[Congressional Record (Bound Edition), Volume 154 (2008), Part 11]
[House]
[Pages 15678-15680]
[From the U.S. Government Publishing Office, www.gpo.gov]




                   MONEY SERVICE BUSINESS ACT OF 2008

  Mrs. MALONEY of New York. Madam Speaker, I move to suspend the rules 
and pass the bill (H.R. 4049) to amend section 5318 of title 31, United 
States Code, to eliminate regulatory burdens imposed on insured 
depository institutions and money services businesses and enhance the 
availability of transaction accounts at depository institutions for 
such business, and for other purposes, as amended.
  The Clerk read the title of the bill.
  The text of the bill is as follows:

                               H.R. 4049

       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 ``Money Service Business Act 
     of 2008''.

     SEC. 2. FINDINGS.

       The Congress finds as follows:
       (1) Check cashers, money transmitters, and other legally 
     authorized and regulated money transmitting businesses (also 
     designated as money services businesses) provide a wide range 
     of necessary financial services and products to customers 
     from all walks of life, including the under-banked and urban 
     communities.
       (2) Those services include domestic and international funds 
     transfers, check cashing, money order and traveler's check 
     sales, and electronic bill payments.
       (3) Regulatory guidance issued by, and expectations of, the 
     Federal banking agencies and the Secretary of the Treasury 
     urge insured depository institutions to conduct reviews of 
     money services businesses' anti-money laundering compliance 
     programs, placing such depository institutions in the 
     position of quasi-regulators.
       (4) Consequently, many insured depository institutions have 
     refused or closed money services businesses' accounts in 
     order either not to incur the burden, risk or potential 
     liability for undertaking a de facto regulatory function, or 
     else to avoid supervisory sanctions for not exercising such 
     oversight.
       (5) This trend endangers the existence of legitimate, 
     regulated money services businesses industry and the ability 
     of such businesses to deliver financial services and 
     products.
       (6) Loss of depository institution accounts by money 
     services businesses threatens to drive the customer 
     transactions of such businesses underground through 
     unregulated channels, including bulk cash smuggling or other 
     means.
       (7) It is critical to the interests of national security 
     that transparency of money services business transactions be 
     maintained by ensuring such businesses have a reasonable 
     process to demonstrate to insured depository institutions the 
     compliance by such businesses with anti-money laundering and 
     counter-terrorism financing obligations.
       (8) Money services businesses are subject to Federal money 
     laundering and terrorist financing control programs and 
     reporting requirements as enforced by State and Federal 
     regulators, including the Secretary of the Treasury, which 
     are authorized to conduct compliance oversight and to impose 
     sanctions through licensing, registration or other powers.
       (9) These State and Federal regulators have committed to 
     coordinate their supervision and enforcement of such money 
     services businesses obligations.
       (10) Insured depository institutions and Federal banking 
     regulators should be able to rely on a regulatory process for 
     conducting oversight of money services businesses' compliance 
     with subchapter II of chapter 53 of title 31, United States 
     Code, as well as on a process of self-certification by 
     legitimate money services businesses that attest to such 
     compliance.
       (11) Accordingly, to eliminate regulatory burden imposed on 
     insured depository institutions and promote access by money 
     services businesses to the banking system and to give full 
     recognition to Federal and State agency authority to 
     supervise and enforce money services businesses' compliance 
     with anti-money laundering and counter-terrorism financing 
     obligations and their implementing regulations, it is 
     appropriate and necessary to provide for the self-
     certification process established pursuant to this Act.

     SEC. 3. SELF-CERTIFICATION PROCESS FOR MONEY SERVICES 
                   BUSINESSES ESTABLISHED.

       (a) In General.--Section 5318(h) of title 31, United States 
     Code, is amended by adding at the end the following new 
     paragraphs:
       ``(4) Money transmitting business accounts.--
       ``(A) In general.--A federally insured depository 
     institution that maintains an account for a money 
     transmitting business (as defined in section 5330(d)(1)) 
     shall have no obligation to review the compliance of that 
     business, or any agent thereof, with that business's or 
     agent's obligations under this section, if the institution 
     has on file--
       ``(i) a certification submitted by the money transmitting 
     business that meets the requirements of paragraph (5)(A); or
       ``(ii) in the case of an agent of a money transmitting 
     business--

       ``(I) the certification required under paragraph (5)(B); 
     and
       ``(II) a certification from the business that the named 
     agent is authorized to act as the principal's agent.

       ``(B) Penalties.--
       ``(i) Civil penalties.--A money transmitting business or an 
     agent of any such business making a material 
     misrepresentation in a certification referred to in 
     subparagraph (A) shall be subject to the civil penalties 
     prescribed under section 5321 without regard to whether such 
     violation was willful.
       ``(ii) Criminal penalties.-- A person who knowingly makes a 
     material misrepresentation in a certification referred to in 
     subparagraph (A) shall be subject to penalties prescribed 
     under section 5322 without regard to whether such violation 
     was willful.
       ``(C) Rule of construction.--No provision of this paragraph 
     shall be construed as requiring any federally insured 
     depository institution to establish, maintain, administer or 
     manage an account for a money transmitting business or an 
     agent of any such business.
       ``(D) Reliance for insured depository institutions.--A 
     federally insured depository institution shall have no 
     liability under this chapter for the failure of any money 
     transmitting business or an agent of any such business to 
     comply with any provision of this section and regulations 
     prescribed under any such provision.
       ``(E) Federally insured depository institution defined.--
     The term `federally insured depository institution' means any 
     insured depository institution (as defined in section 3 of 
     the Federal Deposit Insurance Act) and any insured credit 
     union (as defined in section 101(7) of the Federal Credit 
     Union Act).
       ``(5) Paragraph (4) certification.--
       ``(A) Money transmitting business.--A certification by a 
     money transmitting business meets the requirement of 
     paragraph (4) if the money transmitting business certifies as 
     follows, to the satisfaction of the Secretary:
       ``(i) The business is in compliance with paragraph (1) and 
     regulations prescribed by the Secretary under such paragraph.
       ``(ii) The business maintains an anti-money laundering 
     program covering all of the identified capacities through 
     which the business acts as a money transmitting business that 
     includes the components of the program specified in 
     subparagraphs (A) through (D) of paragraph (1).
       ``(iii) The business is licensed or registered as a money 
     transmitting business by each State--

       ``(I) within which the business operates as a money 
     transmitting business; and
       ``(II) which requires such licensing or registration.

       ``(iv) The business is registered with the Secretary in 
     accordance with section 5330, and regulations prescribed 
     under such section, and remains in full compliance with such 
     section and regulations.
       ``(B) Agents of a money transmitting business.--A 
     certification by an agent of a money transmitting business 
     meets the requirement of paragraph (4) if the agent certifies 
     as follows, to the satisfaction of the Secretary:
       ``(i) The agent is an agent of a money transmitting 
     business that meets the requirements of clauses (i) through 
     (iv) of subparagraph (A).
       ``(ii) If applicable, the agent appears on the list of 
     agents of the money transmitting business maintained by the 
     business pursuant to section 5330(c)(1).
       ``(iii) The agent--

       ``(I) operates as an agent for a money transmitting 
     business pursuant to a written contract;
       ``(II) will act honestly and in compliance with all 
     applicable laws when conducting any business as an agent for 
     a money transmitting business; and
       ``(III) will immediately notify any federally insured 
     depository institution to which the certification is 
     submitted of the occurrence of any material change in the 
     relationship of the agent with the money transmitting 
     business, including termination or suspension, or the 
     institution of any criminal or administrative proceeding 
     commenced against the agent.

       ``(iv) The agent is licensed or registered as a money 
     transmitting business, or as an agent of such business, by 
     any State--

       ``(I) within which the agent operates as an agent of a 
     money transmitting business; and
       ``(II) which requires any such licensing or registration.

       ``(v) The agent is not required to be registered with the 
     Secretary as a money transmitting business pursuant to 
     regulations prescribed by the Secretary under section 
     5330(c)(2).''.
       (b) Regulations.--The Secretary of the Treasury shall 
     prescribe such regulations as the Secretary determines to be 
     appropriate to implement the amendments made by subsection 
     (a), in final form, before the end of the 120-day period 
     beginning on the date of the enactment of this Act.

  The SPEAKER pro tempore. Pursuant to the rule, the gentlewoman from 
New York (Mrs. Maloney) and the gentleman from Connecticut (Mr. Shays) 
each will control 20 minutes.
  The Chair recognizes the gentlewoman from New York.


                             General Leave

  Mrs. MALONEY of New York. Madam Speaker, I ask unanimous consent that 
all Members have 5 legislative days in which to revise and extend their 
remarks on this legislation and to insert extraneous material thereon.
  The SPEAKER pro tempore. Is there objection to the request of the 
gentlewoman from New York?
  There was no objection.
  Mrs. MALONEY of New York. Madam Speaker, I yield myself as much time 
as I may consume.

[[Page 15679]]

  Madam Speaker, H.R. 4049, the Money Service Business Act, is 
bipartisan legislation that has been cosponsored by the chairman and 
ranking member of the Financial Services Committee, as well as the 
ranking member of the Financial Institutions and Consumer Credit 
Subcommittee, Congresswoman Biggert. This bill passed out of the 
Financial Services Committee on a unanimous vote.
  The Money Service Business Act addresses the critical problem of 
money service businesses, MSBs, being denied access to the banking 
system. MSBs have experienced blanket terminations of their commercial 
accounts over the past several years due, in part, to banks responding 
to unclear guidance from regulators.
  This bill establishes a mechanism that would allow MSBs to self-
certify their compliance with the Bank Secrecy Act and anti-money 
laundering requirements, while allowing banks to make risk-based 
decisions about banking particular MSBs.
  MSBs, which include check cashers, money transmitters and money order 
issuers, have served our Nation's community for years. If this issue is 
left unaddressed, the viability of MSBs will be compromised, 
potentially pushing many of these transactions underground and 
potentially untraceable to law enforcement.
  Banks, reacting to regulatory fears, have terminated MSBs accounts in 
a blanket fashion in an attempt to minimize exposure to ``high risk'' 
businesses. Without a banking relationship, MSBs are unable to provide 
financial services to communities, making it difficult for millions of 
Americans to pay bills, send money, or cash checks.
  Federal regulatory agencies, recognizing the problem facing MSBs, 
have sought to address this issue through agency guidance and 
regulatory changes, with little effect. This legislation addresses this 
problem by enabling MSBs to self-certify their compliance with the Bank 
Secrecy Act and anti-money laundering requirements.
  This approach is not novel. It is similar in principle to that used 
for international correspondent banking. It would not relieve banks of 
their due diligence responsibilities with regard to their MSB 
customers, rather, it would permit appropriate reliance on self-
certification to relieve banks of being the de facto regulators only of 
MSBs' Bank Secrecy Act and anti-money laundering compliance.
  The mechanics of this self-certification will be handled by 
regulations set forth by the Secretary of the Treasury, and the 
certification will be filed with the financial institution where the 
MSB has a commercial account. To ensure that there is appropriate 
access to these self-certifications, it has been requested that the 
Secretary of the Treasury, while promulgating the regulations to 
implement this legislation, should require a duplicate copy of the 
self-certification to be filed with the Financial Crimes Enforcement 
Network, FinCEN, and that the Department of Justice have access to 
these files. I am fully in support of this suggestion and believe it 
will allow for even greater transparency in the self-certification 
process.
  I do want to mention that even with the implementation of the self-
certification, MSBs would continue to be responsible for complying with 
all other existing provisions of the Bank Secrecy Act and will continue 
to be the subject of rigorous on-site examinations by IRS examiners.
  MSBs are also State regulated in many jurisdictions. Currently, 28 
States and the District of Columbia require MSBs to be licensed and/or 
regulated by State banking agencies. Both MSBs and the financial 
institutions banking them will still be required to fully comply with 
all other aspects of the Bank Secrecy Act, including the filing of 
Suspicious Activity Reports and Currency Transaction Reports. Any 
violation of their certification would render the same civil and 
criminal penalties provided for by the Bank Secrecy Act and the anti-
money laundering provisions.
  This is a well-crafted bill that allows law enforcement to continue 
to track the transactions of money service businesses while allowing 
the MSBs to have access to the banking accounts they need to conduct 
business.
  Finally, I would like to thank Chairman Frank, Ranking Member Bachus, 
and Financial Institution Subcommittee Ranking Member Biggert for their 
cosponsorship and support in bringing this important bill to the floor 
today.
  I urge my colleagues to support this important legislation.
  Madam Speaker, I reserve the balance of my time.
  Mr. SHAYS. Madam Speaker, I rise in support of H.R. 4049, the Money 
Service Business Act of 2007, and ask for its immediate passage. We do 
need to pass this legislation.
  Madam Speaker, this legislation is important and long overdue. 
Despite expressions of concern by Members of this Congress asking both 
regulators and financial institutions to ensure fair treatment of money 
service businesses, or what we refer to as MSBs, financial institutions 
continue to be uncomfortable offering accounts to MSBs, and, in fact, 
most banks have discontinued offering such accounts, which is the 
issue.
  Madam Speaker, the banks have good reason to be concerned. MSBs 
provide a valuable service to consumers, and in some instances are the 
only financial service providers available to them. But the regulatory 
regime that ensures that MSBs comply with all applicable laws to 
prevent the laundering of money or the financing of terror is muddled, 
to say the least.
  After a series of regulatory actions in which banks were fined 
millions of dollars in connection with the accounts they offered MSBs, 
most banks felt they had to make a choice, either do their own on-site 
investigation of an MSB's anti-money laundering program, or live with 
the liability of not knowing how good or bad that particular program 
is.
  Madam Speaker, banks are not regulators. And we should not expect 
them to act like regulators for a different industry. No one disagrees 
that banks and the MSBs should comply with all applicable anti-money 
laundering guidance; nonetheless, terminating account services to an 
entire industry could end up forcing its customers into the underground 
financial service. That in itself creates a significant money 
laundering risk.
  The measure before us, drafted with a great deal of bipartisan 
cooperation by the gentlelady from New York (Mrs. Maloney), one of the 
stars of this institution, and the gentleman from Alabama (Mr. Bachus), 
would set up a system in which the Treasury Secretary posts a set of 
guidelines MSBs would need to meet to satisfy anti-money laundering 
requirements. When they comply, MSBs would self-certify their 
compliance to their bank.
  This self-certification function is balanced by strict penalties for 
those MSBs that misrepresent their compliance, and in no way would 
excuse banks from reporting any suspicious activity under the laws and 
regulations of the Bank Secrecy Act. But it would relieve banks of the 
requirement to be the de facto regulator of MSBs, which is not the 
bank's job or obligation.
  In reviewing this bill, the Department of Justice has raised a good 
point that I would like to emphasize. The bill requires the MSBs to 
certify, to the satisfaction of the Treasury Secretary, that they are 
in good compliance, but only requires them to file their certification 
with their banks. Madam Speaker, I think that among the regulations the 
Treasury Secretary posts to ensure compliance, the Secretary should 
require the MSBs to file a duplicate form with the Financial Crimes 
Enforcement Network at Treasury where it would be studied for 
compliance and would be available for the DOJ to view as well.

                              {time}  1645

  Madam Speaker, while we are on this subject, I would like to make an 
additional point. Regulation of MSBs is a complex and not very 
effective patchwork of effort between the States and the Federal 
Government. While some States do a terrific job, some really don't. In 
the future I hope Congress can work to find a good solution to make

[[Page 15680]]

thorough, uniform, and effective regulation of MSBs a reality. I know 
they would appreciate it. In the meantime, let's let the banks get back 
to providing accounts and doing what they do best.
  Madam Speaker, this legislation is supported by both the MSBs and the 
banking industry and would benefit those who work hard and have limited 
resources. I urge my colleagues to agree to this commonsense solution 
to the bank discontinuance dilemma.
  Ms. JACKSON-LEE of Texas. Madam Speaker, I rise today in strong 
support of H.R. 4049, the Money Service Business Act. This Act 
eliminates the regulatory burdens imposed on insured depository 
institutions and money services business and enhances the availability 
of transaction accounts at depository institutions for such businesses, 
and for other purposes. I support this bill and I encourage my 
colleagues to do likewise.
  Check cashers, money transmitters, and other legally authorized and 
regulated money transmitting businesses (also designated as money 
services businesses) provide a wide range of necessary financial 
services and products to customers from all walks of life, including 
the under-banked and urban communities. Those services include domestic 
and international funds transfers, check cashing, money order and 
traveler's checks sales, and electronic bill payments.
  Regulatory guidance issued by, and expectations of, the Federal 
banking agencies and the Secretary of Treasury urge insured depository 
institutions to conduct reviews of money services businesses' anti-
money laundering compliance programs, placing such depository 
institutions in the position of quasi-regulators. Consequently, many 
insured depository institutions have refused or closed money services 
businesses' accounts in order either not to incur the burden, risk or 
potential liability for undertaking a de facto regulatory function, or 
else to avoid supervisory sanctions for not exercising such oversight. 
This trend endangers the existence of legitimate, regulated money 
services businesses industry and the ability of such businesses to 
deliver financial services and products. Loss of depository 
institutions accounts by money services businesses threatens to drive 
the customer transactions of such businesses underground through 
unregulated channels, including bulk cash smuggling or other means.
  It is critical to the interests of national security that 
transparency of money services business transactions be maintained by 
ensuring such businesses have a reasonable process to demonstrate to 
insured depository institutions the compliance by such businesses with 
anti-money laundering and counter-terrorism financing obligations. 
Money services businesses are subject to Federal money laundering and 
terrorist financing control programs and reporting requirements as 
enforced by State and Federal regulators. These entities are authorized 
to conduct compliance oversight and to impose sanctions through 
licensing, registration or other powers.
  These State and Federal regulators have committed to coordinate their 
supervision and enforcement of such money services business 
obligations.
  Insured depository institutions and Federal banking regulators should 
be able to rely upon a regulatory process for conducting oversight of 
money services businesses' compliance. Accordingly, to eliminate 
regulatory burden imposed upon insured depository institutions and 
promote access by money services businesses to the banking system and 
to give full recognition to Federal and State agency authority to 
supervise and enforce money services businesses' compliance with anti-
money laundering and counter-terrorism financing obligations and their 
implementing regulations, it is appropriate and necessary to provide 
for self-certification process established pursuant to this Act.
  I support this Act and encourage my colleagues to support it also.
  Mr. SHAYS. Madam Speaker, I yield back the balance of my time and 
will yell a hearty ``yea'' when asked for those who support this bill.
  Mrs. MALONEY of New York. Madam Speaker, I yield back the balance of 
my time.
  The SPEAKER pro tempore. The question is on the motion offered by the 
gentlewoman from New York (Mrs. Maloney) that the House suspend the 
rules and pass the bill, H.R. 4049, as amended.
  The question was taken; and (two-thirds being in the affirmative) the 
rules were suspended and the bill, as amended, was passed.
  A motion to reconsider was laid on the table.

                          ____________________