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MoFo Reenforcement The Enforcement Blog

Scope of Agent of a Payee Exemption in California Appears Poised for Expansion

Posted in Regulatory Developments

The California Department of Business Oversight (DBO) has finally released a much-anticipated draft rulemaking relating to the scope of the “agent of a payee” exemption under the California Money Transmission Act. The DBO’s rulemaking appears to affirm a broader interpretation of the scope of the exemption than has been historically applied, albeit with a number of express limitations as well. While the proposed draft regulations appear to provide a simple clarification of the existing agent of the payee exemption, our initial review of the draft, and the accompanying Initial Statement of Reasons for the proposed regulations, reveals a much more complex framework that will undoubtedly raise a number of questions for industry participants, many specific to their business models and their roles in the online payments ecosystem. Comments on the regulations are due April 20.

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