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MoFo Reenforcement The Enforcement Blog

Is California’s Agent of a Payee Exemption Shrinking?

Posted in Regulatory Developments

Earlier this year, the California Department of Business Oversight (DBO) issued a draft rulemaking relating to the scope of the agent of a payee exemption (the “Exemption”) under the Money Transmission Act, Cal. Fin. Code § 2000 et seq. (MTA). As we observed at the time, the rulemaking affirms a broader interpretation of the scope of the Exemption than has been historically applied. However, a new interpretive opinion from the DBO appears to potentially narrow how the Exemption applies to payment processors that facilitate payments on behalf of consumer-facing merchants. This interpretation, if more widely applied, could risk undermining well-established compliance approaches for companies that provide payment processing services.

Read our client alert.