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SAFE AND FAIR SUPERVISION OF 

MONEY SERVICES BUSINESSES 

HEARING 

BEFORE THE

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS 

AND CONSUMER CREDIT 

OF THE

COMMITTEE ON FINANCIAL SERVICES 

U.S. HOUSE OF REPRESENTATIVES 

ONE HUNDRED TWELFTH CONGRESS 

SECOND SESSION 

JUNE 21, 2012 

Printed for the use of the Committee on Financial Services 

Serial No. 112–139 

( 

(II) 

HOUSE COMMITTEE ON FINANCIAL SERVICES 

SPENCER BACHUS, Alabama, Chairman 

JEB HENSARLING, Texas, Vice Chairman 

PETER T. KING, New York 

EDWARD R. ROYCE, California 

FRANK D. LUCAS, Oklahoma 

RON PAUL, Texas 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JUDY BIGGERT, Illinois 

GARY G. MILLER, California 

SHELLEY MOORE CAPITO, West Virginia 

SCOTT GARRETT, New Jersey 

RANDY NEUGEBAUER, Texas 

PATRICK T. MCHENRY, North Carolina 

JOHN CAMPBELL, California 

MICHELE BACHMANN, Minnesota 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

BILL POSEY, Florida 

MICHAEL G. FITZPATRICK, Pennsylvania 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

NAN A. S. HAYWORTH, New York 

JAMES B. RENACCI, Ohio 

ROBERT HURT, Virginia 

ROBERT J. DOLD, Illinois 

DAVID SCHWEIKERT, Arizona 

MICHAEL G. GRIMM, New York 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

STEVE STIVERS, Ohio 

STEPHEN LEE FINCHER, Tennessee 

BARNEY FRANK, Massachusetts, Ranking 

Member 

MAXINE WATERS, California 

CAROLYN B. MALONEY, New York 

LUIS V. GUTIERREZ, Illinois 

NYDIA M. VELA ́ ZQUEZ, New York 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

BRAD SHERMAN, California 

GREGORY W. MEEKS, New York 

MICHAEL E. CAPUANO, Massachusetts 

RUBE ́ N HINOJOSA, Texas 

WM. LACY CLAY, Missouri 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

STEPHEN F. LYNCH, Massachusetts 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

AL GREEN, Texas 

EMANUEL CLEAVER, Missouri 

GWEN MOORE, Wisconsin 

KEITH ELLISON, Minnesota 

ED PERLMUTTER, Colorado 

JOE DONNELLY, Indiana 

ANDRE ́ CARSON, Indiana 

JAMES A. HIMES, Connecticut 

GARY C. PETERS, Michigan 

JOHN C. CARNEY, JR., Delaware 

JAMES H. CLINGER, Staff Director and Chief Counsel 

(III) 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS AND CONSUMER CREDIT

SHELLEY MOORE CAPITO, West Virginia, Chairman 

JAMES B. RENACCI, Ohio, Vice Chairman 

EDWARD R. ROYCE, California 

DONALD A. MANZULLO, Illinois 

WALTER B. JONES, North Carolina 

JEB HENSARLING, Texas 

PATRICK T. MCHENRY, North Carolina 

THADDEUS G. McCOTTER, Michigan 

KEVIN McCARTHY, California 

STEVAN PEARCE, New Mexico 

LYNN A. WESTMORELAND, Georgia 

BLAINE LUETKEMEYER, Missouri 

BILL HUIZENGA, Michigan 

SEAN P. DUFFY, Wisconsin 

FRANCISCO ‘‘QUICO’’ CANSECO, Texas 

MICHAEL G. GRIMM, New York 

STEPHEN LEE FINCHER, Tennessee 

CAROLYN B. MALONEY, New York, 

Ranking Member 

LUIS V. GUTIERREZ, Illinois 

MELVIN L. WATT, North Carolina 

GARY L. ACKERMAN, New York 

RUBE ́ N HINOJOSA, Texas 

CAROLYN MCCARTHY, New York 

JOE BACA, California 

BRAD MILLER, North Carolina 

DAVID SCOTT, Georgia 

NYDIA M. VELA ́ ZQUEZ, New York 

GREGORY W. MEEKS, New York 

STEPHEN F. LYNCH, Massachusetts 

JOHN C. CARNEY, JR., Delaware 

(V) 

C O N T E N T S 

Page 

Hearing held on: 

June 21, 2012 .................................................................................................... 1 

Appendix: 

June 21, 2012 .................................................................................................... 27 

WITNESSES 

THURSDAY, JUNE 21, 2012 

Bortner, Deborah, Director of Consumer Services, Washington State Department of Financial Institutions, on behalf of the Conference of State Bank 

Supervisors ........................................................................................................... 7 

Daly, Timothy P., Senior Vice President, Global Public Policy, The Western 

Union Company .................................................................................................... 5 

Levine, Ezra C., Counsel, The Money Services Round Table .............................. 8 

Suleiman, Hersi, General Manager, Amal USA, Inc., on behalf of the SomaliAmerican Money Transmitters Association (SAMSA) ...................................... 10 

APPENDIX 

Prepared statements: 

Ellison, Hon. Keith ........................................................................................... 28 

Bortner, Deborah .............................................................................................. 30 

Daly, Timothy P. ............................................................................................... 45 

Levine, Ezra C. ................................................................................................. 51 

Suleiman, Hersi ................................................................................................ 57 

ADDITIONAL MATERIAL SUBMITTED FOR THE RECORD

Ellison, Hon. Keith: 

Written statement of Adeso ............................................................................. 62 

Written statement of Oxfam America ............................................................. 64 

Renacci, Hon. James: 

Written statement of The Clearing House Association L.L.C., et al. ........... 67 

(1) 

SAFE AND FAIR SUPERVISION OF 

MONEY SERVICES BUSINESSES 

Thursday, June 21, 2012 

U.S. HOUSE OF REPRESENTATIVES, 

SUBCOMMITTEE ON FINANCIAL INSTITUTIONS

AND CONSUMER CREDIT, 

COMMITTEE ON FINANCIAL SERVICES, 

Washington, D.C. 

The subcommittee met, pursuant to notice, at 9:32 a.m., in room 

2128, Rayburn House Office Building, Hon. James Renacci presiding. 

Members present: Representatives Renacci, Pearce, Luetkemeyer, Huizenga, Canseco, Grimm, Fincher; Maloney, Watt, Baca, 

and Scott. 

Also present: Representatives Ellison, Perlmutter, and Green. 

Mr. RENACCI [presiding]. This hearing will come to order. Chairwoman Capito is running a little late, so we are going to go ahead 

and get started. 

I would first like to start with opening statements. And the first 

opening statement will be from Ranking Member Maloney. 

Mrs. MALONEY. First of all, I want to thank Chairwoman Capito 

and the Republican Majority for scheduling this hearing on a very 

important issue that affects the community that I represent and, 

literally, communities across the country. And I would like to welcome all of the panelists, particularly Mr. Daly, who has appeared 

before this panel several times on this issue and played a constructive role in trying to find a solution. 

And I would like unanimous consent for the gentleman from 

Minnesota, Mr. Ellison, to participate in this hearing, as it is an 

area of grave concern to him and his constituents. 

Mr. RENACCI. Without objection, it is so ordered. 

Mrs. MALONEY. Okay. Great. Thank you. 

I have been working to find a solution to a very real problem for 

several Congresses now, which concerns money services businesses 

(MSBs) being denied access to banking services. We want to be expanding banking services, not contracting them. 

Without a banking relationship, MSBs are unable to provide financial services to communities, making it difficult for millions of 

Americans to pay their bills, send money or remittances or cash 

checks. The fact is that banks believe that it is simply too burdensome to keep track of the customers of the money services businesses they serve. And the concern about liability in the case of a 

money services business failing to comply with Anti-Money LaunVerDate Nov 24 2008 17:29 Oct 10, 2012 Jkt 076110 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 K:\DOCS\76110.TXT TERRIE
2 

dering and Bank Secrecy Act statutory requirements has led to a 

termination of these accounts. 

We know that many accounting and tracking bills were put in 

place—and laws in place after the 9/11 terrorist attack to track terrorist money after the financial crisis. And many banks or financial 

institutions are saying they do not want to comply. It has gotten 

so challenging in the great City of New York that literally only one 

bank is now supplying this service that is needed for the money 

services businesses. So this is really, I would think, almost a crisis 

for this industry. 

I would like to point out that my colleague, Keith Ellison, has 

highlighted a very real problem that he hears about from his Somali constituents who rely on remittances to send money back to 

Somalia. So I am pleased we have a witness here today who can 

speak to this and possible, potential solutions. 

I do understand that Federal regulatory agencies recognizing the 

problem facing MSBs have sought to address the issue through 

agency guidance and regulatory changes and they say they support 

them. But it has had very little effect. My concern has been that 

if this issue is left unaddressed, the viability of money services 

businesses will be compromised, potentially pushing many of the 

transactions underground and untraceable to law enforcement. 

There have been a few legislative proposals over the years that 

have sought to address the concerns that both the banks and the 

MSBs have. I sponsored a bill in the last Congress and it literally 

passed in that Congress, in the Congress before, that would have 

enabled money services businesses to self-certify that they are in 

compliance with the Bank Secrecy Act and the Anti-Money Laundering Act and that they had the Ant-Money Laundering regime in 

place. This was a bipartisan bill that I would like to work on again 

with my colleagues. 

But there are also proposals that would delegate the registration 

process to the States using a model that has worked for mortgage 

lenders, as well as proposals that create a self-regulatory organization for MSBs. So I will be interested to hear from the witnesses 

today as to whether they believe the denial of access to bank services is something that can be fixed through legislation or whether 

it really is something that can be fixed through additional regulatory guidance. 

I think we would like to see a solution to this problem. And I 

hope we can work together to find it. I look forward to the witnesses’ testimony today, and I really feel that this is an important 

challenge, so I thank everyone who is working on it. 

I yield back. 

Mr. RENACCI. Thank you, Mrs. Maloney. 

I now want to recognize Mr. Scott for 3 minutes for his opening 

statement. 

Mr. SCOTT. Thank you very much, Mr. Chairman. And thank you 

for this very, very important hearing. 

Money services businesses play an important role for many 

Americans. Check-cashing services, money orders, and traveler’s 

checks all play vital roles within the jurisdiction of what we know 

as MSBs. And their services are utilized by different areas of the 

population in different ways. 

3 

Many individuals who are underbanked or completely unbanked 

utilize MSBs. MSBs are their lifeline for critical and crucial financial transactions, many of which are time-sensitive and are emergency situations. And they permit convenient access to cash. 

This is very, very important for millions and millions of Americans. So we have to ensure that these consumers are provided the 

proper and adequate protection and give appropriate financial education to them before transactions are completed. And this is especially true as the money services business industry continues to 

grow and its services become more accessible to potential customers. 

MSBs are regulated at both the Federal and the State levels by 

means of a complex structure of varying spans of reach, and therein lies a part of perhaps the challenge. 

Some of these agencies, namely the IRS, ensures that the money 

services businesses comply with the Bank Secrecy Act. And MSBs 

are required to register with the Financial Crimes Enforcement 

Network (FinCEN) within the Treasury Department. 

And so with this comes a key question that we might want to examine today and that is, how successful is the coordination between all of these regulatory systems. And what is the prospect for 

improvement and moving ahead? 

And then a specific question: Are money services businesses, 

such as money transmitters, categorically determined to be too 

high a risk? 

So as our economy continues to move towards recovery, Americans need reassurances that the financial services they choose to 

utilize are stable and are operating in a sound manner. And this 

holds especially true for many of my constituents and the constituents of members of this committee who rely on the services of 

money services businesses to pay monthly bills and even to help 

family members in need of immediate financial support, especially 

in these tough economic times. 

So it is an important hearing. Thank you, Mr. Chairman. I look 

forward to the panel. 

Mr. RENACCI. Thank you, Mr. Scott. And I recognize Mr. Ellison 

for 3 minutes for an opening statement. 

Mr. ELLISON. Thank you, Mr. Chairman, and thank you Ranking 

Member Maloney. 

In Minneapolis, MSBs are not a foreign policy issue. They are a 

local issue. In Minneapolis, what happens in Somalia is not a foreign policy issue for me as a Representative, it is a domestic policy—it is a domestic issue—it affects my constituents directly. My 

district is home to over 30,000 Somali-Americans, but also many 

people from the Horn and all over the world who have immigrated 

to our great country and our great State. 

And we are very proud of this community. There are four SomaliAmerican police officers, one popularly elected school board member, several people who have run for office, not necessarily successfully, but have run well, and there are a number of businesses that 

have opened up, and a number of nonprofits. We are very proud 

of our Somali community. 

In fact, the Somali community is probably largely responsible for 

the over $400 million that was sent to Somalia and the Horn to 

4 

sustain their families. And global remittances are one-third of the 

Gross Domestic Product of Somalia today. But remittances to Somalia are, unfortunately, very complex. The bottom third of Somalia is a failed nation—the bottom third. And there is no functional 

government, no functional financial system. 

And Al-Shabaab, a terrorist organization, controls large pieces of 

the country. It is important that the United States have anti-terrorism financing controls in place to protect the United States and 

the rest of the world from the dangers of these people. But having 

had many years of experience now with the Bank Secrecy Act and 

anti-terrorism financing laws, I think it may be time to review 

which of these laws really protects us and which of them we passed 

with good intentions but not understanding the impact that these 

may cause. 

It is important to understand, Mr. Chairman, as I wrap up, that 

no government, to my knowledge, has ordered any bank to cease 

and desist. There has been no government action stopping the financial services sector from doing these MSB transactions. What 

has happened is, because of the regulatory burden and the fear of 

exposure to risk of regulatory or even prosecutorial action, the financial services institutions, including Wells Fargo Bank, Sunrise 

Bank, and others, have just come to a hard-nosed business decision 

that they would terminate the facilitation of these transactions, although they readily admit that 99 percent of the people who do the 

transactions are good, decent Americans who are simply trying to 

help their family members. But the risk—the regulatory burden is 

maybe too high. 

Now, I know my friends on the Republican side say—Ellison, you 

are talking about too high of a regulatory burden? Let me assure 

you, I am still a very proud bleeding heart liberal. But I do think 

it is important for us to recognize that perhaps we don’t need more 

regulation. But maybe we need to review the regulations that we 

have in place and take a hard-nosed look at whether they are really protecting us from the harm we are trying to stop, and whether 

we really need those regulations into the future. I think what we 

really need is to look at taking away some things, as opposed to 

adding more. 

Thank you. 

Mr. RENACCI. Thank you, Mr. Ellison. And you notice I let you 

go on a little bit because you were talking about overregulation, 

so— 

[laughter] 

I now recognize Mr. Baca for 1 minute for an opening statement. 

Mr. BACA. Thank you very much, Mr. Chairman, and Ranking 

Member Maloney, for calling this hearing. 

I also want to thank the witnesses for being here this morning 

and offering their insight. 

Over the years, this committee has examined the issue of regulation of money services businesses and remittances. Recent studies 

have shown that remittances have grown constantly, even in spite 

of the recession of 2008. 

So that tells us that our President is doing a good thing, because 

he is still allowing us to do a lot of remittance. And people make 

money because they are sending money somewhere, so the transVerDate Nov 24 2008 17:29 Oct 10, 2012 Jkt 076110 PO 00000 Frm 00010 Fmt 6633 Sfmt 6633 K:\DOCS\76110.TXT TERRIE
5 

action is happening. So I thank the President for his initiatives and 

what he has done. 

In fact, last year, $351 billion globally was sent through remit- tance and $62 billion to Latin America and the Caribbean, and that 

was last year. As the minority population continues to grow in our 

country, more and more Americans may need to send money internationally to support their families. And that is critical, because 

they rely on these funds, not only to take care of their families, but 

their businesses, to create hope, to create dignity, and to create an 

opportunity for them. That plays an important part in allowing this 

to happen. 

The MSB industry is very complicated and there are many moving parts that cross over into many different levels of the State and 

Federal jurisdiction. However, as we examine this industry and the 

products, this committee has been constantly struggling with the 

need to provide—and I say, to provide—a safe and sound regulation with a need to ensure these services are allowed. It is clear 

that there is still work to be done. 

The unfortunate recent trend of the banks discontinuing services 

by MSBs rather than dealing with the tight security regulation is 

troubling because it only seems to make the problem worse. In the 

past, this committee has worked on legislation that has received bipartisan support—and I say, in the past—bipartisan support. And 

I hope we are able to do that again. And we come together because 

that is what the American people want to see us doing, working on 

a bipartisan solution. 

Again, I want to thank the Chair and the Ranking Member for 

calling this hearing and the witnesses for being here. I yield back 

the balance of my time. 

Mr. RENACCI. Thank you. Before we welcome the witnesses, I 

would like to ask unanimous consent to insert the following statements in the record: a letter from the Clearing House Association; 

and the opening statement of Mrs. Capito. 

I will now move on to welcoming our witnesses. And I believe 

Mr. Perlmutter would like to introduce our first witness. 

Mr. PERLMUTTER. Yes. And I thank Chairwoman Capito and 

Ranking Member Maloney for allowing me to sit in on the hearing 

today. 

I want to welcome Western Union. It is a Colorado company with 

a worldwide reach. And my friend, Tim Daly, with whom I have 

practiced law—against, mostly, but somebody whom I have known 

for at least a couple of decades—is a good friend of mine. And we 

are glad to have you here in Washington and look forward to your 

testimony. So, good to have you, Tim. 

Mr. DALY. Thanks. 

Mr. RENACCI. Thank you. And I will recognize Mr. Daly for 5 

minutes. 

STATEMENT OF TIMOTHY P. DALY, SENIOR VICE PRESIDENT, 

GLOBAL PUBLIC POLICY, THE WESTERN UNION COMPANY 

Mr. DALY. Thank you, Congressman Perlmutter, for the kind 

words. I appreciate it. And you are right, it was against, and I 

won’t disclose that I was usually the loser. So, thank you. Congressman Perlmutter is a very accomplished attorney. 

6 

Good morning, Mr. Chairman, Ranking Member Maloney, and 

members of the subcommittee. I am Tim Daly, senior vice president 

for global public policy for Western Union. I am pleased to be here 

today to discuss the regulatory environment for money services 

businesses. 

Western Union is a leader in global payment services. Western 

Union provides consumers and businesses with fast, reliable, and 

convenient ways to send and receive money around the world. 

Today, Western Union operates from approximately 500,000 locations in 200 countries and territories across the globe. As a large, 

geographically diverse business, Western Union operates in a complex and sometimes cumbersome regulatory environment that involves multiple State and Federal agencies. Western Union and 

other money transmitters are licensed by the individual States in 

which we do business. States are responsible for the day-to-day 

regulatory supervision and oversight of money transmitters. 

States conduct regular on-site examinations of money transmitters. These examinations review financial condition, check for regulatory compliance, and monitor the maintenance of financial reserves. 

Western Union is subject to examination by each State in which 

it is licensed. In 2011, Western Union was examined by 11 State 

banking departments. Money transmitters like Western Union 

must also register every 2 years with the Financial Crimes Enforcement Network (FinCEN). Both FinCEN and the IRS have enforcement authority over Western Union’s compliance with BSA requirements. 

A welcome development over the past several years has been the 

enactment of memoranda of understanding (MOUs) among the IRS, 

FinCEN and the State banking departments to share information 

and resources in the examinations of money transmitters whose operations cross State lines. State examiners can monitor and enforce 

compliance with the Bank Secrecy Act and other Federal antimoney laundering laws, as well as examining for safety and soundness. 

FinCEN retains its authority over the legal and practical interpretation of the Bank Secrecy Act. The IRS, FinCEN, and State 

regulators have agreed on a joint examination manual for money 

transmitters that focuses on BSA compliance issues. 

The States have also entered into agreements with each other to 

coordinate and consolidate examinations of money transmitters on 

an interstate basis. Under these agreements, teams of examiners 

from several States participate in a coordinated examination, with 

one State agency serving as the lead. Western Union’s experience 

with these multi-State examination teams has been positive, and 

we support the continuation of this effort to coordinate and consolidate supervision across State lines. We appreciate the efforts of the 

Money Transmitter Regulators Association to develop and deploy 

joint examination protocols for consolidated multi-State examinations, in which a lead State would have the authority to act on behalf of up to 10 other States. 

We are also encouraged by the development of a pilot program 

that would adopt the National Mortgage Licensing System (NMLS) 

to cover State licensing of money transmitters. States would still 

7 

make their own decisions about whether to award a license, but 

this system would eliminate duplication of effort and opportunities 

for error. 

As the committee considers further modernization of the regulatory structure for money transmitters, we encourage the advancement of coordinated, consolidated supervision between and among 

the relevant State and Federal agencies, together with certainty 

and consistency within the examination process. 

Thank you again for inviting Western Union to testify today. I 

look forward to answering any questions you may have. 

[The prepared statement of Mr. Daly can be found on page 45 of 

the appendix.] 

Mr. RENACCI. Thank you, Mr. Daly. 

I now want to recognize Ms. Deborah Bortner, director of consumer services, Washington State Department of Financial Institutions, on behalf of the Conference of State Bank Supervisors, for 5 

minutes. 

STATEMENT OF DEBORAH BORTNER, DIRECTOR OF CONSUMER SERVICES, WASHINGTON STATE DEPARTMENT OF 

FINANCIAL INSTITUTIONS, ON BEHALF OF THE CONFERENCE OF STATE BANK SUPERVISORS 

Ms. BORTNER. Good morning, Mr. Chairman, Ranking Member 

Maloney, and distinguished members of the subcommittee. My 

name is Deborah Bortner, and I am the director of non-depositories 

at the Washington State Department of Financial Institutions. I 

am pleased to testify today on behalf of the Conference of State 

Bank Supervisors. 

I want to thank you and the members of the subcommittee for 

holding this hearing on money services businesses. I appreciate the 

opportunity to discuss the regulation of MSBs by State regulators. 

State and Federal regulators and policymakers have worked together to make non-depository supervision more comprehensive, 

more consistent, and more efficient. Specific initiatives under way 

include the expansion of the Nationwide Mortgage Licensing System and registry, the NMLS, for the licensing of other financial 

services, enhanced multi-State exams and enforcement actions, and 

ongoing efforts to improve State-Federal coordination. 

Before I discuss the State supervision of MSBs, I would like to 

provide a little background on what we have done in the mortgage 

area, because it may provide a roadmap for what we hope to 

achieve in MSB supervision. 

Well over a decade ago, State mortgage regulators recognized the 

need to work together to enhance supervision of the mortgage industry. One of the cornerstones of State mortgage supervision is 

the NMLS. State mortgage regulators began the development of 

the NMLS in 2004. 

In 2008, Congress, through the leadership of Representative 

Bachus, embraced and codified NMLS into Federal law through the 

SAFE Act. The SAFE Act created a comprehensive, State-Federal 

approach to licensing and registration of mortgage loan originators. 

There are certain elements of the mortgage supervisory framework 

that could improve supervision of non-depositories, including 

MSBs. 

8 

Recently, State regulators have begun to use the NMLS for other 

non-depository providers besides mortgage lenders. In several 

States, including my own, these expanded license types will include 

MSBs. By the end of 2013, we anticipate that at least 16 States 

will be using the NMLS to manage their MSB licenses. 

State regulators have been overseeing MSBs through licensing 

and by conducting on-site exams for a number of years. Generally, 

the State licensing process requires background checks on directors 

and officers, financial statements, surety bonds, BSA policies, and 

proof of registration with FinCEN, if appropriate. 

Examiners in the fields review compliance with BSA, reporting 

and recordkeeping, capital and permissible investments. Through 

CSBS and the Money Transmitter Regulators Association (MTRA), 

State regulators have also been working together to increase regulatory efficiency in supervising MSBs that operate in multiple 

States. 

In 2002, the MTRA formed a foundation for multi-State exams 

by establishing the groundwork for States to coordinate MSB examinations and information-sharing. We currently are building 

upon those agreements to further promote coordination, consistency, and efficiency, while ensuring safety and soundness in consumer protection. 

States are also working closely with our Federal counterparts to 

coordinate supervision of MSBs. Coordinated State-Federal efforts 

include jointly developed exam procedures and quarterly calls between the IRS and State regulators to discuss current initiatives 

and supervisory issues. 

MSBs are local in touch and national in scale, so State and Federal regulators must work together to ensure effective and consistent supervision, which benefits regulators, licensees, and consumers. The evolution of State mortgage regulation demonstrates 

that uniform infrastructure and Federal policy should support, not 

supplant, State regulation. As the SAFE Act has shown, combined 

State-Federal regulatory regimes can promote consistent and comprehensive regulation without losing the benefit of having States 

serve as the cops on the beat. 

Thank you for the opportunity to testify before you today. I look 

forward to answering any questions you may have. 

[The prepared statement of Ms. Bortner can be found on page 30 

of the appendix.] 

Mr. RENACCI. Thank you, Ms. Bortner. 

I now want to recognize Mr. Ezra Levine, counsel, the Money 

Services Round Table, for 5 minutes. 

STATEMENT OF EZRA C. LEVINE, COUNSEL, THE MONEY 

SERVICES ROUND TABLE 

Mr. LEVINE. Thank you. And good morning, Mr. Chairman, 

Ranking Member Maloney, and members of the subcommittee. 

I am Ezra Levine, with the law firm of Morrison and Foerster, 

here in D.C., and I am also counsel to the Money Services Round 

Table. 

The Money Services Round Table was founded in 1988 as an information-sharing and advocacy group for the Nation’s leading nonbank money transmitters. Our members provide electronic money 

9 

transmission, payment instruments like money orders and traveler’s checks, and stored value services. Our members are State-licensed and are treated as financial institutions under the BSA. 

Money transmitters operate in a complex regulatory environment, as you have already heard. While States are the prudential 

regulator, both the IRS and the States examine money transmitters for BSA compliance. We have been working towards a more coordinated, consistent regulatory structure for money transmitters, 

and we are pleased with the progress State regulators have made 

under the leadership of the Money Transmitter Regulators Association, known as the MTRA. We support continued efforts to streamline this process and improve the consistency of application and enforcement of laws governing money transmitters. 

The regulatory process has been evolving. In the early 1990s, 

State supervision of money transmitters took its first steps toward 

coordination and uniformity with the development by the MTRA of 

its ‘‘model legislation outline,’’ which served as the basis for new, 

more uniform, and updated safety and soundness licensing laws in 

about 30 States. However, also during this period, States began to 

include BSA compliance as part of the on-site exam protocols and, 

increasingly, our members were subject to multiple duplicative and 

uncoordinated on-site exams. You heard Mr. Daly talk about 11 

exams. 

In part as a response to this proliferation of State exams having 

a BSA component, about 10 years ago, the IRS, FinCEN, and the 

State banking departments entered into MOUs to promote more effective BSA exams by the States. In short, States now monitor and 

enforce BSA compliance, as an adjunct to examining for safety and 

soundness exams. But FinCEN retains the authority, the overall 

authority, to interpret the BSA. In addition, in recent years, to provide substantive BSA guidance, the IRS, FinCEN, and the State 

regulators, working together through the MTRA, adopted an MSB 

exam manual. 

Finally, the States, through the MTRA, have begun to coordinate 

multi-State exams of money transmitters. In this useful program, 

teams of examiners from several States participate in the exam, 

with one State agency as lead. Now, the ultimate goal of this initiative is a system in which a lead State regulator performs one exam 

for each licensee, each year, and then that exam is shared with all 

the other States. 

In sum, State exams probably will continue to be the most effective means of monitoring BSA compliance by money transmitters. 

However, without coordination, inconsistency and duplication are 

sure to occur. Therefore, we urge continued work toward uniform 

application of the BSA and more coordination of State exams and 

enforcement activities. 

The Money Services Round Table looks forward to further discussions as we all work together towards a more effective and efficient 

regulatory structure that protects our entire financial system. 

Thank you again for inviting us to testify today. I look forward to 

answering any questions you have. Thank you, again. 

[The prepared statement of Mr. Levine can be found on page 51 

of the appendix.] 

10 

Mr. RENACCI. Thank you, Mr. Levine. I want to now recognize 

our last witness, Mr. Hersi Suleiman, general manager, Amal USA, 

Inc., for 5 minutes. 

STATEMENT OF HERSI SULEIMAN, GENERAL MANAGER, AMAL 

USA, INC., ON BEHALF OF THE SOMALI-AMERICAN MONEY 

TRANSMITTERS ASSOCIATION (SAMSA) 

Mr. SULEIMAN. Thank you, Mr. Chairman, and Ranking Member 

Maloney. I greatly appreciate the opportunity to testify here today. 

I am here on behalf of the Somali-American Money Transmitters 

Association. I also would like to thank Congressman Ellison for his 

leadership with this issue and also in the Minnesota delegation. 

I am here today because it is our firm conviction that the solutions to our problems lie in amicable discussions and sharing of information. We Somali-Americans own business transmissions 

across the country. We are regulated by both Federal and State. 

We register a license in multiple States. We also register with 

FINCA. 

We also have independent CPAs who audit us on a yearly basis, 

on top of both Federal and State regulations. We have independent 

compliance auditor reviewers who also audit our books on a yearly 

basis. 

I am very, very excited that Ms. Deborah Bortner from Washington State is here today. We have been dealing with Washington 

for a long, long, long time, and they have been helpful to us. 

The issue in front of us today has been going on for a long, long, 

long time. National banks, State banks assisted us in doing business a long, long, long time ago. We have been using the small 

community banks, credit unions, helping us to continue banking 

with our banking relationships. However, that became dead-ended 

recently, and we can no longer continue with our banking relationships. 

We are here to ask you—to bring your attention that this issue 

is a humanitarian issue. We are all aware of the situation in Somalia. We are all well aware this is beyond financial support. It is a 

humanitarian issue that is affecting us here in the United States. 

We follow all the rules, all the compliance imposed on us, both 

at the Federal and the State level. And we do conduct thorough 

customer service in terms of knowing our customer. We follow, 

again, all the rules and regulations. We know our customers. 

A personal story that I would like to share with you. I, myself, 

being here in the United States for nearly 30 years, have a family 

back home. My sister and her children and my nephews, whom she 

takes care on a daily basis, I send money every month. They use 

that money for shelter, for food, and for medicine. It is extremely 

important that they receive that money. The only way they can receive that money is through a money transmitter. 

As you all aware, there is no banking system in Somalia—no financial institutions in Somalia. This is the only way. I greatly appreciate you taking a hard look at this issue and helping us to 

somehow, somewhere solve this banking crisis we are facing. 

I now I look forward your questions and thank you for your time. 

[The prepared statement of Mr. Suleiman can be found on page 

57 of the appendix.] 

11 

Mr. RENACCI. Thank you, Mr. Suleiman. 

We now move on to questions from Members. I will first recognize myself for 5 minutes. I do want to thank all of the witnesses 

for being here today. 

Ms. Bortner, I believe having a single point of contact for money 

transmitter license applicants is a reasonable idea and will allow 

for an efficient sharing of information. You mention in your written 

testimony that the NMLS is a natural possibility for collecting and 

sharing this information. Could you go over again what current efforts are in place to expand NMLS to also manage money services 

businesses, and also describe why the NMLS would be a good fit 

for this industry? 

Ms. BORTNER. Mr. Chairman, for many years, we have been licensing in each State—49 States currently license MSBs. And it is 

kind of like looking through a peephole—we know what that industry is in our State, and we share information amongst States. 

But I think having the NMLS, which is currently adding those 

types of licenses to the NMLS—having them have a single portal 

for all States to be able to license their MSBs—it is just a portal. 

We make all the licensing decisions at the State level, but there is 

this portal, just like mortgage lenders and securities brokers have 

the very same national portal to license. 

And before we can really effectively regulate this industry, I 

think we need to know who they are in one place, where it can be 

shared by Federal and State regulators. And I think that would 

really increase the efficiency. For one thing, if you need fingerprints in one State, you can share those fingerprints. If you need 

some sort of credit reporting or anything like that, it is shared in 

one place and everybody sees the same document. 

So that is really what is really going on right now—States are 

beginning to transition onto the NMLS. But the SAFE Act required 

us all to get on it. It made us all get on within a very short period 

of time. And I think that is a very efficient way to deal with this 

issue. 

Mr. RENACCI. Thank you. What specific changes in Federal law 

are necessary to ensure that NMLS remains effective and will 

allow it to expand into other industries? Do you have any suggestions? 

Ms. BORTNER. We have—the NMLS is available for licensing and 

the SAFE Act required all States to provide that mechanism. And 

it was a very easy way of providing a Federal law that created minimum standards for licensing of mortgage loan originators. And we 

all had to get on it, either that or HUD was going to take over the 

regulatory process for loan originators. 

So amazingly, in 1 year, 49 of the States adopted laws consistent 

with the SAFE Act, and that created the efficiency by getting all 

the loan originators onto the NMLS over a short period of time. 

Mr. RENACCI. I am sorry. I was referring to the privilege and the 

CFPB. I am sorry. 

Ms. BORTNER. Oh, okay. I am sorry. One of the benefits of having 

the SAFE Act was to create the confidentiality amongst the States 

and with the Federal regulators. That means that if Ohio shares 

information with me, then I have to protect that information as if 

12 

I am Ohio. And that is the confidentiality provision that was in the 

SAFE Act. 

It also provided an opportunity for us to share our exams and 

make us more efficient because we could work together as a result 

of that. 

Mr. RENACCI. And I have been working with your organization 

on the legislation to go along in that fashion. I would hope to introduce a bill in the next couple of days. 

I yield back the remainder of my time. And I recognize Mrs. 

Maloney for 5 minutes. 

Mrs. MALONEY. Thank you very much. And I welcome all the 

panelists. Many of you talked about the regulatory burden, and 

what I am hearing from my constituents is not so much the regulatory burden, but the absolute lack of access to banking services 

to be able to process and run their business. That is the absolute 

crucial problem. 

I did want to share, in response to Mr. Daly’s and Ms. Bortner’s 

and Mr. Levine’s testimony about the regulatory burden, that some 

areas or the category of businesses are working with their regulators to come up with one form that solves all of their problems 

and answers. Some are working to computerize it. It is not so much 

providing the information. It is the paperwork and time of employees to put it together. They are putting computer systems together 

that will then shoot that information out every month, so that the 

burden is not so much, and compiling it so that it all comes together. The technology is there. It is a matter of working to make 

it happen. 

But I would like my question to go to the central point of getting 

to banking services. If you can’t process your money, you are out 

of business. Don’t worry about the regulation. You are out of business. 

MSBs are an important part of the financial services in the community I represent and in many communities, because many people 

do not want to pay the bank fees or they feel uncomfortable or they 

don’t speak English or for whatever reason, they want to go to an 

MSB. And it is a huge source of banking in New York City. But 

all of the banks, save one, have said they will not process their 

business. Now, that is a huge problem. We live in America. Businesses can make decisions. And they are basically saying that the 

compliance laws and the oversight laws are too onerous. They don’t 

want to take the risk in any way, shape, or form. 

So in the bill I offered in the last Congress, it tried to take the 

risk away from financial institutions, so that—and by—and incidentally, the banking industry supported the bill, because they are 

concerned about being sued or violating any Federal law. So it is 

just easier for them to just say, no, I don’t even want any of your 

business. And so, if you could get a self-regulatory system going, 

where the liability is not on the bank, maybe some of the banks 

would provide this service. 

I would just like to ask all the panelists how you really handle 

the central issue, which is lack of access to the banks. Now, the 

bank supervisors say, oh, we are not doing anything to encourage 

any financial institution not to provide financial services or to service MSBs. We are not in any way, shape or form; yet, the financial 

13 

institutions are making this decision on their own. So, it is really 

at a crisis point. 

I think, Ms. Bortner, you told me that no bank now in Washington State will process MSBs. Is that correct? 

Ms. BORTNER. Congresswoman Maloney, we lost the largest bank 

that was supporting the Somali community just recently, as a result of a Federal investigation on a compliance officer that was a 

part of a very small MSB. 

So I think what one of the issues is, is the reputational risk. And 

I think the banking institutions just aren’t willing to take that 

reputational risk when they see—one issue happens, and they say, 

I have to get out of this business because we don’t want people 

thinking that we support terrorism or money laundering. 

The interesting part of that investigation is that none of the 

transmissions occurred at that money transmitter. It occurred all 

outside that money transmitter. So it would be impossible to detect 

that as a regulator, but it is also—I don’t think, as a regulator, I 

don’t blame a banking institution for that either. 

Mrs. MALONEY. I agree with you. And I would like the chairman, 

if he would, to yield time for the panelists to respond to my question, which I think is a central issue. How do you get access to 

banking services? What if—okay, just—if Mr. Daly and Mr. Levine 

and Mr. Suleiman, if you have any answer to that? That is the central issue. And in many States, it is totally drying up, so that there 

is no place to go. 

Mr. DALY. Thank you, Congresswoman Maloney. As you can 

imagine, Western Union, as a global company with a robust and 

complex compliance department, doesn’t face the same issues as 

the smaller providers do, because banks have comfort in our services. 

But as Ms. Bortner said, banks can be risk-averse when dealing 

with smaller providers. And some of these smaller providers, by the 

way, are our agents. We operate through different agents around 

the country. In the United States, we have 60,000 agent locations. 

So, it is an issue that we are concerned about. 

We did support the bill last session, which as you said, would 

have addressed this issue. And it was a bipartisan bill that passed 

the House. It did not pass the Senate. And I think that bill would 

have been a good approach, because it would have given banks 

some comfort. Because I think, as Ms. Bortner said, their issue is 

they are worried about the risk. And it would have allowed banks 

to rely upon the certification of companies that they were compliant and that certification would be under oath. So, that is our perspective. 

Mr. RENACCI. Before the rest of the witnesses go, can we please 

try and hold it to 20 seconds only, because we are trying to keep 

the meeting going because of votes. 

Mr. LEVINE. Thank you, Mr. Chairman. In response, the Money 

Services Round Table, as Mr. Daly indicated, actively supported 

your bill, Mrs. Maloney. We thought it was terrific. We thought it 

would fix the problem. And it didn’t go anywhere in the Senate. It 

would have given a safe harbor to banks. The real problem is that 

banks are risk-averse. 

14 

As Ms. Bortner said, the Federal Financial Institutions Examination Council (FFIEC) examination manual since the year 2002 has 

indicated that MSBs are ‘‘risky businesses.’’ Now, while the OCC 

and others say it is an urban myth, that in fact, banking examiners 

are winking an eye, telling local banks, ‘‘Hey, listen. Stay away 

from MSBs.’’ In fact, that is the evidence. And that is what is happening nationwide. And it is happened now for 10 years. 

Mr. SULEIMAN. I would like to add that I agree with Mr. Levine 

100 percent. FFIEC—any time they go and visit a bank, the first 

question they ask you would be, do you have MSB account. And if 

the bank says, yes, they take that account and spend a great deal 

of time simply looking at all the transactions for that particular 

MSB account. It happened to us recently. And as a result, a small 

community bank, which we had a relationship with for a long period of time, called us and said, I can’t take this—simply can’t take 

this. 

So there is pressure coming from the top to the banks, even 

though we are providing all the necessary documentation showing 

that we are in compliance at both the Federal level and the State 

level. 

Mrs. MALONEY. Okay. Thank you. 

Mr. RENACCI. Thank you, Mrs. Maloney. I just want to make 

note that we have votes schedule for approximately 10:45. So as we 

ask questions, as you get to your last question, I would allow 

that—when you get to 5 minutes, that the question just be answered and we move to the next Member, so everybody has a 

chance to ask questions. 

I now recognize Mr. Luetkemeyer for 5 minutes. 

Mr. LUETKEMEYER. Thank you, Mr. Chairman. I thank all of you 

for being here today. And certainly—a comment on Mr. Ellison’s 

testimony today as well. I have outside my district and within the 

district as well, a large eastern European group, which has the 

same problem his folks have, so I am very interested in this issue. 

I want to approach it a little bit differently. I know that the Consumer Financial Protection Bureau recently published a rule back 

in February that seems to have a very negative effect on the institutions in my area, with regards to being able to continue to provide services. Would you like to comment on that or are you aware 

of the rule? I am sure you probably are. 

Mr. Daly? 

Mr. DALY. Thank you, Congressman. That is a question every 

money transmitter is dealing with today. The general premise of 

the rule, as you know, is that consumers should have adequate information to make a purchase decision. They should know what the 

fees are and what the exchange rates are. And we agree with that 

premise. We believe an informed consumer is a good consumer. 

As you can imagine, though, in the implementation of a rule like 

this, there are some complexities. And there are a couple of issues 

that companies like Western Union and banks and credit unions 

are struggling with in the rule. One issue is, in addition to fees disclosed by companies, which I think was Congress’ intent that we 

disclose the fees we charge, the rule also requires us to disclose lifting fees—so fees that are charged by banks on international bank 

transactions. For Western Union, the vast majority of our transVerDate Nov 24 2008 17:29 Oct 10, 2012 Jkt 076110 PO 00000 Frm 00020 Fmt 6633 Sfmt 6633 K:\DOCS\76110.TXT TERRIE
15 

actions are cash-to-cash transactions. But we do have some transactions that involve bank accounts. And in those transactions, we 

incur these lifting fees. 

The challenge we face and that banks face on that issue is these 

lifting fees are not known at the time the transaction is sent. And 

the path these transactions take often changes. So, there is literally no way for us to know those fees to disclose them. On that 

issue, compliance isn’t difficult; it is impossible. 

We have raised this issue with the Bureau and we have met with 

them multiple times. We are working with them on the issue. But 

that— 

Mr. LUETKEMEYER. During the course of the rulemaking process, 

were you a part of the rulemaking process? Do they contact you 

and you give your views, the unintended consequences of what 

would happen if they went forward with this proposal? 

Mr. DALY. Yes, Congressman, on this and other issues, we filed 

extensive comments with both the Federal Reserve, who the rulemaking started with, and then with the Bureau. And we have met 

with and continued to meet with the Bureau, as they address this 

particular issue. 

Mr. LUETKEMEYER. Are you aware—did they do a cost-benefit 

analysis of this rule to see, one, if it is practical; is this going to 

be cost-effective for the people who are going to have to implement 

it, such as yourself? Are you aware of that? 

Mr. DALY. As far as a specific cost-benefit analysis, I am not, sir. 

Mr. LUETKEMEYER. Okay. 

To follow up, Mr. Levine, I am just kind of curious. I know you 

represent a whole group of folks who provide these services. If we 

wind up, as we continue to go down this road of not allowing our— 

or not permitting or continuing to dwindle with the number of folks 

who can provide these services, what happens then? Is there a 

black market that occurs? And if so, how does that work? Can you 

just briefly give me some ideas of the seriousness of this and how 

we can be driving people in the wrong direction for our services 

that they really need? 

Mr. LEVINE. Congressman, thank you. That is a great point. One 

of the points we always argue is that when you foreclose services 

from honest vendors—so you foreclose the opportunity for decent 

citizens to transmit money—likely, what happens is the money is 

going to move anyway. It is just going to move underground. 

And from a law enforcement and public policy standpoint, the 

last thing you want is to encourage with economic incentives, in effect, the growth of underground money transmitters—hawalas and 

others. Hawalas has become a pejorative term— 

Mr. LUETKEMEYER. Basically, what you are doing is probably 

chasing the good money underground— 

Mr. LEVINE. Exactly. 

Mr. LUETKEMEYER. —with the bad money. 

Mr. LEVINE. Right. 

Mr. LUETKEMEYER. Is that a fair statement? 

Mr. LEVINE. Yes. Yes. Absolutely. And then, there is no transparency. 

Mr. LUETKEMEYER. Right. Okay. Fantastic. I appreciate your 

comments today. 

16 

And I will yield back the balance of my time. Thank you, Mr. 

Chairman. 

Mr. RENACCI. Thank you, Mr. Luetkemeyer. 

I recognize Mr. Watt for 5 minutes. 

Mr. WATT. Thank you, Mr. Chairman. If Mr. Scott wants to go 

first, that is fine with me. Do you want me to go? Okay. Thank 

you, Mr. Chairman. And thank you for convening the hearing. 

Like most members of this committee, I have a number of MSBs 

in my congressional district, and certainly a lot of them operating 

in the State of North Carolina. And we have had a number of opportunities just to hear from them about the regulatory burdens 

and costs that they face. They, of course, are regulated by the IRS, 

FinCEN, the State of North Carolina, and now, the CFPB. And 

they clearly have a case for asserting that the regulations are burdensome. I don’t reach, necessarily, the same conclusion that some 

of my colleagues on the committee might reach that is an argument 

for no regulation, but I do think we have an obligation to regulate 

in as efficient and as good a way as we can without being burdensome. 

Mr. Daly, Ms. Bortner, and Mr. Levine, in particular, in light of 

the memorandum of understanding between the IRS, FinCEN, and 

the States, do you see opportunities for the consolidation of the supervisory functions, first? And in light of the CFPB’s involvement 

in the issue now, would it be necessary for the IRS to continue to 

have the role that they have traditionally had or might some of 

that role be logically transferred to the CFPB? 

Mr. DALY. Thank you, Congressman. That is a good question. I 

would say this—first of all, I think on the question of consolidation, 

we have made a lot of progress. 

Mr. WATT. Is that through the MOU? 

Mr. DALY. Through the MOU and increased coordination between 

and among the States and the Federal Government. Yes, sir. It is 

a result of that and we are making progress on that front. 

To your question of on the Federal side, I think it is important 

to remember that we are dealing with AML regulation, safety and 

soundness regulation, which has traditionally been in the province 

of the States. And then the CFPB, really their function is consumer 

protection. So I think we need to continue to recognize the separate 

focuses of each of those agencies. 

Mr. LEVINE. And Congressman, one reason for the MOUs—and 

this was about 10 years ago—was the fact that the IRS with scarce 

resources was really spread very thin, particularly after the USA 

Patriot Act, when insurance companies and others were brought 

into the ambit by the Congress of the Bank Secrecy Act. The IRS 

is the regulator. 

Therefore, since the States were already on scene, it made sense 

for FinCEN and the IRS to really say to the States—look, you are 

already doing on-site exams. Some of the States were already doing 

BSA as an adjunct to the safety and soundness exam, so why not 

do that officially. They are doing it officially and the trend—I think 

Ms. Bortner will testify to this—is for the States, on their own, to 

get together, because in fact, it is far more efficient. We want to 

encourage that. We like that. It is a good thing. 

17 

Mr. WATT. Maybe I should ask the question—are there additional things that can be done to either streamline or consolidate 

the regulation here that you all would suggest? 

Ms. BORTNER. Congressman, I think that this is a work in 

progress. And I think Mr. Daly— 

Mr. WATT. I am trying to figure out where we ought to be trying 

to progress to, I guess, is— 

Ms. BORTNER. Yes. The progress is to eventually—and I don’t 

speak for any of my other State colleagues—we would have one 

exam and yearly, and then some of us who couldn’t be on that 

exam or didn’t feel the necessity to be on that exam, would accept 

that exam. 

I think we are headed in that direction. And I think that would 

make it much more efficient and— 

Mr. WATT. Would that exam be headed by a State or would it 

be headed by a Federal agency? 

Ms. BORTNER. Yes, it would be headed by the State, because the 

State exams are much broader than the Federal exams. When Congress passes an act, we enforce it. So, we have been enforcing BSA. 

And that is part of our exam process. We also have consumer protection and we also have financial stability. And so we enforce that 

across-the-board. So that is what makes our exams, I think, broader, and I would like to think it is very important to make sure the 

industry is stable and that consumers are protected. 

Mr. WATT. Thank you, Mr. Chairman. I yield back. 

Mr. RENACCI. Thank you, Mr. Watt. 

I now recognize Mr. Canseco for 5 minutes. 

Mr. CANSECO. Thank you, Mr. Chairman. 

Ms. Bortner, a number of banks are leaving the money services 

business and discontinuing their partnerships with MSBs. Can you 

give us some idea as to the characteristics of banks that are leaving the businesses, versus the ones that are staying in it, as far 

as size, location, category, that sort of thing? 

Ms. BORTNER. Congressman, it has been my experience that 

starting a number of years ago, the larger institutions started dropping the MSBs. The regional banking institutions took them up, 

and now some of those regional banking institutions have dropped 

them. And now, some of the very smallest institutions are trying 

to bank MSBs, but it isn’t quite as efficient as having some of the 

larger financial institutions, which have better systems to get 

money places. It isn’t as efficient as having the bigger institutions. 

Mr. CANSECO. Mr. Levine, do you have anything to add to that? 

Mr. LEVINE. No, I think that is exactly right. The larger institutions generally backed out first—again, about 10 years ago. But 

there were one or two of them—Wells Fargo in particular, which 

has a very, very active—and I don’t do any work for Wells Fargo— 

but Wells Fargo has a very, very active MSB program, where they 

spend a lot of money vetting all MSB accounts. So it is possible, 

I suppose, but in fact, it is trickling down now even to the community banks. It is a bad trend. 

Mr. CANSECO. Thank you. 

Ms. Bortner, with more banks leaving the business, how does 

this affect the monitoring of the MSBs? 

18 

Ms. BORTNER. Congressman, I agree with Mr. Levine. Our ability 

to monitor is consistent with our ability to have a license. If they 

don’t have a legitimate way to get money, where it is being transferred, then that money is going to go underground. And we are 

not going to be aware of how they get it there, how much, to whom 

it is given. And I think having that capability is very, very important for us to make sure that there is no money laundering and 

money is not going to terrorists. 

Mr. CANSECO. Let me ask you another question, Ms. Bortner. As 

costs increase for MSBs, there runs the risk that more of these 

transactions could be pushed underground and that more fraudulent transactions could take place. So how best can policymakers 

strike a balance between the continuation of these services and the 

protection of Americans from criminals or terrorists? 

Ms. BORTNER. Congressman, as far as the cost goes, I think the 

States are very sensitive about the cost of examination and regulation. We actually changed our systems so that we don’t charge for 

exams and we charge other ways. And some of the cost has been 

shifted to the bigger money transmitters to pay for the cost of that 

regulation, which I think is to their benefit, too. So I think we are 

sensitive to it and we are trying to deal with it. 

Mr. CANSECO. Do you see in the MSB industry some of the same 

things that we see in the banking industry—that costly regulation 

or confusing regulation can drive businesses to less regulated operators? 

Ms. BORTNER. Congressman, I think that, as we try to regulate 

them in the most efficient way, we are trying to deal with some of 

those issues. And I don’t think that—obviously, the less legitimate 

folks who are in this industry who aren’t licensed—if you have to 

get your money somewhere and there is no legitimate banking industry that is going to help you, help the Somali community, for 

instance, then that is problematic. 

Mr. CANSECO. Mr. Levine, do you have anything to add to that? 

Mr. LEVINE. No, I don’t. I agree with what Ms. Bortner said. I 

think it is really a problem. It does—in fact, the entire bank closure problem, the regulatory burden problem, cost, in fact, often— 

maybe not often, but at least sometimes—drives money underground—just a bad thing. It strengthens underground transmitters 

and then you worry about who is using—what are the vehicles Al 

Qaeda and others are going to use? 

Mr. CANSECO. So how do we reverse that? 

Mr. LEVINE. One thing is—we come back to almost how we started with Mrs. Maloney’s bill. Mrs. Maloney’s bill which passed the 

House would have given banks, frankly, the cover—the safe harbor 

they need to be able to back off the Federal regulators—the banking regulators. I think that is a safe statement from looking at my 

regulator colleague here. And that would have worked, but short 

of something like that, I don’t see how you push the banks into accepting MSBs. And in fact, without a bank, you can’t do MSB business. I think we all agree on that. 

Mr. CANSECO. Thank you, very much. My time has expired— 

Mr. LEVINE. Thank you. 

Mr. CANSECO. —and I appreciate your candor. 

Mr. RENACCI. Thank you, Mr. Canseco. 

19 

I now recognize Mr. Scott for 5 minutes. 

Mr. SCOTT. Thank you very much, Mr. Chairman. 

Let me ask—on the issue of anti-money laundering, terrorists are 

financing—in my capacity as vice chairman of the Foreign Affairs 

Subcommittee on Nuclear Non-Proliferation and Terrorism, I went 

over into—with the Special Ops—into Somalia and into Kenya and 

Yemen—very hot spots. And one of the issues that came up is the 

use of monies coming in to finance terrorism, particularly with AlShabaab, that you may be familiar with in Somalia. 

We have Somalia citizens here who have challenges and others. 

I would like for you to address how serious this is, because those 

concerns were raised. And what kinds of difficulties are placed 

upon legitimate citizens in the United States who have the desire 

to send money transmitters into these regions, and especially with 

the requirement as some banks are having. The banks are saying 

it is important for us not just to know our customers, but to know 

the customers of our customers. And so, we on this committee 

would be interested to know what we can do to address this issue. 

Is this a challenge? How serious is this, and particularly, in that 

hot spot region? 

Mr. Suleiman, perhaps you could—yes, sir? 

Mr. SULEIMAN. Congressman, thank you. That is a legitimate 

question and it is a concern we as Somali-Americans also have. 

Al-Shabaab, as we all know, is a terrorist organization. We are 

fighting as a Somali, in a way, and as Somali-Americans. They are 

an enemy to all of us. And somehow, somewhere, we need to defeat 

them. However, it is true that Somalia, Kenya, and Yemen are very 

hot spots, as the Congressman suggested. 

First of all, we are knowing our customer, identifying our customer. We also have agents where the recipient, anywhere that 

money is sent, we have an agent also follow the due diligence of 

customer acknowledgement and customer identification to make 

sure the person—the beneficiary of that particular money receives 

that amount of money. 

As I said earlier, I send money to my sister, and she is the one 

who gets that money. The Somali-American Money Transmitters 

Association (SAMSA) consists of 14 companies. Those 14 companies—we are taking steps to, number one, improve our system. We 

are in the process of making our system work. It cannot be somewhere interrupted or hacked—or make it efficient to track or conduct it—the sender and the receiver. 

In addition to that, most of our customers are repeat customers. 

I would say about 80 to 85 percent of customers are repeat customers—sending money to the same person every month. And we 

track that way and that person is the one who is receiving the 

money. 

Mr. SCOTT. So you believe then that there is enough certainty for 

the banks, in terms of serving MSBs, that we can provide them, 

while being careful not to undermine the effectiveness of the Bank 

Secrecy Act in stopping any money laundering or terrorism. 

What I am trying to get at here is that—is this something this 

committee needs to look into? Is there something more we can do 

to make sure that all of this is a tight network that is put in, so 

that our constituents who may be Somalians or may be Kenyans 

20 

or people from this—who are citizens—are not held to a different 

standard simply because their homeland is in these hot spots? I 

just want to know, is there anything more you think that we on 

the committee can do to give this certainty to banks? 

And also to any of you, particularly Western Union, and any of 

you—do you feel that we are in good enough shape in securing the 

necessary pieces to make sure that our citizens are not held to a 

different standard that—in terms of—in their efforts of trying to 

get money to their relatives in these hot spots? 

Mr. SULEIMAN. Congressman, I think what the committee can do 

is, number one, to pass Ranking Member Maloney’s legislation. 

And also, there is uncertainty out there that the banks are afraid 

of. So if we—if the Congress can ease that uncertainty. 

Mr. RENACCI. Mr. Suleiman, we really have to move on— 

Mr. SCOTT. Thank you. 

Mr. RENACCI. —only because of votes. 

Mr. SCOTT. Sorry, Mr. Chairman. Thank you so much. 

Mr. SULEIMAN. Okay. 

Mr. RENACCI. I want to recognize Mr. Grimm for 5 minutes. 

Mr. GRIMM. Thank you, Mr. Chairman. And I would like to 

thank the panel for testifying today. 

I am very interested in following up on what my colleague was 

just talking about. So if the gentleman would like to complete his 

answer, that would be fine with me. 

Mr. SULEIMAN. Thank you, Congressman. What I was going to 

say was there is uncertainty out there that the banks are afraid 

of. And that is what all the witnesses alluded to earlier, that there 

are some regulations out there that really—if the banks can get uncertainty—and look at the situation a little more—I think the 

banks will be a little more reluctant to work with us. But it is the 

uncertainty in regulations that they are afraid in terms of their 

risk assessment, and that risk assessment can be regulations imposed on the banks. 

Mr. GRIMM. Just to follow up on that—very perfunctory, do you 

think, in your view, that most MSBs are aware of the U.S. antimoney laundering statutes? Do you think that they are up-to-speed 

at the level they should be? 

Mr. SULEIMAN. Absolutely. Yes. 

Mr. GRIMM. Okay. This is open to the panel. What questions 

have we not asked today that you think we need to know? Is there 

something that we haven’t discussed that you feel is relevant that 

you would like this committee to know about? And I open that up 

to the panel. 

No? Wow, we must have hit on everything. 

[laughter] 

Ms. BORTNER. Congressman, I think that we have covered most 

of the issues that we wanted to cover. But, I think that Congress 

could create some sort of uniformity by setting minimum standards 

and protecting the confidentiality of information. 

I think that Congressman Renacci—sorry—I really want to compliment you on focusing in on that issue, because I think that is 

a very, very important issue to allow us to really work together and 

be as effective and efficient as we can. 

Mr. RENACCI. Point well taken. 

21 

Mr. LEVINE. All I would say, Congressman—and we really have 

talked about it—but in the whole construct of the Bank Secrecy 

Act, there is a balance between—because it is risk-based, and that 

is all post-USA Patriot Act. There was a shift—oh, I am sorry. Yes, 

I am sorry. There was a shift to risk-based. Everything is now subjective. And so what banks are looking at, if you look at it from the 

standpoint of the bank, and I am not here to support banks or represent banks; what they are told is, you not only look at your customer, but you also look at where the money is going—to geography. 

So as your colleague indicated before, if you look at hot spots, as 

he mentioned, banks are going to say, wait, there is more risk, not 

only because it is a hot spot, but there are customers who—many 

customers who may be semi-anonymous or sending money to a hot 

spot. Therefore, the regulators are going to say, what enhanced due 

diligence are you doing, bank? And the bank is going to say, well, 

what can we do? It is going to a hot spot, of which there are many. 

And I am not sure how you solve that dilemma, except if you go 

back to—how do you give the bank some sort of protection? And 

that is what this all comes back to, I think, which is why, again, 

Mrs. Maloney has not pushed me to say this, but it is really true. 

Her bill was the perfect response to this. 

Mr. SULEIMAN. I would like to add that we at the Somali-American Money Transmitters Association—this affected us more than 

any other money transmitter companies out there. And we are 

right now in a dead-end where all the banks have ceased to do 

business with us—all over. We are using only very, very few of the 

smallest small banks and credit unions right now in all States. And 

I ask you to take a hard look at this issue, particularly with Somali-Americans. 

Mr. GRIMM. My time has expired. I yield back. 

Mr. RENACCI. Thank you, Mr. Grimm. 

I recognize Mr. Ellison for 5 minutes. 

Mr. ELLISON. Thank you, Mr. Chairman. 

First, I would like to ask for unanimous consent to insert into 

the record letters from Oxfam and Adeso. 

Mr. RENACCI. Without objection, it is so ordered. 

Mr. ELLISON. My question is simply this: have there been any 

government enforcement actions against a financial institution, like 

a bank, that caused them to get out of the MSB business? My understanding is that there haven’t been. Am I right? 

Mr. SULEIMAN. I think so, yes. 

Mr. ELLISON. It is not a trick question. The reason I ask the 

question that way is because I think that this situation that we are 

in as a system is to try to find ways to coax banks to do the MSB 

work. No one has told them not to do it. Nobody has been prosecuted. We haven’t seen the big punch from the government. What 

we have seen is banks making an assessment of risk and coming 

to the conclusion it is too much; we have to back out. Am I right 

about that? 

Ms. BORTNER. Congressman, I think that banks have a variety 

of ways that they interpret what their regulators are saying and 

it doesn’t really take, on the bank side, an enforcement action, but 

22 

those conversations go on in a confidential manner in the exchange 

of information during the exams. 

Mr. ELLISON. Right. 

Ms. BORTNER. So I think that is—just because we have not 

seen— 

Mr. ELLISON. Right. And I can see how you could think that I 

am trying to catch somebody. I am not trying to cross-examine you. 

I am just trying to ascertain that this is a bank assessment of its 

risk and a decision it has made. So therefore, if government can 

affect the situation, it is going to have to do something to create 

greater comfort. Can you agree with that? 

Ms. BORTNER. That is fair. 

Mr. ELLISON. So if that is true—let me just share a quick anecdote with my limited time. A banker whom I cannot name contacted me and told me confidentially—they didn’t tell me this confidentially, they wanted their identity to be confidential, they 

said—look, I am a big banker in town. I have 60 people working 

on the Bank Secrecy Act and the Patriot Act compliance. They are 

not making minimum wage, okay? We are talking about accountants, compliance personnel, lawyers. 

I guess my question is—complying—the regulations might be 

perfectly legitimate. I am not questioning the value of the regulations, but they are expensive. Is this a fair statement? Yes or no. 

Mr. DALY. Congressman, yes. We—Western Union—spend about $40 million a year and have about 400 people dedicated to our 

AML compliance function, which we consider one of the most critical functions that we provide. 

Mr. ELLISON. Is one of the reasons you expend that kind of 

money because of the risk of civil and even maybe criminal penalties if the regulations are not fully complied with? Do you expend 

that kind of money because you are trying to prevent an even 

greater harm, which could be civil penalties or maybe even criminal penalties if you don’t have full compliance? 

Mr. DALY. Actually, Congressman, it is a good question. But from 

Western Union’s perspective, we spend the money to try and make 

sure bad people—whether or not they are terrorists—don’t use our 

services. It is a challenging— 

Mr. ELLISON. Mr. Daly, thank you for responding. And forgive 

my jumping in here, because they only give us 5 minutes, and I 

want to make sure that my colleagues get a chance. 

So you are doing it to protect the American public. But I guess 

here is my root question: We have had the Bank Secrecy Act and 

the Patriot Act in place for a while. Are there ways to consolidate 

or maybe even repeal without risking any of the protections that 

are in place right now? I guess I am asking, can we do what we 

need to do, which is to protect the American public, less expensively by consolidating regulation; maybe even by eliminating some 

that we thought would be helpful, but maybe experience has shown 

aren’t necessary, but still cost money? 

Mr. DALY. Congressman, that is a very good question. And we 

have thought about it. On the AML front, I don’t know that there 

is anything I would change. 

I think the greatest potential for savings from our perspective is 

the kind of thing we have talked about, which is the increased conVerDate Nov 24 2008 17:29 Oct 10, 2012 Jkt 076110 PO 00000 Frm 00028 Fmt 6633 Sfmt 6633 K:\DOCS\76110.TXT TERRIE
23 

solidation of the exam process and other regulatory structures. In 

fact, in the past, we have testified in support of a Federal license 

for money transmitters. So uniformity at some level is what I think 

would lead to the greater cost savings. 

Mr. ELLISON. I am out of time. Let me thank all the panelists, 

particularly Mr. Suleiman. I appreciate all your work. 

Mr. RENACCI. Thank you, Mr. Ellison. I want to recognize Mr. 

Fincher for 5 minutes. 

Mr. FINCHER. Thank you, Mr. Chairman. 

Ms. Bortner, I have a question for you. I thank the panel, also, 

for being with us today. 

The manufactured housing industry is big in our State. And in 

your testimony, you talked about the SAFE Act a lot. There seems 

to be some confusion about some of the language in the SAFE Act. 

And in the manufactured housing industry at home, some of the 

customers are having some issues getting capital. Can you comment on maybe some of the confusion or clarification in the SAFE 

Act in moving forward on the State level or back to what I am alluding to? 

Ms. BORTNER. Congressman, I think we have tried to work with 

our manufactured housing folks in our State, in the State of Washington, to clarify when we expect licensing and when we don’t expect licensing. And we work with them on seller financing and 

whether or not they would be required to license. 

I think you would find that if you talk to the manufactured housing folks in Washington, they would be pleased as to how we have 

enforced the SAFE Act when necessary, and backed off away from 

the SAFE Act when we haven’t thought it was necessary—and still 

enforcing the SAFE Act, but interpreting it in a way that is consistent with protection of consumers in that arena. 

Mr. FINCHER. I guess what I am getting at is that maybe the interpretation or maybe misinterpretation from different States to 

others. Do you think there is something that needs to be done at 

the Federal level to make sure that we are all following the same 

statute? 

Ms. BORTNER. Congressman, since I haven’t heard any of the 

complaints from any of our manufactured home providers, I don’t 

really know how to answer that question. 

Mr. FINCHER. Okay. Thank you. I yield back. 

Mr. RENACCI. Thank you, Mr. Fincher. 

I recognize Mr. Green for 5 minutes. 

Mr. GREEN. Thank you, Mr. Chairman. I thank the ranking 

member as well. Thank you for allowing me to be a part of the 

hearing. I serve on the full committee, but I am not a part of this 

subcommittee, so thank you. 

Let me start with my friend from Somalia. Thank you for appearing. I appreciate some of the great difficulties your country is 

contending with. These are difficult times. And my hope is that we 

will be able to do as much as we can to assist you, not only with 

this issue but many other issues. 

And I am a believer in the notion that when you cannot do 

enough, and we may not be able to do enough, you should do all 

that you can. And I think this government has demonstrated a 

24 

willingness to do all that it can and I hope that we will continue 

to do this. 

Now, with reference to this specific issue, it appears to me that 

some of the concern emanates from the notion that, candidly, banks 

don’t want to do a lot of policing. They don’t get in the business 

of banking to do policing. So they just really—they understand the 

necessity. They understand that we don’t want to in any way promote, promulgate money laundering, but banks don’t want to be in 

the business of policing if they can avoid it, just as doctors, by the 

way, don’t want to get in the business of policing certain things 

that we assign them to police. 

Given that this is something that they don’t find a great comfort 

zone with, they do it because it is patriotic to do so. The law requires it, so they want to be patriotic and they want to follow the 

law. My suspicion is that your business—you didn’t get into the 

business of transference of money remittances to try to police some 

other things, but you understand it is something you have to do. 

So now, with this degree of reluctance, the question for me becomes, first of all, how do we establish a greater comfort zone for 

the industry, so that they understand that this is really not about 

overregulation? Because I know that there is this belief that we 

push too hard; we impose too many regulations. We are trying as 

best we can to protect the country so that we can continue to engage in the business that makes the country as vibrant as it is. 

Is just saying to you, that we want to help you, enough? What 

do we have to do to help businesses understand that we are not 

really antithetical to business? And I say this as it relates to both 

sides of the aisle, because my suspicion is that when we produce 

things that business doesn’t see as exactly beneficial, they don’t 

just look at one side of the aisle. They say that the Congress is 

doing this. 

Is the bill that Mrs. Maloney has going to give you the comfort 

that you are looking for? I have heard one person comment, I believe—Mr. Levine, did you comment on it? Does that bill give you 

the comfort zone that you are looking for? Maybe it is not perfect. 

But does it help you to the extent that you will feel comfortable 

moving forward? 

Mr. Levine? 

Mr. SULEIMAN. Thank you, Congressman. We as Somali-Americans are well aware of the generosity of the American government 

and the American people towards Somalia, which is unwavering. 

We do appreciate that. I am here as a Somali-American to appreciate it—the American government and the American people to 

help—the support in Somalia. 

To go back to your question—yes, I do believe that Ranking 

Member Maloney’s bill is a good start. 

Mr. GREEN. Let me just intercede, because I have 31 seconds left. 

Mr. Levine would you kindly give a yea or a nay, as to the Maloney bill? 

Mr. LEVINE. Yea. 

Mr. GREEN. Let me just go right on down the line. 

Madam, I am sorry, I can’t read your name from here. Ms. 

Bortner—is that correct? 

25 

Ms. BORTNER. Yes. I don’t think the organization has taken a position on the bill, but from what I read of it, personally, it looks 

like it is a good step. 

Mr. GREEN. Thank you. I appreciate your answer. 

Yes, sir. If you would—Mr. Daly? 

Mr. DALY. Yes, Congressman. As I indicated earlier, Western 

Union is not directly impacted by the bank account closure issue, 

but many of our agents are, so we have supported the Maloney bill 

in the past. 

Mr. GREEN. Thank you very much. I yield back any time that I 

have left. And I thank you, Mrs. Maloney, as well. 

Mr. RENACCI. Thank you, Mr. Green. 

And I want to thank the panel and all the witnesses for their testimony today. The Chair notes that some Members may have additional questions for this panel, which they may wish to submit in 

writing. Without objection, the hearing record will remain open for 

30 days for Members to submit written questions to these witnesses and to place their responses in the record. 

This hearing is adjourned. 

[Whereupon, at 11:02 a.m., the hearing was adjourned.] 

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A P P E N D I X 

June 21, 2012 

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