UPDATE: On December 16, the DFPI extended the December 31 deadline referenced throughout this post to March 15, 2022.
It’s nearly the end of the year, and if you’re a California Financing Law licensee that has not yet transitioned to NMLS, don’t wait any longer! The deadline to submit a transition request is December 31, and the California Department of Financial Protection and Innovation isn’t expected to extend it.
As we previously covered, the transition process can be time-consuming for CFL licensees, especially those new to NMLS. Here are 10 important things to keep in mind regarding the process based on our experience working through it with numerous licensees over the past several months:
1. Business as usual while awaiting transition approval
As confirmed by the DFPI in several email alerts, CFL licensees may continue to conduct business under the authority of their licenses into 2022 assuming that they’ve submitted a transition request on or before December 31. The transition request doesn’t need to be approved by the DFPI by the end of the year; indeed, we understand from DFPI personnel that it could be weeks (or even a few months) into the new year before they’re able to complete their review of a transition request.
2. Meet the deadline to avoid penalties
If a CFL licensee doesn’t meet the December 31 deadline for submitting a transition request, there’s a possibility that the DFPI will impose monetary penalties for non-compliance.
3. Budget time for NMLS account creation
Creating a company NMLS account may not be as easy as CFL licensees expect, particularly when it comes to obtaining the formation and IRS documents that are required to be submitted with the account creation request. Check out our recent blog post on the topic.
4. Renewals in NMLS
CFL licensees that had their transition request approved prior to November 1 are required to request the renewal of their license via NMLS by the end of the year.
5. Attention to detail helps avoid fees
To avoid being charged a new application fee, CFL licensees should enter their current license number in the transition number field in exactly the following format using alpha and numeric characters and capitalization:
Main office and branch license numbers can be found on the DFPI’s website here. If a CFL licensee had their license issued on or after July 1, 2021, and they are not yet on NMLS, then they will need to contact the DFPI by email at [email protected] or phone at (866) 275-2677 to obtain the appropriate number to enter in the transition number field.
6. Background check authorizations not required
In attesting to their NMLS Individual Forms (Form MU2s) as part of the CFL license transition, the licensee’s key individuals are not required to authorize either a criminal background check or credit report.
7. Some amendments should be submitted outside of NMLS
License amendments that are effective prior to the date that a CFL license transition request is submitted must be submitted to the DFPI outside of NMLS. Examples include amendments to the licensee’s address, legal name, slate of key individuals, and ownership.
8. Requirements for management charts
The management chart that is required to be uploaded to the CFL licensee’s NMLS Company Form (Form MU1) must meet specific requirements:
- Displays the licensee’s divisions, directors, officers, and managers (including name and title)
- Identifies compliance reporting and internal audit structure
- Identifies the lowest level of management
- Includes the individuals identified in the Direct Owners and Executive Officers section of the Form MU1
- Is titled CA [Company Legal Name] Management Chart
9. Other documents required to be uploaded
CFL licensees don’t need to upload a financial statement to their NMLS record with their transition request. However, if information has changed in other documents that they previously submitted to the DFPI (for example, business plans and organizational charts), then they must upload them to their Form MU1s.
10. Conversion to electronic surety bond
CFL licensees must initiate the conversion of their paper bond on file with the DFPI to an electronic surety bond before submitting a transition request.
APPROVED has launched a dedicated resource center with news and information for California licensees. For assistance with preparing and submitting CFL license applications, transitions, amendments, and more, check in with APPROVED.