[Congressional Bills 103th Congress]
[From the U.S. Government Publishing Office]
[H.R. 3998 Introduced in House (IH)]

103d CONGRESS
  2d Session
                                H. R. 3998

   To protect the consumers of check cashing services by encouraging 
  States to establish uniform laws on the regulation of check cashing 
  services and to require the Secretary of the Treasury to study the 
effectiveness of State efforts with respect to such regulation and make 
      appropriate recommendations to the Congress on such efforts.


_______________________________________________________________________


                    IN THE HOUSE OF REPRESENTATIVES

                             March 10, 1994

Mr. Foglietta introduced the following bill; which was referred to the 
            Committee on Banking, Finance and Urban Affairs

_______________________________________________________________________

                                 A BILL


 
   To protect the consumers of check cashing services by encouraging 
  States to establish uniform laws on the regulation of check cashing 
  services and to require the Secretary of the Treasury to study the 
effectiveness of State efforts with respect to such regulation and make 
      appropriate recommendations to the Congress on such efforts.

    Be it enacted by the Senate and House of Representatives of the 
United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Check Cashing Consumer Protection 
Act of 1994''.

SEC. 2. UNIFORM STATE LICENSING AND REGULATION OF CHECK CASHING 
              SERVICES.

    (a) Uniform Laws and Enforcement.--For purposes of protecting the 
consumers of check cashing services from fraud and abuse, it is the 
sense of the Congress that the several States should--
            (1) establish uniform laws for licensing and regulating 
        businesses which--
                    (A) provide check cashing services, transmit money, 
                or issue or redeem money orders, travelers' checks, and 
                other similar instruments; and
                    (B) are not depository institutions (as defined in 
                section 19(b)(1)(A) of the Federal Reserve Act); and
            (2) provide sufficient resources to the appropriate State 
        agency to enforce such laws and regulations prescribed pursuant 
        to such laws.
    (b) Model Statute.--It is the sense of the Congress that the 
several States should develop, through the auspices of the National 
Conference of Commissioners on Uniform State Laws, the American Law 
Institute, or such other forum as the States may determine to be 
appropriate, a model statute to carry out the goals described in 
subsection (a) which would include the following:
            (1) Licensing requirements.--A requirement that any issuer, 
        redeemer, or cashier of travelers' checks, checks, money 
        orders, or similar instruments, and any transmitter of money, 
        other than a depository institution (as defined in section 
        19(b)(1)(A) of the Federal Reserve Act), be licensed and 
        regulated by an appropriate State agency in order to engage in 
        any such activity within the State.
            (2) Licensing standards.--A requirement that--
                    (A) in order for any issuer, redeemer, or cashier 
                of travelers' checks, checks, money orders, or similar 
                instruments, and any transmitter of money to be 
                licensed in the State, the appropriate State agency 
                shall review and approve--
                            (i) the business record and the capital 
                        adequacy of the business seeking the license; 
                        and
                            (ii) the competence, experience, integrity, 
                        and financial ability of any individual who--
                                    (I) is a director, officer, or 
                                supervisory employee of such business; 
                                or
                                    (II) owns or controls such 
                                business;
                    (B) as a condition for the issuance and continued 
                validity of the license the business may not impose, 
                charge, or collect any fee for cashing or redeeming any 
                travelers' check, check, money order or similar 
                instrument in excess of the amount which is equal to 
                the greater of--
                                    (i) an amount equal to 1.5 percent 
                                of the face amount of such check or 
                                money order (not to exceed $8); or
                                    (ii) 50 cents; and
                    (C) any record, on the part of any business seeking 
                the license or any person referred to in subparagraph 
                (A)(ii), of--
                            (i) any criminal activity;
                            (ii) any fraud or other act of personal 
                        dishonesty;
                            (iii) any act, omission, or practice which 
                        constitutes a breach of a fiduciary duty; or
                            (iv) any suspension or removal, by any 
                        agency or department of the United States or 
                        any State, from participation in the conduct of 
                        any federally or State licensed or regulated 
                        business,
                be grounds for the denial of any such license by the 
                appropriate State agency.
            (3) Procedures to ensure compliance with federal cash 
        transaction reporting requirements.--A civil or criminal 
        penalty for operating any business referred to in paragraph (1) 
        without establishing and complying with appropriate procedures 
        to ensure compliance with subchapter II of chapter 53 of title 
        31, United States Code (relating to records and reports on 
        monetary instruments transactions).
            (4) Criminal penalties for operation of business without a 
        license.--A criminal penalty for operating, within the State, 
        any business referred to in paragraph (1) after the effective 
        date of the model statute without a license issued by the 
        State.
    (c) Study Required.--The Secretary of the Treasury shall conduct a 
study of--
            (1) the progress made by the several States in developing 
        and enacting a model statute which--
                    (A) meets the requirements of subsection (b); and
                    (B) furthers the goals of--
                            (i) preventing money laundering by 
                        businesses which are required to be licensed 
                        under any such statute; and
                            (ii) protecting the payment system, 
                        including the receipt, payment, collection, and 
                        clearing of checks, from fraud and abuse by 
                        such businesses; and
            (2) the adequacy of--
                    (A) the activity of the several States in enforcing 
                the requirements of such statute; and
                    (B) the resources made available to the appropriate 
                State agencies for such enforcement activity.
    (d) Report Required.--Before the end of the 3-year period beginning 
on the date of the enactment of this Act and by the end of each 1-year 
period beginning after the end of such period, the Secretary of the 
Treasury shall submit a report to the Congress containing the findings 
and recommendations of the Secretary in connection with the study under 
subsection (c), together with such recommendations for legislative and 
administrative action as the Secretary may determine to be appropriate, 
including any recommendation pursuant to subsection (e).
    (e) Recommendations for Incentives or Sanctions in Cases of 
Inadequate Regulation and Enforcement by States.--If the Secretary of 
the Treasury determines that any State has failed--
            (1) to enact a statute which meets the requirements 
        described in subsection (b);
            (2) to undertake adequate activity to enforce such statute; 
        or
            (3) to make adequate resources available to the appropriate 
        State agency for such enforcement activity,
the report submitted pursuant to subsection (d) shall contain 
recommendations for legislation establishing incentives which may be 
provided or sanctions which may be imposed to remedy such failure.

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