Honorable Calvin K.Y. Say

Speaker, House of Representatives

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committee on Consumer Protection & Commerce, to which was referred S.B. No. 747, S.D. 2, entitled:

begs leave to report as follows:

The purpose of this bill is to take the first steps toward ensuring that money transmitter businesses are used for lawful purposes. Specifically, this bill establishes a registration system for persons conducting money transmission services that:

1. Requires persons to register as money transmitters with the Commissioner of Financial Institutions; and
2. Provides civil penalties for transmitting money without being registered.

Your Committee received testimony in support of this bill from the Office of the Lieutenant Governor, Department of Commerce and Consumer Affairs, and Hawaii Bankers Association. Testimony in opposition to this measure was received from the Non-Bank Funds Transmitters Group.

Your Committee finds that money transmitters receive currency or payment instruments and transmit these by wire, facsimile, electronic transfer, and other means, to another location inside or outside the United States. Money transmitters are a portal into the nation's financial system, and can be used to launder and circulate the financial means for crimes such as drug trafficking and terrorism.

Your Committee believes that some regulation of money transmitters in this state is warranted at this time. There was testimony that federal laws governing money transmitters are not being enforced as aggressively as state laws, especially with respect to smaller, non-bank financial institutions. Further, Hawaii currently has no information about money transmitters whose operations include Hawaii, and has no means of knowing even such basic information as how many there are, and where they are.

Your Committee notes that the term "currency" was used in the measure but was not defined and has amended this measure by:

As affirmed by the record of votes of the members of your Committee on Consumer Protection & Commerce that is attached to this report, your Committee is in accord with the intent and purpose of S.B. No. 747, S.D. 2, as amended herein, and recommends that it pass Second Reading in the form attached hereto as S.B. No. 747, S.D. 2, H.D. 1, and be referred to the Committee on Judiciary.