the operation of which no member, director, officer, partner,

employee, agent, or other affiliated person profits financially other than receiving reasonable

salaries if applicable.;

     (32) "Multi-state licensing system" a system involving one or more states, the District of

Columbia, or the Commonwealth of Puerto Rico established to facilitate the sharing of regulatory

information and the licensing, application, reporting and payment processes, by electronic or

other means, for mortgage lenders and loan brokers, and other licensees required to be licensed

under this chapter.

 

     19-14-3. Application for license. [Effective March 31, 2007.] -- (a) Application for a

license shall be made in writing under oath in a form to be provided by the director or the

director's designee. The application for a license shall be in the form prescribed by the director

and shall contain the name and address or addresses where the business of the applicant is located

and if the applicant is a partnership, association, corporation or other form of business

organization, the names and addresses of each member, director and principal officer thereof or

any individual acting in the capacity of the manager of an office location. Such application shall

also include a description of the activities of the applicant, in such detail and for such periods as

the director may require, as well as such further information as the director may require. The

director may require a background investigation of each applicant for a license by means of

fingerprint checks pursuant to Rhode Island general laws sections 19-14-7 and 42-14-14, utilizing

the federal bureau of investigation, or other agency as determined by the director for state and

national criminal history record checks. If the applicant is a partnership, association, corporation

or other form of business organization, the director may require a background investigation by

means of fingerprint checks on each member, director or principal officer of such applicant or any

individual acting in the capacity of the manager of an office location. The director will determine

by rule those items of information appearing on a criminal records check that will constitute

disqualifying information and therefore render the applicant ineligible for licensing under this

chapter in accordance with the provisions of section 19-14-7. Receipt of criminal history record

information by a private entity is prohibited. Each application for a license shall be accompanied

by an investigation fee. The applicant at the time of making application shall pay to the director

or the director's designee the sum of one half (1/2) of the annual license fee as a fee for

investigating the application. If the application for license is approved, the applicant shall pay a

fee equal to the annual license fee as provided in this chapter. The license shall be continuous and

the license fee shall cover the period through March December 31 of each year. Any application

approved after January October 1 of any given year shall pay one half (1/2) of the annual license

fee for the period ending March December 31 of that year. as well as a full annual license fee for

the succeeding calendar year ending December 31st. The director or the director's designee is

authorized to participate in a multi-state licensing system for licensees. The director may

establish requirements for participation by an applicant for a license or a person licensed under

this chapter. Any such requirements that may be established by the director shall be published on

the website of the department of business regulation. Upon implementation, participation by an

applicant for a license or by a person licensed under the provisions of this chapter shall be

mandatory. The applicant may be required to an additional fee for a license or other participation

in such multi-state licensing system.

      (b) [Reserved].

      (c) [Reserved].

      (d) Any license issued under the provisions of former section 5-66-2 shall remain in full

force and effect until its expiration and shall be subject to the provisions of this chapter.

 

     19-14-4. Annual fee. [Effective March 31, 2007.] -- (a) Each licensee shall pay an

annual license fee as follows:

      (1) Each small loan lender license and each branch certificate, the sum of five hundred

fifty dollars ($550);

      (2) Each loan broker license and each branch certificate, the sum of five hundred fifty

dollars ($550);

      (3) Each lender license and each branch certificate, the sum of one thousand one hundred

dollars ($1,100);

      (4) Each sale of checks license, the sum of three hundred dollars ($300);

      (5) Each check cashing license, the sum of three hundred dollars ($300);

      (6) Each electronic money transfer license, the sum of three hundred dollars ($300); and

      (7) Each registration to provide debt-management services, the sum of two hundred

dollars ($200).

      (b) Any licensee who shall not pay the annual fee by March December 31 of each year

shall be subject to a daily penalty of twenty-five dollars ($25) per day, subject to a maximum of

seven hundred fifty dollars ($750). The penalty shall be paid to the director to and for the use of

the state. The penalty may be waived for good cause by the director or the director's designee,

upon written request.

 

     SECTION 3. This act shall take effect on December 31, 2008 or at such other date after

December 31, 2008 pursuant to a notice as published on the department's website at least sixty

(60) days prior to December 31, 2008; however, upon passage of this act all licensees shall insure

that all aspects of the licensees' business are conducted in compliance with all applicable state

and/or federal statutes and/or regulations and should take reasonable steps to conduct business

consistent with the provisions of this act. Should the effective date of this act change pursuant to

the provisions of this section, the annual license fee that is due on December 31, 2008 pursuant to

this act shall be amended to a date no later than June 30, 2009.

     

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LC01337

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