Banking Interpretations
NYSBL 640
October 14, 2005
Mr. Randolph W. Pinny
Chief Executive Officer
5,750 Major Boulevard — Suite 200
Orlando , Florida 32819
Dear Mr. Pinna:
I am writing in response to your inquiry regarding whether Foreign Currency Exchange ("FCE") requires a New York State money transmission license in order to conduct the following activities. FCE is incorporated in Florida with headquarters in Orlando. FCE is owned by Banclreland/First Financial ("BIFF"), a New Hampshire Corporation. BIFF is a wholly owned subsidiary of the Bank of Ireland Group. Since 1987, FCE has been in the business of servicing banks, financial institutions and the hospitality industry. FCE specializes in processing banks" foreign exchange transactions, which includes the exchange of foreign bank notes, the purchase and sale of foreign bank drafts and international traveler's checks, wire transfer payments and check collections.
Specifically, you have asked whether FCE requires a New York State money transmission license to provide the following services to [ ] and [ ], (collectively the "Banks") both chartered pursuant to New York's Banking Law.
Wire Transfers
FCE facilitates the transmission of international wires for [ ] and [ ]. FCE has entered into agreements with the Banks whereby the Banks have contracted with FCE to be a service provider in facilitating the transmission of international wires on behalf of the Banks for their customers. Customers of the Banks go to a local branch of their respective bank and request a foreign wire transfer, providing the amount and payment instructions. In accordance with FCE's agreements with the Banks, an employee of [ ] or [ ] as the case may be, logs into FCE's website and requests FCE to process the wire transfer per the customer instructions. The FCE software provides the exchange rate and calculates the total amount owed by the customer to [ ] or [ ] or the wire transfer.
At that point, the Banks collect payment from their customer for the wire transfer typically by debiting the customer account held with [ ] or [ ] and crediting the bank's own account. The Banks issue a receipt for the transaction which details the transaction, the wire reference number and provides contact details for the Banks. FCE is not referenced on the receipt and customers are not aware that the Banks are using FCE as their service provider for this line of business. It is the Banks and not FCE that are responsible to their respective customers for providing the requested wire transfers.
When FCE receives the wire instructions, FCE determines the international bank through which it will route and execute the wire. FCE contacts the international bank (either Bank of Ireland, Royal Bank of Canada, Wachovia Bank, Wells Fargo Bank, or Bank of New York) and requests that it process the wire as per the [ ] or [ ] wire instructions. FCE then pays the international bank for routing and-executing the wire, usually by the international bank debiting FCE's account maintained with the international bank.
The international bank selected by FCE to route and execute the wire processes it to the ultimate beneficiary. FCE is provided with confirmation of the execution of the wire transfer. Foreign currency wire transfers are usually credited and available to the ultimate beneficiary's account within 1 to 2 business days, depending on the currency transferred,_ the beneficiary bank and the country of the bank. FCE then provides [ ] or [ ] with confirmation of the completed wire which is available to [ ] or [ ]through FCE's online system together with the wire history.
[ ] and [ ] pay FCE on a daily basis for each day's total of all wire transmissions facilitated through FCE. The Banks will send a US dollar wire payment to FCE's account at [ ] paying for that day's total of all wire transmissions.
Foreign Drafts
FCE facilitates the provision of checks drawn in foreign currency for [ ] and [ ] as follows.
Customers of the Banks contact a local branch of their respective bank and request a foreign check drawn in foreign funds. In accordance with FCE's agreements with the Banks, an employee of [ ] or [ ] as the case may be, logs into FCE's website and requests FCE to process and issue a foreign draft per customer instructions. The FCE software provides the exchange rate used and calculates the grand total owed by the customer to [ ]or [ ]. The Banks then collect the payment from their customer usually by debiting the customer's account with them and crediting an account of the Banks.
The Banks issue a receipt to their customer for the transaction with details of the transaction and the Banks contact information. FCE is not referenced on the receipt and the customers have no knowledge that the Banks are using FCE as a service provider to facilitate the processing of the transaction. It is the Banks and not FCE that are responsible to their respective customers for providing the requested drafts.
FCE uses the draft product of The Bank of New York ("BNY") to facilitate the processing of foreign checks in foreign funds for the Banks. BNY has an agreement with FCE to provide FCE with their checks on consignment in FCE's office in Orlando, Florida. FCE has a specially designated printer provided by BNY to issue BNY drafts. FCE uses the BNY equipment to generate the requested foreign drafts by typing in the payee name and amount of the foreign funds requested. The BNY printer generates a signature of an authorized BNY signer on the drafts. Drafts are deemed to be issued, pursuant to FCE's agreement with BNY, at the time that BNY receives the draft data keyed into the printer and authorizes the drafts. Drafts are then printed out in FCE's Florida office.
FCE ships the drafts to the [ ] or [ ] branch that requested them on behalf of their customers. The customers collect their drafts at the Banks. FCE pays BNY for issuing the drafts usually by BNY debiting FCE's account maintained at BNY.
At the end of each day the Banks pay FCE for facilitating the processing of all foreign draft request is for the day. The Banks will either wire payment to FCE's account at [ ] Bank or credit FCE's account maintained at the Banks for the total amount of all draft requests.
Based on the above explanation of the wire transfer and foreign draft products provided by [ ] and [ ] to their customers using FCE as a service provider in facilitating the offering of such products, the Banking Department is of the opinion that a money transmitter license, as contemplated under Article XIII- B of New York's Banking Law, is not required for FCE to perform the services described above for the Banks.
I trust that this is responsive to your inquiry. If you have any questions I can be reached at (212) 709-1650.
Sincerely,
Christine R. Cardi
Assistant Counsel
cc: Regina Stone, Deputy Superintendent of Banks