< Back to H.R. 3998 (103rd Congress, 1993–1994)

Text of the Check Cashing Consumer Protection Act of 1994

This bill was introduced on March 10, 1994, in a previous session of Congress, but was not enacted. The text of the bill below is as of Mar 10, 1994 (Introduced).

Source: GPO

HR 3998 IH

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.

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

SECTION 1. SHORT TITLE.

    This Act may be cited as the ‘Check Cashing Consumer Protection Act of 1994’.

SEC. 2. UNIFORM STATE LICENSING AND REGULATION OF CHECK CASHING SERVICES.

    (a) UNIFORM LAWS AND ENFORCEMENT- For purposes of protecting the consumers of check cashing services from fraud and abuse, it is the sense of the Congress that the several States should--

      (1) establish uniform laws for licensing and regulating businesses which--

        (A) provide check cashing services, transmit money, or issue or redeem money orders, travelers’ checks, and other similar instruments; and

        (B) are not depository institutions (as defined in section 19(b)(1)(A) of the Federal Reserve Act); and

      (2) provide sufficient resources to the appropriate State agency to enforce such laws and regulations prescribed pursuant to such laws.

    (b) MODEL STATUTE- It is the sense of the Congress that the several States should develop, through the auspices of the National Conference of Commissioners on Uniform State Laws, the American Law Institute, or such other forum as the States may determine to be appropriate, a model statute to carry out the goals described in subsection (a) which would include the following:

      (1) LICENSING REQUIREMENTS- A requirement that any issuer, redeemer, or cashier of travelers’ checks, checks, money orders, or similar instruments, and any transmitter of money, other than a depository institution (as defined in section 19(b)(1)(A) of the Federal Reserve Act), be licensed and regulated by an appropriate State agency in order to engage in any such activity within the State.

      (2) LICENSING STANDARDS- A requirement that--

        (A) in order for any issuer, redeemer, or cashier of travelers’ checks, checks, money orders, or similar instruments, and any transmitter of money to be licensed in the State, the appropriate State agency shall review and approve--

          (i) the business record and the capital adequacy of the business seeking the license; and

          (ii) the competence, experience, integrity, and financial ability of any individual who--

            (I) is a director, officer, or supervisory employee of such business; or

            (II) owns or controls such business;

        (B) as a condition for the issuance and continued validity of the license the business may not impose, charge, or collect any fee for cashing or redeeming any travelers’ check, check, money order or similar instrument in excess of the amount which is equal to the greater of--

            (i) an amount equal to 1.5 percent of the face amount of such check or money order (not to exceed $8); or

            (ii) 50 cents; and

        (C) any record, on the part of any business seeking the license or any person referred to in subparagraph (A)(ii), of--

          (i) any criminal activity;

          (ii) any fraud or other act of personal dishonesty;

          (iii) any act, omission, or practice which constitutes a breach of a fiduciary duty; or

          (iv) any suspension or removal, by any agency or department of the United States or any State, from participation in the conduct of any federally or State licensed or regulated business,

        be grounds for the denial of any such license by the appropriate State agency.

      (3) PROCEDURES TO ENSURE COMPLIANCE WITH FEDERAL CASH TRANSACTION REPORTING REQUIREMENTS- A civil or criminal penalty for operating any business referred to in paragraph (1) without establishing and complying with appropriate procedures to ensure compliance with subchapter II of chapter 53 of title 31, United States Code (relating to records and reports on monetary instruments transactions).

      (4) CRIMINAL PENALTIES FOR OPERATION OF BUSINESS WITHOUT A LICENSE- A criminal penalty for operating, within the State, any business referred to in paragraph (1) after the effective date of the model statute without a license issued by the State.

    (c) STUDY REQUIRED- The Secretary of the Treasury shall conduct a study of--

      (1) the progress made by the several States in developing and enacting a model statute which--

        (A) meets the requirements of subsection (b); and

        (B) furthers the goals of--

          (i) preventing money laundering by businesses which are required to be licensed under any such statute; and

          (ii) protecting the payment system, including the receipt, payment, collection, and clearing of checks, from fraud and abuse by such businesses; and

      (2) the adequacy of--

        (A) the activity of the several States in enforcing the requirements of such statute; and

        (B) the resources made available to the appropriate State agencies for such enforcement activity.

    (d) REPORT REQUIRED- Before the end of the 3-year period beginning on the date of the enactment of this Act and by the end of each 1-year period beginning after the end of such period, the Secretary of the Treasury shall submit a report to the Congress containing the findings and recommendations of the Secretary in connection with the study under subsection (c), together with such recommendations for legislative and administrative action as the Secretary may determine to be appropriate, including any recommendation pursuant to subsection (e).

    (e) RECOMMENDATIONS FOR INCENTIVES OR SANCTIONS IN CASES OF INADEQUATE REGULATION AND ENFORCEMENT BY STATES- If the Secretary of the Treasury determines that any State has failed--

      (1) to enact a statute which meets the requirements described in subsection (b);

      (2) to undertake adequate activity to enforce such statute; or

      (3) to make adequate resources available to the appropriate State agency for such enforcement activity,

    the report submitted pursuant to subsection (d) shall contain recommendations for legislation establishing incentives which may be provided or sanctions which may be imposed to remedy such failure.