In a statement released on July 25, the California Department of Financial Protection and Innovation (DFPI) expressed a new viewpoint regarding the necessity of licensure under the California Money Transmission Act (MTA). The entity concluded that a company that only receives payment instructions, orders, or directions to transmit money or monetary value does not actually constitute “receiving money for transmission” requiring licensure under the California MTA. This denotes a significant interpretation which might affect the way companies manage their operations.
The revision by the DFPI suggests a much-needed clarification for the operations of data processing companies, which may have been operating under the assumption that they required a license to handle such transactions. Prior to this announcement, there had been some ambiguity about the definition of “receiving money for transmission”, with many firms considering any interaction with payment instructions or monetary value as necessitating compliance with the MTA.
This recent perspective from the DFPI offers a clearer delineation, potentially assisting corporations, legal teams and compliance officers in better understanding the scope of their obligations. To continue following updates on this or for more in-depth information, please refer to the opinion letter by the DFPI found at the following link: JD Supra.
More news on similar developments to come, as Orrick, Herrington & Sutcliffe LLP continue to monitor and report on legal news affecting the potentially impacted companies.