California Department of Business Oversight
October 2019 Volume 7, Number 3
DBO Issues Cannabis Banking Guidance
The Department of Business Oversight has issued guidance to state-chartered financial institutions regarding banking relationships with cannabis-related businesses as more banks and credit unions choose to bank the industry.
The guidance, issued October 3 in the form of an extensive questionnaire used by examiners, is part of the DBO’s continued effort to assist banks and credit unions that serve cannabis-related businesses in California and will help financial institutions make appropriate risk assessments and comply with federal guidelines.
The DBO developed the questionnaire for the growing number of state banks and credit unions establishing banking relationships with cannabis-related businesses. Additional financial institutions are considering pilot programs for cannabis banking.
“If financial institutions choose to serve the cannabis market, they must understand risks and build out their compliance infrastructure accordingly,” said Commissioner of Business Oversight Manuel P. Alvarez. “By making this questionnaire available to our licensees, we hope it can serve as an additional resource for banks and credit unions as they roll out their cannabis banking programs.”
The DBO questionnaire addresses financial institutions’ cannabis program governance and compliance with the federal Bank Secrecy Act (BSA), with a focus on the U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) guidance on cannabis banking.The questionnaire tracks the FinCEN guidance, calling attention to customer due diligence, ongoing monitoring and filing requirements, along with priorities and potential red flags identified by FinCEN.
In line with Proposition 64, the DBO also reaffirmed that it will not bring regulatory actions against state-chartered banks or credit unions solely for establishing a banking relationship with licensed cannabis businesses. These financial institutions will still be required to comply with FinCEN’s BSA expectations, including the FinCEN guidance and priorities set forth in the Cole Memo, and to identify, evaluate, and manage risks appropriately.
DBO Sues to Stop $30 Million Silver Saddle Ranch Investment Fraud
The DBO announced on October 1 that a state judge granted its request to shut down an alleged investment fraud that collected more than $30 million from illegal land sales and other charges associated with the Silver Saddle Ranch & Club in California City, California.
Acting on a civil complaint filed under seal, San Diego Superior Court Judge Joel R. Wohlfeil granted the DBO’s request for a temporary restraining order barring further land sales, a freeze of all related assets and the appointment of a receiver to take possession of Silver Saddle Ranch and two affiliated entities, Silver Saddle Commercial Development and the Galileo Commercial Property Owners Association. The judge’s order can be found here.
The complaint names Thomas M. Maney of Lancaster, California as the central figure in a scheme that violated state securities laws and targeted Filipino, Chinese and Spanish-speaking communities with high-pressure sales tactics and false promises. In addition to Maney, Silver Saddle Ranch & Club, Inc.; Silver Saddle Commercial Development, LP; and the Galileo Commercial Property Owners Association, Inc. are named as defendants. Clifford J. Reynolds of Pasco, Washington; Marian G. Ducreux of Corona, California; and Wayne A. Pedersen of Sequim, Washington are identified as relief defendants who allegedly received ill-gotten gains from the scheme.
The DBO previously issued a Desist and Refrain Order on June 18, 2019, that directed Maney, Silver Saddle and the other business entities to stop offering or selling investments in the desert property. Administrative actions filed simultaneously requested penalties and an order that Maney, Silver Saddle Ranch and the other entities offer to repurchase the investments. The administrative action is currently pending.
Governor Gavin Newsom Signs Public Bank Bill into Law
Governor Gavin Newsom has signed Assembly Bill 857, a measure that will allow local agencies to establish public banks. Under the new law, local agencies such as cities and counties can apply to the DBO for permission to organize a public bank.
Public banks would be supervised and regulated by the DBO and the FDIC in the same manner as privately-owned banks and they would be subject to the same regulatory requirements, such as FDIC deposit insurance. Only two public banks may be licensed in a calendar year and not more than ten in total.
Retail activities must be conducted in partnership with a local financial institution and public banks are prohibited from competing with commercial banks except in the areas of local agency banking, infrastructure lending, wholesale lending, and participation lending, as defined.
2019-20 California Financing Law Assessment Due
The 2019-20 California Financing Law (CFL) Assessment Notice was mailed out Monday, September 30. The notice states that the assessment is due upon receipt of invoice and becomes delinquent if not paid by October 31, 2019. Licensees may pay by check or electronically via ACH. The receipt for check payment is the cancelled check and licensees can confirm payment by calling 916-322-5397.
Licensees with multiple locations must pay $250 per location or the amount based on the Factor whichever is larger.
Licensees that were assessed based on the number of locations must pay the total amount of assessment even if they are going to surrender some of the locations that were included in the assessment calculation.
For any other question not addressed on the invoice, licensees may contact the CFL Licensing Specialist on phone duty or email CFL.Inquiries@dbo.ca.gov.
2019-20 Local Agency Security Program Assessment Due
The 2019-20 Local Agency Security Program assessment notice was mailed Monday, September 30 to banks and credit unions that hold local agency deposits. The notice states that the assessment is due upon receipt of invoice and becomes delinquent if not paid by October 31, 2019.
Licensees may pay by check or electronically via ACH. The receipt for check payment is the cancelled check and licensees can confirm payment by calling 916-322-5397.
The assessment was based on the average local agency deposits over the last four quarters. The rate was 0.0034%, an increase from 0.0026% for the previous fiscal year.
For any other questions, licensees may contact Lisa Huang at Lisa.Huang@dbo.ca.gov or (415) 542-6256.
Solar Consumer Protection Government Taskforce Distributes Bulletin to Address Fraudulent Activity
In late September, approximately 300,000 electric utility customers in Fresno County received a bulletin in the mail with specific steps to take before installing a solar photovoltaic system on their home. The bulletin was issued by the Solar Consumer Protection Government Taskforce, made up of the California Public Utilities Commission (CPUC), Contractors State License Board (CSLB), Department of Business Oversight (DBO), and the Fresno County District Attorney’s Office (Fresno DA). The agencies have been working together to address fraudulent activity in the solar industry and ensure customers are aware of resources available to them before going solar. Although most solar system installations are done professionally and with no problems, the bulletin was sent in response to an increase in fraudulent behavior in Fresno County, specifically scams targeting Spanish-speaking immigrant households in small communities, including Parlier and Huron. The Taskforce hopes the bulletin, which is in both English and Spanish, will help educate utility customers and make sure they know they can report solar fraud. The bulletin is also available online at www.cslb.ca.gov/solar.
The CPUC has adopted several consumer protections targeted at solar customers, including the development of a California Solar Consumer Protection Guide. Beginning September 30, solar sales will be required to have the guide signed by the consumer. The guide is available at www.cpuc.ca.gov/solarguide.
Commercial Bank Activity
First State Bank of Colorado, Greenwood Village, Colorado, to merge with and into United Business Bank, Walnut Creek, California
Lighthouse Bank, Santa Cruz, to merge with and into Santa Cruz County Bank, Santa Cruz
Premium Finance Company Activity
New Premium Finance Company
Alpine Premium Finance Corporation
600 W. Broadway, San Diego
Pantheon Reserve, Inc.,
The 1108 Willow Pass Ct, Concord
Principal Premium Financing, Inc.
Credit Union Activity
City of Ukiah Employees Credit Union, Ukiah, to merge with and into Redwood Credit Union, Santa Rosa
Schools Financial Credit Union, Sacramento, to merge with and into SchoolsFirst Federal Credit Union, Santa Ana
S.F. Bay Area Educators Credit Union, San Francisco, to merge with and into San Francisco Federal Credit Union, San Francisco
Conversion to Federal Charter
I.L.W.U. Credit Union, Long Beach to convert to federal charter as I.L.W.U. Federal Credit Union
Change of Name
Point Loma Credit Union, to change its name to MyPoint Credit Union
Foreign (Other Nation) Bank Activity
Harneys Corporate and Trust Services Limited (Trust Representative Office)
Harneys Fiduciary (Cayman) Limited (Trust Representative Office)
Money Transmitter Activity
New Money Transmitter
DFS GSD Corp.
eBay Commerce Inc.
Acquisition of Control
DeltaDX Purchaser, Inc., to acquire control of DolEx Dollar Express, Inc.
Global Payments, Inc., to acquire control of NetSpend Corporation
Voluntary Surrender of License
Bannockburn Global Forex, LLC
MANUEL P. ALVAREZ • Commissioner of Business Oversight
The October 2019 Monthly Bulletin covers the month ended September 30, 2019.
It is issued pursuant to Financial Code section 376.
The Monthly Bulletin is available at no charge via e-mail.
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