Proposed bill spells out regs for money transfer businesses

fili@samoanews.com

Pago Pago, AMERICAN SAMOA — The Lolo Administration is proposing a wide-range of regulations governing operations of money transfer businesses, under Money Services Business Regulatory Act legislation, introduced this week in both the Senate and House.

“Due to the large amount of monies handled by these types of businesses, regulatory oversight is needed to ensure monies are not handled fraudulently,” notes the bill’s preamble.

Additionally, proper regulation is needed to enable money service businesses to open accounts with local financial institutions when in full compliance with local and federal laws.

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.

The bill makes clear that a money service business does not included a “bank” as that term is defined in federal law, nor does it include a person registered with and regulated by the US Securities and Exchange Commission or the Commodity Futures Trading Commission.

LICENSE

According to the bill, the ASG Office of Financial Institutions would issue a license to a money services business and the license will be required for such a business to operate in the territory. The applicant must obtain a general business license (which is issued by the Commerce Department.)

The bill sets out a long list of requirements, in writing, to obtain such a license. Among them is the applicant’s name, location of business; and if the applicant is a business entity, names and addresses of the company’s directors, officers and key shareholders are required.

Other requirements include the history of the applicant’s “material litigation and criminal convictions for the 7-year period before the date of the application submission."

The bill gives the Commissioner of the Office of Financial Institution the authority to administer the proposed law, as well as to deny a money services business license.

The bill also outlines reasons for denying an application; such as if the applicant has been convicted of, or pled guilty or no contest to a felony, during the seven years preceding the day on which the individual files an application. Felonies identified in the bill include: fraud; dishonesty; breach of trust; or money laundering.

Provisions of the bill also outline specific areas in which a license is issued and among them is that the Commissioner has investigated the financial condition and responsibility, financial and business experience, character, and general fitness of the applicant.

It also sets out specific rules to follow for the renewal of a license, such as a copy of the licensee’s most recent financial statements, including balance statement of income or loss, and statement of changes in financial position.

If the licensee wants to conduct licensed activities through authorized agents, the bill sets specific regulations that must be met including that the authorized agents be registered with the Commissioner, along with a copy of a written contract between the licensee and the authorized agents.

If the authorized agent is a nonresident, approval from immigration and/ or other proper authorities is required.

REPORTING REQUIREMENTS

Licensees are required to submit quarterly reports, which include a report of total funds transmitted outside of the territory and the number of individuals transmitting; and a report of the total amount of foreign currency transacted in the territory.

Additionally, the Commissioner may require money transmitters to obtain details of senders for amounts aggregating $10,000 or more and such details include social security numbers and tax identification. (It’s unknown if tax identification refers to the Employer’s Identification Number  — EIN — or a number assigned by the local Tax Office.)

Licensees are also required to report to the Commissioner if they filed for bankruptcy or reorganization; and a felony indictment or conviction of the licensee or any of its officers, directors, or principals related to money transmission activities.

The bill notes federal reporting requirements in which the licensee and its agents are required to complete anti-money laundering forms in accordance with federal law.

The bill makes very clear that all information obtained by the Commission is confidential. However, this provision of the proposed law does not prohibit the Commissioner from releasing to the public a list of persons licensed under this chapter or from releasing aggregated financial data on the licensees and their activities.

In the past years, lawmakers have requested the government for information on how much money is being sent off island, especially to Asian countries, since many of the local stories are Asian-operated but owned by American Samoans. But there hasn’t been much success over the years.

(Samoa News notes conversely — information about remission amounts — money sent to Am. Samoa residents is unknown too.)

FORWARDING OF FUNDS

The bill also sets the required timeframe of 48-hours for the licensee to transfer the money received from the depositor to the receiver, “unless otherwise ordered by” the customer.

Additionally, customers must be provided a written disclosure highlighting fees, reporting, cancellation, and compliance prior to each transaction.

Samoa News should point out that the “48-hour” requirement becomes particularly important due to recent criminal cases before the High Court, where two former employees of one of the money services companies (Western Union) are being charged with theft. They are alleged to have told some of their customers that asked about their transfers that the money would take up to a month to transfer due to the foreign country it was going to.

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