I’m From The Government And Here To Help Remittances

Treasury Department oversight of non-bank money-remittance businesses would be more streamlined by reducing duplication of regulatory reviews with states under a bill now awaiting President Obama’s signature. The bill also could save remittance companies millions by not have to go through duplicative state and federal review processes.

The U.S. Senate on Friday (Aug. 1) approved the Money Remittances Improvement Act. The legislation authorizes the secretary of the treasury to rely on examinations conducted by the relevant state supervisory agency when weighing whether a non-bank funds-transfer company complies with monetary instrument transaction reporting requirements. This authorization applies if the category of financial institution is required by state law to comply with federal requirements, and the state supervisory agency is authorized to ensure that the financial institution complies with federal requirements.

The House approved its version of the bill in May.

Current law has hindered collaboration between state and federal regulators by restricting information sharing. By expanding state and federal coordination, the bill promotes more consistent approaches to examinations while streamlining the remittance process and eliminating funds-transfer regulatory barriers.

The bill would also reduce duplicative examinations on the regulated firms. Under current law, these institutions must comply with rules from state regulators and such federal bureaus as the IRS and Financial Crimes Enforcement Network (FinCEN). Consequently, these entities are examined for compliance by both state and federal examiners.

The legislation, by reducing compliance costs, opens the door to greater competition for international funds-transfer services, which should make it easier for American immigrants supporting their extended families overseas while continuing to provide the necessary safeguards to ensure their funds reaches the intended destination.

Responding to the Senate action, U.S. Rep. Keith Ellison, (D-Minn.), suggested the legislation will be especially helpful for the Somali and Hmong communities his direct represents. “This bill will simplify the process by which families and businesses send money home,” he said. “I look forward to the president signing this bill into law.”

By allowing federal regulators to use state exams, they are able to more efficiently ensure compliance with laws and regulations while also reducing costs for the regulated firms themselves, Ellison said.

Citing Treasury Secretary Jack Lew, Ellison noted that the FinCEN’s ability to formally rely on examinations conducted by state supervisory agencies will greatly improve Bank Secrecy Act compliance and oversight for nonbank financial institutions lacking a federal regulator. Obama had requested the authority outlined in the bill in three of his budget requests.

“It enables FinCEN to focus federal examinations more efficiently on institutions of greatest risk,” Ellison noted in April in comments about the bill. “It will increase information sharing between FinCEN and counterpart anti-money laundering/counter-terrorist financing regulators.”

Among the organizations also supporting the legislation are The Conference of State Bank Supervisors, Money Transmitter Regulators Association, Oxfam America African Development Solutions, the Somali American Remittances association, Tawakal Money Express, Kaah Express, Dahab-shiil, Amal USA Inc., and the Somali Action Alliance, and The Confederation of Somali Community in Minnesota, Ellison noted.