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Banking Interpretations

NYSBL 640 and 641

August 16, 2005

Claire Carroll
Project Manager
Certegy Transaction Services, Inc.
11601 Roosevelt Boulevard
St. Petersburg , Fl 33716

Re: Money Transmitter License

Dear Ms. Carroll:

Your inquiry to the New York State Banking Department ("the Department), whether Certegy Transaction Services, Inc. ("CTS") is required to obtain a money transmitter license in New York State in order to provide cash access to customers of the Akwesasne Mohawk Casino in Hogansburg, NY, ("the casino") has been referred to me for response.

You explain in your letter and further communications, that CTS has a contract with the casino to provide casino customers with quasi-cash advance options by way of credit- and debit-card processing. Casino patrons present their credit or debit card to the casino cashier, who then obtains an authorization from the customer's bank. This preliminary authorization is processed through a CTS system. The cashier also obtains additional customer identification. Once the cashier has authorization from the customer's bank, the cashier lets the customer know and also conveys to the customer what amount the fee will be for this transaction. If the customer agrees to the fee, the cashier will swipe the customer's card through the CTS terminal and then after the transaction is authorized, print out the draft. CTS will charge the customer for the principal amount requested as well as the fee. The draft is drawn on a CTS bank account which is located in Atlanta, Georgia. The draft is made payable to the casino in the total amount including the principal and fee. CTS gives the draft to the customer, who signs the draft and then presents it to the casino for payment. The customer receives cash from the casino for the principal amount, paid from the casino's funds. The casino does not negotiate the draft by cashing it or depositing it into its account. Instead, the casino transmits an electronic settlement to CTS at the end of each business day. The casino returns the draft without ever negotiating it. CTS reimburses the casino for the principal amount paid to the customer by the casino from CTS funds. CTS eventually receives payment from the customer's credit card company.

Banking Law Section 641 (1) provides that ".... no person shall engage in the business of selling or issuing (emphasis added) checks, or engage in the business of receiving money for transmission or transmitting the same, without a license therefore obtained from the superintendent....". As defined in Section 640 of the Banking Law, a "check" means any check, draft, travelers check, money order or other instrument for the transmission or payment of money. The actions, as you described, would require a license under Article 13-B of the Banking Law. It is the act of issuing the drafts that triggers the need to be licensed. However, since as you explained, the casino does not actually negotiate the drafts but instead returns them to CTS and only uses them as documentation that the customer has approved the transaction, if another form of documentation were to be used, a license would not be needed. If CTS could avoid issuing a negotiable draft as evidence of the customer's approval of the transaction a license would not be needed. For example, if CTS were to issue a receipt or issue an instrument that is similar to the sample draft that you provided but is stamped or water marked non-negotiable instrument, a license would not be needed. This water stamp should be within the four corners of the instrument.

I note that in the additional information that you provided to our Licensed Financial Services Division, you also refer to a location that you acquired in March, 2004 on the Freeport Casino Boat. You state that you are also developing a system at that location to execute quasi-cash advance transactions. The suggested changes as mentioned above should also be made at that location.

I trust that this has been responsive to your inquiry.

Very truly yours,

Megan Prendergast
Associate Attorney

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