established banking relationships we have tens of thousands of ranging from mom and pop convenience stores to large international market players i think we recognize that for most of our constituents they provide valuable financial services providing universal array of options for consumers to determine which best meet their individual financial needs non o although the many service businesses are subject as we know to federal registration and certain money laundering provisions such as the bank secrecy act they're largely non bank institutions that do not have comprehensive federal regulator leaving state agencies to enforce state statutes governing the result federal financial regulators have proposed new compliance rules for institutions doing business with regardless of their intent this i believe has had a perverse effect of leading some institutions to  just cut their ties with the money service businesses rather than deal with the increased obligations or indeed potential increased liability if incentives correctly stated that quote an effect of a m l program requires sound risk management is a point to which i wholeheartedly agree but we must also be cautious and in our pursuit of a m l compliance that we do not use and that we end up pushing currently monitored transactions underground into a shadowy world of illicit transactions what is ultimately the impact on low income citizens low income neighborhoods if we drive into the banking sector i think it's a relevant question for this committee said before we know that each and every regulation that has been imposed on our banking system seemingly made sense at the time but our challenge is constantly to look at the cost of these regulations that are being imposed on our economy and our nation particularly at a time when so many of our fellow citizens remain unemployed in this recession and it is important incumbent upon us to recognize unintended consequences that these regulations may cause that's why last year i was pleased to join with ranking member baucus in co sponsoring our colleague carolyn maloney bill h r twenty twenty eight ninety three which would establish a self certification process for the by our chairman the gentleman millon ois mr ranking members baucus bill would establish the office of money services business compliance with in treasury and empower the director of that office to recognize a self regulatory organization financial services to the public money transfer money orders cashing and these services while often vital to the community are regulated by the internal revenue service in an attempt to i any kind of abuse but there are reports that operate in this country without the proper compliance and registration where appropriate my home state of georgia is among thirty seven that have some form of registration the m s b section of the non depository financial institutions division is responsible for supervising regulation system perhaps resembling the one we have in georgia could very well provide benefits on the federal level and deterring money laundering for financial transactions that support terrorist activities and to support informative testimony from the witnesses this morning on this very important and timely topic and i look forward to their suggestions on how they might suggest that we in congress compliance is a patchwork complex patchwork of regulations which involve both federal restrictions on money laundering and terrorist financing as well as consumer protection mandates and for tens of thousands of m  they had to make a choice either do their own home side investigation and money laundering compliance or live with the law bell consequently most banks stopped offering accounts  soundness in consumer law mr chairman h r thirty one forty three thirty one is a good solution to make the uniform and effective national registration and compliance for money laundering  that a new federal regime which could potentially be in conflict with our state regulation we encourage the committee to consider creating a single regulator for neighborhood financial service providers operating in the united states our membership serves millions of customers from all walks of life including those with bank accounts as well as our members which we call financial service centers or  transactions providing over one hundred billion dollars products and services to over thirty million customers specialize in delivering retail financial services offering convenient locations and hours of operation showing that more than ninety percent of our customers find a value and level of our services as good check cashers another are dependent on access to depository and banking services for their very survival banks that service and maintaining accounts banking costs are increasing and would be entrepreneurs in this area are experiencing barriers and opening new businesses part of the current bank discontinuance problems in the eyes of some regulators and bankers are inadequately regulated let me demonstrate how this is not accurate at the state level check cashers are regulated in most u s jurisdiction typically by banking departments or other regulators state regulation typically includes licensing or registration requirements mandatory recordkeeping examinations financial reporting regulation and consumer protections virtually every state with a sizable check casher industry as an act of legislation to one every two years with the u s department of treasury they must also implement an anti money laundering programs including policies and compliance officer training programs and independent compliance examinations banks and other financial and remittance activities at certain levels as mandated by the b s a compliance is overseen by the financial crimes enforcement network examination function administered by the internal revenue service typical title thirty one audit i examiners will go onsite to assess the level of compliance including a review of all reporting and record keeping functions the i r s examination process is rigorous and short the perception that check cashing industry is under regulated is simply not accurate it will continue to work with members of congress and this subcommittee to help ensure the availability of banking services to the industry one solution currently being considered is h r twenty eight ninety three the money service business act of two thousand and nine look at our industry in conclusion and its members are committed to working with the subcommittee and our industry partners to help ensure that continue to have access to banking services again we thank you for the opportunity to present  that they had commentary to that effect and i'm going to ask you a line of argument here that while this may be true that in terms of effectiveness the current regulatory structure  thousand are actually registered and then they say due to the limited resources of the i r s the enforcement of anti money laundering and anti terrorist financing oversight is largely left and home to the poorest of the poor because we have so many in that county comments and questions will be directed towards that group this makes it very difficult the majority of my constituents to obtain non predatory loans and force them to rely on the check cashers and payday lenders for their financial transactions and such transactions make it very difficult for them to obtain non predatory loans and thereby prevent them from establishing credit possibly purchasing a car and it's just very difficult for them to be able to get into the mainstream  financial institutions in fact payday loans over a period of time can result in my constituents paying up to four hundred percent interest if they don't pay the loans by the end of each month over the years i the bank in the united states into the mainstream financial services and unfortunately many of them remain on by distrust banks and other mainstream financial services and entities sent continue to suffer at the hands of those folks i mentioned and predatory lenders i have a question that i would like to to direct i can get my hands on it more disposable income to be able to enjoy a better quality of under ground and potentially untraceable to law enforcement something we all agree is not the result we are looking for and i hope to have a discussion that can best possible conclusion and i'd like to ask mr might make plain as you know my colleague has a bill that would recognize a self regulatory organization that would be delegated rulemaking authority as well as enforcement and creative bill and something that i think consideration and will continue to look at it and working with do you believe that this is a better approach to a self certification process i think it's certainly a different approach with respect t situation how is it affecting businesses and their ability to deliver financial services regulation if you think that there is no need for additional revenue one to thank you given my source of information and i'll share with you what i have indication is that we have approximately locations that don't need to be registered do you agree then that we have more that are not registered than are registered i don't know but i think you're right in that there are there are a number out there is an indication was that we have about forty thousand that are correct and my indication is that we have fifteen to twenty thousand that are actually registered so if it's forty then we have at least as many that are not registered at our register their statement do you concur without the estimates in front of you do you agree that we have more that are not registered than are registered do you agree that we have a good number that are not ready now given that we have a good number that are not registered and given that we have found that some banks are having great difficulty with the current circumstance and they are discontinuing the service  my question to you is how would you stand on the premise that we don't need additional regulation given this circumstance that exists with our banking institutions  this premise that we need no additional regulation my guess is we may or may not like the regulation that's being proposed you may think that that this is not a panacea but surely given the circumstance something has to be done because we have legitimate business enterprises who are not engaging in the process and others that are considering this continuing as it relates to this how can you stand on this so as not to give you a moment to talk about it endlessly and i'm sorry to have to do it to you would you agree rather than tell me answer the question which was rhetorical would you agree that some regulation is necessary and i'll start with you is that correct would you agree that some regulation is necessary no i think we just need to apply the registered as a as a transmitter and at the state level they have to be licensed in many jurisdictions that's an absolute threshold that they do have to meet with respect to the proposed legislation i don't think it would subcommittee but i think it's again it's something that would not necessarily directly impact money transmitters ability to conduct business also i'm curious to get your views on this topic post nine eleven our country very correctly