Honorable Robert Bunda

President of the Senate

Twenty-Third State Legislature

Regular Session of 2005

State of Hawaii

Sir:

Your Committees on Commerce, Consumer Protection, and Housing and Energy, Environment, and International Affairs, to which was referred S.B. No. 747 entitled:

beg leave to report as follows:

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

Testimony in support of this measure was received from the Office of the Lieutenant Governor, Department of Commerce and Consumer Affairs, Department of the Attorney General, Department of the Prosecuting Attorney of the City and County of Honolulu, Hawaii Credit Union League, and Hawaii Bankers Association.

Under this measure, a money transmitter is a non-bank entity that provides services relating to the transfer of funds from one party to another, domestically or internationally, and using a variety of methods, including wire and electronic transfers and facsimile.

Your Committees find that money transmitters have been used to further unlawful purposes, such as "laundering" the proceeds of drug distribution, gambling, and prostitution, and funding terrorist operations. While potentially illegal activities involving money transmitters are subject to federal investigation, your Committees further find that supervision and regulation of the money transmitter industry is uneven, and that federal laws are not being enforced as aggressively as state laws; currently, thirty-nine states, in addition to the District of Columbia and Puerto Rico, require the registration of money transmitters.

This measure proposes to require the annual registration of money transmitters with the Commissioner of Financial Institutions (Commissioner) and establishes civil penalties for a failure to register. Your Committees further find that requiring money transmitters to register with the State will discourage and deter money transmitting for unlawful purposes, provide valuable information to financial institutions that provide banking services to money transmitters, and facilitate enforcement of the money laundering laws.

Your Committees have amended this measure:

As affirmed by the records of votes of the members of your Committees on Commerce, Consumer Protection, and Housing and Energy, Environment, and International Affairs that are attached to this report, your Committees are in accord with the intent and purpose of S.B. No. 747, as amended herein, and recommend that it pass Second Reading in the form attached hereto as S.B. No. 747, S.D. 1, and be referred to the Committee on Ways and Means.