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Financial Services Law Insights and Observations


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  • DFPI addresses MTA licensing in new letter

    State Issues

    Recently, California’s Department of Financial Protection and Innovation (DFPI) released a new opinion letter covering aspects of the Money Transmission Act (MTA) related to the registered clearing house and payment processing service exemptions.

    The redacted opinion letter concluded that the company, a Delaware Corporation, is required to apply for and receive an MTA license to engage in the proposed activities in California, absent receiving an exemption. According to the letter, the company proposes to offer automated clearing house (ACH) services to merchants through an “integrated payment gateway” in order to “aid merchants with online and offline stores in collecting cross-border payments.” The ACH services would be a five-step process in which (i) a foreign customer purchases goods or services from a U.S.-based merchant; (ii) the merchant scans a quick response code using the company’s payment software; (iii) the company “withdraws a USD equivalent amount of payment in Chinese Renminbi (RMB) from the foreign customer’s” digital wallet; (iv) the company uses foreign exchange services “to convert the RMB amount into the correct corresponding USD amount” and remits the amount into the company’s U.S. bank account; and lastly (v) the company distributes the payment from its account to the merchant’s account. The company sought a clearing agency exemption and/or an excluded persons processing exemption, however, the DFPI concluded that the company did not supply evidence to show it qualified for either exemption. Thus, the company would need an MTA license to engage in the stated processing activity in California. 

    State Issues Money Service / Money Transmitters DFPI Licensing

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  • California DBO now Department of Financial Protection and Innovation

    State Issues

    On September 29, the California governor signed AB 107, an Assembly Budget Committee bill, which changes the name of the Department of Business Oversight (DBO) to the Department of Financial Protection and Innovation (DFPI), effective immediately. As previously covered in depth by a Buckley Special Alert, the California legislature passed AB 1864, which was signed by the governor on September 25 and enacts the California Consumer Financial Protection Law (CCFPL) and establishes the DFPI name change.

    The DFPI name change is now live on their website.

    State Issues DFPI CDBO Consumer Finance State Regulator State Legislation

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