Soon, the Office of Administrative Law will decide whether it will determine the merits of a petition for review of underground regulations allegedly being enforced by the Department of Business Oversight (fka Department of Financial Institutions).  Regardless of whether the OAL accepts the petition, the petition raises some troubling questions about the DBO’s administration and enforcement of the Money Transmission Act, Fin. Code § 2000 et seq.

In 2010, the legislature repealed the Transmitters of Money Abroad Law, the Issuers of Payment Instruments Law, and the Issuers of Travelers Check Act and created a new unitary law, the MTA.  2010 Cal. Stat. ch. 612 (AB 2789).  The bill was sponsored by the Money Services Round Table, a trade association of money transmitters and stored value card issuers.

The petition cites numerous failures by the DBO in the two years since the enactment of the MTA, including the failure to adopt regulations:

  • prescribing how to obtain a license under the MTA;
  • defining what constitutes “money transmission” under the MTA; and
  • adopting “public interest” exemptions as authorized by the MTA.

The petition also faults the DBO for creating requirements and adopting interpretations without complying with the rulemaking provisions of the Administrative Procedure Act.  The petitioner is a lecturer at the U.C. Berkeley School of Law and a partner at a prominent international law firm.