N.Y. Comp. Codes R. & Regs. tit. 3 § 400.1

Current through Register Vol. 46, No. 43, October 23, 2024

Section 400.1 - Original issuance of license or change of control of a licensee

(a) Application. No person shall engage in the business of cashing checks, drafts or money orders, as principal, broker, agent or otherwise, for a consideration, without first obtaining a license from the superintendent. This licensing requirement applies whether such activities are conducted for customers who are natural persons or for any business, corporation, partnership, limited liability company or partnership, association, or sole proprietorship, or any other entity. Application for a new license or for a change of control of a licensee shall be made upon forms issued by the superintendent. These forms may be obtained at Banking Department offices at the locations specified in Supervisory Policy G 1 of this Title. For purposes of this Part, the term person shall include a natural person or a partnership, corporation, association or any other entity. The term control shall mean having the power directly or indirectly to direct or cause the direction of the management and policies of a licensee, whether through the ownership of voting stock of a licensee, the ownership of voting stock of any corporation which possesses such power or otherwise and shall be presumed to exist if any person, directly or indirectly, owns, controls, or holds with power to vote 10 percent or more of the voting stock of any licensee or any person owning, controlling or holding with power to vote 10 percent or more of the voting stock of any licensee.

(b) Application procedure. Completed applications should be delivered to the Licensed Financial Services Division of the Banking Department at the New York City office location specified in Supervisory Policy G 1 of this Title. An application for a new license for a fixed location or for a mobile unit must be accompanied by payment of the fees specified in section 1.2 of Supervisory Policy G 1 of this Title. An application by a licensee to operate a limited station must be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. An application for change of control of a licensee must be accompanied by payment of the fee specified in section 1.2 of Supervisory Policy G 1 of this Title. Applicants for a new license seeking to conduct business under a trade name must file a certificate in the office of the county clerk as required by General Business Law, section 130. A certificate of the county clerk stating that such a document has been filed must be submitted with an application for a new license.

(c) Information and documents required. Any person seeking to obtain a license to cash checks or to acquire control of a licensed check casher shall submit the following information and documents:

(1) The name and address of the applicant(s). If the applicant is a partnership or corporation, the names and addresses of all partners, officers, directors and substantial stockholders of the applicant, as applicable. For purposes of this Part, substantial stockholder means any stockholder that owns, controls or holds with power to vote 10 percent or more of the voting stock of the applicant.

(2) A background report prepared by an independent investigatory agency acceptable to the superintendent for every partner, officer, director, substantial stockholder and owner of the applicant, as may be applicable.

(3) For each partner, officer, director, substantial stockholder and owner of the applicant, as may be applicable, detailed biographical information in such form as the superintendent shall prescribe.

(4) For each partner, officer, director, substantial stockholder and owner of the applicant, as may be applicable, and for all individuals to be employed by the licensee (or, for a change of control application, for all individuals not currently employed by a licensee):

(i) a set of completed fingerprint cards;

(ii) a receipt from a law enforcement agency indicating the place at which the fingerprints were taken;

(iii) a check in the appropriate amount payable to the "Superintendent of Banks - Fingerprints"; and

(iv) two portrait-style photographs of the individual measuring not more than 2" x 2".

(5) Documentation demonstrating:

(i) that one or more of the partners, officers, directors, substantial stockholders or owners of the applicant, as may be applicable, has management or supervisory experience of at least one year in the check cashing business with a licensee in this State or in the case of changes of control;

(ii) that at least one individual with such experience, or such other equivalent experience deemed adequate by the superintendent, has been engaged by the applicant for a period of at least one year following the date of commencement of business or the effective date of the change of control, whichever is the case. The superintendent may increase such one-year experience requirement if it is determined that such increase is in accordance with the purposes of article 9-A of the Banking Law. If at any time during the one-year period (or any longer period required by the superintendent) the licensee ceases to be in compliance with the requirements of this subdivision, it shall notify the superintendent within 10 calendar days of such noncompliance. The name and qualifications of any other individual engaged by the licensee to satisfy the requirements of this subdivision shall be submitted to the superintendent for approval.

(6) Financial documentation including:

(i) a current financial statement for each applicant;

(ii) a current personal financial statement for each partner, officer, director, stockholder or owner, as may be applicable;

(iii) in the case of an application for a new license, a projected (pro forma) balance sheet and income and expense statement for the first year of operation;

(iv) in the case of an application for a new license, an affirmation that net liquid assets of at least $10,000 shall be available each business day for each licensed location (including mobile units). Net liquid assets, as used in this subparagraph, shall mean funds on hand, funds in banking institutions and marketable securities owned, less any loans and accounts payable in one year or less; and

(v) in the case of an application for a new license, a credit facility letter provided by a banking institution or similar credit facility approved by the superintendent demonstrating an existing right of access to a line of credit in an amount of $100,000 or more for each licensed location. This line of credit must be available continuously and a licensee must immediately give written notice to the superintendent if it is not at any time in compliance with this requirement.

(7) A business plan containing such information as shall permit the superintendent to make a finding that the granting of the license will promote the convenience and advantage of the area in which the business is to be conducted including a determination that there is a community need for a new licensee in the proposed area to be served. Such a plan shall contain at least the following information.

(i) description of primary market area (e.g., identification of blocks and other landmarks including the locations of banking institutions and other licensed check cashers operating in the service area surrounding the proposed location;

(ii) description of projected customer base;

(iii) proposed days and hours or operation;

(iv) types of services proposed to be offered including special services such as fluency in languages which are predominant in the area of licensed location(s);

(v) detailed description of demographics of the area including population density which information should be derived from official government records and other published sources;

(vi) description of any proposed economic development of area; and

(vii) specific marketing targets, if any.

In evaluating an application to permit a change of control of a licensee, where the operations conducted at the licensed location are not to be moved to a new location, the superintendent shall not be required to make a determination that there is a community need for the licensee in the area to be continued to be served.

(8) In the case of an application for a new license, a copy of the deed to the property on which the check cashing business will be conducted or a copy of the contract to purchase such property or, if the proposed licensed location is leased or to be leased, a copy of the lease or proposed lease or letter from the owner or its agent that the applicant has obtained or will obtain possession of the proposed licensed location. All leases shall be for a term of at least three years. For a change of control application wherein succession to the licensee's business premises does not occur by operation of law, the applicant shall provide evidence to the satisfaction of the superintendent that the lease(s) for the licensed locations will be assigned or sublet to the applicant or that a new lease(s) will be given the applicant if the applicant is not purchasing the property. All licensed locations except for limited stations and mobile units must include the dimensions of the location and a diagram of the proposed layout with the application.

(9) An affidavit signed by the applicant stating that the information given in the application is accurate and complete.

(10) The superintendent may request such additional information from an applicant deemed necessary to determine whether the applicant satisfies the standard set forth in section 369 of the Banking Law.

(d) Publication of application. Upon receipt of an application for a license or a change of control of a licensee in a form satisfactory to the superintendent, notice thereof shall be published in the Weekly Bulletin. Each notice shall contain the name of the applicant and the location of the proposed site. Comments or objections regarding the application should be submitted in writing to the superintendent within 10 business days of the date of publication.

(e) Determination. The superintendent shall make a determination on the granting of a license within 90 days after the receipt of all information and documents required by this Part.

(f) If an application for change of control is approved by the superintendent, a new license is granted to the applicant in cases in which the name of the licensee is changed. However, although section 369 (1) of the Banking Law indicates that no license shall be granted in such cases, where the licensee is located within three-tenths of a mile of another licensee, the legislative intent, as expressed in chapter 546 of the Laws of 1994 and set forth in section 400.15 of this Part, is consistent with the granting of licenses in all cases in which there is a change of control of an existing licensee. Consequently, an applicant may acquire control of a licensee and change the name of the licensee even if the licensee being acquired is located within three-tenths of a mile of another licensee.

(g) The license of a restricted location authorized pursuant to subdivision 1 of section 369 of the Banking Law shall not be affected by a change of control, pursuant to section 370-a of the Banking Law, pertaining solely to such restricted location of such licensee, provided that the licensee continues thereafter to engage at that location in the cashing of checks, drafts or money orders only for payees that are other than natural persons and provided further that such license shall bear a legend stating that such location is restricted to the cashing of checks, drafts or money orders only for payees that are other than natural persons.

N.Y. Comp. Codes R. & Regs. Tit. 3 § 400.1

Amended New York State Register June 21, 2023/Volume XLV, Issue 25, eff. 6/21/2023