The commissioner may make general rules and regulations and specific rulings, demands, and findings for the enforcement of this division.

Licensees shall observe reasonable precautions against theft or alteration of checks, drafts or money orders, and against burglary or holdup.

Every person engaging in the business of a check seller shall conduct the business under his or her true name unless he or she has complied with Chapter 5 (commencing with Section 17900) of Part 3 of Division 7 of the Business and Professions Code.

All funds received by a licensee or its agents from the sale of checks, drafts, money orders, or other commercial paper serving the same purpose and for the purpose of paying bills, invoices, or accounts of an obligor, equal in amount to the face value of such instruments or equal to the amount to be paid, shall constitute trust funds owned by and belonging to the person from whom they were received or a licensee who has paid the checks, drafts, money orders or other commercial paper serving the same purpose, for which the funds of such persons have been received by the agent but not transmitted to such licensee or deposited in the trust account of such licensee. If a

licensee or an agent of a licensee shall commingle such funds with those of his own, all assets of such agent shall be impressed with a trust in favor of said purchaser or the licensee in an amount equal to the aggregate funds received or which should have been received by the agent from such sale. Such trust shall continue until an amount equal to said funds is separated from those of the agent and transmitted to the licensee or deposited in the trust account of licensee. An amount equal to all such trust funds shall be deposited in a bank or banks in an account or accounts in the name of the licensee designated “trust account,” or by some other appropriate name indicating that the funds are not the funds of the licensee or of its officers, employees, or agents. Such funds, or, in the event of commingling of such funds by licensee or its agent with those of the licensee or its agent, an amount of funds of such licensee or of its agent equal thereto, shall constitute trust funds as herein provided and shall

not be subject to attachment, levy of execution or sequestration by order of court except by a payee, or bona fide assignee, or bona fide holder in due course of a check, draft, or money order sold by a licensee, or except by an obligor for whom a licensee is acting as an agent in paying bills. Funds in said account, together with funds and checks on hand and in the hands of agents held for the account of the licensee, at all times shall be at least equal to the aggregate liablity of the licensee on account of checks sold and bills, invoices, and accounts accepted for payment.

Upon request of the commissioner, a licensee shall furnish to the commissioner an authorization for examination of financial records of any such trust fund account, maintained in a financial institution, in accordance with the procedures set forth in Section 7473 of the Government Code.

Nothing in this law shall be construed to prevent a purchaser, a

holder in due course, the payee of a check, draft or money order sold by the licensee in the usual course of his business, or an obligor for whom the licensee is acting as an agent in paying bills of the obligor, from taking any legal action necessary to enforce any claims which said purchaser, holder in due course, payee, or obligor may desire to take including the right to levy attachment or execution.

In the event a license under this law shall be suspended or terminated the licensee shall immediately deposit in said trust account an amount which with funds therein contained shall be equal to the outstanding checks sold and bills unpaid.

Prior to such separation and transmittal to the licensee or deposit by its agent such funds received by said agent may be used by said agent for the sole purpose only of the making of change or cashing of checks in the normal course of its business. All such funds received by said agent to the date of deposit or transmittal as required below or an amount equal to such funds must be separated from those of the agent and transmitted to, or deposited in the trust account of, the licensee not less than every third business day. If an agent owns or operates, either directly or indirectly, more than two locations for the sale of checks, drafts, money orders, or other commercial

paper serving the same purpose and/or for the receipt of money for the purpose of paying bills, invoices or accounts of an obligor, and handles trust funds in any three-day period equal to or in excess of securities to be deposited as provided in Section 12223, said agent shall transmit to, or deposit in the trust account of, the licensee directly from each such location of such agent such funds not later than the end of the next business day following receipt; such funds to be in form of cash or checks cashed in the normal course of business only.

Where the total amount of such funds held by an agent does not exceed one thousand dollars ($1,000) in a calendar week, the commissioner may, in his discretion, by written order permit the agent to transmit or deposit such funds in periods in excess of 3 days but not more than 10 days.

If, after reasonable notice from licensee, an agent shall fail to transmit or deposit the

funds, or an amount equal thereto, or to report to the licensee, as herein provided without just cause, or if an agent shall use any of such funds, directly or indirectly, for any purpose other than is permitted herein, licensee shall immediately terminate such agency and within five (5) days thereafter notify the commissioner in writing of the reason for such termination, setting forth the name and address of the agency location. No agent so terminated shall be permitted to become an agent of the licensee or any other licensee except as provided in Section 12301.4 of the Financial Code.

An amount equal to all such funds received by a licensee shall be separated from the funds of the licensee and deposited in its trust account not later than the end of the next business day following receipt by such licensee. All such funds shall thereafter remain in such trust account and may be used for no purpose other than paying bills of said persons, or paying checks, drafts, money orders, or other commercial paper sold by the licensee except as otherwise provided in Section 12300.6.

Prior to separation and deposit by the licensee such funds may only be used by the licensee for the making of change or the cashing of checks in the normal course of its business, and then only to the extent of the amount of the bond which has been filed under Section 12206.

After separation and deposit such funds also may be used by a licensee for the cashing of checks in the normal course of its business, and then only to the extent of the amount of the bond which has been filed with the commissioner containing the provisions and conditions set forth in Sections 12207 through 12213, inclusive, of this code.

A licensee may establish branch offices or agencies if it is qualified under the provisions of Section 12205 and if it expressly assumes responsibility for the acts of any person selling checks, drafts, or money orders for the licensee or accepting money in its name or on its behalf at such place of business. There shall be posted in a prominent place in each branch office or agency a sign stating that the place of business is a branch office or agency of the licensee. The licensee is responsible for the acts of any person selling checks, drafts, or money orders or accepting money in its name or on its behalf.

A licensee within 10 days after establishing a mobile unit, a branch office or agency location shall notify the commissioner in writing and shall furnish the commissioner with the name and address of each such branch office or agency location and the California state registration number or other identification of the mobile unit and the area in which it proposes to operate such mobile unit and such other information as the commissioner may require so that he may be continuously advised of every location at which checks, drafts, or money orders of the licensee are being sold or issued. Within five days after the termination of a mobile unit, a branch office or agency

location a licensee shall inform the commissioner of the name and address of the branch office or agency location terminated and the California state registration number or other identification of the mobile unit terminated, together with a statement of the reasons for the termination.

A check, draft, or money order sold by a licensee shall be drawn on an account of a licensee maintained at a bank authorized to do business in the State of California.

A licensee shall not permit any officer, employee, or agent to sell any check, draft, or money order unless the signature of the person signing the same is on file with the bank on which the check, draft, or money order is drawn or the licensee shall have filed with the bank and the commissioner written authorization to said bank to pay any checks, drafts, or money orders presented for payment on a form of the licensee as described in the authorization except as to items as to which licensee has filed a stop payment notice with said bank.

A licensee shall terminate and cancel any agency immediately upon instruction from the commissioner and when it has been established (a) that the agent has refused to permit the examination of its books, accounts, records, and files; (b) that an examination has revealed a shortage in its accounts relating to the sale of checks; (c) that the agent after specific instruction to do so has failed to remit to the licensee or deposit in its trust account within the time specified in Section 12300.4 funds received from the sale of checks, drafts, money orders, or other commercial paper serving the same purpose or

funds received for the purpose of paying bills, invoices, or accounts of an obligor; (d) that the agency has violated any provision of this chapter. No agency terminated and canceled by a licensee pursuant to or for the reasons set forth in this section shall be re-established by said licensee or established by any other licensee until after the written consent of the commissioner is given to the establishment or re-establishment of such agency. If the licensee or the agent requests a hearing with respect to such termination, the commissioner shall thereupon hold a hearing within 10 days after receiving such request. If the commissioner finds that the violations were purely technical and do not substantially affect the agent’s ability to perform his duties as such agent, or if the commissioner finds that such violations did not occur, the commissioner shall issue an order vacating his said notice to the licensee.

No agent of a licensee shall issue or cause to be issued any check, draft, or money order, or other commercial paper serving the same purpose which is drawn upon the trust account of a licensee without concurrently receiving in full, in cash, or by check, draft, or money order from a third party believed to be valid, the principal amount thereof.

Whenever a licensee desires to change his place of business to a street address other than that designated in his license or desires to change the place or area of doing business in the case of a mobile unit, he shall give written notice to the commissioner of the desired change.

Every licensee shall keep and use in his business books, accounts and records in accordance with good accounting practice and which will enable the commissioner to determine whether such licensee has violated the provisions of this division or the rules and regulations made by the commissioner. Every licensee shall preserve such books, accounts and records for at least four years after making the final entry on each transaction recorded therein. Such books, accounts and records shall be kept current, shall be maintained at the main office of the licensee and shall be available for inspection by the commissioner on demand during regular business hours.

Nothing in this section shall be construed to require any licensee to keep an individual record of each individual fee charged in each transaction but the licensee shall be required to keep a record of the total charges made for any accounting period.

the commissioner, at such person’s own expense, an audit report containing audited financial statements covering the 12 calendar months next preceding the month of receipt of the request, or such other period as the commissioner may require. Unless the public interest shall otherwise require, the commissioner shall exempt a licensee from the provisions of subdivision (a) hereof, in whole or in part, if such licensee has complied with a request pursuant to this subdivision (b) for financial statements as of a date within the calendar or fiscal year for which such exemption is granted.

commissioner may specify. Such report shall include the information required by subdivision (a) of this section and other relevant information specified by the commissioner. A licensee who has complied with this subdivision is exempted from subdivision (a) hereof.

in subdivision (d) hereof is in any way qualified, the commissioner may require the licensee to take such action as he deems appropriate to permit an independent accountant to remove such qualification from the report, certificate or opinion.

such reports and financial statements be verified by the licensee in such manner as he may prescribe.

For the purpose of discovering violations of this division the commissioner may at any time investigate the business and examine the books, accounts, records, and files used therein, of any licensee, of any agent, and of any person who the commissioner has reason to believe is engaging in the business defined in this division.

The cost of every examination of a licensee or other person subject to this division shall be paid to the commissioner by the licensee or person examined, and the commissioner may maintain an action for the recovery of these costs in any court of competent jurisdiction. In determining the cost of an examination, the commissioner may use the estimated average hourly cost for all persons performing examinations of licensees or other persons subject to this division for the fiscal year. For the purposes of this section only, no person other than a licensee shall be deemed to be a person subject to this division unless and until the person is determined to be

a person subject to this division by an administrative hearing in accordance with Chapter 5 (commencing with Section 11500) of Part 1 of Division 3 of Title 2 of the Government Code or by a judicial hearing in any court of competent jurisdiction.

The commissioner may require the attendance of witnesses and examine under oath all persons whose testimony he requires relative to any examination or investigation.

The commissioner may commence and prosecute actions and proceedings to enjoin violations of this division or violations of orders or decisions of the commissioner rendered pursuant to this division, and for the enforcement of any and all civil penalties provided for by this division.