The QI File

Washington · RCW 19.310 · not legal advice

Washington exchange-facilitator rules

Washington does not license qualified intermediaries. Chapter 19.310 RCW (Exchange Facilitators) requires a $1 million fidelity bond or a qualified escrow/trust with independent client authentication of withdrawals, plus $250,000 E&O (or a deposit), TIN-titled separately identified accounts, and a conspicuous disclosure that no Washington or federal agency regulates the activity. This page reports the Legislature’s RCW text as fetched. It is not a compliance opinion. Overview:state QI bonding. Olympic Exchange’s listing is an example of a firm that publishes the Path B (QEA) choice — that is a firm disclosure, not a finding that every Washington QI uses it.

Who is covered

RCW 19.310.010(4): a person who, for a fee, acts as QI on Washington relinquished property, takes Washington title as EAT under Rev. Proc. 2000-37, or acts as qualified trustee/escrow holder; or maintains a Washington office to solicit facilitator business. Exclusions include the taxpayer and disqualified persons, a depository or title/escrow company acting solely as QEA/QTA and not facilitating, seminar teachers, a QI holding funds from property located outside Washington, and an affiliated EAT vehicle.

License

None. The §19.310.040 disclosure that must appear in large, bold, or otherwise conspicuous type on the website and contract says facilitation is not regulated by any Washington or U.S. agency. Civil suit, consumer-protection act application, and criminal provisions appear later in the chapter (see the chapter index). This page does not summarize every penalty section.

Financial assurance

Path A — bond (RCW 19.310.040(1)(a)(i)). Fidelity bond of not less than $1 million, insurer authorized in Washington, for a client who suffers a direct financial loss from a covered dishonest act. The bond must cover employees and owners of a non-publicly traded facilitator.

Path B — qualified escrow/trust (RCW 19.310.040(1)(a)(ii)). All exchange funds in a (g)(3) qualified escrow or qualified trust at a financial institution. Withdrawal requires the facilitator and the client to independently authenticate a record of the transaction. The client must receive, independently from the depository, a current statement for verification.

Evidence that §19.310.040 is satisfied must be provided before the exchange agreement, and again on request of a current or prospective client or the attorney general.

E&O (RCW 19.310.060). $250,000 policy or a $250,000 deposit. Named-insured aggregation to $250,000 is permitted. Evidence to each client before the agreement.

Required consumer disclosure

RCW 19.310.040(1)(b) dictates the substance: bond or QEA/QTA with client consent for withdrawals; separately identified account using the client’s TIN; written deposit notification; written independent-verify instructions; no state or federal regulator; client responsibility for safety of funds. Referral-fee and affiliated-vendor conflicts must also be disclosed when the facilitator recommends other products.

What to ask on a Washington file

  • Which 19.310.040 path — $1 million bond or QEA/QTA — and current evidence?
  • If Path B: named bank, written QEA, how the client independently authenticates a withdrawal, and how to verify the deposit with the bank.
  • 19.310.060 E&O certificate (limit, named insured, expiry).
  • Does the website and the draft agreement reprint the statutory disclosure?

FAQ

Does Washington license qualified intermediaries?

RCW 19.310 does not create a QI license. The required website and contract disclosure in RCW 19.310.040 states that exchange facilitation services are not regulated by any agency of the state of Washington or of the United States government, and that it is the client’s responsibility to determine that exchange funds will be held in a safe manner.

What are Washington’s two financial-assurance paths?

RCW 19.310.040(1)(a): either a fidelity bond of not less than $1 million covering dishonest acts (including employees and owners of a non-publicly traded facilitator), or all exchange funds in a qualified escrow or qualified trust under Treas. Reg. §1.1031(k)-1(g)(3). The QEA/QTA path requires independent authentication of each withdrawal by the facilitator and the client, and an independent current statement from the depository to the client.

Does Washington also require E&O?

Yes. RCW 19.310.060: $250,000 errors-and-omissions insurance or a $250,000 cash/securities/LOC deposit, with evidence to each client before the exchange agreement. That is a separate duty from the §19.310.040 fidelity-or-QEA choice.

What account-title rule is in the disclosure?

The statutory disclosure that must appear on the website and contract says all exchange funds must be deposited in a separately identified account using the client’s taxpayer identification number; the client must receive written notification of how funds were deposited and written directions on how to independently verify the deposit.

Other state deep-dives

Related

Sources

This is a QI custody explainer, not a securities offering and not legal advice. Statutes change.