Kentucky

286.11-001 Short title.

This subtitle may be cited as the Kentucky Money Transmitters Act of 2006. Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 1, effective April 24, 2006.

Legislative Research Commission Note (7/12/2006). This section was created in 2006 Ky. Acts ch. 247 as a new section of KRS Chapter 366A. Sec. 38 of that same bill also required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the “Kentucky Financial Services Code.” Therefore, the Statute Reviser, acting under KRS 7.136(1), has codified this section as a new section of KRS Chapter 286.

286.11-003 Definitions for subtitle.

As used in this subtitle, unless the context requires otherwise:

(1)

(2) (3) (4)

“Affiliate” means any person who directly or indirectly through one (1) or more intermediaries controls, is controlled by, or is under common control with, another person;

“Agent” means a person authorized by written agreement and designated by the licensee to act on behalf of a licensee under the provisions of this subtitle;

“Applicant” means a person filing an application or renewal application for a license under this subtitle;

“Control” means:

(a) Ownership of, or the power to vote, directly or indirectly, twenty-five percent (25%) or more of a class of voting securities or voting interests of a licensee or applicant, or person in control of a licensee or applicant;
(b) The power to elect a majority of executive officers, managers, directors, trustees, or other persons exercising managerial authority of a licensee or applicant, or person in control of a licensee or applicant; or
(c) The power to exercise, directly or indirectly, a controlling influence over the management or policies of a licensee or applicant, or person in control of a licensee or applicant;

“Controlling person” means any person in control of a licensee;

“Director” means a member of a licensee’s or applicant’s board of directors if the applicant or licensee is a corporation, or manager if the applicant or licensee is a limited liability company, or a partner if the applicant or licensee is a partnership;

“Electronic instrument” means a card or other tangible object for the transmission or payment of money, including a stored value card or device, which contains a microprocessor chip, magnetic stripe, or other means for storage of information, that is prefunded and for which the value is decremented upon each use, but does not include a card or other tangible object that is redeemable by the issuer in the issuer’s goods and services;

“Commissioner” means the commissioner of the Department of Financial Institutions;

“Executive officer” means the president, chairperson of the executive committee, responsible individual, chief financial officer, and any other person who performs similar functions;

“Financial institution” means any person doing business under the laws of any state or commonwealth or the United States relating to banks, bank holding companies, savings banks, savings and loan associations, trust companies, or credit unions;

“Insolvent” means that appearing upon examination of any licensee or its agent that its liabilities exceeds its assets or it cannot meet its obligations in the usual and ordinary course of business for any reason;

“Key shareholder” means any person, or group of persons acting in concert, who is the owner of twenty percent (20%) or more of any voting class of an applicant’s or

(5) (6)

(7)

(8) (9)

(10) (11) (12)

licensee’s stock;

(13) “Licensee” means a person licensed under this subtitle;
(14) “Material litigation” means litigation that according to generally accepted accounting principles is significant to an applicant’s or a licensee’s financial health, and would be required to be disclosed in the applicant’s or licensee’s annual audited financial statements, report to shareholders, or similar records, including any adjudication against an applicant or licensee by a federal or state administrative or regulatory agency relating to a violation of the Bank Secrecy Act, 31 U.S.C. secs. 5311-5332 and 31 C.F.R. pt. 103, regardless of whether the applicant or licensee has admitted liability or fault;
(15) “Monetary value” means a medium of exchange whether or not redeemable in money;
(16) “Money” means a medium of exchange that is authorized or adopted by the United States or a foreign government or other recognized medium of exchange, including a monetary unit of account established by an intergovernmental organization or by agreement between two (2) governments;
(17) “Money transmission” means engaging in the business of receiving money or monetary value to transmit, deliver, or instruct to be transmitted or delivered, money or monetary value to another location inside or outside the United States by any and all means, including but not limited to wire, facsimile, electronic transfer, or issuing stored value;
(18) “Money transmitter” means a person that is engaged in money transmission;
(19) “Net worth” means the excess of assets over liabilities as determined by generally accepted accounting principles;
(20) “Department” means the Kentucky Department of Financial Institutions;
(21) “Outstanding payment instrument” means any payment instrument issued by the licensee which has been sold or issued in the United States directly by the licensee or any payment instrument issued by the licensee which has been sold by an agent of the licensee in the United States, which has been reported to the licensee as having been sold, and which has not yet been paid by or for the issuer;

(22) (a)

“Payment instrument” means:

A check, draft, money order, traveler’s check, or other written or electronic instrument or order for the transmission or payment of money, sold or issued to one (1) or more persons, whether or not such instrument is negotiable; or
The purchase or the deposit of funds for the purchase of a check, draft, money order, traveler’s check, or other written or electronic instrument;

(b) “Payment instrument” does not include any credit card voucher, letter of credit, or instrument that is redeemable by the issuer in goods or services;

(23) “Person”meansanyindividual,corporation,businesstrust,estate,trust,partnership, limited liability company, association, organization, joint venture, government and any subdivision, agency or instrumentality thereof, or any other legal or commercial

entity;

(24) “Record” means information that is inscribed on a tangible medium, or that is stored in an electronic or other medium, and is retrievable in perceivable form;
(25) “Remit” means either to make direct payment of the funds to the licensee or its representatives authorized to receive those funds, or to deposit the funds in a bank, credit union, or savings and loan association, or other similar financial institution in an account specified by the licensee;
(26) “Responsible individual” means an individual who is employed by a licensee and has principal managerial authority over the provision of money transmission by the licensee in this state;
(27) “State” means a state or commonwealth of the United States, the District of Columbia, Puerto Rico, the United States Virgin Islands, or any territory or insular possession that is subject to the jurisdiction of the United States;
(28) “Stored value” means monetary value that is evidenced by an electronic record; and
(29) “Unsafe or unsound practice” means a practice or conduct by a person licensed to provide money transmission, or an agent of such a person, which creates the likelihood of material loss, insolvency, or dissipation of the licensee’s assets, or otherwise materially prejudices the financial condition of the licensee or the interests of its customers.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 834, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 2, effective April 24, 2006.

286.11-005 License required for persons engaging in money transmission — Prohibition against transfer or assignment of license.

(1) On or after October 1, 2006, no person shall engage in the business of money transmission in this state without a license, or without being an agent of a licensee, as provided in this subtitle.

(2) A person is deemed to be engaged in the business of money transmission under this subtitle if the person advertises those services, provides those services with or without compensation, solicits to provide those services, or holds itself out as providing those services to or from this state, even if the person has no physical presence in this state.

(3) A licensee may conduct its business in this state at one (1) or more locations, directly or indirectly owned, or through one (1) or more agents, or both, pursuant to the single license issued to the licensee.

(4) A license issued under this subtitle shall not be transferred or assigned. Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 3, effective April 24, 2006.

286.11-007 Exemptions.

This subtitle does not apply to:

(1) The United States or any department, agency, or instrumentality thereof;
(2) The United States Post Office or a contractor acting on behalf of the United States Post Office;
(3) A state or any agency, department, or political subdivision of a state;
(4) A financial institution or its subsidiaries, affiliates, and service corporations, or any office of an international banking corporation, branch of a foreign bank, or corporation organized pursuant to the Bank Service Corporation Act, 12 U.S.C. secs. 181 to 1867, or a corporation organized under the Edge Act, 12 U.S.C. secs. 611 to 633;
(5) A service provider that:
1. (a) Pursuant to a written agreement, acts on behalf of an entity exempt from licensure as set forth in subsection (4) of this section; and
2. (b) Allows the state or federal regulators with regulatory jurisdiction over the exempt entity to examine and inspect the service provider’s applicable records, books, and transactions;
(6) A service provider that receives money or monetary value on behalf of an entity selling goods or services other than money transmission services if:
1. (a) The entity, upon receipt of funds by the service provider, immediately either:
  1. Provides the purchased goods or services to the purchaser; or
  2. Credits the purchaser for the full amount of money or monetary value received by the service provider, which credit is not revocable by the entity, and evidences this credit in writing; and
2. (b) The entity is obligated to provide the purchased goods or services to the purchaser regardless of whether or not the service provider transmits the money or monetary value to the entity; or
(7) The provision of electronic transfer of government benefits for any federal, state, or county governmental agency as defined in Federal Reserve Board Regulation E, by a contractor for and on behalf of the United States or any department, agency, or instrumentality thereof, or any state or any political subdivisions thereof.

Effective: July 15, 2016
History: Amended 2016 Ky. Acts ch. 89, sec. 1, effective July 15, 2016. — Created

2006 Ky. Acts ch. 247, sec. 4, effective April 24, 2006.

286.11-009 Contents of application — Additional information to be provided by corporate applicants — Power of commissioner to waive requirements.

(1) Each application for a license under this subtitle shall be made in writing and in a form and medium prescribed by regulation by the commissioner. The application shall state or contain the following:

(a) The legal name of the applicant, business addresses, and residential addresses, if applicable, of the applicant, and any fictitious or trade name used by the applicant in conducting its business;
(b) The legal name, residential and business addresses, date of birth, Social Security number, and employment history for the five (5) year period preceding the filing of the application, of the applicant’s proposed responsible individual;
(c) A list and description of any criminal conviction, other than a traffic violation, of the applicant and proposed responsible individual, for the ten (10) year period preceding the filing of the application. The commissioner may request a copy of any criminal conviction from the applicant, which shall be promptly provided by the applicant to the commissioner within ten (10) working days of the request;
(d) A list and description of any material litigation of the applicant and proposed responsible individual, for the ten (10) year period preceding the filing of the application. The commissioner may request a copy of any material litigation from the applicant, which shall be promptly provided by the applicant to the commissioner within ten (10) working days of the request;
(e) A description of the activities conducted by the applicant and a history of operations, including, if applicable, a description of any money transmission that has been previously provided by the applicant in this state;
(f) A list of other states or countries in which the applicant is licensed to engage in money transmission or other similar money services, and any license revocations, suspensions, restrictions, or other disciplinary action taken against the applicant in another state or country;
(g) A list of any license revocations, suspensions, restrictions, or other disciplinary action taken against any money transmission business involving the proposed responsible individual;
(h) A description of the source of money and credit to be used by the applicant to provide money transmissions;
(i) A sample form of contract for an agent;
(j) A sample form of payment instrument;
(k) Information concerning any bankruptcy, reorganization, or receivership proceedings involving or affecting the applicant or the proposed responsible individual;
(l) A list identifying the name, physical location or locations, and telephone number at which the applicant and its proposed agents intend to conduct

money transmission business in the state at the time of the filing of the license application;

(m) The name, address, and telephone number of the clearing bank or banks on which the applicant’s payment instruments will be drawn or through which such payment instruments will be payable;
(n) A copy of the written procedures that will be provided by the applicant or licensee to its agent or agents;
(o) That neither the applicant, nor any executive officer, nor person who exercises control over the applicant, nor key shareholder, nor any proposed agent, nor the proposed responsible individual, is listed on the specially designated nationals and blocked persons list prepared by the United States Department of the Treasury or the United States Department of State under Presidential Executive Order No. 13224 as a potential threat to commit terrorist acts and to finance terrorist acts; and
(p) Any other information regarding the background, experience, character, financial responsibility, or general fitness of the applicant, the applicant’s responsible individual, or agent that the commissioner may require by rule or order.

(2) If the applicant is a corporation, limited liability company, partnership, or other entity, then the applicant shall also provide:

(a) A copy of the applicant’s filed articles of incorporation;
(b) The name, address, and telephone number of the registered process agent of the applicant in this state;
(c) If applicable, then a certificate of good standing from the state or country in which the applicant was incorporated or formed;
(d) A description of the corporate structure of the applicant, including the identity of any parent or subsidiary of the applicant, and the disclosure of whether any parent or subsidiary is publicly traded on any stock exchange;
(e) The legal name, any fictitious or trade name, all business and residence addresses, date of birth, Social Security number, and employment history for the ten (10) year period preceding the filing of the application for each executive officer, board director, key shareholder, or person that has control of the applicant;
(f) Copies and description of material litigation for the ten (10) year period prior to the filing date of the application of every executive officer or key shareholder of the applicant;
(g) Copies and descriptions of criminal convictions, other than traffic violations, for the ten (10) year period prior to the filing date of the application of every executive officer or key shareholder of the applicant;
(h) A copy of the applicant’s audited financial statements for the most recent fiscal year or, if the applicant is a wholly owned subsidiary of another corporation, the most recent audited consolidated annual financial statement of the parent corporation or the applicant’s most recent audited consolidated

annual financial statements and, in each case, if available, for the two (2) year period preceding the filing of the application;

(i) A copy of the applicant’s unconsolidated financial statements for the current fiscal year, whether audited or not, and, if available, for the two (2) year period preceding the filing of the application;
(j) If the applicant is publicly traded, then a copy of the most recent report filed with the United States Securities and Exchange Commission pursuant to 15 U.S.C. sec. 78m;
(k) If the applicant is a wholly owned subsidiary of:
1. A corporation publicly traded in the United States, then a copy of audited financial statements for the parent corporation for the most recent fiscal year or a copy of the parent corporation’s most recent report filed with the United States Securities and Exchange Commission pursuant to 15 U.S.C. sec. 78m; or
2. A corporation publicly traded outside of the United States, a copy of similar documentation for the most recent fiscal year filed with the regulator of the parent corporation’s domicile outside the United States.

(3) Every corporate applicant, at the time of filing of an application for a license under this subtitle and at all times after a license is issued, shall be in good standing in the state of its incorporation.
(4) Every applicant shall, at the time of the filing of an application for a license under this subtitle and at all times after a license is issued, be registered or qualified to do business in this state.
(5) The commissioner is authorized, for good cause, to waive any requirement of this section with respect to any license application or to permit a license applicant to submit substituted information in its license application in lieu of the information required by this section.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 835, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 5, effective April 24, 2006.

286.11-011 Minimum net worth of licensee.

Each licensee under this subtitle shall at all times have a net worth of not less than five hundred thousand dollars ($500,000), calculated in accordance with generally accepted accounting principles.

Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 6, effective April 24, 2006.

286.11-013 Bond or other security devices.

(1) Each application shall be accompanied by a surety bond or other similar security acceptable to the commissioner, in the amount of at least five hundred thousand dollars ($500,000). The commissioner may increase the amount of the surety bond, or other similar security, to a maximum of five million dollars ($5,000,000), upon the basis of the financial condition of an applicant, as evidenced by net worth, transaction volume, or other relevant criteria that the commissioner may establish by order or rule.
(2) The surety bond, or other similar security acceptable to the commissioner, shall be in a form satisfactory to the commissioner and shall hold and bind the principal and surety to the Commonwealth of Kentucky for the benefit of any claimants against the licensee to secure the faithful performance of the obligations of the licensee with respect to the receipt, handling, transmission, and payment of money in connection with the sale and issuance of payment instruments or money transmissions by the licensee and its agent. The aggregate liability of the surety bond or other similar security accepted shall not exceed the principal sum of the bond.
(3) A claimant may maintain a civil action on the surety bond, or other similar security acceptable to the commissioner, against a licensee, or the commissioner may maintain an action on behalf of the claimant, in the Franklin Circuit Court, or in any other court of competent jurisdiction, either in one (1) action or in successive actions.
(4) A licensee shall at all times maintain a surety bond, or other similar security acceptable to the commissioner, in the amount and type required under subsections (1) and (2) of this section. The commissioner may, at any time, accept a substitute or replacement surety bond, or other acceptable similar security, from the licensee, provided that the requirements of subsections (1) and (2) are met.
(5) The surety bond, or other similar security acceptable to the commissioner, shall be continuous and remain in effect until canceled. The licensee shall provide the commissioner with at least a thirty (30) day written notice of the intent to cancel the surety bond or other similar security accepted by the commissioner. The cancellation of the surety bond or other acceptable security shall not affect any liability incurred or accrued during the thirty (30) day notice of cancellation period.
(6) A surety bond, or other security acceptable to the commissioner, shall remain in place and cover claims for at least five (5) years after the date of any violation of this subtitle by the licensee or its agent, or the date the licensee ceases providing money transmission services in this state, whichever date occurs last. The commissioner may permit the licensee to reduce or eliminate the surety bond, or other similar security approved by the commissioner, prior to the expiration of the five (5) years, to the extent that the amount of the licensee’s payment instruments outstanding in this state are reduced.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 836, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 7, effective April 24, 2006.
Legislative Research Commission Note (7/12/2006). This section was created in 2006

Ky. Acts ch. 247 as a new section of KRS Chapter 366A. Sec. 38 of that same bill also required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the “Kentucky Financial Services Code.” Therefore, the Statute Reviser, acting under KRS 7.136(1), has codified this section as a new section of KRS Chapter 286.

286.11-015 Permissible investments — Power of commissioner to define permissible investments — All permissible investments deemed to be held in trust for benefit of purchasers and holders.

(1) Every licensee shall, at all times, maintain permissible investments that have a market value that is computed in accordance with generally accepted accounting principles. These investments shall not be less than the aggregate amount of all outstanding payment instruments.
(2) Except to the extent otherwise limited in subsection (5) of this section, the following investments are permissible for a licensee:
1. (a) Cash, time deposits, savings deposits, demand deposits, a certificate of deposit, or senior debt obligation of an insured depository institution as defined in 12 U.S.C. sec. 1813 or as defined under 12 U.S.C. sec. 1781;
2. (b) Banker’s acceptance or bill of exchange that is eligible for purchase upon endorsement by a member bank of the federal reserve system and is eligible for purchase by a federal reserve bank;
3. (c) An investment bearing a rating of one (1) of the three (3) highest grades as defined by a nationally recognized organization that rates securities;
4. (d) An investment security that is an obligation of the United States or a department, agency, or instrumentality thereof; an investment in an obligation that is guaranteed fully as to principal and interest by the United States; or an investment in an obligation of a state or a governmental subdivision, agency, or instrumentality thereof;
5. (e) Receivables that are payable to a licensee from its agents, in the ordinary course of business, pursuant to contracts which are not past due or doubtful of collection if the licensee does not hold, at one (1) time, receivables under this paragraph from any one (1) person aggregating more than ten percent (10%) of the licensee’s total permissible investments. A receivable is deemed past due or doubtful of collection if not remitted to the licensee in five (5) business days or less; and
6. (f) A share or certificate issued by an open-end management investment company that is registered with the United States Securities and Exchange Commission pursuant to the Investment Companies Act of 1940, 15 U.S.C. secs. 80a-1 et seq., and whose portfolio is restricted by the management company’s investment policy to investments specified in paragraphs (a) to (d) of this subsection.
(3) The following investments are permissible under this section, but only to the extent specified as follows:

(a) An interest-bearing bill, note, bond, or debenture of a person whose equity shares are traded on a national securities exchange or on a national over-the- counter market, if the aggregate of investments under this paragraph do not exceed twenty percent (20%) of the total permissible investments of a licensee and the licensee does not, at one (1) time, hold investments under this paragraph in any one (1) person aggregating more than ten percent (10%) of

the licensee’s total permissible investments;

(b) A share of a person traded on a national securities exchange or a national over-the-counter market or a share or certificate issued by an open-end management investment company that is registered with the United States Securities and Exchange Commission pursuant to 15 U.S.C. secs. 80a-1 to 80a-64, and whose portfolios are restricted by the management company’s investment policy to shares of a person traded on a national securities exchange or a national over-the-counter market, if:
1. The aggregate of investments under this paragraph does not exceed twenty percent (20%) of the total permissible investments of a licensee; and
2. The licensee does not, at one (1) time, hold investments under this paragraph in any one (1) person aggregating more than ten percent (10%) of the licensee’s total permissible investments; and
(c) A demand-borrowing agreement made to a corporation or a subsidiary of a corporation whose securities are traded on a national securities exchange, if:
1. The aggregate amount of principal and interest outstanding under demand-borrowing agreements under this paragraph does not exceed twenty percent (20%) of the total permissible investments of a licensee; and
2. The licensee does not, at one (1) time, hold principal and interest outstanding under demand-borrowing agreements under this paragraph with any one (1) person aggregating more than ten percent (10%) of the licensee’s total permissible investments.

(4) The aggregate of investments under subsection (3) of this section shall not exceed fifty percent (50%) of the total permissible investments of a licensee.
(5) The commissioner may limit the extent to which a type of investment within a class of permissible investments may be considered a permissible investment, except for money, time deposits, savings deposits, demand deposits, and certificates of deposit issued by a federally insured financial institution. The commissioner may by rule or order allow other types of investments that the commissioner determines to be substantially equivalent to other permissible investments in regards to safety and soundness.
(6) Permissible investments, even if commingled with other assets of the licensee, shall be deemed by operation of law to be held in trust for the benefit of the purchasers and holders of the licensee’s outstanding payment instruments in the event of insolvency or bankruptcy of the licensee.

Effective: July 12, 2012

History: Amended 2012 Ky. Acts ch. 66, sec. 1, effective July 12, 2012. — Amended 2010 Ky. Acts ch. 24, sec. 837, effective July 15, 2010. — Created 2006 Ky. Acts ch. 247, sec. 8, effective April 24, 2006.

and 368 be renumbered as sections of a single KRS chapter entitled the “Kentucky Financial Services Code.” Therefore, the Statute Reviser, acting under KRS 7.136(1), has codified this section as a new section of KRS Chapter 286.

286.11-017 Application fee and license fee.

Each application shall be accompanied by a nonrefundable application fee in the amount of five hundred dollars ($500) and a nonrefundable license fee of five hundred dollars ($500) if application is made on or before March 31, or the next business day if March 31 falls on a weekend or holiday. If application is made after March 31, the license fee shall be two hundred fifty dollars ($250). The license shall remain in force through September 30 of the same year the license is issued.

Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 9, effective April 24, 2006.

286.11-019 Powers of commissioner to approve, deny, or refuse to issue or renew licenses — Procedure for hearing and appeal upon denial of license — Reapplication after denial.

(1) Upon the filing of a complete application, the commissioner shall investigate the competence, experience, character, financial condition, and responsibility of the applicant. The commissioner may conduct an on-site investigation of the applicant, the reasonable cost of which shall be paid by the applicant. The commissioner shall review each application on a case-by-case basis. If the commissioner finds that the applicant has the competence, experience, character, financial condition, and responsibility, and has fulfilled the requirements of this subtitle, then the commissioner shall issue a license to the applicant authorizing the applicant to engage in the licensed activities in this state. If any of these requirements has not been met, then the commissioner shall deny the application, in writing setting out the reason for the denial.
(2) The commissioner shall approve, or deny in writing, every completed application for a license within one hundred twenty (120) days from the date a complete application is submitted, which period may be extended for good cause by the commissioner.
(3) The commissioner may deny a license application where the applicant does not meet the requirements of this subtitle or for any of the grounds under KRS 286.11- 039.
(4) The commissioner may probate, place conditions upon, or refuse to issue or renew any license issued under this subtitle.
(5) The commissioner may in writing deny or refuse to renew the designation of an agent by a licensee for any of the grounds found in KRS 286.11-041.
(6) A person is deemed to have received a copy of a written denial issued by the commissioner in this section within three (3) days of its mailing.
(7) Any person who has had his or her license application or designation as an agent denied by the commissioner may file a written application for an administrative hearing in accordance with KRS Chapter 13B. The written application shall be filed with the commissioner within twenty (20) days of the date of the denial.
(8) A written application for an appeal shall be made in good faith and shall briefly state the reason or reasons the person is aggrieved, together with the grounds to be relied upon as a basis for the relief to be sought at the hearing.
(9) Any person who has had his or her license application, or designation as an agent, denied by the commissioner may not file another application for a license, or designation as an agent, under this subtitle for one (1) year after the date of the denial.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 838, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 10, effective April 24, 2006.

Legislative Research Commission Note (7/12/2006). This section was created in 2006 Ky. Acts ch. 247 as a new section of KRS Chapter 366A. Sec. 38 of that same bill

also required that all sections of KRS Chapters 287, 288, 290, 291, 294, 366, 366A, and 368 be renumbered as sections of a single KRS chapter entitled the “Kentucky Financial Services Code.” Therefore, the Statute Reviser, acting under KRS 7.136(1), has codified this section as a new section of KRS Chapter 286.

286.11-021 Renewal of license and annual report — Expiration and reinstatement of license.

(1) A licensee under this subtitle shall pay an annual renewal fee of five hundred dollars ($500) no later than September 20 of each year.
(2) The renewal fee shall be accompanied by a written renewal report, in a form prescribed by the commissioner, which shall include:
1. (a) A copy of the licensee’s most recent audited annual financial statement, or if the licensee is a wholly owned subsidiary of another corporation, the most recent audited consolidated annual financial statement of the parent corporation, or the licensee’s most recent audited financial statement;
2. (b) For the most recent quarter for which data is available prior to the date of the filing of the renewal application, but in no event more than one hundred twenty (120) days prior to the renewal date, a list of the number of payment instruments sold by the licensee in the state, the dollar amount of those instruments, and the dollar amount of those instruments currently outstanding;
3. (c) Any material changes to any of the information submitted by the licensee on its original application which have not previously been reported to the commissioner on any other report required to be filed under this subtitle;
4. (d) A list of the licensee’s permissible investments under this subtitle and a certification that the licensee continues to maintain permissible investments according to the requirements set forth in KRS 286.11-015; and
5. (e) A list of the locations, including names, physical addresses, and telephone numbers, in this state where the licensee or agent of the licensee engages in money transmission.
(3) The failure of a licensee to pay the annual renewal fee or file the written renewal report, by the renewal date of September 20, shall result in the expiration of the licensee’s license by operation of law by September 30 of the same year. The commissioner may reinstate the license if the licensee becomes compliant with this subtitle and pays a civil penalty equal to the amount of the annual renewal fee, as specified in this section, within thirty (30) days of the expiration of the license.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 839, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 11, effective April 24, 2006.

286.11-023 Extraordinary reporting requirements.

A licensee shall file a written report with the commissioner within fifteen (15) business days of its knowledge of the occurrence of any one (1) of the events listed below. In the written report, the licensee shall describe the event and its expected impact on the licensee’s activities in the state:

(1) Any material change in information provided in a licensee’s application or renewal report;
(2) The cancellation or other impairment of the licensee’s bond or other similar security accepted by the commissioner;
(3) Insolvency or the filing for bankruptcy or reorganization under the United States Bankruptcy Code, 11 U.S.C. secs. 101 to 110, by the licensee, responsible individual, any agent, or any key officers or directors;
(4) The filing of a petition by or against the licensee, or any agent of the licensee, for receivership, the commencement of any other judicial or administrative proceeding for its dissolution or reorganization, or the making of a general assignment for the benefit of its creditors;
(5) The filing of any material litigation against the licensee by any state or federal governmental authority, or by any country in which the licensee engages in the business of money transmission or is licensed;
(6) Any felony indictment of the licensee, responsible individual, agent, or any of its key officers or directors;
(7) Any felony conviction of the licensee, responsible individual, agent, or any of its key officers or directors;
(8) Any misdemeanor conviction of the licensee, responsible individual, agent, or any of its key officers or directors of any misdemeanor involving the business of money transmission; and
(9) Any misdemeanor conviction of the licensee, responsible individual, agent, or any of its key officers or directors of any misdemeanor involving fraud, theft, or breach of trust.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 840, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 12, effective April 24, 2006.

286.11-025 Changes in control of a licensee.

(1) A licensee shall give the commissioner written notice of a proposed change of control within fifteen (15) days after learning of the proposed change of control and at least thirty (30) days prior to the proposed change of control.
(2) A licensee shall file a written request for approval of the acquisition with the commissioner. A licensee shall also submit, with the notice, a nonrefundable fee of one hundred dollars ($100).
(3) After review of a request for approval under subsection (1) of this section, the commissioner may require the licensee to provide additional information concerning the proposed person in control.
(4) The commissioner shall approve a request for change of control under subsection (1) of this section if, after investigation, the commissioner determines that the person or group of persons requesting approval has the competence, experience, character, financial condition, and responsibility to operate the licensee or person in control of the licensee in a lawful and proper manner and that the interest of the public will not be jeopardized by the change of control.
(5) The following persons are exempt from the requirements of subsection (1) of the section, but the licensee shall notify the commissioner, within fifteen (15) days after learning of a change of control:
1. (a) A person that acts as a proxy for the sole purpose of voting at a designated meeting of the security holders or holders of voting interests of a licensee or person in control of a licensee;
2. (b) A person that acquires control of a licensee by devise or descent;
3. (c) A person that acquires control as a personal representative, custodian, guardian, conservator, or trustee, or as an officer appointed by a court of competent jurisdiction or by operation of law; and
4. (d) A person that the commissioner exempts by regulation or order if it is in the public interest to do so.
(6) Subsection (1) of this section does not apply to public offerings of securities.
(7) Before filing a request for approval to acquire control, a person may request in writing a determination from the commissioner as to whether the person would be considered a person in control of a licensee upon consummation of a proposed transaction. If the commissioner determines that the person would not be a person in control of a licensee, then the commissioner may enter an order or respond in writing, to that effect, and the proposed person and transaction shall not be subject to the requirements of this section.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 841, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 13, effective April 24, 2006.

Financial Services Code.” Therefore, the Statute Reviser, acting under KRS 7.136(1), has codified this section as a new section of KRS Chapter 286.

286.11-027 Examinations and investigations.

(1) The commissioner may conduct an examination or investigation of a licensee or any of its agents, as it relates to the business of money transmission.
(2) The commissioner may conduct an examination or investigation in conjunction with representatives of other agencies of this state or agencies of another state or of the federal government. Instead of an examination, the commissioner may accept the examination report of an agency of this state or of another state or of the federal government or a report prepared by an independent licensed or certified public accountant. The reasonable expenses incurred by the department, other Kentucky agencies, agencies of another state, agencies of the federal government, or an independent licensed or certified accountant in making such examination, investigation, or report shall be borne by the licensee.
(3) A joint examination or an acceptance of an examination report does not preclude the commissioner from conducting an examination as provided by law. A joint report or a report accepted under this subsection is an official report of the commissioner for all purposes.
(4) A licensee or agent is deemed to consent to the commissioner’s examination or investigation, whether or not prior notice is given to the licensee or agent, of the books, records, and business operations of the licensee or agent of the licensee.
(5) A report of examination of a licensee under this section shall be considered confidential and privileged and not subject to disclosure under the Kentucky Open Records Act, KRS 61.870 to 61.884. However, a licensee may disclose a Kentucky report of examination to a financial institution upon written request from the financial institution for the purpose of assisting the financial institution in its compliance with the Bank Secrecy Act, 31 U.S.C. secs. 5311 to 5332 and 31 C.F.R. pt. 103. The licensee shall provide written notice to the commissioner of the disclosure of the Kentucky report of examination at the same time that disclosure is made to the financial institution.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 842, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 14, effective April 24, 2006.

286.11-029 Maintenance of records.

(1) Each licensee shall make, keep, and preserve the following books, accounts, and other records for a period of five (5) years, and these records shall be open to inspection by the commissioner:
1. (a) A record or records of each payment instrument sold;
2. (b) A general ledger containing all assets, liability, capital, income, and expense accounts, which general ledger shall be posted at least monthly;
3. (c) Bank statements and bank reconciliation records;
4. (d) Records of outstanding payment instruments;
5. (e) Records of each payment instrument paid within the five (5) year period;
6. (f) A list of the names, addresses, and telephone numbers of all of the licensee’s agents;
7. (g) Copies of all currency transaction reports and suspicious activity reports filed in compliance with KRS 286.11-031; and
8. (h) Any other record the commissioner may reasonably require by order or regulation.
(2) Records required to be maintained in this subtitle may be kept in an electronic retrievable format or other similar form of medium.
(3) Records may be maintained by a licensee or agent at a location other than within this state so long as they are made accessible to the commissioner upon seven (7) business days’ written notice.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 843, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 15, effective April 24, 2006.

286.11-031 Filing and maintenance of reports required by federal and state law governing money laundering.

(1) Every licensee and its agent shall file with the commissioner all reports by federal currency reporting, recordkeeping, and suspicious transaction reporting requirements as set forth in the Bank Secrecy Act, 31 U.S.C. secs. 5311 to 5332, 31 C.F.R. pt. 103, and other federal and state laws pertaining to money laundering, for every transaction in this state. Every licensee and its agent shall maintain copies of these reports in its records in compliance with KRS 286.11-029.
(2) The timely filing of a complete and accurate report required under subsection (1) of this section with the appropriate federal agency is deemed compliance with the requirements of subsection (1) of this section, unless the commissioner notifies the licensee that reports of the type required in subsection (1) of this section are not being regularly and comprehensively transmitted to the federal agency.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 844, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 16, effective April 24, 2006.

286.11-032 Definition — Commissioner’s power to order submission of required filings to the registry, its parent or affiliate, and other agencies or authorities — Power to establish relationships or contracts with governmental agencies and the registry or its affiliates — Report of violations, enforcement actions, and other relevant information — Procedure for requesting information from and distributing information to the United States Department of Justice.

(1) As used in this section, “registry” means the State Regulatory Registry, LLC, or its successor organization.
(2) When an application, report, or approval request is required by this subtitle to be filed with the commissioner, the commissioner may by rule or order require the filing of the application, report, or approval request, including the applicable fees, be submitted to:
1. (a) The State Regulatory Registry, LLC, or its successor organization;
2. (b) The registry’s parent, affiliate, or operating subsidiary; or
3. (c) Other agencies or authorities, as part of a nationwide licensing system; which may act as an agent for receiving, requesting, and distributing information to and from any source directed by the commissioner.

(3) (a)

The commissioner is authorized to establish relationships or contracts with other governmental agencies, the registry, or entities affiliated with the registry that he or she deems necessary to carry out the purpose of this section.

(b) The commissioner may report violations of this subtitle, enforcement actions, and other relevant information to governmental agencies, the registry, or affiliated entities with which the commissioner has established a relationship or contract, notwithstanding any provision to the contrary in this subtitle.

(4) For purposes of this section and to reduce the points of contact which the Federal Bureau of Investigation may have to maintain for purposes of this subtitle, the commissioner may use other governmental agencies, the registry, or entities affiliated with the registry, as an agent for requesting information from and distributing information to the United States Department of Justice or other governmental agencies.

Effective: June 25, 2013
History: Created 2013 Ky. Acts ch. 106, sec. 14, effective June 25, 2013.

286.11-033 Confidentiality of data submitted to commissioner.

(1) Documents, materials, reports, or other information in the possession or control of the commissioner that is provided according to this subtitle shall be confidential by law and privileged, and shall not be subject to the Kentucky Open Records Act, KRS 61.870 to 61.884. These documents, materials, reports, or other information shall not be subject to subpoena, and shall not be subject to discovery or admissible in evidence in any civil action, unless, after notice to the commissioner and a hearing, a court of competent jurisdiction determines that the commissioner would not be prejudiced. However, the commissioner may use the documents, materials, reports, or other information in the furtherance of any regulatory or legal action brought as a part of the commissioner’s official duties.
(2) Neither the commissioner nor any person who received documents, materials, reports, or other information while acting under the authority of the commissioner shall be permitted or required to testify in any civil action concerning any confidential documents, materials, reports, or information subject to subsection (1) of this section.
(3) In order to assist in the performance of the commissioner’s duties, the commissioner:
1. (a) May share documents, materials, reports, or other information, including the confidential and privileged documents, materials, reports, or information subject to subsections (1) and (2) of this section, with other state, federal, and international regulatory agencies, with the Money Transmitter Regulators Association, its affiliates or subsidiaries, and with local, state, federal, and international law enforcement authorities, if the recipient agrees to maintain the confidentiality and privileged status of the documents, materials, reports, or other information;
2. (b) May receive documents, materials, reports, or other information, including otherwise confidential and privileged documents, materials, reports, or information from the Money Transmitter Regulators Association, its affiliates or subsidiaries, and from regulatory and law enforcement officials of other foreign or domestic jurisdictions, and shall maintain as confidential and privileged any documents, materials, reports, or information received with notice or the understanding that they are confidential and privileged under the laws of the jurisdiction that is the source of the documents, materials, reports, or information;
3. (c) May enter into agreements governing the sharing and use of information, including the furtherance of any regulatory or legal action brought as part of the recipient’s official duties;
4. (d) May disclose to the public a list of persons licensed under this subtitle or the aggregate financial data concerning those licensees; and,
5. (e) May disclose to the public any order issued under this subtitle that is the result of an administrative or legal action against a licensee, agent of a licensee, responsible individual, key shareholder, executive officer, or director.

(4) No waiver of any applicable privilege or claim of confidentiality in the documents, materials, reports, or information shall occur as a result of disclosure to the commissioner under this subsection or as a result of sharing as authorized in subsection (3) of this section.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 845, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 17, effective April 24, 2006.

286.11-035 Authorized agent contracts.

Licensees desiring to conduct licensed activities through agents shall authorize each agent to operate pursuant to an express written contract, which shall include the following provisions:

(1) That the licensee designates the person as its agent with authority to engage in money transmission on behalf of the licensee as authorized under this subtitle;
(2) That the agent shall operate in full compliance with this subtitle, and rules promulgated under this subtitle, and any order issued by the commissioner pursuant to this subtitle;
(3) That neither a licensee nor an agent of the licensee may authorize subagents;
(4) That the agent shall timely remit all money legally due to the licensee in accordance with the terms of the written contract between the licensee and the agent;
(5) That the licensee and agent are subject to regulation by the commissioner; and
(6) That the licensee and agent shall comply with applicable federal and state law.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 846, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 18, effective April 24, 2006.

286.11-037 Authorized agent conduct — Commingled proceeds deemed trust funds — Agent’s duty to report to licensee.

(1) An agent shall not make any fraudulent statements or misrepresentations to a licensee or to the commissioner.
(2) All money transmissions, or sale, or issuance of payment instrument activities conducted by agents shall be strictly in accordance with the licensee’s written procedures provided to the agent.
(3) An agent shall timely remit all money legally due to the licensee in accordance with the terms of the contract between the licensee and the agent. The commissioner shall have the discretion to set, by regulation or order, the maximum remittance time.
(4) An agent shall act only as authorized under the contract with the licensee.
(5) All funds, less fees, received by an agent of a licensee from the sale or delivery of a payment instrument issued by a licensee or received by an agent for transmission shall, from the time the funds are received by the agent until such time when the funds or an equivalent amount are remitted by the agent to the licensee, constitute trust funds owned by and belonging to the licensee. If an agent commingles any of these funds with any other funds or property owned or controlled by the agent, then all commingled proceeds and other property shall be impressed with a trust in favor of the licensee in an amount equal to the amount of the proceeds due the licensee.
(6) An agent shall report to the licensee the theft, forgery, or loss of payment instruments within twenty-four (24) hours from the time it knew of the theft, forgery, or loss.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 847, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 19, effective April 24, 2006.

286.11-039 Suspension or revocation of license — Procedure for hearing and appeal upon suspension or revocation — Limitations upon reissue of license — Factors to be considered by commissioner.

(1) The commissioner may issue a written order to suspend or revoke a license issued under this subtitle if the commissioner finds that:

(a) The licensee no longer meets the requirements to hold a license under this subtitle;
(b) Any fact or condition exists that, if it had existed at the time the licensee applied for its license, would have been grounds for denying the application;
(c) The licensee’s net worth, as determined in accordance with generally accepted accounting principles, falls below the required net worth as prescribed in KRS 286.11-011, and the licensee, after ten (10) days written notice from the commissioner, fails to take such action as the commissioner deems necessary to remedy such deficiency;
(d) The licensee violates any provision of this subtitle, any administrative regulation promulgated thereunder, or order of the commissioner issued under authority of this subtitle, or any other state law or regulation related to the business of money transmission;
(e) The licensee is conducting its business in an unsafe or unsound manner;
(f) The licensee engages in an unfair and deceptive act or practice;
(g) The licensee engages in fraud, intentional misrepresentation, or gross negligence;
(h) The licensee is insolvent;
(i) The licensee has suspended payment of its obligations or has made an assignment for the benefit of its creditors;
(j) The licensee has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under the United States Bankruptcy Code, 11 U.S.C. secs. 101-110;
(k) The licensee fails to cooperate in an examination, investigation, or subpoena issued by the commissioner;
(l) The licensee fails to make any report required by this subtitle;
(m) The licensee has been found to have violated any of the recordkeeping and reporting requirements of the United States government including 31 U.S.C. secs. 5311 to 5332 and 31 C.F.R. pt. 103;
(n) The competence, experience, character, financial condition, or responsibility of the licensee indicates that it is not in the public interest to permit the licensee to continue to provide money transmission services;
(o) The licensee has been convicted of a felony;
(p) The licensee has been convicted of a misdemeanor related to the business of money transmission;
(q) The licensee has been convicted of a misdemeanor involving theft, fraud, or

breach of trust;

(r) The licensee has failed to terminate or suspend its agent’s authority to act on its behalf when the licensee knew, or has been given reasonable notice that its agent violated, or is about to violate, a material provision of this subtitle, an administrative regulation promulgated thereunder, or an order of the commissioner, or any grounds that are found in KRS 286.11-041; or
(s) The licensee, its responsible individual, or any agent, key shareholder, executive officer, director, or other person in control of the licensee are listed or become listed on the specially designated nationals and blocked persons list prepared by the United States Department of the Treasury or United States Department of State under Presidential Executive Order No. 13224 as a potential threat to commit terrorist acts or to finance terrorist acts.

(2) A licensee who has had his or her license revoked or suspended by the commissioner may file a written application for an administrative hearing in accordance with KRS Chapter 13B.
(3) A person is deemed to have received a copy of the written order of revocation or suspension with three (3) days of its mailing.
(4) A written application for an appeal shall be made with the commissioner within twenty (20) days of the date of the order of suspension or revocation and shall be made in good faith and shall briefly state the reason or reasons the person is aggrieved, together with the grounds to be relied upon.
(5) The commissioner shall not issue a license again under this subtitle to any person whose license has been revoked until three (3) years after the date of the revocation, and thereafter, not until the person again qualifies under the applicable provisions of this subtitle. A person whose license has been revoked twice shall be deemed permanently revoked and shall not again be eligible for a license under this subtitle.
(6) In determining whether a licensee is engaging in an unsafe or unsound practice under subsection (1)(e) of this section, the commissioner may consider the size and condition of the licensee’s provision of money transmissions, the magnitude of the loss, the gravity of the violation of this subtitle, the administrative regulation adopted, or order issued under this subtitle, any action taken by another state or federal government against the licensee, or the previous conduct of the licensee.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 848, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 20, effective April 24, 2006.

286.11-041 Suspension or revocation of designation of an agent — Factors to be considered by commissioner — Procedure for hearing and appeal upon revocation of designation — Limitations upon future designation of agent after revocation.

(1) The commissioner may issue a written order suspending or revoking the designation

of an agent if the commissioner finds that:

The agent violates this subtitle or a rule adopted or an order issued under this subtitle;
The agent does not cooperate with an examination, investigation, or subpoena issued by the commissioner;
The agent has engaged in fraud, intentional misrepresentation, or gross negligence;
The agent has been convicted of a felony;
The agent has been convicted of a misdemeanor related to the business of money transmission;
The agent has been convicted of a misdemeanor involving theft, fraud, or breach of trust;
The competence, experience, character, or general fitness of the agent or a person in control of the agent indicates that it is not in the public interest to permit the agent to be engaged in the business of money transmission;
The agent is engaged in or is engaging in an unsafe or unsound practice;
The agent is engaged in, or is engaging in, an unfair and deceptive act or practice as that act or practice relates to the business of money transmission;
The agent is insolvent;
The agent has applied for an adjudication of bankruptcy, reorganization, arrangement, or other relief under the United States Bankruptcy Code, 11 U.S.C. secs. 101 to 110; or
The agent fails to timely remit all money legally due to its licensee as required by this subtitle; or
The agent, any executive officer, or other person in control of the agent is listed or become listed on the specially designated nationals and blocked persons list prepared by the United States Department of the Treasury or United States Department of State under Presidential Executive Order No. 13224 as a potential threat to commit terrorist acts or to finance terrorist acts.

(2) In determining whether an agent is engaging in an unsafe or unsound practice under subsection (1)(h) of this section, the commissioner may consider the size and condition of the agent’s provision of money transmissions, the magnitude of the loss, the gravity of the violation of this subtitle, the administrative regulation adopted, or order issued under this subtitle, any action taken by another state or federal government against the agent, or the previous conduct of the agent.
(3) Any person who has his or her designation as an agent revoked or suspended by the commissioner may file a written application for an administrative hearing in

accordance with KRS Chapter 13B.

(4) An agent is deemed to have received a copy of the written order of revocation or suspension within three (3) days of its mailing.
(5) A written application for an appeal shall be made with the commissioner within twenty (20) days of the date of the order of suspension or revocation in good faith and shall briefly state the reason or reasons the agent is aggrieved, together with the grounds to be relied upon.
(6) The commissioner shall not designate a person as an agent again under this subtitle where the designation of an agent has been revoked, until after three (3) years after the date of revocation, and thereafter, not until the person again qualifies under the applicable provisions of this subtitle. Any person whose designation as an agent has been revoked twice by the commissioner shall be deemed permanently revoked and shall not again be eligible for designation as an agent under this subtitle.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 849, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 21, effective April 24, 2006.

286.11-043 Power of commissioner to issue cease and desist orders — Petition for temporary or permanent injunction.

(1) If the commissioner has reason to believe or determines that a violation of this subtitle, regulation adopted, or an order issued under this subtitle, by any person, licensee, or agent has occurred or will occur, then the commissioner may issue an order to show cause why an order to cease and desist should not be issued requiring the person, licensee, or agent to cease and desist from the violation.
(2) The commissioner may enter an order to cease and desist if the person, licensee, or agent fails to show cause for the violation of the subtitle, regulation, or order within ten (10) days of the date of the receipt of the order of show cause.
(3) The commissioner may petition the Franklin Circuit Court, or any court of competent jurisdiction, for an issuance of a temporary or permanent injunction, or any other appropriate judicial order, against any person, licensee, or agent that violates this subtitle, regulation adopted, or order issued.
(4) An order issued under this section becomes effective when signed by the commissioner. The order shall be delivered by certified mail to the last known address of the person, licensee, or agent. The order shall be deemed received by the person, licensee, or agent within three (3) days of its mailing with the United States Postal Service.
(5) The commissioner may issue an order against a licensee to cease and desist from providing money transmission through an agent that is subject of a separate order from the commissioner.
(6) An order to cease and desist remains effective and enforceable pending the completion of an administrative proceeding.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 850, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 22, effective April 24, 2006.

286.11-045 Emergency order governing suspension, limitation, or restriction of license or designation of agent — Appeal from emergency order.

(1) If the commissioner has reason to believe or determines that a violation of this subtitle or of a regulation adopted, or an order issued under this subtitle, by a licensee or agent will cause immediate or irreparable harm to the public health, safety, or welfare, then the commissioner may enter an emergency order suspending, limiting, or restricting the licensee’s license or the designation of an agent, without prior notice or hearing.
(2) One (1) or more of the following circumstances shall be considered grounds for an emergency order suspending, limiting, or restricting a license or designation of an agent under this section:
1. (a) The licensee’s or agent’s indictment or conviction of a felony for a crime involving theft, fraud, or breach of trust;
2. (b) The licensee’s or agent’s indictment or conviction under the USA PATRIOT Act of 2001, Pub. L. No. 107-56;
3. (c) The suspension or revocation of any other money transmitter license or equivalent license held by the licensee, or designation held by the agent in another state or country;
4. (d) The licensee, its responsible individual, or any agent, key shareholder, executive officer, director, or other person in control of the licensee are listed or become listed on the specially designated nationals and blocked persons list prepared by the United States Department of the Treasury or United States Department of State under Presidential Executive Order No. 13224 as a potential threat to commit terrorist acts or to finance terrorist acts; or
5. (e) Insolvency, or the filing of an application of bankruptcy, reorganization, arrangement, or other relief under bankruptcy, or an adjudication under the United States Bankruptcy Code, 11 U.S.C. secs. 101 to 110 by the licensee or agent.

(3) An commissioner. The emergency order shall be delivered by certified mail to the last known address of the licensee or agent. The order shall be deemed received by the licensee or agent within three (3) days of its mailing with the United States Postal Service.
(4) A licensee or agent aggrieved by an emergency order issued by the commissioner under this section may file with the commissioner a written appeal for an emergency hearing. The application for a hearing shall be filed with the commissioner within twenty (20) days of the date of the emergency order.
(5) Upon receipt of a written appeal by any licensee or agent aggrieved by an emergency order issued under this section, the commissioner shall conduct an emergency hearing as required under KRS 13B.125, within ten (10) working days from the date of receipt of the appeal, unless the parties agree otherwise. The hearing officer shall render a written decision affirming, modifying, or reversing the emergency order within five (5) working days of the completion of the hearing. The

emergency order issued under this section becomes effective when signed by the

emergency order shall be affirmed if there is substantial evidence of a violation of law that constitutes an immediate danger to the public health, safety, or welfare.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 851, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 23, effective April 24, 2006.

286.11-047 Civil penalties.

The commissioner may levy a civil penalty against a person that violates any provision of or administrative regulation promulgated under this subtitle or order issued by the commissioner under this subtitle. The civil penalty shall be not less than one thousand dollars ($1,000) nor more than five thousand dollars ($5,000) per day for each day the violation is outstanding, plus the state’s costs and expenses for the examination, investigation, and prosecution of this matter, including reasonable attorney’s fees and court costs.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 852, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 24, effective April 24, 2006.

286.11-049 Consent orders.

The commissioner may enter into a consent order with another person at any time, in order to resolve a matter arising under this subtitle. A consent order shall be signed by the person to whom it is issued or by the person’s authorized representative and shall indicate agreement with the terms contained in the order. A consent order may provide that it does not constitute an admission by a person that this subtitle, or an administrative regulation promulgated under this subtitle, or an order issued under this subtitle has been violated. Any consent order that the commissioner enters into in order to resolve a matter arising under this subtitle shall be deemed an administrative action and a public record.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 853, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 25, effective April, 2006.

286.11-051 Commissioner’s power to stay orders pending exhaustion of administrative remedies.

The commissioner may stay, suspend, or postpone the effective date of an order issued under this subtitle, pending the administrative proceeding and the issuance of a final order resulting from the proceeding, upon written request by the affected person, licensee, or agent.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 854, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 26, effective April 24, 2006.

286.11-053 Right of aggrieved person to apply for administrative hearing — Appeal from final order to Franklin Circuit Court.

(1) Any person aggrieved by the entry of an order by the commissioner under this subtitle may file written application for an administrative hearing.
(2) The written application for a hearing under this subtitle shall be made in good faith and shall state the reasons or grounds the person is so aggrieved and the remedy sought at the hearing.
(3) Any application for a hearing under this subtitle shall be filed with the commissioner within twenty (20) days of the date of the order.
(4) If the commissioner finds that the application for a hearing is made in good faith, and that the applicant would be aggrieved as claimed if his or her grounds are established, then a hearing shall be held in accordance with KRS Chapter 13B.
(5) An appeal from the commissioner shall be taken only from a final order.
(6) The appeal from a final order issued by the commissioner shall be granted as a matter of right to the Franklin Circuit Court.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 855, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 27, effective April 24, 2006.

286.11-055 Right of aggrieved person to file written complaint with commissioner – – Commissioner’s power to investigate and resolve complaints — Suspension of license for noncompliance with subpoena — Petition to court for enforcement.

(1) Any person aggrieved by the conduct of a licensee or agent under this subtitle in connection with the licensee’s or agent’s regulated activities may file a written complaint with the commissioner, who may investigate the complaint.
(2) In the course of the investigation initiated by a complaint or by the commissioner,

the commissioner may:

(a) Subpoena witnesses;
(b) Administer oaths;
(c) Examine any individual under oath; and
(d) Compel the production of records, books, papers, contracts, or other documents relevant to the investigation.

(3) If any person fails to testify or to comply with a subpoena from the commissioner under this section, then the commissioner may petition the Franklin Circuit Court or any court of competent jurisdiction for enforcement.
(4) The license of any licensee or the designation of an agent under this subtitle who fails to comply with a subpoena of the commissioner may be suspended pending compliance with the subpoena.
(5) The commissioner may investigate all complaints filed by any person. Effective: July 15, 2010

History: Amended 2010 Ky. Acts ch. 24, sec. 856, effective July 15, 2010. — Created 2006 Ky. Acts ch. 247, sec. 28, effective April, 2006.

286.11-057 Penalties.

(1) A person that intentionally or knowingly makes a false statement, misrepresentation, or false certification in a record filed or required to be maintained under this subtitle or that intentionally or knowingly makes a false entry or omits a material entry in such a record is guilty of a Class D felony.
(2) A person that intentionally or knowingly engages in any activity for which a license is required under this subtitle without being licensed under this subtitle is guilty of a Class C felony.

Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 29, effective April 24, 2006.

286.11-059 Administrative proceedings to be conducted under KRS Chapter 13B.

All administrative proceedings under this subtitle shall be conducted in accordance with KRS Chapter 13B.

Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 30, effective April 24, 2006.

286.11-061 Powers and duties of department and commissioner relating to the regulation, supervision, and licensing of money transmitters.

(1) The department shall exercise all administrative functions of the state in relation to the regulation, supervision, and licensing of money transmitters.
(2) The commissioner may promulgate, amend, and repeal any administrative regulations, forms, and orders as are necessary to interpret and enforce the provisions of this subtitle.
(3) The commissioner may request any additional information as the commissioner deems necessary to interpret and carry out any of the provisions of this subtitle from any applicant, licensee, agent, responsible individual, controlling person, executive officer, or key shareholder.

Effective: July 15, 2010
History: Amended 2010 Ky. Acts ch. 24, sec. 857, effective July 15, 2010. — Created

2006 Ky. Acts ch. 247, sec. 31, effective April 24, 2006.

286.11-063 Licensees and agents to comply with all applicable federal and state laws.

In addition to the requirements contained in this subtitle, every licensee and agent shall comply with all applicable federal and state laws.

Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 32, effective April 24, 2006.

286.11-065 Licenses issued under provisions of former KRS Chapter 366 to remain in force.

A license issued under the provisions of KRS Chapter 366 that is in effect immediately prior to April 24, 2006, shall remain in force as a license under this subtitle until midnight on September 30, 2006, and the licensee shall be governed by the provisions of this subtitle with the exception that such licensees shall be given until midnight on September 30, 2006, to be in compliance with this subtitle. Such licensees must file an application for a renewal license pursuant to this subtitle within three (3) months after April 24, 2006. Upon compliance with the provisions of this subtitle, applicants shall be issued a money transmitter license effective October 1, 2006, through September 30, 2007.

Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 33, effective April 24, 2006.

286.11-067 General Assembly intends to ensure safe and sound operation of money transmission in the Commonwealth.

It is the intent of the General Assembly to establish a state system of licensure and regulation to ensure the safe and sound operation of money transmission to ensure that this business is not used for criminal purposes, to promote confidence in the state’s financial system, and to protect the public interest.

Effective: April 24, 2006

History: Created 2006 Ky. Acts ch. 247, sec. 34, effective April 24, 2006.

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