By the Division of Banks

COMMONWEALTH OF MASSACHUSETTS

Suffolk, SS.

COMMISSIONER OF BANKS
FOREIGN TRANSMITTAL AGENCY
LICENSING
Docket No. 2010-375

FINDINGS OF FACT AND
TEMPORARY ORDER TO
CEASE AND DESIST

In the Matter of
BRAZ TRANSFERS, INC.

Foreign Transmittal Agency License No(s): FT6343 and FT5534


The Commissioner of Banks ("Commissioner") having determined that two foreign transmittal agent locations operated by BRAZ TRANSFERS, INC., ("Braz Transfers" or the "Corporation") under license numbers FT6343 and FT5534 have engaged in, or are engaged in, or are about to engage in, acts or practices constituting violations of Massachusetts General Laws chapter 169, and applicable regulations found at 209 CMR 44.00 et seq., hereby issues the following ORDER TO CEASE AND DESIST pursuant to Massachusetts General Laws chapter 169, section 13(b).

FINDINGS OF FACT

  1. The Division of Banks ("Division"), through the Commissioner, has jurisdiction over the licensing and regulation of persons engaged in the business of a foreign transmittal agency pursuant to Massachusetts General Laws chapter 169.
  2. Braz Transfers is, and at all relevant times has been, a corporation conducting business in the Commonwealth of Massachusetts. Braz Transfer's main office is located at 999 Broadway, Suite 500, Saugus, Massachusetts.
  3. Braz Transfers is licensed by the Commissioner as a foreign transmittal agency under Massachusetts General Laws chapter 169. According to records maintained on file with the Division, the Commissioner initially issued a foreign transmittal license to Braz Transfers on or about June 16, 2004, with license number FT3346. License number FT3346 authorized Braz Transfers to operate as a foreign transmittal agency at 144 Maverick Street, East Boston, Massachusetts.
  4. According to records maintained on file with the Division, the Commissioner issued a foreign transmittal license to Braz Transfers on or about October 17, 2008, with license number FT6343. License number FT6343 authorized Braz Transfers to operate as a foreign transmittal agency at 581 Boston Post Road, Marlboro, Massachusetts. According to the Division's records, Claucimar DePaula was the Branch Manager until the 2010-2011 license renewal period. During the 2010-2011 license renewal period, Braz Transfers notified the Division that Jackqueline DeFreitas was appointed as the Branch Manager for the Marlboro, Massachusetts location.
  5. According to records maintained on file with the Division, the Commissioner issued a foreign transmittal license to Braz Transfers on or about July 19, 2007, with license number FT5534. License number FT5534 authorized Braz Transfers to operate as a foreign transmittal agency at 177 Brighton Avenue, Allston, Massachusetts. According to the records maintained on file with the Division, Marcelino Barbosa is the Branch Manager who operates this location on behalf of Braz Transfers.
  6. Braz Transfers maintains a total of one hundred and twenty six (126) foreign transmittal licenses for one hundred and twenty six authorized agents, for locations operated in the Commonwealth from which the Corporation conducts its foreign transmittal business.
  7. Braz Transfers is a money service business as defined by the federal Bank Secrecy Act ("BSA") and its implementing regulation at 31 C.F.R. Part 103.

    Failure to Establish Adequate and Appropriate Supervision Over Authorized Agents

  8. The Division is an agency of the Commonwealth of Massachusetts and was created pursuant to Massachusetts General Laws chapter 26, section 1. Through the Commissioner, the Division has jurisdiction over the licensing and regulation of persons and entities engaged in the foreign transmittal business in Massachusetts pursuant to Massachusetts General Laws chapter 169, and applicable regulations found at 209 CMR 44.00 et seq., which are administered by the Commissioner.
  9. Massachusetts General Laws chapter 169, section 12 relevant to the licensing of foreign transmittal agencies states:

    The commissioner may suspend or revoke any license issued pursuant to this chapter if he finds that: (a) the licensee has violated any provision of this chapter or any rule or regulation adopted hereunder or any other law applicable to the conduct of such business; or (b) any fact or condition exists which, if it had existed at the time of the original application for such license, would have warranted the commissioner to refuse to issue such license.

  10. Massachusetts General Laws chapter 169, section 8 states, in part:

    All money received for transmission to a foreign country by any licensee shall be forwarded to the person to whom the same is directed within seven days following receipt thereof...

  11. The Division's regulation 209 CMR 44.10(5) states:

    Grounds for license revocation under M.G.L. c. 169, § 12 and the issuance of cease and desist orders under M.G.L. c. 169, § 13 shall include, but are not limited to, the following prohibited acts and practices by Licensees:

    (5) failing to forward all money received for transmission to a foreign country to the person to whom the same is directed within seven days following receipt thereof.

  12. On December 12, 2001, subsequent to the passage of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 ("USA PATRIOT Act"), the Division issued an Industry Letter to all licensed foreign transmittal agents a letter (the "Division's Letter") that notified licensed foreign transmittal agents that maintained multiple licensed agent locations in the Commonwealth that it was the Division's policy that "when the Division grant[ed] a license to a foreign transmittal agency to conduct business at an authorized agent, it [did] not authorize the agent to transmit monies beyond the agent's agreement with the licensed foreign transmittal agency." The Division's Letter further advised all licensed entities that "An agent may not transmit funds for another licensed foreign transmittal agency on its own behalf without approval from the Division."
  13. The Division's Letter advised the industry that "any agent who transmitt[ed] money outside of the agent agreement with the licensee or on its own behalf w[ould] be deemed by the Division to be operating an illegal and unlicensed money transmitting business for the purpose of G.L. c. 169 and 18 USC 1960."
  14. A copy of the Division's Letter is posted on the Division's website and sent to all licensed entities, including Braz Transfers, that are granted approval to engaged in the foreign transmittal business from multiple agent locations.
  15. On November 19, 2010 , pursuant to Massachusetts General Laws chapter 169, section 13(b), the Division issued a Temporary Order to Cease and Desist ("Temporary Order") against Omnex Group d/b/a Uno Remittance ("Omnex Group"), Docket number 2010-374 based on findings of a 2009 examination/inspection commenced by the Division on June 1, 2009. The Temporary Order issued by the Division alleged significant failures to comply with applicable state and federal laws, rules, regulations, and regulatory guidelines governing the conduct of two of Omnex Group's authorized agents engaged in the foreign transmittal business in the Commonwealth.
  16. The Division's records indicate that Braz Transfers maintains licenses to operate the foreign transmittal business from both the Marlboro and Allston agent locations identified in the Temporary Order issued against Omnex Group.
  17. The Temporary Order alleged that Omnex Group had failed to implement and maintain certain internal controls and quality control standards in the supervision of at least two foreign transmittal agents of Omnex Group. The Temporary Order alleged that two of Omnex Group's agent locations, Gol Latino Market ("Gol Latino") operating from 581 Boston Post Road Marlboro, Massachusetts and Marcelino Money Transfer, ("Marcelino") operating from 177 Brighton Avenue, Allston, Massachusetts were engaged in the practice of conducting illegal transmittals through entities unrelated to Omnex Group or any other licensed money remitter.
  18. Omnex Group's agent operating from the Marlboro branch location was unable to produce any evidence demonstrating that the funds received for transmission from the Massachusetts consumer on behalf of Omnex Group had been transmitted and received within seven days.
  19. The Temporary Order alleged that the Division's examiners discovered another transmittal receipt at the Gol Latino location that indicated that consumer funds were transmitted through an entity that was unrelated to Omnex Group or any other licensed money remitter. Additionally, the funds were remitted to Brazil through what appeared to be an unauthorized foreign agent in Brazil.
  20. The Temporary Order further alleged that Omnex Group's authorized agent located in Allston utilized the Gol Latino branch located in Marlboro, to transmit funds to Brazil. In response to an inquiry regarding the Allston's agents practices, the manager of the Allston location indicated that funds were transmitted from the Gol Latino agent location because there was a "better exchange rate," available at the Marlboro location. This practice raised serious questions as to whether the funds were being transferred to Brazil through unauthorized means.

    Unlicensed Check Cashing Activity

  21. General Laws chapter 169A, section 2 states in part:

    No person or entity shall engage in cashing checks, drafts or money orders for a consideration in excess of one dollar per item without first obtaining a license from the commissioner.

  22. The Temporary Order issued by the Division also alleged that that the Gol Latino agent location operating on behalf of Omnex Group who is also authorized to conduct business on behalf of Braz Transfers was engaged in the business of check cashing without obtaining the appropriate license as required pursuant to General Laws chapter 169A, section 2. Information reviewed by the Division indicated that the Gol Latino location routinely cashed checks for a fee for up to four percent of the check amount.
  23. On or about April 20, 2010, the Division sent a Cease Activity letter to the Marlboro Gol Latino location and ordered the agent to cease engaging in check cashing activity without first obtaining a license from the Division. The Cease Activity letter required a duly authorized officer to execute an Affidavit that certified that the entity had ceased operated as a check casher.
  24. In response to the Division's Cease Activity letter, the Division received the Affidavit signed by Alex R. Figueredo who represented himself as a duly authorized officer of Betel Variety Corp. The Division's records indicate that the agent operating from the Marlboro location is licensed to do business on behalf of Omnex Group or Braz Transfers as Gol Latino and the Division's records do not reflect Alex R. Figueredo as a designated officer or representative of Omnex Group or Braz Transfers.
  25. The Division's records indicate that Braz Transfers is not licensed as a check casher in the Commonwealth.

    Conclusions of Law

  26. Based on the information contained in Paragraphs 1 through 25, Braz Transfers has failed to demonstrate the financial responsibility, character, reputation, integrity, and general fitness that would warrant the belief that the business will operated honestly, fairly, and soundly in the public interest in violation of General Laws chapter 169, section 6 the Division's regulation 209 CMR 44.03, and the Division's regulation 209 CMR 44.04.
  27. Based upon the information contained in Paragraphs 1 through 25, Braz Transfers failed to establish risk-based policies, procedures and controls designed to ensure that authorized agents operating on behalf of Braz Transfers were not engaged in the practice of conducting illegal transmittals through money remitters unrelated to Braz Transfers in violation of General Laws chapter 169, the Division's regulation 209 CMR 44.00 et seq., and the Division's industry letter issued on or about December 12, 2001.
  28. Based on the information contained in Paragraphs 1 through 25, by cashing checks, for a consideration in excess of one dollar per item without first obtaining a license from the Division, Braz Transfers has violated General Laws chapter 169A, section 2.
  29. Based upon the information contained in Paragraphs 1 through 25, had the facts and conditions found therein existed at the time of Braz Transfers' original foreign transmittal agency license applications for license numbers FT6343 and FT5534, the Commissioner would have been warranted in refusing to issue such licenses.
  30. Based upon the information contained in Paragraphs 1 through 25, the public interest will be harmed by delay in issuing an Order to Cease and Desist under General Laws chapter 169, section 13(b) because, upon information and belief, two agents operating on behalf of Braz Transfers have collected funds from Massachusetts consumers for illegal transmittals through money remitters unrelated to Braz Transfers and at least one agent has engaged in unlicensed check cashing activity.
  31. Based upon the information contained in Paragraphs 1 through 25, the Commissioner has determined that:
    1. Two authorized agents maintaining foreign transmittal license numbers FT6343 and FT5534 have engaged, or are about to engage in, acts or practices which warrant the belief that they are not operating honestly, fairly, soundly and efficiently in the public interest in violation of standards governing the licensing and conduct of a foreign transmittal agency including, but not limited to, the provisions under General Laws chapter 169 and the Division's regulations at 209 CMR 44.00 et seq.
    2. The public interest will be irreparably harmed by delay in issuing an ORDER TO CEASE AND DESIST against license numbers FT6343 and FT5534 maintained by Braz Transfers.

    ORDER TO CEASE AND DESIST

    After taking into consideration the FINDINGS OF FACT and CONCLUSIONS OF LAW stated herein, it is hereby:

  32. ORDERED that, any and all officers, directors, employees, independent contractors, or agents engaged in the foreign transmittal business at 581 Boston Post Road, Marlboro, Massachusetts, with license number FT6343 on behalf of Braz Transfers, shall immediately cease engaging directly or indirectly in the business of a foreign transmittal agency in Massachusetts, as defined in M.G.L. chapter 169, section 1, except as otherwise expressly permitted by the terms of this Temporary Order or by the Commissioner.
  33. IT IS FURTHER ORDERED that, any and all officers, directors, employees, independent contractors, or agents engaged in the foreign transmittal business at 177 Brighton Avenue, Allston, Massachusetts and with license number FT5534 on behalf of Braz Transfers, shall immediately cease engaging directly or indirectly in the business of a foreign transmittal agency in Massachusetts, as defined in M.G.L. chapter 169, section 1, except as otherwise expressly permitted by the terms of this Temporary Order or by the Commissioner.
  34. IT IS FURTHER ORDERED that Braz Transfers shall immediately terminate its relationship with all officers, directors, employees, independent contractors, or agents engaged in the foreign transmittal business at 177 Brighton Avenue, Allston, Massachusetts and with license number FT5534 and all officers, directors, employees, independent contractors, or agents engaged in the foreign transmittal business at 581 Boston Post Road, Marlboro, Massachusetts, with license number FT6343.
  35. IT IS FURTHER ORDERED that within (5) days of the effective date of this Temporary Order, Braz Transfers shall submit to the Commissioner: a detailed record of the Corporation's pending transmittal orders for funds received from Massachusetts consumers from agent locations operating under the license numbers FT6343 and FT5534. The records to be provided shall be as of the effective date of this Temporary Order.
  36. IT IS FURTHER ORDERED that Braz Transfers, shall reimburse all fees collected by the Corporation for unlicensed check cashing activity. Reimbursements shall be made to each person on a per transaction basis in an amount equal to the entire portion of the fee retained by the Corporation for such transaction. A record shall be provided to the Division of the names and addresses of all individuals whom the Corporation charged a fee for the purpose of cashing a check, the total fees charged on each transaction, and check numbers of payments issued by the Corporation to evidence reimbursements made to consumers, and the amount reimbursed to each individual.
  37. IT IS FURTHER ORDERED that this Temporary Order shall become effective immediately and shall remain in effect unless set aside, limited or suspended by the Commissioner or upon court order after review pursuant to General Laws chapter 30A.
  38. IT IS FURTHER ORDERED that a hearing will be scheduled on this matter to determine whether or not such Temporary Order shall become permanent and final only upon receipt of a written request for such a hearing from the Licensee within twenty (20) days of the effective date of this Temporary Order. If no hearing is requested within this twenty (20) day period, this Temporary Order shall become permanent and final until it is modified or vacated by the Commissioner.

BY ORDER AND DIRECTION OF THE COMMISSIONER OF BANKS.

Dated at Boston, Massachusetts, this 22nd day of December, 2010

David J. Cotney
Acting Commissioner of Banks
Commonwealth of Massachusetts

Temporary Order terminated upon entering of Consent Order on July 6, 2011