Banking Interpretations

BL 641

October 10, 2006

Re:   [---] Money Transmitter License Inquiry

Dear Ms. [---]

As you are aware, the State of New York Banking Department ("Department") has reviewed correspondence and documents submitted thus far in connection with the above referenced inquiry. In this respect, the Department requests to be provided with copies of the account opening documentation, including signature cards and account applications for the Retailer Reserve Account, Operating Account, Funding Account and Settlement Account, to the extent such information has not been received by the Department.
Additionally, sections [---] and [---] of the Sales and Distribution Agreement (the "Agreement") address the retailer bank account. In those sections, cardholder funds placed in the retailer bank account are not to be commingled with the retailer's operating account. The retailer account is to be held in trust so that it is not subject to the retailer's creditors, whether secured or unsecured, or can become the subject of any bankruptcy proceeding. Accordingly, we request to know in whose name the retailer account is to be held. Also, please provide any documentation or instructions that, the retailers are given in order to ensure that the retailer account is established and maintained in accordance with the Agreement.
As to the licensing inquiry, based on the Department's review of the documentation and correspondence submitted to date, it appears that the retailers, [---] and [---] are transmitting money as contemplated under New York Banking Law (“Banking Law") Article 13-B.  Therefore, since the retailers [---] and [---] are not agents of [---] Bank and Trust Company, and they do not fit within any of the other licensing exceptions noted in Article 13-B Section 641 of the Banking Law, each would require a license to conduct their New York State money transmission activities, as described to the Department.

Please be mindful that unlicensed money transmission activity in New York State is a crime. To the extent that the retailers [---] and [---] may be conducting New York State money transmission activity that would require a license, it is advisable to have these entities discontinue doing so until a final decision regarding any licensing requirements is rendered, and complied with, if necessary.
We look forward to receiving the additional information as requested. If you have any questions, I can be reached at (212) 709-1650.

Christine R. Cardi
Assistant Counsel

cc:   Sara A. Kelsey, Deputy Superintendent and Counsel 

Regina A. Stone, Deputy Superintendent