CHAPTER 13-04.1
MONEY BROKERS
13-04.1-01.
Administration.
The department of financial institutions shall use its
facilities to administer and enforce this chapter. Any person or persons delegated to administer<br>this chapter may not have financial interests directly or indirectly in any business which is subject<br>to this chapter. The department has the power to promulgate rules and regulations having the<br>force and effect of law, reasonably necessary to carry out the provisions of this chapter, in<br>accordance with chapter 28-32. Any hearing held and any orders issued pursuant to this chapter<br>must be in accordance with chapter 28-32. In addition to those powers set forth in chapter 28-32,<br>the department has additional powers as set forth in this chapter.
13-04.1-01.1. Definitions. As used in this chapter, unless the context or subject matter
otherwise requires:
1.
"Borrower" means a person or entity that seeks out, or is solicited by a money broker<br>for the purpose of money brokering.
2.
"Commissioner" means the commissioner of financial institutions.
3.
"Money broker" means a person or entity who, in the ordinary course of business,<br>engages in money brokering.
4.
"Money brokering" means the act of arranging or providing loans or leases as a form<br>of financing, or advertising or soliciting either in print, by letter, in person, or<br>otherwise, the right to find lenders or provide loans or leases for persons or<br>businesses desirous of obtaining funds for any purposes.
13-04.1-02. Money broker license required. Except as otherwise provided, a person
other than a money broker licensed and authorized under this chapter may not engage in money<br>brokering in the state of North Dakota without a money broker license issued by the<br>commissioner. A person engages in money brokering in North Dakota if the borrower resides in<br>North Dakota.
13-04.1-02.1. Entities exempted from licensing requirements. This chapter does not
apply to:
1.
Banks;
2.
Credit unions;
3.
Savings and loan associations;
4.
Insurance companies;
5.
Individuals licensed under chapter 13-10;
6.
State or federal agencies and their employees;
7.
Institutions chartered by the farm credit administration;
8.
Trust companies;
9.
Any other person or business regulated and licensed by the state of North Dakota;
10.
A real estate broker, broker, or a real estate salesperson as defined in section<br>43-23-06.1 in the brokering of loans to assist a person in obtaining financing for real<br>estate sold by the real estate broker, broker, or real estate salesperson; or
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11.
Any person, retail seller, or manufacturer providing lease financing for its own<br>property or inventory held as a normal course of business, or to leases on any real<br>property.
13-04.1-03.
Application for money broker license. Every application for a money
broker license, or for a renewal thereof, must be made upon forms designed and furnished by the<br>department of financial institutions and must contain any information which the department shall<br>deem necessary and proper. The department may further require any application to provide<br>additional information which is not requested on the application form.
The applicant must
register with the North Dakota secretary of state if so required.
13-04.1-04. Fee and bond to accompany application for money broker license. The
application for license must be in writing, under oath, and in the form prescribed by the<br>commissioner. The application must give the location where the business is to be conducted and<br>must contain any further information the commissioner requires, including the names and<br>addresses of the partners, officers, directors, trustees, and the principal owners or members, as<br>will provide the basis for the investigation and findings contemplated by section 13-04.1-03. At<br>the time of making such application, the applicant shall include payment in the sum of four<br>hundred dollars, which is not subject to refund, as a fee for investigating the application, and the<br>sum of four hundred dollars for the annual license fee, and provide a surety bond in the sum of<br>twenty-five thousand dollars. In addition, the applicant must pay a fifty dollar annual fee for each<br>branch location within the state. Fees must be deposited in the financial institutions regulatory<br>fund.
13-04.1-05. Expiration and renewal of license. All licenses required herein expire on
December thirty-first of each year and may be renewed. Renewals are effective the succeeding<br>January first. Applications for renewal must be submitted thirty days before the expiration of the<br>license and must be accompanied by the required annual fees, which are not subject to refund.<br>The form and content of renewal applications must be determined by the department of financial<br>institutions, and a renewal application may be denied upon the same grounds as would justify<br>denial of an initial application. When a licensee has been delinquent in renewing the licensee's<br>license, the department may charge an additional fee of fifty dollars for the renewal of such<br>license. A money broker license is not transferable. If the commissioner determines that an<br>ownership change has occurred in a sole proprietorship, partnership, limited liability partnership,<br>corporation, or limited liability corporation that was previously granted a money broker license,<br>the commissioner may require a new application from the purchaser. The application must be<br>filed within forty-five days from the date change of ownership is consummated. The department<br>shall act on the application within sixty days from the date the application is received but may<br>extend the review period for good cause. The money broker license granted to the previous<br>owner continues in effect to the new purchaser until the application is either granted or denied.
13-04.1-05.1. Automatic six-month extension of license during 2009 calendar year.
All current licensees who have made payment of a fee in accordance with section 13-04.1-04 or<br>13-04.1-05, for a money broker license effective after July 1, 2008, shall be granted an extension<br>of their current licenses until December 31, 2009. If at any time prior to December 31, 2009, a<br>licensee's license expires or otherwise terminates under this chapter, the applicant shall be<br>required to pay licensing fees in accordance with section 13-04.1-04, and that license will expire<br>on December 31, 2009.
13-04.1-06. Powers of the department of financial institutions. Insofar as consistent
with the provisions of law, the department of financial institutions has the power to:
1.
Determine the qualifications of all applicants based on financial responsibility,<br>financial condition, business experience, character, and general fitness which must<br>reasonably warrant the belief that the applicant's business will be conducted lawfully<br>and fairly. In determining whether this qualification is met, and for the purpose of<br>investigating compliance with the chapter, the commissioner may review and<br>consider the relevant business records and capital adequacy of the applicant and the
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competence, experience, integrity, and financial ability of a person who is a member,<br>partner, director, officer, or twenty-five percent or more shareholder of the applicant.
2.
Establish codes of ethical conduct for licensees.
13-04.1-07. Manner in which records to be kept. Every money broker licensed under
this chapter shall keep a record of all sums collected by them and of all loans and leases<br>completed as a result of their efforts for a period of six years from the date of last entry thereon.<br>The records of a licensee may be maintained electronically provided they can be reproduced<br>upon request by the department of financial institutions and within the required statutory time<br>period provided in this section.
13-04.1-08. Revocation of license - Suspension of license - Surrender of license.
1.
The department of financial institutions may, if it has reason to believe that grounds<br>for revocation of a license exist, send by registered or certified mail to the licensee, a<br>notice of hearing stating the contemplated action and in general the grounds thereof<br>and setting the time and place for a hearing thereon. Such hearing must be held in<br>accordance with chapter 28-32 as must any appeal therefrom.
2.
If the department of financial institutions finds that probable cause for revocation of<br>any license exists and that enforcement of the chapter requires immediate<br>suspension of such license pending investigation, it may, upon written notice, enter<br>an order suspending such license for a period not exceeding thirty days, pending the<br>holding of a hearing as prescribed in this chapter.
3.
Any licensee may surrender the licensee's license by delivering it to the department<br>of financial institutions with written notice of its surrender, but such surrender does<br>not affect the licensee's civil or criminal liability for acts committed prior thereto.
13-04.1-08.1. Suspension and removal of money broker officers and employees.
1.
The commissioner of financial institutions may issue and serve upon a money broker<br>officer or employee and upon the licensee involved a complaint stating the basis for<br>the commissioner's belief that the officer or employee is willfully engaging or has<br>willfully engaged in any of the following conduct:
a.
Violating a law, rule, order, or written agreement with the commissioner;
b.
Engaging in harassment or abuse, the making of false or misleading<br>representations, or engaging in unfair practices involving lending activity; or
c.
Performing an act of commission or omission or practice which is a breach of<br>trust or a breach of fiduciary duty.
2.
The complaint must contain a notice of opportunity for hearing pursuant to chapter<br>28-32.
3.
If a hearing is not requested within twenty days of the date the complaint is served<br>upon the officer or employee, or if a hearing is held and the commissioner finds that<br>the record so warrants, the commissioner may enter an order suspending or<br>temporarily removing the employee or officer from office for a period not exceeding<br>three years from the effective date of the suspension or temporary removal.
4.
A contested or default suspension or temporary removal order is effective<br>immediately upon service of the order on the officer or employee and upon the<br>licensee. A consent order is effective as agreed. An officer or employee suspended<br>or temporarily removed from office pursuant to this section is not eligible, while<br>under suspension, for reinstatement to a position within a licensed money broker.
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5.
When an officer or employee, or other person participating in the conduct of the<br>affairs of a licensee is charged with a felony in state or federal court which involves<br>dishonesty or breach of trust, the commissioner may immediately suspend the<br>person from office or prohibit the person from further participation in the affairs of the<br>money broker, or both. The order is effective immediately upon service of the order<br>on the licensee and the person charged and remains in effect until the criminal<br>charge is finally disposed of or until modified by the commissioner. If a judgment of<br>conviction, federal pretrial diversion, or similar state order or judgment is entered,<br>the commissioner may order that the suspension or prohibition be made permanent.<br>A finding of not guilty or other disposition of the charge does not preclude the<br>commissioner from pursuing administrative or civil remedies.
6.
Under this section, a person engages in conduct "willfully" if the person acted<br>intentionally in the sense that the person was aware of what the person was doing.
13-04.1-09. Fraudulent practices. It is a fraudulent practice and it is unlawful:
1.
For any person knowingly to subscribe to, or make or cause to be made, any<br>material false statement or representation in any application or other document or<br>statement required to be filed under any provision of this chapter, or to omit to state<br>any material statement or fact necessary in order to make the statements made, in<br>light of the circumstances under which they are made, not misleading.
2.
For any person, in connection with the procurement or promise of procurement of<br>any lender or loan funds, directly or indirectly, to employ any device, scheme, or<br>artifice to defraud.
3.
For any person, in connection with the procurement or promise of procurement of<br>any lender or loan funds, directly or indirectly, to make any untrue statement of a<br>material fact or to omit to state a material fact necessary in order to make the<br>statements made, in the light of the circumstances under which they are made, not<br>misleading.
13-04.1-09.1. Advance fees prohibited - Exception. A money broker may not take any
type of fee in advance before the funding of the loan or lease, unless the money broker is<br>licensed under this chapter.
13-04.1-09.2. Maximum charges permitted for loans not in excess of one thousand
dollars - Refund - Installment payments - Permitted charges.
1.
Every licensee may make loans under this section in any amount not exceeding one<br>thousand dollars and may contract for, receive, or collect on the loans, charges not<br>in excess of two and one-half percent per month on that part of the unpaid balance<br>of principal not exceeding two hundred fifty dollars; two percent per month on that<br>part of the unpaid balance of principal exceeding two hundred fifty dollars but not<br>exceeding five hundred dollars; one and three-fourths percent per month on that part<br>of the unpaid balance of principal in excess of five hundred dollars but not exceeding<br>seven hundred fifty dollars; and one and one-half percent per month on that part of<br>the unpaid balance of principal exceeding seven hundred fifty dollars but not<br>exceeding one thousand dollars.
For the purpose of computing charges for a
fraction of a month, whether at the maximum rate or less, a day is considered<br>one-thirtieth of a month. Amounts to be charged for any small loan by a licensee<br>under this chapter may also be calculated and charged on a stated dollar per<br>hundred basis but the charges over the entire term of the loan may not be in excess<br>of the equivalent percentage charges on the monthly unpaid balances of principal<br>authorized in this section. If charges are calculated and charged on a dollar per<br>hundred basis, the loan must be repayable in substantially equal periodic<br>installments of principal and charges and the annual percentage simple interest
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equivalent must be conspicuously stated in the note or small loan contract executed<br>in connection with the loan.
2.
When any note or loan contract in which charges have been calculated and charged<br>on a dollar per hundred basis is paid in full by cash, a new loan, renewal, or<br>otherwise, one month or more before the final installment date, the licensee shall<br>refund or credit to the borrower a portion of the total charges which must be at least<br>as great as the sum of the full periodic installment balances scheduled to follow the<br>installment date following the date of prepayment in full bears to the sum of all the<br>periodic installment balances of the loan contract, both sums to be determined<br>according to the payment schedules that had been agreed upon in the loan contract.<br>Charges during the month of payment must be prorated in the proportion that the<br>number of days remaining in the installment period bears to the total days of the<br>installment period. No refund of one dollar or less need be made.
3.
On any note or loan contract in which charges have been calculated and charged on<br>a dollar per hundred basis, a licensee may charge, collect, and receive on any<br>installment of principal and charges continuing unpaid for five or more days from the<br>date the payment is due a sum that may not exceed the amount of charges during<br>the final full month of the loan before maturity. The charge may not be collected<br>more than once for the same default. The charge may be collected at the time of<br>the default or any time thereafter.
However, if the charge is taken out of any
payment received after a default occurs and if the deduction results in the default of<br>a subsequent installment, no charge may be made for the subsequent default.
4.
On any note or loan contract in which charges have been calculated and charged on<br>a dollar per hundred basis, if the payment date for any scheduled installment is<br>deferred one or more full months and a corresponding deferment is made for all<br>subsequent installments, the licensee may charge and receive a deferment charge<br>that may not exceed one-twelfth of the charges authorized in subsection 1 applied to<br>the balance of principal and charges due at the date of the deferment multiplied by<br>the number of full months during the deferment in which no payment is made.<br>Thereafter, charges must be made over the remaining extended life of the loan in<br>the same manner and at the same ratio as though no deferral or extension had been<br>granted. The charges may be collected at the time of the deferment or any later<br>time.
If the loan is prepaid in full during the deferment period, the borrower is
entitled to receive in addition to the refund required under subsection 2 a refund of<br>that portion of the deferment charge applicable to any unexpired months of the<br>deferment period.
5.
A licensee may not enter into any contract of loan under this section under which the<br>borrower agrees to make any scheduled payment of principal and charges more<br>than twenty-four and one-half calendar months from the date of making the contract.<br>Every loan contract must require payment of principal and charges in installments<br>that must be payable at approximately equal periodic intervals, except that payment<br>dates may be omitted to accommodate borrowers with seasonal incomes.
No
installment contracted for may be substantially larger than any preceding<br>installment.
When a loan contract provides for monthly installments, the first
installment may be payable at any time within forty-five days after the date of the<br>loan.
6.
A licensee may not induce or permit any person, or husband and wife, jointly or<br>severally, to be obligated, directly or indirectly, under more than one contract of loan<br>at the same time if the multiple loans result in a higher rate of charge than would<br>otherwise be permitted by this chapter.
7.
No further amount in addition to the charges provided for in this chapter may be<br>directly or indirectly charged, contracted for, or received. However, this restriction<br>does not apply to court costs, lawful fees for the filing, recording, or releasing in any
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public office of any instrument securing a loan, and the identifiable charge or<br>premium for insurance provided for by rule. If any sum in excess of the amounts<br>authorized by this chapter is willfully charged, contracted for, or received, the<br>licensee or any assignee or other person has no right to collect or receive any<br>charges or recompense.
13-04.1-10.
Orders and injunctions.
Whenever it appears to the department of
financial institutions either upon complaint or otherwise, that any person has engaged in, is<br>engaging in, or is about to engage in any act or practice or transaction which is prohibited by this<br>chapter, or by any order of the department issued pursuant to any section of this chapter or<br>which is declared to be illegal in this chapter, the department may, in its discretion:
1.
Issue any order, including cease and desist, stop, and suspension orders, which it<br>deems necessary or appropriate in the public interest or for the protection of the<br>public; provided, however, that any person aggrieved by an order issued pursuant to<br>this subsection may request a hearing before the department if such request is<br>made within ten days after receipt of the order.
Such hearing must be held in
accordance with chapter 28-32 as must any appeal therefrom.
2.
Apply to the district court of any county in this state for an injunction restraining such<br>person and the agents, employees, partners, officers, and directors of such person<br>from continuing such act, practice, or transaction of engaging therein or doing any<br>acts in furtherance thereof, and for such other and further relief as the facts may<br>warrant. In any proceeding for an injunction, the department may apply for and on<br>due showing be entitled to have issued the court's subpoena requiring the<br>appearance forthwith of any defendants and their agents, employees, partners,<br>officers, or directors, and the production of such documents, books, and records as<br>may appear necessary for the hearing upon the petition for an injunction. Upon<br>proof of any of the offenses described in this section, the court may grant such<br>injunction as the facts may warrant. The court may not require the department to<br>post a bond.
13-04.1-11. Investigations and subpoenas.
1.
The department of financial institutions in its discretion:
a.
May make such public or private investigation within or outside this state as it<br>deems necessary to determine whether any person has violated or is about to<br>violate any provision of this chapter or any rule or order hereunder, or to aid in<br>the enforcement of this chapter or in the prescribing of rules and forms<br>hereunder. The licensee shall pay an investigation fee and must be charged by<br>the department of financial institutions at an hourly rate to be set by the<br>commissioner, sufficient to cover all reasonable expenses of the department<br>associated with the visitation provided for by this section. Fees must be paid to<br>the state treasurer and deposited in the financial institutions regulatory fund.
b.
May require or permit any person to file a statement in writing, under oath or<br>otherwise as the department determines, as to all the facts and circumstances<br>concerning the matter to be investigated.
c.
May publish information concerning any violation of this chapter or any rule or<br>order hereunder.
2.
For the purpose of any investigation or proceeding under this chapter, the<br>department of financial institutions may administer oaths and affirmations, subpoena<br>witnesses, compel their attendance, take evidence, and require the production of<br>any books, papers, correspondence, memoranda, agreements, or other documents<br>or records which the department deems relevant or material to the inquiry.
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3.
In case of contumacy by, or refusal to obey a subpoena issued to, any person, the<br>district court, upon application by the department of financial institutions, may issue<br>to the person an order requiring such person to appear before the department, there<br>to produce documentary evidence if so ordered or to give evidence touching the<br>matter under investigation or in question. Failure to obey the order of the court may<br>be punished by the court as a contempt of court.
4.
No person is excused from attending and testifying or from producing any document<br>or record before the department of financial institutions, or in obedience to the<br>subpoena of the department, or in any proceeding instituted by the department, on<br>the grounds that the testimony or evidence, documentary or otherwise, required of<br>such person may tend to incriminate such person or subject such person to a<br>penalty forfeiture; but no individual may be prosecuted or subjected to any penalty or<br>forfeiture for or on account of any transaction, matter, or thing concerning which<br>such person is compelled, after claiming the privilege against self-incrimination, to<br>testify or produce evidence, documentary or otherwise, except that the individual<br>testifying is not exempt from prosecution and punishment for perjury or contempt<br>committed in testifying.
13-04.1-11.1.
Response to department requests.
An applicant, licensee, or other
person subject to the provisions of this chapter shall comply with requests for information,<br>documents, or other requests from the department of financial institutions within the time<br>specified in the request, which must be a minimum of ten days, or, if no time is specified, within<br>thirty days of the mailing of the request by the department of financial institutions. If the request<br>for information is in regard to a new application or renewal of an existing application and is not<br>received within the time specified in the request, or within thirty days of the mailing of the request,<br>the department may deny the application.
13-04.1-12. Remedies not exclusive. The remedies provided for in this chapter are in
addition to and not exclusive of any other remedies provided by law.
13-04.1-13. Penalty. Any person violating any of the provisions of this chapter or any
rule or order of the department of financial institutions made pursuant to the provisions of this<br>chapter or who engages in any act, practice, or transaction declared by any provision of this<br>chapter to be unlawful is guilty of a class C felony. The commissioner may impose a civil money<br>penalty not to exceed five thousand dollars per violation upon a person or agency who willfully<br>violates a law, rule, written agreement, or order under this chapter. An interested party may<br>appeal the assessment of a civil money penalty under the provisions of chapter 28-32 by filing a<br>written notice of appeal within twenty days after service of the assessment of civil money<br>penalties. A civil money penalty collected under this section must be paid to the state treasurer<br>and deposited in the financial institutions regulatory fund.
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Document Outline
chapter 13-04.1 money brokers
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