Money services businesses operate locally without regulatory oversight, says Lolo
Pago Pago, AMERICAN SAMOA — A security deposit of $10,000 will be required for applicants who are issued a license to operate a money transfer business in American Samoa, under new regulations proposed by the Lolo Administration through legislation introduced in the Fono last week.
The Money Services Business Regulatory Act also requires a money transmission fee imposed on the amount of money sent outside of American Samoa.
The Administration’s bill is a move by the government to regulate the “money services business,” which Gov. Lolo Matalasi Moliga says plays an increasing role in providing financial services to the unbanked and self-banked in communities across the U.S.
And while 49 states in the nation regulate these types of businesses, Lolo said they operate in American Samoa without any regulatory oversight.
According to the bill, “money services business” includes each agent, agency, branch or office within the territory of any person doing business, whether or not on a regular basis, or as an organized business concern, as a money transmitter, or a foreign currency exchanger. (See last Friday’s edition for other detailed provisions of the bill).
The Commissioner of the Office of Financial Institution is charged with overseeing the proposed regulation as well as the issuance of licenses to each money services business.
As security for the faithful performance of its obligations, each licensee, before engaging in money transmission, shall deposit with the ASG Treasury Department $10,000 in a time deposit at a designated bank in the territory; and such value must be maintained at all times.
Additionally, a separate security deposit is required for each license that is issued, according to the bill, which also provides details of procedures for security deposits. For example, the time deposit account must show the money service business company “and” the ASG Treasurer or the Commissioner — or both — as holders of the account.
“Interest earned on such deposit shall accrue to the benefit of the money service business,” it says, adding the security deposit is not required for money service businesses, which do not offer money transmission services.
Under provision of ‘Trust Fund’, the bill states that the money deposited with the Treasury “shall constitute a fund for the benefit of persons in case a licensee or its agent is not able to pay for funds entrusted to them for money transfer." (This is the time deposit or security deposit that is to be deposited in a designated local bank.)
The fee schedule outlined in the bill states that each money service business license is $1,000 — per location — and this is the same fee for the renewal of a license. Furthermore, an authorized agency license is $100, which is also the same cost for a renewal.
MONEY TRANSMISSION FEE
Money transmitters shall collect $5 for each transaction not in excess of $500. For amounts in excess of $500 a $5 base fee and 1% of the amount in excess of $500 will be charged.
And these fees are to be submitted by the licensees, with the required quarterly reports to the Commissioner, according to the bill, which notes that 30% of this fee will go towards the operations of the Office of Financial Institution with the balance deposited into the general fund.