STAND

STAND. COM. REP. 2632

Honolulu, Hawaii

, 2004

RE: S.B. No. 2903

S.D. 2

Honorable Robert Bunda

President of the Senate

Twenty-Second State Legislature

Regular Session of 2004

State of Hawaii

Sir:

Your Committee on Commerce, Consumer Protection and Housing, to which was referred S.B. No. 2903, S.D. 1, entitled:

"A BILL FOR AN ACT RELATING TO REGISTRATION OF MONEY TRANSMITTERS,"

begs leave to report as follows:

The purpose of this measure is to establish a system of registration for money transmitters.

This measure also helps to ensure that money transmitter operations are not being used to further unlawful purposes, and provides protection and recourse for consumers.

Testimony in support of this measure was submitted by the Office of the Lieutenant Governor, the Department of Commerce and Consumer Affairs, the Department of the Attorney General, and the Department of the Prosecuting Attorney of the City and County of Honolulu. Comments on the measure were submitted by the Non-Bank Funds Transmitters.

Your Committee finds that under the current law, there is no system of registration or regulation of money transmitters that are not otherwise regulated pursuant to the laws which apply to traditional financial institutions. Your Committee further finds that, although two money transmitters predominately control the marketplace, nationwide there are approximately eight thousand other businesses in the industry, six thousand of which are small businesses that either operate their own networks or are acting as one-person agencies conducting transactions on behalf of another money transmitter. Locally, it is impossible to identify the number of money transmitters doing business within the State due to a complete lack of information.

Your Committee also finds that an underlying concern associated with the utilization of money transmitter services is that these services are being or may be misused for the purposes of money laundering in furtherance of criminal activity. Therefore, your Committee determines that the institution of a registration requirement for money transmitters will not only protect the consumers by creating accountability within the industry, but will also assist law enforcement authorities in their efforts to identify and curb illegal activity. Your Committee also determines that further clarification is necessary to ensure that money transmitters clearly understand the duties imposed by this measure.

Accordingly, your Committee has amended this measure by:

(1) Clarifying that a registrant that is a corporation, limited liability company, partnership, or other entity, shall include in its registration statement the state, and not the status, of its incorporation or formation;

(2) Specifying that the definition for the term "money equivalent" is applicable when used in connection with a money transmission in which the customer provides the money transmitter or its authorized dealer with the money of one government, and the designated recipient is to receive the money of another government;

(3) Specifying that, if the exchange rate for a money transmission to be paid in a foreign currency is fixed at the time the transaction is initiated, a money transmitter must provide the customer a receipt which discloses the rate of exchange for that transaction; and

(4) Making technical, nonsubstantive amendments for purposes of clarity and style.

As affirmed by the record of votes of the members of your Committee on Commerce, Consumer Protection and Housing that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 2903, S.D. 1, as amended herein, and recommends that it pass Third Reading in the form attached hereto as S.B. No. 2903, S.D. 2.

Respectfully submitted on behalf of the members of the Committee on Commerce, Consumer Protection and Housing,

		____________________________ RON MENOR, Chair