RESOLUTION

WHEREAS, Section 5318(h) of Title 31 of the United States Code was amended on October 26, 2001; and

WHEREAS, to require that all financial institutions must have formal anti-money laundering programs, must check customers against government Terrorist Lists, and must report "suspicious activity"; and

WHEREAS, the definition of "financial institutions" now includes money services businesses, which are defined as businesses engaged in currency dealing or exchanging, check cashing, issuing traveler's checks, selling or redeeming traveler's checks, money orders, or stored values, and money transmitting; and

WHEREAS, many money services businesses are small businesses or "mom and pop shops" or convenience stores with a single owner in one location who offer these financial transactions as incidental services to supplement their primary businesses; and

WHEREAS, a formal anti-money laundering program under amendments to Section 5318(h) of Title 31 of the United States Code requires written policies and procedures for monitoring and deterrence, the designation of a compliance officer to supervise the program, the provision of employee education and training programs, and an independent audit to assess individual programs; and

WHEREAS, strict compliance with these programs places an additional financial and human resources burden on small businesses as resources are committed to establishing and maintaining the program's requirements rather than developing and improving personal business; and

WHEREAS, the Specially Designated Nationals List against which small businesses are required to cross-reference their customers contains over 5,000 names while being continually updated, far exceeding the capacity of some small businesses to comply accordingly with federal guidelines and avoid civil and criminal penalties; now, therefore,

BE IT RESOLVED by the House of Representatives of the Twenty-third Legislature of the State of Hawaii, Regular Session of 2005, the Senate concurring, that the Legislature of the State of Hawaii requests that the Congressional delegation of the State of Hawaii support an exemption for small businesses that provide only check cashing services from the amendments to Section 5318(h) of Title 31 of the United States Code, which require all financial institutions, including small businesses to establish anti-money laundering programs to fight terrorism; and

BE IT FURTHER RESOLVED that certified copies of this Concurrent Resolution be transmitted to each member of Hawaii's Congressional delegation.

Report Title:

Anti-money laundering programs for small businesses; exemptions