[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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