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Can I collect financial information from participants in California? What are the requirements?

Yes, you can collect financial information from participants in California, but you must comply with the California Financial Information Privacy Act, also known as Fin Code CACL 4050 [1.1]. The California Financial Information Privacy Act is intended to afford persons greater privacy protections than those provided in Public Law 106-102, the federal Gramm-Leach-Bliley Act [1.2].

Under the California Financial Information Privacy Act, financial institutions must provide their consumers notice and meaningful choice about how consumers’ nonpublic personal information is shared or sold by their financial institutions [1.2]. If you plan to engage in money transmission business, you must provide pro forma financial statements and projections for your business, including a pro forma statement showing the amount of money transmission business conducted by the applicant, including total transmission money received for each period and average daily transmission liability outstanding for each period, on a monthly basis during the first year of operation, and on a quarterly basis during the second year and third year of operation, detailing in each case the amount conducted in the State of California, the total amount conducted in the United States, and the total amount conducted worldwide [2.2].

Furthermore, if you are not a reporting company, you must provide financial statements, including a balance sheet, statement of income, statement of cash flows, and statement of shareholders’ equity for each of the two fiscal years of the applicant next preceding the date of the balance sheet, and if such balance sheet is not as of the end of a fiscal year of the applicant, a statement of income for the interim period from the date of the balance sheet called for in Subparagraph (B) of this Paragraph (1) to the date of the balance sheet called for in Subparagraph (A) of this Paragraph (1) [2.3].

In summary, to collect financial information from participants in California, you must comply with the California Financial Information Privacy Act and provide the necessary financial statements and reports if you plan to engage in money transmission business or if you are not a reporting company [1.1][1.2][2.2][2.3].

Source(s):
Jurisdiction

California