Michael J. Bloom 

Assistant Director 

Bureau of Competition 

Office of Policy & Coordination 

Phone: (202) 326-2475 

Email: mjbloom@ftc.gov 

Ezra C. Levine, Esq. 

Morrison & Foerster LLP 

UNITED STATES OF AMERICA 

Federal Trade Commission 

Washington, D.C. 20580 

September 4, 2013 

2000 Pennsylvania A venue, NW 

Washington, D.C. 20006 

Dear Mr. Levine, 

This letter responds to your request on behalf of The Money Services Round 

Table ("TMSRT") for an advisory opinion concerning TMSRT's proposal to collect and 

disseminate certain information regarding terminated United States money transmitter 

agents. TMSRT wishes to know whether Federal Trade Commission ("FTC" or 

"Commission") staff is likely to recommend an enforcement action, challenging the 

information exchange as an anticompetitive restraint of trade. 

Based on the information you provided, 1 FTC staff has no present intention of 

recommending law enforcement action. As discussed below, the stated purpose of the 

proposed information exchange is to improve money transmitters' ability to evaluate 

prospective United States agents and to comply with federal and state money laundering 

and other laws, and there appears to be little or no potential for competitive harm 

associated with the information exchange. Our conclusions, however, are entirely 

dependent on the completeness and accuracy of the information you provided to us, and 

on our understanding ofthe pertinent facts, as described below. Should there be 

information that we are unaware of that qualifies, modifies or contradicts this 

information, or should the proposed information exchange materially change in the 

future, we may change our law enforcement recommendations accordingly. 

1 Our analysis and conclusions rely on your representations to staff, including those made in 

correspondence you provided to us on July 25,2013 (which superseded an earlier June 14,2013 letter), as 

well as those made during our telephone conversations with you and your colleague, Sean Ruff. We have 

not conducted an independent investigation or otherwise verified the information that you provided. 
Ezra C. Levine, Esq. 

September 4, 2013 

Page 2 of6 

Statement of the Pertinent Facts 

TMSRT is a trade association comprised of six licensed national money 

transmitters (hereinafter "TMSRT Participants").2 Money transmitters are non-bank 

entities that transfer funds from one individual or institution to another by wire, check, 

computer network, or other means. TMSRT Participants are the largest money 

transmitters in the United States by volume and revenue, and offer money transfer 

services to consumers through a network of agents located in cities across the United 

States and abroad. 

Under the money transmitter agent model, money transmitters enter into agent 

service agreements with commercial entities, such as neighborhood grocery stores, 

convenience stores, liquor stores, and check casher services, which seek to add money 

transmission services to their existing inventory of consumer products and services? 

Agents serve as the point of contact for the money transmitter with the public, and act 

pursuant to express contractual authority and the pertinent state's money transmitter law.4 

Money transmitters pay their agents a commission based on a percentage of their revenue 

-that is, the transaction fees charged to consumers to transfer funds. The commission 

may be split between the sending agent (i.e., the agent that initiated the transaction) and 

the receiving agent (the agent that paid the transaction). Agents frequently migrate among 

money transmitters to obtain higher commissions and other benefits.5 

A typical money transmission requires four parties: the sender, the money 

transmitter's sending agent, the money transmitter's receiving agent, and the recipient. 6 A 

sender walks in to one of the money transmitter's agent locations and provides the agent 

the funds and instructions for delivery to the recipient, as well as the fee established by 

the money transmitter for the transmission service. 7 The sending agent takes the funds 

and instructions, and enters the transaction information into a computer terminal owned 

by the money transmitter.8 Upon receiving the instructions, the money transmitter 

contacts the appropriate receiving agent for payment to the recipient. 

Recipients may receive payment within several minutes or several days, 

depending on the sender's instructions, the money transmitter's policies, and the 

2 TMSRT members include Western Union Financial Services, Inc.; MoneyGram Payment Systems, Inc.; 

American Express Travel Related Services Co., Inc.; RIA Financial Services; Sigue Corporation; and 

Integrated Payment Systems, Inc. Letter from Ezra C. Levine, Morrison & Foerster LLP, to DonaldS. 

Clark, Secretary, Fed. Trade Comm'n (July 25, 2013) ("July 25 Letter") at 1. 3 July 25 Letter at 2. 4 /d. Nearly every state regulates money transmission services through licensing requirements. 

5 !d. 

6 !d. at 2-3. All United States money transmitter agents are contractually obligated to send and receive 

transmissions. 

7 !d. at 3. 8 /d. Transmissions also may occur by telephone, facsimile or other means. 
Ezra C. Levine, Esq. 

September 4, 2013 

Page 3 of6 

receiving agent's location and availability. In certain instances, the money transmitter 

may remit payment to the recipient before receiving the funds from the sending agent.9 

For example, the sending agent may not have transferred (deposited) the funds before the 

appointed transmission time. Alternatively, the sending agent may have fraudulently 

withheld the funds from the money transmitter. 10 

Both agent fraud and reliability concerns have prompted many money transmitters 

to vet prospective agents by conducting background checks. 11 In addition, money 

transmitters are obligated to perform due diligence on prospective agents under various 

federal and state laws designed to prevent money laundering, terrorist financing, and 

other criminal behavior. 12 

1. Federal Regulation 

The Currency and Foreign Transactions Reporting Act (commonly referred to as 

the "Bank Secrecy Act" or "BSA")13 requires money transmitters, banks, and other 

financial institutions to maintain certain records and to file certain reports, which are used 

by law enforcement agencies to prevent and detect money laundering, terrorist financing, 

and other crimes. 14 In addition, the BSA requires money transmitters to develop and 

implement an "effective anti-money laundering program reasonably designed to prevent 

[the money transmitter] from being used to facilitate money laundering and the financing 

of terrorist activities."15 An effective anti-money laundering program includes 

"evaluat[ing] the suitability of prospective agents," which means that money transmitters 

that contract with agents must conduct "reasonable, risk-based due diligence* * *to help 

ensure that such agents themselves are not complicit in illegal activity." 16 

2. State Regulation 

Nearly every state regulates money transmitters through licensing laws. In 

addition, several states have enacted statutes or implemented regulations that make 

violations of the BSA a state violation. 17 Certain states also require money transmitters to 

9 !d. at 3. 10 See id. llld. 

12 !d. 

13 Currency and Foreign Transactions Reporting Act, 31 U.S.C. §§ 5311-5314, 5316-5322 (2013). 14 July 25 Letter at 3. 15 Jd. (citing Rules for Money Services Businesses, 31 C.F.R. § 1022.210(a) (2013)). 16 Jd. at 4 (citing Financial Crimes Enforcement Network ("FinCEN") Interpretive Release 2004-1, AntiMoney Laundering Program Requirements for Money Services Businesses With Respect to Foreign Agents 

or Foreign Counterparties, 69 Fed. Reg. 74,439, 74,440 (Dec. 14, 2004)). FinCEN, a bureau of the United 

States Department of Treasury, is authorized to implement and administer the regulations under the BSA. 17 Jd. at 5 (citing, as an example, Wash. Rev. Code§ 19.230.180, which requires "every licensee and its 

delegates [to] file all reports required by federal currency reporting, recordkeeping, and suspicious 

transaction reporting requirements * * * and other federal and state laws pertaining to money laundering"). 
Ezra C. Levine, Esq. 

September 4, 2013 

Page 4 of6 

conduct "risk-based background investigations" of prospective agents to determine 

whether such agents have "complied with applicable state and federal law, including laws 

dealing with fraud and other criminal activities harmful to consumers." 18 

3. The Proposed Information Exchange 

Spurred, in part, by these federal and state requirements, TMSR T proposes an 

information exchange that will consist of a database developed, maintained, and secured 

by an independent third-party vendor. 19 The database will contain information regarding 

former United States sending and receiving agents whose contractual relationships were 

terminated due to failure to comply with federal and/or state law, or money transmitter 

contract terms or policies?0 Exchange membership will be open to all licensed non-bank 

money transmitters, and will include TMSRT Participants.21 Participation in the 

information exchange will be voluntary,22 and each member of the information exchange 

("Exchange Member") will retain the right to decide unilaterally whether to appoint an 

agent that has been terminated by another Exchange Member (and thus included in the 

database). 23 

Per your correspondence and conversations with staff, the following information will 

be collected and made available in the Exchange Member database: 

• the name of the Exchange Member that supplied the terminated agent 

information; 

• the agent's name(s), address, telephone number, and business tax identification 

number (including any name under which the agent is doing business); 

• the name, address, telephone number, and individual or business tax identification 

number of any individual or entity that owns more than ten percent of the agent; 

• the name, addresses, telephone number, and tax identification number or social 

security number of any other principal, including executive officers, directors, and 

managers; 

• the date of termination; and 

• the reason( s) for termination. 

Once an agent has been added to the database, the third-party vendor will notify the agent 

in writing and provide the agent, upon the agent's request, a copy of its database record?4 

Exchange Members will be under a continuing obligation to update any information 

submitted to the exchange and to correct any errors?5 

18 I d. (citing, as examples, Tex. Fin. Code § 151.402(b) and Fla. Stat. § 560.1235). 19 I d. at 6, 8. 20 Jd. at 6-7. 21 Jd. at 1. 22 Jd. at 8. 23 I d. at 6, 8. 24 I d. at 7. 25 Jd. 
Ezra C. Levine, Esq. 

September 4, 2013 

Page 5 of6 

Analysis of the Proposed Information Exchange 

TMSRT's proposal contemplates a type of information exchange among 

competitors?6 Both the United States Department of Justice and the Commission have 

recognized that information exchanges among competitors may be competitively neutral 

or even procompetitive?7 However, certain information exchanges among competitors 

may violate Section 1 of the Sherman Act, which prohibits a "contract, combination * * * 

or conspiracy" that unreasonably restrains trade.28 The antitrust concern is that the 

information exchange may facilitate anticompetitive harm by advancing competitors' 

ability to collude or tacitly coordinate in a manner that lessens competition. 

Under the antitrust laws, information exchanges among competitors generally are 

examined under the "rule of reason. "

29 The "rule of reason" is a method of antitrust 

analysis that distinguishes legitimate information exchanges from illegal ones by 

balancing the information exchange's anticompetitive effects with its efficiencies and 

other procompetitive benefits. Various criteria are considered in assessing the legality of 

an information exchange, including the nature and quantity of the information shared, the 

parties' intent in sharing the information, and how the information exchange is structured 

and controlled.30 

Based on the information you provided, TMSR T' s proposed exchange does not 

appear likely to facilitate collusion or anticompetitive refusals to deal, or to otherwise 

restrict competition. To the contrary, the information exchange has the potential to 

generate efficiencies that benefit consumers. Our assessment is based on a number of 

factors. 

First, the goals of the information exchange do not appear to be either directly or 

indirectly anticompetitive, or designed to further coordination among United States 

money transmitters with regard to any significant competitive factor, such as the 

commission rates paid to agents for completing money transfer services. Given that the 

information sharing is unlikely to facilitate coordination on a significant competitive 

26 Without performing a formal market defmition exercise, it is not possible to know whether or to what 

extent Exchange Members are actual competitors. Nonetheless, for purposes of this analysis, we assume 

that Exchange Members are competitors, at least with respect to one or more relevant United States 

markets. 

27 U.S. DEP'T OF JUSTICE AND FED. TRADE COMM'N, ANTITRUST GUIDELINES FOR COLLABORATIONS 

AMONG COMPETITORS (2000), available at http://www.ftc.gov/os/2000/04/ftcdojguidelines.pdf (hereinafter 

the "Collaboration Guidelines"). The Collaboration Guidelines provides a general outline of the analytical 

framework for evaluating collaborations among competitors. 28 15 U.S.C. § 1. 29 United States v. United States Gypsum Co., 438 U.S. 422,441, n. 16 (1978) (information exchanges 

among competitors may be procompetitive, and thus such exchanges- when not evidence of actual 

agreements to limit competition- should be subject to the rule of reason). 30 !d. See also United States v. Container Corp. of America, 393 U.S. 333, 335-38 (1969) (finding a direct 

exchange of pricing information among competitors unlawful, despite finding no agreement on price, 

largely because of the nature of the information exchanged, the structure of the market, and the absence of 

a benign justification for the exchange). 
Ezra C. Levine, Esq. 

September 4, 2013 

Page 6 of6 

factor, such as price, cost, or output, efforts by Exchange Members to identify and share 

terminated agent information is not likely to create a substantial risk of competitive harm. 

Second, the proposed information exchange appears to contain several safeguards 

that further lessen the risk of competitive harm. For example, the database will be 

maintained and secured by a third-party vendor; participation in the exchange will be 

voluntary; and each Exchange Member will conduct its own risk assessment and render 

its own judgment regarding whether to appoint a terminated agent. 

Finally, the proposed information exchange could generate efficiencies for 

Exchange Members and enhance consumer welfare. For example, to the extent that the 

sharing of terminated agent information improves Exchange Members' ability to conduct 

thorough background checks on prospective agents, the intormation exchange could 

prevent the appointment of problematic agents, including agents who may be money 

launderers or other criminal offenders, and thus benefit consumers. 

Conclusion 

For the reasons stated above, FTC staff believes that TMSRT's proposed 

information exchange is unlikely to constitute an unreasonable restraint of trade. 

Accordingly, we have no present intention to recommend a challenge to the program. 

This letter sets out the views of the staff of the Bureau of Competition, as 

authorized by Rule l.l(b) ofthe Commission's Rules ofPractice, 16 C.F.R. § l.l(b). 

Under Commission Rule 1.3(c), 16 C.F.R. § 1.3(c), the Commission is not bound by this 

staff advisory opinion and reserves the right to rescind it at a later time. In addition, FTC 

staff retains the right to reconsider this opinion, and, with notice to the requesting party, 

to rescind or revoke it if implementation of the proposed information exchange appears to 

result in significant anticompetitive effects, if the exchange is used for improper 

purposes, if pertinent facts (or our understanding thereof) change significantly, or if it 

would be in the public interest to do so. 

Sincerely, 

Michael J. Bloom 

Assistant Director 

Office of Policy & Coordination