Bipartisan Money Service Business Act Passes House

Press Release

Bipartisan Money Service Business Act Passes House

Legislation Aims to Ensure Millions Maintain Access to Important Financial Services, While Combating Money Laundering and Terrorist Financing

The "Money Service Business Act" (H.R. 4049), bipartisan legislation introduced by Congresswoman Carolyn B. Maloney (D-NY) to ease regulatory burdens on commercial banks that service money service businesses (MSBs), passed the U.S. House of Representatives today.

MSBs provide an array of important financial services, such as check cashing and wire transfers, to millions of Americans - including populations generally underserved by traditional financial institutions. These MSBs rely on commercial banks to do business. Federal regulations require banks to conduct reviews of MSBs' anti-money laundering and counter-terrorism financing compliance, but it is difficult and costly for banks to monitor the source of money in MSBs' accounts. In fact, this regulatory burden has prompted many banks to stop doing business with MSBs altogether rather than incur potential liability - a practice known as "bank discontinuance." Without access to the commercial banking industry, MSBs could be driven out of business and MSB services could be driven underground, making it difficult for law enforcement to track money laundering, terrorist financing, and other financial crimes.

"Bank discontinuance threatens the economic stability of millions of hardworking Americans who rely on MSBs for important services like check cashing and sending money to their families. It also threatens to drive MSB services underground, making it more difficult to bring money launderers and terrorist financers to justice," said Congresswoman Maloney, Chair of the Financial Services' Subcommittee on Financial Institutions and Consumer Credit. "I'm pleased to be working with Chairman Frank, Ranking Member Bachus, and Ranking Member Biggert to break the bank discontinuance log-jam. This common sense bill addresses important law-enforcement concerns, while establishing more reasonable bank regulation."

"We need a regulatory structure that takes into account the needs of consumers who may not have access to mainstream financial institutions," said Financial Institutions and Consumer Credit Subcommittee Ranking Member Judy Biggert (R-IL-13), an original co-sponsor of the bill. "This is a sensible fix that will allow MSBs to continue offering services, while at the same time ensuring that transactions are properly regulated and monitored for illegal activity. I appreciate Congresswoman Maloney's hard work on this important, bipartisan issue."

The "Money Service Business Act" would enable MSBs to self-certify that they and their customers are not engaged in money laundering or terrorist financing. MSBs, after all, are in a better position to monitor their customers than are the banks that MSBs do business with. This self-certification would limit the liability and regulatory burdens of commercial banks, and help MSBs stay in business.

In addition to Subcommittee Ranking Member Biggert, Financial Services Committee Chairman Barney Frank (D-MA) and Ranking Member Spencer T. Bachus (R-AL) are also original co-sponsors of H.R. 4049.

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