(REPRINTED WITH ADOPTED AMENDMENTS) SECOND REPRINT
Assembly Bill No. 211-Assemblymen Williams, Arberry, Herrera, Freeman, Ohrenschall, Bache, Carpenter, Amodei, Krenzer, Cegavske, Mortenson, Berman, Collins, Sandoval, Anderson, de Braga, Manendo, Tiffany, Ernaut, Goldwater, Perkins, Chowning, Buckley, Giunchigliani, Von Tobel, Hickey, Neighbors, Segerblom, Evans, Nolan, Price, Humke, Koivisto, Parks, Lambert, Lee, Dini and Braunlin
February 27, 1997
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Referred to Committee on Commerce
SUMMARY--Requires registration of persons who provide check-cashing and deferred deposit services. (BDR 52-1322)
FISCAL NOTE: Effect on Local Government: No.
Effect on the State or on Industrial Insurance: Yes.
EXPLANATION - Matter in italics is new; matter in brackets [ ] is material to be omitted.
AN ACT relating to financial services; requiring the registration of persons who provide check-cashing and deferred deposit services; requiring the commissioner of financial institutions to adopt regulations governing those persons; providing a penalty; and providing other matters properly relating thereto.
THE PEOPLE OF THE STATE OF NEVADA, REPRESENTED IN SENATE AND ASSEMBLY, DO ENACT AS FOLLOWS:
Section 1 Title 52 of NRS is hereby amended by adding thereto a new chapter to consist of the provisions set forth as sections 2 to 16, inclusive, of this act.
Sec. 2 As used in this chapter, unless the context otherwise requires, the words and terms defined in sections 3 to 8, inclusive, of this act, have the meanings ascribed to them in those sections.
Sec. 3 "Cashing" means providing currency or a negotiable instrument in exchange for a check.
Sec. 4 "Check" means a check, draft or money order, but does not include a traveler's check or an instrument of payment drawn on a foreign account in foreign money.
Sec. 5 "Check-cashing service" means any person engaged in the business of cashing checks for a fee, service charge or other consideration.
Sec. 5.5. "Commissioner" means the commissioner of financial institutions.
Sec. 6 "Deferred deposit" means a transaction in which, pursuant to a written agreement:
1. A customer tenders to a person a personal check drawn upon the account of the customer; and
2. The person:
(a) Provides to the customer an amount of money that is equal to the face value of the check, less any fee charged for the transaction; and
(b) Agrees not to cash the check for a specified period.
Sec. 7 "Deferred deposit service" means any person engaged in the business of deferring deposits for a fee, service charge or other consideration.
Sec. "Registrant" means a person who has been issued a certificate of registration to operate a check-cashing or deferred deposit service pursuant to this chapter.
Sec. 8.5. The commissioner shall adopt regulations to carry out the provisions of this chapter.
Sec. 9. 1. Except as otherwise provided in subsection 2, it is unlawful to operate a check-cashing or deferred deposit service without being registered with the commissioner.
2. The provisions of this chapter do not apply to:
(a) A person doing business pursuant to the authority of any law of this state or of the United States relating to banks, savings banks, trust companies, savings and loan associations, credit unions, development corporations, mortgage companies, thrift companies, pawnbrokers or insurance companies.
(b) A person licensed to make installment loans pursuant to chapter 675 of NRS.
(c) A person who is primarily engaged in the retail sale of goods or services who:
(1) As an incident to or independently of a retail sale or service from time to time cashes checks for a fee or other consideration of not more than $2; and
(2) Does not hold himself out as a check-cashing service.
(d) A person while performing any act authorized by a license issued pursuant to chapter 671 of NRS.
(e) A person who holds a nonrestricted gaming license issued pursuant to chapter 463 of NRS while performing any act in the course of that licensed operation.
Sec. 10. 1. An application for registration pursuant to this chapter must be made in writing, under oath and on a form prescribed by the commissioner. The application must include:
(a) If the applicant is a natural person, the name and address of the applicant.
(b) If the applicant is a business entity, the name and address of each:
(1) Partner:
(2) Officer;
(3) Director;
(4) Manager or member who acts in a managerial capacity; and
(5) Registered agent,
of the business entity.
(c) Such other information concerning the financial responsibility, background, experience and activities of the applicant and its:
(1) Partners;
(2) Officers;
(3) Directors; and
(4) Managers or members who act in a managerial capacity,
as the commissioner determines is necessary.
(d) The address of each location at which the applicant proposes to do business.
(e) If the applicant intends to provide deferred deposit services in addition to check-cashing services, a statement of that intent.
2. Each application for registration must be accompanied by a nonrefundable registration fee of $250.
Sec. 11. 1. Except as otherwise provided in section 12 of this act, each application for registration must be accompanied by a surety bond payable to the State of Nevada in the amount of $50,000 for the use and benefit of any customer receiving the registrant's check-cashing or deferred deposit service.
2. The bond must be in a form satisfactory to the commissioner, issued by a bonding company authorized to do business in this state and must secure the faithful performance of the obligations of the registrant respecting the provision of the check-cashing or deferred deposit service.
3. A registrant shall, within 10 days after the commencement of any action or notice of entry of any judgment against him by any creditor or claimant arising out of business regulated by this chapter, give notice thereof to the commissioner by certified mail with details sufficient to identify the action or judgment. The surety shall, within 10 days after it pays any claim or judgment to a creditor or claimant, give notice thereof to the commissioner by certified mail with details sufficient to identify the creditor or claimant and the claim or judgment so paid.
4. Whenever the principal sum of the bond is reduced by recoveries or payments thereon, the registrant shall furnish:
(a) A new or additional bond so that the total or aggregate principal sum of the bonds equals the sum required pursuant to subsection 1; or
(b) An endorsement, duly executed by the surety, reinstating the bond to the required principal sum.
5. The liability of the surety on the bond to a creditor or claimant is not affected by any misrepresentation, breach of warranty, failure to pay a premium or other act or omission of the registrant, or by any insolvency or bankruptcy of the registrant.
6. The liability of the surety continues as to all transactions entered into in good faith by the creditors and claimants with the registrant's agents within 30 days after:
(a) The registrant's death or the dissolution or liquidation of his business; or
(b) The termination of the bond,
whichever event occurs first.
7. A registrant or his surety shall not cancel or alter a bond except after notice to the commissioner by certified mail. The cancellation or alteration is not effective until 10 days after receipt of the notice by the commissioner. A cancellation or alteration does not affect any liability incurred or accrued on the bond before the expiration of the 30-day period designated in subsection 6.
Sec. 12. 1. In lieu of any surety bond, or any portion of the principal sum thereof as required by this chapter, a registrant may deposit with the state treasurer or with any bank or trust company authorized to do business in this state as the registrant may select, with the approval of the commissioner:
(a) Interest-bearing stocks;
(b) Bills, bonds, notes, debentures or other obligations of the United States or any agency or instrumentality thereof, or guaranteed by the United States; or
(c) Any obligation of this state or any city, county, town, township, school district or other instrumentality of this state or guaranteed by this state,
in an aggregate amount of, based upon principal amount or market value, whichever is lower, of not less than the amount of the required surety bond or portion thereof.
2. The securities must be held to secure the same obligation as would the surety bond, but the depositor may receive any interest or dividends and, with the approval of the commissioner, substitute other suitable securities for those deposited.
Sec. 13. 1. The commissioner shall issue to each registrant a certificate of registration in such form and size as is prescribed by the commissioner for each location at which the registrant proposes to do business. Each certificate of registration must show the name and address of the registrant.
2. Each registrant shall prominently display his certificate of registration at the location where he does business.
Sec. 14. 1. A certificate of registration issued pursuant to this chapter expires annually on the anniversary of the issuance of the certificate. A registrant must renew his certificate of registration on or before the date on which the certificate expires by paying a renewal fee of $250 and an additional fee of $50 for each branch location at which the registrant is authorized to operate under the certificate of registration.
2. For the purposes of section 9 of this act, a registrant who fails to renew his certificate of registration within the time required by this section is not registered pursuant to this chapter.
Sec. 15. 1. A registrant shall immediately notify the commissioner of any change of control of the registrant.
2. A person who acquires stock, partnership or member interests resulting in a change of control of the registrant shall apply to the commissioner for approval of the transfer. The application must contain information which shows that the requirements of this chapter for obtaining a certificate of registration will be satisfied after the change of control. If the commissioner determines that those requirements will not be satisfied, he may deny the application and forbid the applicant from participating in the business of the registrant.
3. As used in this section, "change of control" means:
(a) A transfer of voting stock, partnership or member interests which results in giving a person, directly or indirectly, the power to direct the management and policy of a registrant; or
(b) A transfer of at least 25 percent of the outstanding voting stock, partnership or member interests of the licensee.
Sec. 16. A registrant shall:
1. Post in a conspicuous place in every location at which he conducts business under his certificate of registration a notice that states the fees charged for cashing checks or entering into a deferred deposit transaction.
2. Give written notice to each customer of the fees charged for cashing checks or entering into a deferred deposit transaction. The notice must be signed by the customer before any such services are provided.
Sec. 16.5. The commissioner of financial institutions shall adopt the regulations required by section 8.5 of this act not later than July 1, 1998.
Sec. 17. The provisions of this act do not apply to offenses that are committed before July 1, 1998.
Sec. 18. The provisions of subsection 1 of NRS 354.599 do not apply to any additional expenses of a local government that are related to the provisions of this act.
Sec. 19. This act becomes effective upon passage and approval, for the purpose of adopting the regulations necessary to carry out the provisions of this act, and on July 1, 1998, for all other purposes.