[Congressional Record Volume 150, Number 121 (Thursday, September 30, 2004)]
[Senate]
[Pages S10063-S10068]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. SARBANES (for himself, Mr. Corzine, Mrs. Clinton, Mr. 
        Akaka, Mr. Bingaman, Mr. Schumer, Mr. Dodd, Mrs. Boxer, and Ms. 
        Mikulski):
  S. 2868. A bill to amend the Electronic Fund Transfer Act to extend 
certain consumer protections to international remittance transfers of 
funds originating in the United States, and for other purposes; to the 
Committee on Banking, Housing, and Urban Affairs.
  Mr. SARBANES. Mr. President, I rise today to introduce the 
International Remittance Consumer Protection Act of 2004. This 
legislation extends basic consumer protection rights to those who send 
remittances, and it creates new avenues and incentives for federally 
insured financial institutions to provide remittance and basic banking 
services to those who currently do not use such institutions to send 
remittances.
  The practice of sending remittances is not new. Immigrants to the 
United States traditionally have used remittances to provide financial 
assistance to family members who remained in their country of origin, 
but the practice has been largely overlooked; it has not been 
systematically studied and its implications have not been fully 
understood. The 2000 census shows that 30 million people in this 
country are foreign-born--the largest number in our Nation's history 
and the vast majority of them--22 million--are citizens or legal 
residents. More than 40 percent of our Nation's foreign-born population 
immigrated to the United States in the 1990s, and some 15.4 million, or 
more than half the immigrant community, have come from Latin American 
countries. Immigrants make a vital contribution to the economic and 
social life of our Nation.
  In a recent study, Sending Money Home: Remittances to Latin America 
from the US, 2004, the Inter-American

[[Page S10064]]

Development Bank (IADB) found that nationwide over 60 percent of Latin 
American immigrants send remittances. On average, each immigrant sends 
$240 at a time, 12 times per year. Although these individual 
transactions are not large, they have constituted an aggregate amount 
of over $30 billion from America to our Latin American neighbors in 
this year alone.
  In my State of Maryland, we have 175,000 immigrants from Latin 
America and the vast majority send remittances back home. According to 
the IADB's study 80 percent of Maryland's immigrants from Latin America 
send remittances. The typical sender remits an average of $245, 14 
times per year--in other words, remittances are a monthly matter, with 
special gifts for Christmas and Mother's Day.
  The subject of remittances has been a major interest of mine for some 
time. As chairman of the Banking Committee, in February, 2002, during 
the 107th Congress, I chaired what I understand was the first 
congressional hearing devoted exclusively to the subject. Dr. Manuel 
Orozco, a leading researcher on remittances at the Inter-American 
Dialogue, told the committee that remittances from the U.S. to Latin 
America had grown substantially--at that point to an estimated $20 
billion in 2001--and that between 15 to 20 percent--$3-$4 billion--was 
being lost in fees and other transaction costs. Since Dr. Orozco 
testified, remittances to Latin America have grown by $10 billion, 50 
percent, in just 3 years, and continued growth is expected.
  That an estimated 15 percent to 20 percent of the money sent in 
remittances is diverted to fees and other transaction costs, often 
hidden from the remittance sender, is evidence of the abusive practices 
that exist in the remittance market. There are two primary factors that 
account for this abuse. First, studies have shown that people who send 
remittances tend to be relatively low-wage earners, with modest formal 
education and relatively little experience in dealing with this 
country's complex system of financial institutions. As a result they 
are susceptible to unscrupulous actors who can take advantage of them 
by charging all sorts of exorbitant fees, which are often hidden or 
misrepresented. The exchange rate conversion is often the mechanism for 
this abusive practice.
  Second, remittances are currently not subject to the requirements set 
by Federal consumer protection law, including the disclosure of fees. 
There is no requirement that a remittance transfer provider disclose to 
the consumer the exchange rate fee that will be applied in the 
transaction. Without knowing the exchange rate fee that the company is 
charging, a consumer has little ability to gauge accurately the full 
cost of sending a remittance. As Sergio Bendixen, a leading researcher 
of public opinion and behavior, with a specialty among Hispanic 
consumers, testified before the Banking Committee: ``an overwhelming 
majority of Hispanic immigrants are unaware that their families in 
Latin America receive less money than what they send from the United 
States.'' Further, a remittance sender cannot effectively shop between 
remittance transfer providers. The lack of basic information limits the 
amount of competition in this market.
  The legislation I am introducing today extends basic consumer rights 
to those who send remittances. Further, by requiring clear and 
understandable disclosures to the remittance sender of the cost of the 
remittance, thus presenting to the consumer the full cost of sending 
money, the legislation will enhance competition, which in turn should 
lead to an overall decrease in the cost of sending remittances. As 
Sergio Bendixen testified to the Banking Committee, ``Full disclosure 
should unleash market forces that, hopefully, will result in a 
significant reduction in the cost of sending cash remittances.''

  This legislation amends the Electronic Fund Transfer Act (EFTA), 
which is the primary vehicle for providing basic protections to most 
persons who engage in electronic transactions, to cover remittances, 
and to provide the basic rights associated with EFTA to remittance 
transactions. The two most important components of EFTA are the 
requirement of full disclosure of fees and the establishment of a 
process for the resolution of transactional errors. These rights have 
been an integral part of the regulations that govern our banking 
infrastructure since EFTA's enactment in 1978. The new legislation will 
build upon the success of EFTA by extending these basic rights to 
remittance senders.
  The cornerstone of this legislation is the requirement that 
remittance transfer providers make three key disclosures to their 
consumers: (1) The total cost of the remittance, represented in a 
single dollar amount; (2) the total amount of currency that will be 
sent to the designated recipient, and (3) the promised date of delivery 
for the remittance. These disclosures follow the core recommendations 
of the InterAmerican Development Bank, which in its publication, 
Remittances to Latin America and the Caribbean: Goals and 
Recommendations, states: ``Remittance institutions should disclose in a 
fully transparent manner, complete information on total costs and 
transfer conditions, including all commissions and fees, foreign 
exchange rates applied and execution time.''
  The total cost disclosure will include the cost of the exchange rate 
conversion as well as all up-front fees. This single item will both 
give consumers a more accurate representation of the cost of the 
remittance transaction and allow consumers to more effectively compare 
costs between remittance transfer providers.
  In order to calculate the cost of the exchange rate conversion, which 
is part of the total cost, the legislation requires that the Treasury 
Department post on its website, on a daily basis, the exchange rate for 
all currencies. At present the Treasury receives this information on a 
daily basis, but posts it only on a quarterly basis on the Treasury 
website. By posting the information daily, the Treasury could create a 
uniform and credible source for exchange rate information.
  To calculate the cost to the consumer of the exchange rate 
differential, remittance transfer providers will use the difference 
between the previous business day's exchange rate, as posted on the 
Treasury website, and the exchange rate that the remittance transfer 
provider offers. Using the exchange rate posted by the Treasury will 
ensure that the exchange rate cost is calculated on a uniform basis. 
When the exchange rate cost is disclosed to the consumer as part of the 
total cost of the remittance transfer, the consumer will be better able 
to understand the full cost of the transaction and to shop between 
different remittance transfer providers.
  In addition to fee disclosure requirements, this legislation 
establishes an error resolution mechanism so that consumers whose 
remittance transactions experience an error have a fair, open, and 
expedient process through which they may resolve those errors with the 
institution that conducted the flawed transaction. This basic right is 
already afforded to consumers who are protected by EFTA, and now this 
right will be extended to cover consumers who send remittances as well. 
Further, the legislation establishes an error resolution mechanism for 
remittance transfer errors that is responsive to the different types of 
errors that can occur in a remittance transaction and is reflective of 
the unique characteristics of the remittance market and its 
participants.
  Under this legislation, a consumer has 1 year from the date that the 
remittance transfer company promised to deliver the money to notify the 
company that an error has occurred. The company is then required to 
resolve the error within 90 days. To resolve the error, the company 
must either (1) refund the full amount of the remittance that was not 
properly transferred, (2) resend that amount at no additional cost to 
the consumer or the designated recipient, or (3) demonstrate to the 
consumer that there was no error. The Federal Reserve Board is also 
granted the authority to establish additional remedies for specific 
situations that cannot be addressed by the three specific remedies that 
are described in the legislation.
  It is urgent that we continue to encourage efforts to bring those who 
send remittances into the financial mainstream. In his testimony to the 
Banking Committee, Dr. Orozco pointed out that, ``About two-thirds of 
immigrants cash their salary checks in check cashing stores that charge 
exorbitant fees.

[[Page S10065]]

Many of these same immigrants then use what remains of their income to 
send remittances back home. In this common scenario, immigrants are 
penalized in both receiving and sending their earnings.'' In order to 
further bank those who are currently unbanked, the legislation that I 
am introducing today requires that the Federal banking agencies and the 
National Credit Union Administration provide guidelines to financial 
institutions regarding the offering of low-cost remittance transfers 
and no-cost or low-cost basic consumer amounts. This legislation also 
amends the Federal Credit Union Act to allow credit unions to offer 
remittances and to cash checks for persons who are in their field of 
membership but are not credit union members. The guidelines set out in 
the legislation will help educate the financial services industry about 
the importance and potential profitability of providing these services.

  The sending of remittances in a fair and scrupulous manner is likely 
to be profitable for the institution that provides the remittance 
service, and indeed we have begun to see aggressive moves into the 
remittance market by many of the largest banking institutions. 
Individuals who send remittances but are currently unbanked represent 
an expanded and profitable customer base for financial institutions.
  By its very nature, remittances is an issue that involves both the 
United States and other nations. As Professor Susan Martin of 
Georgetown University, who also testified at our hearing, told the 
Banking Committee: ``Until relatively recently, researchers and policy 
makers tended to dismiss the importance of remittances or emphasize 
only their negative aspects . . . but recent work on remittances show a 
far more complex and promising picture. . . Experts now recognize that 
remittances have far greater positive impact on communities in 
developing countries than previously acknowledged.'' In fact, the size 
of the remittance market is such that for six Central American and 
Caribbean nations--Nicaragua, Haiti, El Salvador, Honduras, Guyana and 
Jamaica--remittances constitute more than 10 percent of GDP; Haiti and 
Jamaica receive more in remittances than in revenues from trade. The 
World Bank estimates that Mexico receives more in remittances than it 
does in foreign direct investment. Reducing the costs of remittances is 
in the interest of both the United States and the countries that 
receive them.
  Given the growing importance of annual remittance flows, we must work 
to increase their efficiency. One mechanism for accomplishing this 
objective, and for increasing the ability of financial institutions to 
offer remittances is linking our banking infrastructure with the 
banking infrastructures of other nations. The Federal Reserve operates 
an international automated clearing house system (ACHi) that is 
currently linked to seven countries, of which the vast majority are 
highly developed trading partners that receive relatively low levels of 
remittances. The ACHi was recently connected to Mexico, however, which 
will allow financial institutions throughout the United States, 
especially those institutions of smaller size, to provide remittance 
services more easily and cheaply to Mexico. This legislation directs 
the Fed to take into account the importance of remittance flows to 
other countries as it continues to expand the ACHi system. Linking the 
ACHi to countries that receive significant remittances has the 
potential to result in great benefits to consumers who send remittances 
from America as well as to those who receive the remittances around the 
world.
  Finally, I am acutely aware of the need for better and more broadly 
available financial literacy and education for all Americans. I am 
pleased to report that in the last Congress, as part of the 
reauthorization of the Fair Credit Reporting Act, we established a 
Presidential Financial Literacy and Education Commission, which is 
charged with developing a national strategy to promote financial 
literacy and education. The Act addresses the issue of remittances by 
including in the commission's work a focus on increasing the 
``awareness of the particular financial needs and financial 
transactions, such as the sending of remittances of consumers who are 
targeted in multilingual financial literacy and education programs and 
improve the development and distribution of multilingual financial 
literacy and education materials.'' The legislation that I am 
introducing today builds on that framework by instructing the bank and 
credit union regulators to work with the commission to specifically 
increase the financial education efforts that target those persons who 
send remittances.
  Millions of Americans send remittances to family members around the 
world, for a total far exceeding the $30 billion that goes to Latin 
America alone. Yet almost all of these transactions take place without 
the basic consumer rights and protections that apply to other 
electronic transfers. Consumers who send remittances are often 
immigrants and workers who earn modest wages, who are not aware of the 
full costs of each remittance, as a practical matter have no way of 
finding out and, as a consequence, in the aggregate pay billions of 
dollars in costs and hidden fees. They do not have available to them an 
established procedure for resolving transactional errors. This 
legislation rectifies this situation by extending to remittances the 
basic consumer rights established in EFTA. The bill also contains 
provisions that, when implemented, will allow more insured financial 
institutions to provide remittance services--and potentially at lower 
costs to consumers. The bill contains important provisions to help 
bring the unbanked--men and women without an account at a bank or 
credit union--into the financial mainstream. Taken together, these 
measures will increase transparency, competition and efficiency in the 
remittance market, while helping to bring more Americans into the 
financial mainstream.

  A broad range of community, civil rights, and consumer groups have 
endorsed this legislation including the National Council of La Raza, 
the Mexican American Legal Defense and Educational Fund, the League of 
United Latin American Citizens, the Leadership Conference on Civil 
Rights, United Farm Workers of America, the Farmworker Justice Fund, 
the NAACP, Casa de Maryland, the National Federation of Filipino 
American Associations, the Asian Pacific American Labor Alliance, 
National Asian Pacific American Legal Consortium, Consumers Union, 
Consumer Federation of America, the National Consumer Law Center, the 
National Community Reinvestment Coalition, the Center for Responsible 
Lending, U.S. PIRG, ACORN, Woodstock Institute, and the National 
Association of Consumer Advocates.
  I ask unanimous consent that the text of the Intemational Remittance 
Consumer Protection Act be printed in the Record, together with letters 
in support of the bill from the National Council of La Raza, the 
Mexican American Legal Defense and Educational Fund, the Leadership 
Conference on Civil Rights, Casa de Maryland, and a letter from 
Consumers Union, Consumer Federation of America, National Consumer Law 
Center, and U.S. PIRG.
  There being no objection, the material was ordered to be printed in 
the Record, as follows:

                                S. 2868

       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 ``International Remittance 
     Consumer Protection Act of 2004''.

     SEC. 2. TREATMENT OF REMITTANCE TRANSFERS.

       (a) In General.--The Electronic Fund Transfer Act (15 
     U.S.C. 1693 et seq.) is amended--
       (1) in section 902(b), by inserting ``and remittance'' 
     after ``electronic fund'';
       (2) by redesignating sections 918, 919, 920, and 921 as 
     sections 919, 920, 921, and 922, respectively; and
       (3) by inserting after section 917 the following:

     ``SEC. 918. REMITTANCE TRANSFERS.

       ``(a) Disclosures Required for Remittance Transfers.--
       ``(1) In general.--Each remittance transfer provider shall 
     make disclosures to consumers, as specified by this section 
     and augmented by regulation of the Board.
       ``(2) Specific disclosures.--In addition to any other 
     disclosures applicable under this title, a remittance 
     transfer provider shall clearly and conspicuously disclose, 
     in writing and in a form that the consumer may keep, to each 
     consumer requesting a remittance transfer--
       ``(A) at the time at which the consumer makes the request, 
     and prior to the consumer making any payment in connection 
     with the transfer--

[[Page S10066]]

       ``(i) the total amount of currency that will be required to 
     be tendered by the consumer in connection with the remittance 
     transfer;
       ``(ii) the amount of currency that will be sent to the 
     designated recipient of the remittance transfer, using the 
     values of the currency into which the funds will be 
     exchanged;
       ``(iii) the total remittance transfer cost, identified as 
     the `Total Cost'; and
       ``(iv) an itemization of the charges included in clause 
     (iii), as determined necessary by the Board; and
       ``(B) at the time at which the consumer makes payment in 
     connection with the remittance transfer, if any--
       ``(i) a receipt showing--

       ``(I) the information described in subparagraph (A);
       ``(II) the promised date of delivery;
       ``(III) the name and telephone number or address of the 
     designated recipient; and

       ``(ii) a notice containing--

       ``(I) information about the rights of the consumer under 
     this section to resolve errors; and
       ``(II) appropriate contact information for the remittance 
     transfer provider and its State licensing authority and 
     Federal or State regulator, as applicable.

       ``(3) Exemption authority.--The Board may, by rule, and 
     subject to subsection (d)(3), permit a remittance transfer 
     provider--
       ``(A) to satisfy the requirements of paragraph (2)(A) 
     orally if the transaction is conducted entirely by telephone;
       ``(B) to satisfy the requirements of paragraph (2)(B) by 
     mailing the documents required under such paragraph to the 
     consumer not later than 1 business day after the date on 
     which the transaction is conducted, if the transaction is 
     conducted entirely by telephone; and
       ``(C) to satisfy the requirements of subparagraphs (A) and 
     (B) of paragraph (2) with 1 written disclosure, but only to 
     the extent that the information provided in accordance with 
     paragraph (2)(A) is accurate at the time at which payment is 
     made in connection with the subject remittance transfer.
       ``(b) Foreign Language Disclosures.--The disclosures 
     required under this section shall be made in English and in 
     the same languages principally used by the remittance 
     transfer provider, or any of its agents, to advertise, 
     solicit, or market, either orally or in writing, at that 
     office, if other than English.
       ``(c) Remittance Transfer Errors.--
       ``(1) Error resolution.--
       ``(A) In general.--If a remittance transfer provider 
     receives oral or written notice from the consumer within 365 
     days of the promised date of delivery that an error occurred 
     with respect to a remittance transfer, including that the 
     full amount of the funds to be remitted was not made 
     available to the designated recipient in the foreign country, 
     the remittance transfer provider shall resolve the error 
     pursuant to this subsection.
       ``(B) Remedies.--Not later than 90 days after the date of 
     receipt of a notice from the consumer pursuant to 
     subparagraph (A), the remittance transfer provider shall, as 
     applicable to the error and as designated by the consumer--
       ``(i) refund to the consumer the total amount of funds 
     tendered by the consumer in connection with the remittance 
     transfer which was not properly transmitted;
       ``(ii) make available to the designated recipient, without 
     additional cost to the designated recipient or to the 
     consumer, the amount appropriate to resolve the error;
       ``(iii) provide such other remedy, as determined 
     appropriate by rule of the Board for the protection of 
     consumers; or
       ``(iv) demonstrate to the consumer that there was no error.
       ``(2) Rules.--The Board shall establish, by rule, clear and 
     appropriate standards for remittance transfer providers with 
     respect to error resolution relating to remittance transfers, 
     to protect consumers from such errors.
       ``(d) Applicability of Other Provisions of Law.--
       ``(1) Applicability of title 18 and title 31 provisions.--A 
     remittance transfer provider may only provide remittance 
     transfers if such provider is in compliance with the 
     requirements of section 5330 of title 31, United States Code, 
     and section 1960 of title 18, United States Code, as 
     applicable.
       ``(2) Applicability of this title.--A remittance transfer 
     that is not an electronic fund transfer, as defined in 
     section 903, shall not be subject to any of sections 905 
     through 913. A remittance transfer that is an electronic fund 
     transfer, as defined in section 903, shall be subject to all 
     provisions of this title that are otherwise applicable to 
     electronic fund transfers under this title.
       ``(3) Rule of construction.--Nothing in this section shall 
     be construed--
       ``(A) to affect the application to any transaction, to any 
     remittance provider, or to any other person of any of the 
     provisions of subchapter II of chapter 53 of title 31, United 
     States Code, section 21 of the Federal Deposit Insurance Act 
     (12 U.S.C. 1829b), or chapter 2 of title I of Public Law 91-
     508 (12 U.S.C. 1951-1959), or any regulations promulgated 
     thereunder; or
       ``(B) to cause any fund transfer that would not otherwise 
     be treated as such under paragraph (2) to be treated as an 
     electronic fund transfer, or as otherwise subject to this 
     title, for the purposes of any of the provisions referred to 
     in subparagraph (A) or any regulations promulgated 
     thereunder.
       ``(e) Publication of Exchange Rates.--The Secretary of the 
     Treasury shall make available to the public in electronic 
     form, not later than noon on each business day, the dollar 
     exchange rate for all foreign currencies, using any 
     methodology that the Secretary determines appropriate, which 
     may include the methodology used pursuant to section 613(b) 
     of the Foreign Assistance Act of 1961 (22 U.S.C. 2363(b)).
       ``(f) Agents and Subsidiaries.--A remittance transfer 
     provider shall be liable for any violation of this section by 
     any agent or subsidiary of that remittance transfer provider.
       ``(g) Definitions.--As used in this section--
       ``(1) the term `exchange rate fee' means the difference 
     between the total dollar amount transferred, valued at the 
     exchange rate offered by the remittance transfer provider, 
     and the total dollar amount transferred, valued at the 
     exchange rate posted by the Secretary of the Treasury in 
     accordance with subsection (e) on the business day prior to 
     the initiation of the subject remittance transfer;
       ``(2) the term `remittance transfer' means the electronic 
     (as defined in section 106(2) of the Electronic Signatures in 
     Global and National Commerce Act (15 U.S.C. 7006(2))) 
     transfer of funds at the request of a consumer located in any 
     State to a person in another country that is initiated by a 
     remittance transfer provider, whether or not the consumer is 
     an account holder of the remittance transfer provider or 
     whether or not the remittance transfer is also an electronic 
     fund transfer, as defined in section 903;
       ``(3) the term `remittance transfer provider' means any 
     person or financial institution that provides remittance 
     transfers on behalf of consumers in the normal course of its 
     business, whether or not the consumer is an account holder of 
     that person or financial institution;
       ``(4) the term `State' means any of the several States, the 
     Commonwealth of Puerto Rico, the District of Columbia, and 
     any territory or possession of the United States; and
       ``(5) the term `total remittance transfer cost' means the 
     total cost of a remittance transfer expressed in dollars, 
     including all fees charged by the remittance transfer 
     provider, including the exchange rate fee.''.
       (b) Effect on State Laws.--Section 919 of the Electronic 
     Fund Transfer Act (12 U.S.C. 1693q) is amended--
       (1) in the first sentence, by inserting ``or remittance 
     transfers (as defined in section 918)'' after ``transfers''; 
     and
       (2) in the fourth sentence, by inserting ``, or remittance 
     transfer providers (as defined in section 918), in the case 
     of remittance transfers,'' after ``financial institutions''.

     SEC. 3. FEDERAL CREDIT UNION ACT AMENDMENT.

       Paragraph (12) of section 107 of the Federal Credit Union 
     Act (12 U.S.C. 1757(12)) is amended to read as follows:
       ``(12) in accordance with regulations prescribed by the 
     Board--
       ``(A) to provide remittance transfers, as defined in 
     section 918(h) of the Electronic Fund Transfer Act, to 
     persons in the field of membership; and
       ``(B) to cash checks and money orders for persons in the 
     field of membership for a fee;''.

     SEC. 4. AUTOMATED CLEARINGHOUSE SYSTEM.

       (a) Expansion of System.--The Board of Governors of the 
     Federal Reserve System shall work with the Federal reserve 
     banks to expand the use of the automated clearinghouse system 
     for remittance transfers to foreign countries, with a focus 
     on countries that receive significant remittance transfers 
     from the United States, based on--
       (1) the number, volume, and sizes of such transfers;
       (2) the significance of the volume of such transfers, 
     relative to the external financial flows of the receiving 
     country; and
       (3) the feasibility of such an expansion.
       (b) Report to Congress.--Not later than 180 days after the 
     date of enactment of this Act, and on April 30 biannually 
     thereafter, the Board of Governors of the Federal Reserve 
     System shall submit a report to the Committee on Banking, 
     Housing, and Urban Affairs of the Senate and the Committee on 
     Financial Services of the House of Representatives on the 
     status of the automated clearinghouse system and its progress 
     in complying with the requirements of this section.

     SEC. 5. EXPANSION OF FINANCIAL INSTITUTION PROVISION OF 
                   REMITTANCE TRANSFERS.

       (a) Provision of Guidelines to Institutions.--Each of the 
     Federal banking agencies (as defined in section 3 of the 
     Federal Deposit Insurance Act) and the National Credit Union 
     Administration shall provide guidelines to financial 
     institutions under the jurisdiction of the agency regarding 
     the offering of low-cost remittance transfers and no-cost or 
     low-cost basic consumer accounts, as well as agency services 
     to remittance transfer providers.
       (b) Content of Guidelines.--Guidelines provided to 
     financial institutions under this section shall include--
       (1) information as to the methods of providing remittance 
     transfer services;
       (2) the potential economic opportunities in providing low-
     cost remittance transfers; and
       (3) the potential value to financial institutions of 
     broadening their financial bases to include persons that use 
     remittance transfers.

[[Page S10067]]

       (c) Assistance to Financial Literacy Commission.--The 
     Secretary of the Treasury and each agency referred to in 
     subsection (a) shall, as part of their duties as members of 
     the Financial Literacy and Education Commission, assist that 
     Commission in improving the financial literacy and education 
     of consumers who send remittances.

     SEC. 6. STUDY AND REPORT ON REMITTANCES.

       (a) Study.--The Comptroller General of the United States 
     shall conduct a study and analysis of the remittance transfer 
     system, including an analysis of its impact on consumers.
       (b) Areas of Consideration.--The study conducted under this 
     section shall include, to the extent that information is 
     available--
       (1) an estimate of the total amount, in dollars, 
     transmitted from individuals in the United States to other 
     countries, including per country data, historical data, and 
     any available projections concerning future remittance 
     levels;
       (2) a comparison of the amount of remittance funds, in 
     total and per country, to the amount of foreign trade, 
     bilateral assistance, and multi-development bank programs 
     involving each of the subject countries;
       (3) an analysis of the methods used to remit the funds, 
     with estimates of the amounts remitted through each method 
     and descriptive statistics for each method, such as market 
     share, median transaction size, and cost per transaction, 
     including through--
       (A) depository institutions;
       (B) postal money orders and other money orders;
       (C) automatic teller machines;
       (D) wire transfer services; and
       (E) personal delivery services;
       (4) an analysis of advantages and disadvantages of each 
     remitting method listed in subparagraphs (A) through (E) of 
     paragraph (3);
       (5) an analysis of the types and specificity of disclosures 
     made by various types of remittance transaction providers to 
     consumers who send remittances; and
       (6) if reliable data are unavailable, recommendations 
     concerning options for Congress to consider to improve the 
     state of information on remittances from the United States.
       (c) Report to Congress.--Not later than 1 year after the 
     date of enactment of this Act, the Comptroller General shall 
     submit a report to the Committee on Banking, Housing, and 
     Urban Affairs of the Senate and the Committee on Financial 
     Services of the House of Representatives on the results of 
     the study conducted under this section.
                                  ____



                                  National Council of La Raza,

                                   Washington, DC, Sept. 30, 2004.
     Hon. Paul Sarbanes,
     Ranking Member, U.S. Senate Committee on Banking, Housing, 
         and Urban Affairs, Washington, DC.
       Dear Senator Sarbanes: On behalf of the National Council of 
     La Raza (NCLR), the largest national Hispanic constituency-
     based organization, I write to express our support for your 
     proposed legislation, the International Remittance Consumer 
     Protection Act of 2004.
       As you know very well, the cost of sending remittances to 
     Latin America can be very high--as much as 12 percent per 
     transaction. Lack of competition in the remittance business, 
     which is dominated by a small number of companies that charge 
     higher fees than financial institutions, has kept prices 
     high. In addition to fees, consumers are often subject to 
     poor monetary exchange rates that are not fully disclosed. 
     These exorbitant fees and hidden charges adversely affect 
     many Latinos who send money regularly to Latin America. Many 
     of these remitters are working poor, and nearly half (43 
     percent) do not have basic banking accounts to conduct simple 
     transactions.
       For these reasons, we appreciated the opportunity to meet 
     with your staff and provide input regarding several issues 
     that affect Latino remittance senders. Specifically, we 
     support provisions in your bill that require disclosing 
     upfront all fees and exchange rates to consumers, most of 
     whom are immigrant and/or English language learners (ELL), in 
     languages and formats accessible to them; allow credit unions 
     to offer remittance and check cashing services to nonmembers 
     in the field of membership, which will connect remitters to 
     low-cost financial services facilitating their entry into the 
     financial mainstream; and assist the Federal Financial 
     Literacy Commission in informing remitters of new consumer 
     rights relating to remittance transactions via wire 
     transfers.
       Again, thank you for soliciting our feedback on the 
     International Remittance Consumer Protection Act and for your 
     continued support of Latino and immigrant communities. We 
     look forward to working with you to ensure that immigrants 
     have access to information and make fully-informed choices 
     when wiring money to family members abroad. In the end, we 
     hope such legislative measures will provide remitters greater 
     access to mainstream banking tools and services to improve 
     their long-term financial security. We hope to work with you 
     to achieve these goals. Please do not hesitate to contact me 
     if I can be of assistance to you.
       Sincerely,
                                                   Raul Yzaguirre,
     President/CEO.
                                  ____


                            [Sept. 30, 2004]

   MALDEF Applauds Sarbanes Bill to Regulate Remittances and Protect 
                        Latinos' Consumer Rights

      (By MALDEF President and General Counsel Ann Marie Tallman)

       MALDEF applauds Senator Paul Sarbanes' (D-MD) introduction 
     of the International Remittance Consumer Protection Act of 
     2004. We believe this bill is the first step in the right 
     direction to improve Latino immigrants' access to banks, and 
     to protect their rights as consumers. This bill is long 
     overdue. MALDEF urges Congress to pass it into law and 
     protect Latino consumer rights.
       Senator Sarbanes' International Remittance Consumer 
     Protection Act would bring remittance transfers under the 
     umbrella of protection of U.S. financial services laws. It 
     would make remittance transfers subject to the same set of 
     laws to which any other money transaction in the U.S. is 
     subject. Senator Sarbanes' bill would provide for basic 
     consumer protections for the millions of Latinos and the 
     billions of dollars they send through remittances, by 
     requiring full disclosure of all transfer fees, and a receipt 
     with such full disclosure in the language used by the 
     consumer. It would also provide for error resolutions and 
     reimbursements when family members overseas do not receive 
     the full amount of funds sent. The bill would also: (1) 
     permit credit unions to offer remittance and check cashing 
     services; (2) direct the Federal Reserve Board to provide 
     guidelines to encourage U.S. financial institutions to offer 
     low-cost remittance services and tap into this market; (3) 
     assist the Federal Financial Literacy Commission in improving 
     ``financial literacy'' of consumers who send remittances; and 
     (4) direct the General Accounting Office to study the 
     remittance market and report to Congress with its findings.
       Latino immigrants' remittances represent the most important 
     source of ``development aid'' to most Latin American 
     countries. Hard-working Latino immigrants are making 
     essential contributions to the U.S. economy, and U.S. 
     financial institutions have benefited greatly from Latino 
     immigrants' money transfers or ``remittances.'' In keeping 
     with the tradition of American immigrants, more than 60 
     percent of Latin American born adults generously send money 
     to their extended families in Latin America on a regular 
     basis. The volume is staggering--the International Monetary 
     Fund reported that over $30 billion in remittances are 
     expected to be sent from the United States to Latin America 
     in 2004. The Hispanic Association of Corporate Responsibility 
     reported that Mexico is the second-largest recipient, just 
     behind India, and that nearly 12 percent of remittances 
     worldwide go to Mexico. This market is unregulated, leaving 
     Latinos vulnerable to excessive processing fees imposed by 
     some remittance transfer agencies. As the PEW Hispanic Center 
     has reported, the fees have been inappropriately high, 
     reaching up to 20 percent. Even worse, some Latinos have had 
     their hard-earned money never reach their intended 
     recipients, or portions of their transfers have been skimmed 
     by unscrupulous agents.
       For all these reasons, MALDEF thanks Senator Sarbanes for 
     the introduction of the International Remittance Consumer 
     Protection Act, and urges the Congress to enact this 
     essential piece of legislation as soon as possible, in order 
     to protect Latino consumer rights.
                                  ____

                                          Leadership Conference on


                                                 Civil Rights,

                                   Washington, DC, Sept. 30, 2004.
     Hon. Paul Sarbanes,
     U.S. Senate,
     Washington, DC.
       Dear Senator Sarbanes: On behalf of the Leadership 
     Conference on Civil Rights (LCCR), the nation's oldest, 
     largest and most diverse civil and human rights coalition, we 
     write to express our strong support for the ``International 
     Remittance Consumer Protection Act of 2004.'' LCCR greatly 
     appreciates your efforts to strengthen the rights of 
     consumers who send money overseas.
       This important legislation will, for the first time, bring 
     remittances under the framework of federal consumer 
     protection law, and will encourage transparency and 
     competition in the remittance market. There are three key 
     components to the bill:
       First, it establishes clear disclosure requirements for 
     remittance transfer companies, including the requirement that 
     the cost of the exchange rate conversion be included in the 
     total cost of the transfer. This cost is, at present, a 
     hidden fee through which consumers are unwittingly charged 
     excessive and abusive additional costs. The bill also takes 
     an innovate approach to calculating the exchange rate fee, so 
     consumers will be able to shop among different remittance 
     companies with the full knowledge of each company's prices.
       Second, it creates an open and fair error resolution 
     process for remittance transfer errors. Currently, consumers 
     who send remittances do not have any guaranteed recourse to 
     recover money if a remittance transfer company fails to 
     deliver on its promises. The bill establishes an error 
     resolution mechanism for remittance transfer errors that is 
     responsive to the different types of errors that can occur in 
     a remittance transaction, and is reflective of the unique 
     characteristics of the remittance market and its 
     participants.
       Finally, it requires Federal bank and credit union 
     regulators to encourage federally-insured financial 
     institutions to offer low-cost remittance services and no-
     cost or low-

[[Page S10068]]

     cost basic consumer bank accounts. It is estimated that half 
     of all remittance senders do not have a bank account, and 
     only one in ten consumers use banks to send remittances. This 
     requirement on the Federal regulators will further encourage 
     competition in the market and will assist in the critical 
     effort to bank the unbanked.
       We greatly appreciate your leadership on this issue, and we 
     look forward to working with you to enact the International 
     Remittance Consumer Protection Act of 2004. If we can be of 
     any help, please feel free to contact Rob Randhava, LCCR 
     Policy Analyst, at (202) 466-6058.
           Sincerely,
                                                   Wade Henderson,
                                               Executive Director.
                                                     Nancy Zirkin,
     Deputy Director.
                                  ____



                                       CASA of Maryland, Inc.,

                                                  Takoma Park, Md.
     Hon. Paul Sarbanes,
     U.S. Senate,
     Washington, DC.
       Dear Senator Sarbanes: On behalf of CASA of Maryland, Inc., 
     the largest Latino service and advocacy organization in 
     Maryland, I write to offer strong support for the 
     ``International Remittance Consumer Protection Act of 2004.'' 
     CASA greatly appreciates your efforts to strengthen the 
     rights of consumers who send money overseas.
       CASA of Maryland, Inc. provides high quality and affordable 
     remittances services for the Latino community in Maryland. We 
     witness every day the abuses that this legislation will 
     prevent.
       This historic legislation brings remittances under the 
     framework of federal consumer protection law, and will 
     encourage transparency and competition in the remittance 
     market. There are three components to the bill:
       First, it establishes clear disclosure requirements for 
     remittance transfer companies, including the requirement that 
     the cost of the exchange rate conversion be included in the 
     total cost of the transfer. This cost is, at present, a 
     hidden fee through which consumers are unwittingly charged 
     excessive and abusive additional costs. The bill also takes 
     an innovate approach to calculating the exchange rate fee, so 
     consumers will be able to shop among different remittance 
     companies with the full knowledge of each company's prices.
       Second, it creates an open and fair error resolution 
     process for remittance transfer errors. Currently, consumers 
     who send remittances do not have any guaranteed recourse to 
     recover money if a remittance transfer company fails to 
     deliver on its promises. The bill establishes an error 
     resolution mechanism for remittance transfer errors that is 
     responsive to the different types of errors that can occur in 
     a remittance transaction, and is reflective of the unique 
     characteristics of the remittance market and its 
     participants.
       Finally, it requires Federal bank and credit union 
     regulators to encourage federally-insured financial 
     institutions to offer low-cost remittance services and no-
     cost or low-cost basic consumer bank accounts. It is 
     estimated that half of all remittance senders do not have a 
     bank account, and only one in ten consumers use banks to send 
     remittances. This requirement on the Federal regulators will 
     further encourage competition in the market and will assist 
     in the critical effort to bank the unbanked.
       On behalf of the immigrant community throughout Maryland, I 
     congratulate you on your leadership with this issue, and we 
     look forward to working with you to enact the International 
     Remittance Consumer Protection Act of 2004. If I can be of 
     any assistance, please feel free to contact me at 301-270-
     0419.
           Sincerely,
                                                   Gustavo Torres,
     Executive Director.
                                  ____

                                                   Consumers Union


                                            West Coast Office,

                            San Francisco, CA, September 30, 2004.
     Senator Paul Sarbanes,
     U.S. Senate.
       Dear Senator Sarbanes: Consumers Union, the nonprofit 
     publisher of Consumer Reports, the Consumer Federation of 
     America, the National Consumer Law Center on behalf of its 
     low income clients, and U.S. PIRG are pleased to express our 
     strong support the International Remittance Consumer 
     Protection Act of 2004, as introduced today. This bill will 
     provide essential information and consumer protections to 
     hardworking people who send money to family members in other 
     countries, very significantly improving the operation of the 
     money transmission marketplace for consumers.
       Consumers in the U.S. send a significant dollar volume of 
     international remittances using both financial institutions 
     and non-financial institutions. Money sent to family members 
     outside the U.S. represents hard-earned family income. As the 
     Inter-American Development Bank has said: ``The dramatic 
     growth of international remittances is testimony to the hard 
     work and commitment of migrant workers seeking better lives 
     for themselves and their families.'' Money transmission 
     costs, disclosures, and consumer rights are not an issue that 
     extends beyond recent immigrants. Consumers who are U.S. 
     citizens or longstanding residents also send money to family 
     members outside of the U.S.
       U.S consumers sent $13.2 billion to Mexico in 2003, usually 
     in amounts of about $500 per transmission, according to a 
     report by the Pew Hispanic Center. According to the Inter-
     American Development Bank, U.S. consumers send $38 billion a 
     year to Latin America and the Caribbean, often in amounts of 
     $200 to $300 per transmission. U.S. workers also send money 
     to India, the Philippines, and other countries.
       Consumers who transmit funds internationally need the 
     protections that would be provided by the International 
     Remittance Consumer Protection Act of 2004. These protections 
     include plain disclosures before sending the money such as 
     the amount of foreign currency that will actually be sent to 
     the recipient in another country and the total cost of the 
     money transmission. The bill will require that this 
     information to be given before the transaction starts, which 
     is the time that pricing information is most useful to the 
     consumer. Consumers who are informed about the true amount of 
     funds that will be sent, and about the full cost of the money 
     transmission transaction, can shop around much more 
     effectively for the best rates and fees.
       The bill will also require that the consumer be given a 
     receipt with this important pricing information and with the 
     date when the money is to be delivered. In addition, the bill 
     will protect persons in the U.S. who send money out of the 
     country if that money is not received in the other country, 
     or if the wrong amount is received. These error resolution 
     provisions are designed specifically for money transmission, 
     but are based on the same principles as existing protections 
     that consumers enjoy when they make payments domestically 
     using an electronic fund transfer from a bank account. Money 
     that is sent to family members outside the country often is 
     essential to the economic survival of those family members. 
     It is important that the funds arrive as promised. This bill 
     would require money transmitters to tell the sender when the 
     money should arrive and would also create a mechanism for a 
     refund if there is a problem with the sending of the funds.
       Finally, the bill would encourage more federally insured 
     financial institutions to offer low cost remittance services. 
     Since some consumers who send remittances do not have bank 
     accounts, this could be a way for federally insured financial 
     institutions to serve new markets. According to an extensive 
     study by the Pew Hispanic Center, financial institutions 
     current have only about 3% of the international remittance 
     market.
       For these reasons, we are pleased to express our very 
     strong support for the International Remittance Consumer 
     Protection Act of 2004.
           Very truly yours,
                                                  Gail Hillebrand,
                                     Consumers Union of U.S., Inc.
                                                     Jean Ann Fox,
                                   Consumer Federation of America.
                                                  Margot Saunders,
                                     National Consumer Law Center.
                                                   Ed Mierzwinsky,
                                                        U.S. PIRG.
                                 ______