Monthly Bulletin – December 2023
Volume 11, Number 5
DFPI Invitation for Comment for the Digital Financial Assets Law
The DFPI is seeking public comment prior to engaging in formal rulemaking for the new Digital Financial Assets Law (DFAL). The law was enacted on Oct. 13, 2023 when Governor Gavin Newsom signed into law AB 39 and SB 401.
The DFAL provides the DFPI with rulemaking authority and an 18-month delayed operative date to ensure the adopted regulatory framework can be thoughtfully tailored to address industry trends and mitigate consumer harm. As a result, DFPI is engaging in the rulemaking process to further the implementation of the DFAL.
The DFPI seeks public comment on topics related to the DFAL license application, licensure requirements, and stablecoin approval. The Commissioner invites interested parties to submit comments by Jan. 12, 2024.
Prior to the comment deadline, the DFPI will host a virtual informal listening session with stakeholders to discuss feedback on this informal invitation for comments on Jan. 8, 2024. Interested parties should email regulations@dfpi.ca.gov with the subject line “DFAL Listening Session RSVP” for an invitation to attend. The DFPI anticipates to issue invitations for comment on additional topics in the future.
Contents
DFPI Protections for Small Businesses
On Dec. 4, 2023, Judge R. Gary Klausner granted the Department of Financial Protection and Innovation’s Motion for Summary Judgment in the case Small Business Finance Association v. DFPI.
Judge Klausner’s order upholds the Department’s recently adopted commercial financing disclosure regulations related to the implementation of SB 1235 (Glazer) that require providers to disclose key metrics to small businesses to help them understand potential financing options, including the amount of funding provided, Annual Percentage Rate (APR), finance charge, and payment amounts. Judge Klausner’s order concluded that the disclosures required under the Department’s regulations were lawful under the First Amendment and were not preempted by federal law.
Crypto Kiosk Information
The DFPI has published information for crypto kiosk operators regarding the upcoming Jan. 1, 2024, requirements as mandated by the passage of SB 401. An operator is defined as a person who owns, operates, or manages a digital financial asset transaction kiosk located in this state.
Beginning January 1, 2024, a kiosk operator must provide the Department with a list of all kiosk locations that an operator owns, operates, or manages in the state. Additionally, by January 1, 2024, an operator (1) may not dispense or accept more than $1,000 in a day to or from a customer via kiosks and (2) must provide a customer with a receipt with specified information for any transaction made at the operator’s kiosk.
New State Laws That May Affect DFPI Licensees
Highlights of 2023 Chaptered Legislation, a compendium of new state laws that may affect or be of interest to DFPI licensees, is now available on the Department’s website. The collection includes a brief description and a link to the text of each bill.
In addition to AB 39 and SB 401, known as the Digital Financial Assets Law, significant new laws this year include AB 386 (Nguyen) on financial privacy and AB 1116 (Grayson) on money transmitters.
Some Escrow Reports Due Dec. 14
Escrow agents are required to submit to the Commissioner an annual report prepared by an independent certified public accountant or an independent public accountant (Financial Code section 17406) within 105 days after the close of the escrow agent’s fiscal year. The annual report includes audited financial statements and required supplemental information.
If your fiscal year ended on Aug. 31, 2023, your annual report is due Dec. 14, 2023. Please have your CPA email your report to ESCAnnualReportFiling@dfpi.ca.gov by the deadline using a secured, encrypted delivery system. The use of a secured dropbox is also acceptable. If your CPA is unable to submit the annual report electronically, it can be mailed to Queen Padilla, Senior Financial Institutions Examiner, Escrow Law, Department of Financial Protection and Innovation, 320 West Fourth Street, Suite 750, Los Angeles, CA 90013.
Penalties for failure to file the annual report by the due date or to include required information are $100 per day for the first five days a report is late and $500 per day thereafter (Financial Code section 17408). Failure to file a report or to include any required information may also result in the suspension or revocation of an escrow agent’s license or prompt an immediate examination (Financial Code section 17602.5).
For questions about the annual reports, email Escrow.Licensing@dfpi.ca.gov.
Debt Collector Annual Report
The DFP will be requiring debt collectors that are licensed prior to Jan. 1, 2024, to file an annual report by Mar. 15, 2024, for the year 2023. The requirements for the annual report can be found in California Financial Code section 100021(a) (1) – (4), (6) and (7). The annual report must be filed through the DFPI portal. A draft of the report will be sent mid-December to the designated email set up in the licensee’s portal account. Licensees will be able to input the reports from Jan. 1, 2024, through midnight, Mar. 15, 2024.
Proposed DCLA Regulations, 2nd Draft – Invitation for Comments
Regulations implementing the application requirements under the Debt Collection Licensing Act (DCLA) became effective on Dec. 22, 2021. On Aug. 19, 2021, the Commissioner released an invitation to comment on an anticipated subsequent rulemaking related to the scope, annual report, and bond amount increase provisions of the DCLA. On Jul. 15, 2022, The Commissioner released a draft text related to the scope, annual report, and document retention requirements of the DCLA for public comment.
The Commissioner has made changes to this draft and is now releasing it for a second round of prenotice public comment. This draft concerns only the scope and document retention requirements of the DCLA. Annual report requirements will be adopted through a separate rulemaking.
The invitation and questions may be found here:
The Commissioner invites interested parties to submit comments, including comments describing the potential financial impact of the draft regulations, by Jan. 15, 2024. Comments may be submitted electronically to regulations@dfpi.ca.gov. Include “PRO 05-21” in the subject line. Comments may also be submitted via regular mail by sending to:
Department of Financial Protection and Innovation
Legal Division
Attn: DeEtte Phelps, Regulations Coordinator
2101 Arena Blvd.
Sacramento, CA 95834
Questions regarding this invitation for comments may be directed to Emily Gallagher, DFPI Senior Counsel, at emily.gallagher@dfpi.ca.gov.
Banks Must Submit Lists of Offices by Dec. 31
Pursuant to Financial Code Section 1077, all commercial banks, industrial banks and trust companies are required to file a list of all offices currently maintained and operated by the bank. The report shall designate the type and complete address of each such office. Please note this requirement does not apply to other licensee types, such as foreign banking organizations, credit unions, money transmitters, etc.
For the purposes of section 1077, please provide the DFPI the following information on or before Dec. 31, 2023:
- Name of bank
- Popular name of branch offices and facilities
- Office type (include the head office, branch, and facility locations; do not include free-standing ATMs)
- Street address, including city, state, country, and ZIP code.
Responses may be emailed to Licensing@dfpi.ca.gov or sent by regular mail to Department of Financial Protection and Innovation, One Sansome Street, Suite 600, San Francisco, CA 94104 Attn: Licensing Section.
For questions, please contact Patrick Carroll at Patrick.Carroll@dfpi.ca.gov or (415) 263-8559.
REMINDER: Banks and Credit Unions to Report Fee Income from NSF and Overdraft Charges
Financial Code section 521 requires state-chartered banks and credit unions to report annually to the Department of Financial Protection and Innovation (DFPI) the revenue they received from fees on nonsufficient funds and overdraft charges during the calendar year. These reports are due by Mar. 1, 2024, so the DFPI can publish the information on its website by Mar. 31.
On Dec. 29, the DFPI will send an email with a report link to the designated email address of each reporting institution.
Please refer to the FAQs or contact Marilyn Davis at marilyn.davis@dfpi.ca.gov (banks) or Kim-Phuong Hoang at kim-phuong.hoang@dfpi.ca.gov (credit unions) for more information.
Time to Renew
2024 Renewal Program Calendar for Broker-Dealers and Investment Advisers
Monday, Dec. 11, 2023 – RENEWAL PAYMENT DUE DATE.
This is the DEADLINE for receipt of Preliminary Renewal Statement payments. Review the Renewal Program Payment Options for detailed information. FINRA recommends using E-Bill to pay your Preliminary Statement. If you use other means, submit your payment with additional time to sufficiently allow for mail delivery and/or payment processing to post to your Renewal Account by the deadline. FINRA-registered firms that do not have payment posted by the deadline may be assessed a Renewal Late Fee.
Tuesday, Dec. 26, 2023 – Last Day to submit form filings prior to year-end. Web CRD and IARD are available from 5 AM until 6 PM Eastern Time (ET).
Wednesday, Dec. 27, 2023 – Web CRD and IARD are unavailable due to FINRA statement and renewals processing.
Thursday, Dec. 28 – Sunday, Dec. 31, 2023 – Web CRD and IARD are available for QUERY-only and the creation of “Pending” filings.
Action on Unlawful Student Lending Practices
On Nov. 20, the DFPI announced that the U.S. Bankruptcy Court for the District of Delaware approved a joint Stipulated Final Judgment in the Chapter 7 bankruptcy case of Prehired, LLC and its related entities.
The agreement resolves a complaint brought by the DFPI, the Consumer Financial Protection Bureau (CFPB), and 10 state attorneys general against Prehired under the Consumer Financial Protection Act of 2010 (CFPA) for its administration of Income Share Agreements (ISAs) used to finance students’ tuition for “tech sales bootcamps.”
Fraudulent Crypto Investment Scheme
On Nov. 16, the DFPI announced that it has issued a desist and refrain order against GSB Gold Standard Bank Ltd., Swiss Valorem Bank Ltd., and GSB Gold Standard Corporation AG for violations of California securities laws.
These entities, along with three executives, offered and sold unqualified securities and made material misrepresentations and omissions to investors related to crypto asset investments. This enforcement action was part of a coordinated effort with other state regulators to protect investors.
Consumer Webinar Dec. 20
The DFPI hosts a monthly consumer financial education webinar exploring a new topic every month. Each 30-minute webinar includes guest speakers and a Q&A session. Watch past presentations in the series on the DFPI YouTube site.
The next webinar is on Year-end Financial Planning on Dec. 20.
- Year-End Financial Planning
Dec. 20, 12 – 12:30 p.m.
Learn about year-end financial decisions and strategies that can positively impact your financial well-being for the next year and beyond, including tax planning, maximizing contributions to retirement accounts, charitable giving and donations, budgeting for the oncoming year, and more. Register online.
LICENSEE ACTIVITY
Commercial Bank Activity
Merger
Community West Bank, NA., Goleta, to merge with and into Central Valley
Community Bank, Fresno
Filed: 11/16/23
Acquisition of Control
PCB Financial, Inc. to acquire control of Northern California Bancorp, Inc. /
Monterey County Bank
Filed: 11/10/23
Change of Name
Manufacturers Bank, to change its name to SMBC Manubank
Effected: 11/08/23
Credit Union Activity
Conversion
Sesloc Federal Credit Union, to convert to state charter
Approved: 10/03/23
Foreign (Other Nation) Bank Activity
New Office
Resona Bank, Limited
350 South Grand Avenue, Los Angeles (Representative Office)
Approved: 11/20/23
Trust Company Activity
New Trust Company
Parallel Trust Company of California
150 Spear Street, San Francisco
Filed 11/02/23
Money Transmitter Activity
Acquisition of Control
Spectrum Purchaser, LLC to acquire control of PNC Global Transfers, Inc.
Approved 11/08/23
CLOTHILDE V. HEWLETT Commissioner, Department of Financial Protection and Innovation
The December 2023 Monthly Bulletin covers the month ended November 30, 2023.
It is issued pursuant to Financial Code section 376.
The Monthly Bulletin is available at no charge via e-mail.
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