I

103D CONGRESS

2D SESSION H. R. 3998

To protect the consumers of check cashing services by encouraging States

to establish uniform laws on the regulation of check cashing services

and to require the Secretary of the Treasury to study the effectiveness

of State efforts with respect to such regulation and make appropriate

recommendations to the Congress on such efforts.

IN THE HOUSE OF REPRESENTATIVES

MARCH 10, 1994

Mr. FOGLIETTA introduced the following bill; which was referred to the

Committee on Banking, Finance and Urban Affairs

A BILL

To protect the consumers of check cashing services by encouraging States to establish uniform laws on the regulation of check cashing services and to require the Secretary of the Treasury to study the effectiveness of State

efforts with respect to such regulation and make appropriate recommendations to the Congress on such efforts.

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled,

3 SECTION 1. SHORT TITLE.

4 This Act may be cited as the ‘‘Check Cashing

5 Consumer Protection Act of 1994’’.
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1 SEC. 2. UNIFORM STATE LICENSING AND REGULATION OF

2 CHECK CASHING SERVICES.

3 (a) UNIFORM LAWS AND ENFORCEMENT.—For pur4 poses of protecting the consumers of check cashing serv5 ices from fraud and abuse, it is the sense of the Congress

6 that the several States should—

7 (1) establish uniform laws for licensing and reg8 ulating businesses which—

9 (A) provide check cashing services, trans10 mit money, or issue or redeem money orders,

11 travelers’ checks, and other similar instruments;

12 and

13 (B) are not depository institutions (as de14 fined in section 19(b)(1)(A) of the Federal Re15 serve Act); and

16 (2) provide sufficient resources to the appro17 priate State agency to enforce such laws and regula18 tions prescribed pursuant to such laws.

19 (b) MODEL STATUTE.—It is the sense of the Con20 gress that the several States should develop, through the

21 auspices of the National Conference of Commissioners on

22 Uniform State Laws, the American Law Institute, or such

23 other forum as the States may determine to be appro24 priate, a model statute to carry out the goals described

25 in subsection (a) which would include the following:
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1 (1) LICENSING REQUIREMENTS.—A require2 ment that any issuer, redeemer, or cashier of travel3 ers’ checks, checks, money orders, or similar instru4 ments, and any transmitter of money, other than a

5 depository institution (as defined in section

6 19(b)(1)(A) of the Federal Reserve Act), be licensed

7 and regulated by an appropriate State agency in

8 order to engage in any such activity within the

9 State.

10 (2) LICENSING STANDARDS.—A requirement

11 that—

12 (A) in order for any issuer, redeemer, or

13 cashier of travelers’ checks, checks, money or14 ders, or similar instruments, and any transmit15 ter of money to be licensed in the State, the ap16 propriate State agency shall review and ap17 prove—

18 (i) the business record and the capital

19 adequacy of the business seeking the li20 cense; and

21 (ii) the competence, experience, integ22 rity, and financial ability of any individual

23 who—

24 (I) is a director, officer, or super25 visory employee of such business; or
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1 (II) owns or controls such busi2 ness;

3 (B) as a condition for the issuance and

4 continued validity of the license the business

5 may not impose, charge, or collect any fee for

6 cashing or redeeming any travelers’ check,

7 check, money order or similar instrument in ex8 cess of the amount which is equal to the greater

9 of—

10 (i) an amount equal to 1.5 per11 cent of the face amount of such check

12 or money order (not to exceed $8); or

13 (ii) 50 cents; and

14 (C) any record, on the part of any business

15 seeking the license or any person referred to in

16 subparagraph (A)(ii), of—

17 (i) any criminal activity;

18 (ii) any fraud or other act of personal

19 dishonesty;

20 (iii) any act, omission, or practice

21 which constitutes a breach of a fiduciary

22 duty; or

23 (iv) any suspension or removal, by any

24 agency or department of the United States

25 or any State, from participation in the con-
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1 duct of any federally or State licensed or

2 regulated business,

3 be grounds for the denial of any such license by

4 the appropriate State agency.

5 (3) PROCEDURES TO ENSURE COMPLIANCE

6 WITH FEDERAL CASH TRANSACTION REPORTING RE7 QUIREMENTS.—A civil or criminal penalty for oper8 ating any business referred to in paragraph (1)

9 without establishing and complying with appropriate

10 procedures to ensure compliance with subchapter II

11 of chapter 53 of title 31, United States Code (relat12 ing to records and reports on monetary instruments

13 transactions).

14 (4) CRIMINAL PENALTIES FOR OPERATION OF

15 BUSINESS WITHOUT A LICENSE.—A criminal penalty

16 for operating, within the State, any business re17 ferred to in paragraph (1) after the effective date of

18 the model statute without a license issued by the

19 State.

20 (c) STUDY REQUIRED.—The Secretary of the Treas21 ury shall conduct a study of—

22 (1) the progress made by the several States in

23 developing and enacting a model statute which—

24 (A) meets the requirements of subsection

25 (b); and
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1 (B) furthers the goals of—

2 (i) preventing money laundering by

3 businesses which are required to be li4 censed under any such statute; and

5 (ii) protecting the payment system, in6 cluding the receipt, payment, collection,

7 and clearing of checks, from fraud and

8 abuse by such businesses; and

9 (2) the adequacy of—

10 (A) the activity of the several States in en11 forcing the requirements of such statute; and

12 (B) the resources made available to the ap13 propriate State agencies for such enforcement

14 activity.

15 (d) REPORT REQUIRED.—Before the end of the 3-

16 year period beginning on the date of the enactment of this

17 Act and by the end of each 1-year period beginning after

18 the end of such period, the Secretary of the Treasury shall

19 submit a report to the Congress containing the findings

20 and recommendations of the Secretary in connection with

21 the study under subsection (c), together with such rec22 ommendations for legislative and administrative action as

23 the Secretary may determine to be appropriate, including

24 any recommendation pursuant to subsection (e).
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1 (e) RECOMMENDATIONS FOR INCENTIVES OR SANC2 TIONS IN CASES OF INADEQUATE REGULATION AND EN3 FORCEMENT BY STATES.—If the Secretary of the Treas4 ury determines that any State has failed—

5 (1) to enact a statute which meets the require6 ments described in subsection (b);

7 (2) to undertake adequate activity to enforce

8 such statute; or

9 (3) to make adequate resources available to the

10 appropriate State agency for such enforcement activ11 ity,

12 the report submitted pursuant to subsection (d) shall con13 tain recommendations for legislation establishing incen14 tives which may be provided or sanctions which may be

15 imposed to remedy such failure.

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