MTRA 2005 NEWS Archive

TEXAS ISSUES ORDER REVOKING LICENSE of UNIS DICH VU - A Texas money transmitter 20 December 2005 - Texas Banking Commissioner Randall S. James issued an Order Revoking License (Order) for Van Thanh Le d/b/a Unis Dich Vu (Unis), a money transmitter located in Houston, Texas and licensed under Texas Finance Code, Chapter 151. Unis was granted a money transmission license by the Department of Banking on March 5, 1998 and operated from an office in Southwest Houston offering money transmission services to the Vietnamese community. The Order results from violations of state law by Unis for failure to file a written quarterly report, failure to pay its assessment fee, and for failure to notify the Department of Banking of the business closing sometime before November 1, 2005. GREG GONZALES APPOINTED ACTING COMMISSIONER IN TENNESSEE 5 December 2005 - Governor Phil Bredesen today appointed Greg Gonzales acting commissioner of the Department of Financial Institutions. Gonzales will temporarily fill the vacancy created by the resignation of Commissioner Kevin Lavender. The department regulates state-chartered banks, credit unions and a number of non-depository institutions. Gonzales has been associated with MTRA for more than ten years and is currently serving on the MTRA Board of Directors. "We’ve made real progress at Financial Institutions, in part due to the work of Greg Gonzales in support of Commissioner Lavender," Bredesen said. "I am pleased that Greg has agreed to step into this position so we can take time to find the right person to continue the work we’ve started." Gonzales, a native of Baxter, Tenn., has been with the department for 19 years and currently serves as Assistant Commissioner and General Counsel. In this role, Gonzales is responsible for coordinating the provision of legal advice to the Commissioner and the Department. He also directs the budget, human resource and legislative functions for the Department. Lavender, 44, who was appointed Commissioner of Financial Institutions in January of 2003, announced last month he would leave his position to become a senior vice president at Fifth Third Bank, a national bank not regulated by the department. TEN YEAR SENTENCE FOR MONEY LAUNDERING AND OPERATING WITHOUT A VIRGINIA MONEY TRANSMISSION LICENSE 29 November 2005 - A federal judge sentenced a Herndon, Va., man to 10 years in prison for illegally sending more than $6 million to Pakistan and other countries. Mohammad Bajwa, a 40-year-old Pakistani national, was sentenced to prison for 10 years and ordered to give up his home in Herndon, Virginia and $3.5 million. Mohammad Bajwa was convicted by a federal grand jury in October pursuant to the U.S. Patriot Act that requires money transmitters to obtain the required state license and register with FinCEN, an agency of the US Treasury, before engaging in the money transmission business. Testimony showed that Mohammad Bajwa operated a money transmission business in Virginia before and after March 2002 when the Virginia Bureau of Financial Institutions denied the money transmission application of Hashim Enterprises, Inc., a company owned and managed by Bajwa. The prosecution produced evidence connecting Bajwa to six million dollars he helped people wire to Pakistan and other countries from Virginia residents. He was also convicted of wire fraud connected to a refinancing application he filed on a mortgage. Prosecutors said Bajwa collected money from people in Virginia and then wired it to overseas banks. His brother in Pakistan then collected the money and distributed it to its recipients. Prosecutors said Bajwa also illegally wired money to several other countries, including the United Arab Emirates, Japan, India, China, Taiwan, and Holland. In April, Bajwa was convicted of immigration fraud and was later sentenced to two years in prison. Bajwa's conviction for operating without a state money transmission license is the third handed down by Virginia juries in Northern Virginia in 2005. A current list of licensed money transmitters can be found in the Bureau of Financial Institutions' web site at www.scc.virginia.gov/division/banking. STATE ATTORNEY GENERALS AGREEMENT TO CURB WIRE FRAUD Western Union to Launch Consumer Education Campaign 14 November 2005 - Attorney Generals in 45 states and the District of Columbia announced today that they have entered into an agreement with Western Union Financial Services, Inc. ("Western Union") that will educate consumers and discourage fraud-induced transfers using Western Union's wire services. The agreement will curb "fraud-induced transfers," in which unsuspecting consumers wire money to telemarketers and other scam artists. Some telemarketers, often based in other countries, use a "lottery" scam, in which they entice consumers into wiring them money for "taxes" or other charges in order to receive false lottery winnings. Other scammers frighten consumers into wiring money with a false story that a loved one needs bail money or emergency medical care. Western Union and all states have joined forces to reduce the frequency of fraud-induced money transfers that are encouraged by scam operators. Western Union operates 40,000 wire transfer points in the U.S. and more than 195,000 around the world which, up to now, have been fertile ground for fraud artists to perpetrate crime against innocent consumers. International wire fraud scammers have hit American consumers especially hard. For example, a seven-state survey found that approximately 29 percent of Western Union money transfers to Canada in excess of $300 were fraud-induced. Fraud-induced transfers represented about 58 percent of the total dollars transferred, at an average of over $1500 per transfer. Total American consumer losses to Canada in the year 2002 alone were estimated at $113 million. Under the Agreement, Western Union will, among other actions: Publish prominent warnings to consumers on Send Forms about fraud-induced wire transfers in both English and Spanish; Pay $8.1 million over five years for national peer-counseling programs, overseen by the AARP Foundation, to reach 3 million consumers; Reimburse the transfer amounts plus transfer fees to any consumer who requests, prior to pickup, that a transfer be stopped and who reasonably claims that the transfer was fraud-induced; Regularly advise and provide enhanced training for Western Union agents about fraud issues; Terminate agents who are involved in fraud, and suspend or terminate agents who do not take reasonable steps requested by Western Union to reduce fraud; and Block wire transfers when Western Union learns of potential fraudulent transfers. Western Union Financial Services is a wholly-owned subsidiary of First Data Corporation, based in Greenwood Village, Colorado. MTRA PRESIDENT ROONEY SETS GOALS FOR THE NEXT TWO YEARS To All MTRA Member States: The 2005 MTRA Annual Conference in Charleston, SC last week was a huge success. It seems that every year the conference is better than the year before. For two years, President Phil Goddard has led the 35 or so member states in a cooperative effort to improve regulation and examination of the money transmission industry. During this time period, healthy and constructive dialogue between the industry and the regulators has allowed each side to have a better understanding of the other. The examination committee has made significant strides in realizing our goal to provide a more seamless examination product. With these successes in mind, we must look ahead and challenge ourselves to improve the process that we began when we signed the cooperative agreement. I would like to set certain goals for the MTRA for the next two years. 1. Examination Committee - Establish the use of one core examination report that all member states find acceptable. All examiners have the same objectives when examining a company. It is clear that we use different methods to achieve these objectives. I know from past experience with our bank and credit union examiners who have already been through this process that states often do not like to give up what they perceive as "their way". Now is the time to prepare this new Core Examination Report and gain acceptance for use by each member state. The 15 or so states that currently perform examinations are the likely candidates to undertake this review. No state should have to give up what they consider important exam information or data. Some states might have to accept a more detailed report than what is currently accepted. With the use of state-specific sections, all states will be able to meet their particular requirements. The industry will also benefit by understanding one examination format. 2. Ratings System - Those of us who are familiar with examination ratings systems know that the language between different groups can be bridged by the use of a common acceptable rating system. Examinations should produce a way for all readers to measure the different aspects of the operations of a company. After producing a core report, a rating system is the next logical step. 3. Examination School - As individual state regulators, we know the value of training our examination staffs' to become proficient in their particular areas of expertise. The MTRA examiners school was formed several years ago as part of our annual conference. The schools have been praised by the attendees as providing valuable, timely and current information that can instantly be used as part of examination procedures. Bert Gonzales of Texas and John Bishop of Ohio have been invaluable to our examination school. When a state makes the decision to begin examining money transmitters, where can they turn to train a new examiner? Historically, you either trained your own people or asked other states if they could have a new employee tag along to learn the techniques. This approach does allow the student to see different methods but it is not a consistent training technique that the industry needs as it tries to operate across state lines. The industry comments I received at this year's conference confirmed my belief that consistency in examination findings are needed. How can we produce a universal examination program that flows seamlessly from state to state? I believe the MTRA needs to establish an Introductory Exam School for new money transmitter examiners that last at least 4 days held at least once a year. A second school for advanced examiners should also be established annually to discuss current topics and more advanced techniques. These schools do not necessarily need to be attached to the annual conference. I believe these goals can be accomplished with input from all involved states and the Board of Directors of the MTRA. Once they are achieved, our examination product will improve greatly and the industry will appreciate the efficiencies that we bring to the examination process. I look forward to working with all member states and the industry to improve and build on our past accomplishments. I am sure the 2006 Annual Conference in Santa Fe will be as successful as the Charleston conference. Sincerely, Joseph E. Rooney Deputy Commissioner State of Maryland RECORD NUMBER ATTENDS MTRA 2005 ANNUAL CONFERENCE IN CHARLESTON 10 November 2005 - MTRA's 2005 Annual Conference kicked off on November 7th in Charleston, South Carolina, with a record number of regulators and industry officials attending. About 240 regulators and industry officials attended the three day event, representing member states and money transmitters across the country. Representatives of the US, Mexico and Canadian governments also attended and made presentations. The conference included an examiners school, where the new IRS examination program was unveiled by IRS and FinCEN representatives. FinCEN Director William Fox, no stranger to MTRA, was the keynote speaker. This year's theme was entitled "A new Cooperation in State and Federal Regulation". The program provided an atmosphere to facilitate networking and exchange between and among industry and regulators. In his key note address FinCEN Director Fox emphasized the important role states are playing in licensing and examining money transmitters thereby diminishing the money laundering risks associated with unlicensed money transmitters. There was also a discussion of the cooperative examination program developed by MTRA to examine transmitters operating across state lines thereby reducing the regulatory burden, the costs associated with multiple examinations and duplication of effort. A panel consisting of regulators, bankers and industry had a healthy discussion of the reasons banks are closing accounts of money transmitters and ways to address the problem. The consensus was that both bankers and money transmitters need to understand each others business and FinCEN needs to dispel the erroneous perception that the money transmitter business is high risk. As FinCEN Director Fox stated licensing and examination of money transmitters by the states and examination by IRS ameliorates the risk associated with the business. The following directors and officers were elected for two years terms: Joseph E. Rooney (MD) President and Director, Randall S. James (TX) Vice President and Director, Robert Venchiarutti (CA) Secretary and Director, Tracy M Hudson (WV) Treasurer and Director, John Bishop (OH) Director, Reitzel Deaton (NC) Director, J. Philip Goddard (IN) Director, Greg Gonzales (TN) Director and Nicholas C. Kyrus (VA) Director. The conference closed with a presentation of a plaque to outgoing MTRA President Phil Goddard for his services to the association. Incoming president Joe Rooney announced that the next annual MTRA conference will be held in Santa Fe, NM, in November 2006. MTRA JOINS THE DISCUSSION ON MONEY LAUNDERING DETECTION/PREVENTION 3 November 2005 - MTRA President Phil Goddard of Indiana and MTRA Vice President Joe Rooney of Maryland were asked to be on a panel of the American Bankers Association and American Bar Association joint conference of money transmitter issues and money laundering topics. The conference was from October 30 through November 1 at the Marriot Wardman in Washington D.C., and was attended by over 1,100 bankers and attorneys. The panel was moderated by Ezra Levine and Goddard and Rooney were joined on the panel by William Langford of FinCen and Tom Haider of Moneygram. The focus of the discussion was on the new MOUs as they relate to MSBs, interaction with the federal authorities regarding examinations, and the closing of MSB's accounts by banking institutions. This breakout session was well attended by over 200 attendees and was the only session to include state regulators. MTRA JOINT EXAMINATIONS COMMITTEE NEWS AND NOTICE OF ORGANIZATIONAL MEETING IN CHARLESTON, SC October 2005 - The MTRA Joint Examinations Committee has had a productive 2004-2005 term and is looking forward to establishing new goals for the coming 2005-2006 term. During the past twelve months and since the last MTRA conference in Denver, Colorado the committee has worked diligently to encourage MTRA member states to conduct joint examinations of common license holders. In addition, the committee continues to act as a resource for member states and to encourage communication between all member states with the hopes that this will lead to the sharing of reports of examination between member states as contemplated in the MTRA Cooperative Agreement. During the past year, with guidance from the committee for planning and coordination purposes, a total of nine joint examinations were conducted. Lead states for these examinations included California, New York, Ohio, Pennsylvania, and Texas. For these joint reports of examination, the lead states utilized the core examination report pages and notification documents that were developed by the committee during the 2003-2004 term and which are available to all member states. Also, during the course of the year, the committee assisted in the coordination and planning of several "training" examinations which provided an opportunity for states developing examination programs to work with states that have on-going MSB examination programs and experience examining MSBs. States that participated for training purposes at these examinations were Georgia, Iowa, Maryland, Tennessee, Washington, and Wyoming. The committee has also developed a list of criteria that must be met by states that want to serve as "lead state" for joint examinations. Also, to receive feedback from licensees that are examined jointly by MTRA member states, the committee implemented a survey questionnaire. Lastly, the committee assisted in developing a new section of the secure area of the MTRA website which displays a list of the joint examinations conducted. This section of the website entitled "Copies of Examination Reports of Money Transmitters" provides instructions, guidelines, and contact information to member states for requesting copies of joint examination reports. An organizational meeting of the committee for the upcoming 2005-2006 term will take place on Tuesday, November 8, 2005 at 5:30 p.m. at the Francis Marion Hotel in Charleston, South Carolina during the MTRA Conference. The committee is seeking new members for the upcoming term and requests representatives from each member state to attend. For more information about the committee's work, one may contact Bert Gonzalez at the Texas Department of Banking or John Bishop at the Ohio Division of Financial Institutions ANOTHER TRANSMITTER CONVICTED FOR OPERATING WITHOUT A VIRGINIA LICENSE October 25, 2005 - On October 21, 2005 a federal jury convicted a Herndon, Virginia, man pursuant to the U.S. Patriot Act that requires money transmitters to obtain the required state license and register with FinCEN, an agency of the US Treasury, before engaging in the money transmission business. Testimony showed that Mohammad Bajwa operated a money transmission business in Virginia before and after March 2002 when the Virginia Bureau of Financial Institutions denied the money transmission application of Hashim Enterprises, Inc., a company owned and managed by Bajwa. The prosecution produced evidence connecting Bajwa to six million dollars he helped people wire to Pakistan and other countries from Virginia residents. He was also convicted of wire fraud connected to a refinancing application he filed on a mortgage. Bajwa was ordered to give up his home and four million dollars. He could face a maximum penalty of five years in prison for each charge when he is sentenced November 29th. Prosecutors say Bajwa collected money from people in Virginia and then wired it to overseas banks. His brother in Pakistan then collected the money and distributed it its recipients. In April, Bajwa was convicted of immigration fraud and was later sentenced to two years in prison. Bajwa's conviction for operating with out state money transmission license is the third handed down by Virginia juries in Northern Virginia in 2005. A current list of licensed money transmitters can be found in the Bureau of Financial Institutions' web site at www.scc.virginia.gov/division/banking. BARIEK SENTENCED FOR OPERATING A MSB WITHOUT A VIRGINIA LICENSE September 16, 2005 - Rahim A. Bariek, age 46, of Herndon, Virginia, was sentenced today before the Honorable James C. Cacheris, United States District Judge for operating a money transfer business (commonly known as hawala) without a Virginia license in violation of provisions of the U.S.A. Patriot Act. Bariek, who previously pled guilty to a single count indictment, charging him with operating Bariek Money Transfer from on or about November 1, 2001 through on or about August 8, 2003, was sentenced to 18 months incarceration and required to forfeit $32,343.29. Special agents from U.S. Immigration and Customs Enforcement (ICE) and agents from the Internal Revenue Service (IRS) arrested Bariek on April 15, 2005. Bariek and his business received at least $4.9 million in funds from individuals wishing to transfer money out of the United States from November 1, 2001, until August 8, 2003. In furtherance of Bariek's money transmitting business, those funds were deposited in five bank accounts controlled by Bariek. Equivalent amounts of money were transferred to individuals in various Middle East countries, including Afghanistan, Pakistan and Iran, without a money transmission license from the Virginia State Corporation Commission as required by Virginia law. On November 14, 2001, Bariek testified before the U.S. Senate Committee on Banking, Housing and Urban Affairs, Subcommittee on International Trade and Finance, concerning hawalas and underground terrorist financing mechanisms. Among other things, Bariek told lawmakers, "I pay taxes on my hawala business and I comply with the law. I am happy to comply with the new federal law, which you wrote, and to register and to file suspicious activity reports". He also stated that he knew his customers but the government presented evidence at sentencing showing that Bariek could not possibly have known all of his customers, and that he transmitted money to Afghanistan immediately after the September 11th terrorist attacks when Afghanistan was still under the control of the Taliban, and a base for Al-Qaeda operations. Paul J. McNulty, United States Attorney for the Eastern District of Virginia, who prosecuted Bariek stated: "The first priority of law enforcement is to prevent terrorism. That is why we are cracking down on illegal financial systems that could be used to supply money to terrorists." Allan J. Doody, Special Agent-in-Charge for U.S. Immigration and Customs Enforcement (ICE) in Washington, D.C. stated that 'illegal money transmittal businesses and "hawalas" pose serious vulnerability because they provide criminals with a back-door mechanism to move dirty money around the globe undetected. What is particularly troubling is that Mr. Bariek testified before the U.S. Senate about the dangers posed by illegal hawalas while he was operating one himself at the same time." "The use of money transfer business of "hawalas" is an emerging area of law enforcement because of potential use by money launderers and terrorists," said Charles Pine, Special Agent in Charge, IRS- Criminal Investigation, Alexandria Field Office. This case was investigated by the US Bureau of Immigration and Customs Enforcement and the Internal Revenue Service, Criminal Investigations Division, and prosecuted by Assistant United States Attorney David Laufman and Special Assistant Jessica Lombardo. Special assistance was provided by Virginia state authorities. Nicholas C. Kyrus, Deputy Commissioner of Financial Institutions at the Virginia State Corporation Commission stated that this case exemplifies the close cooperation of state and federal agencies in cracking down on unlicensed money transmitters. The conviction of Bariek is the latest enforcement action in ICE's nationwide crackdown on unlicensed money transmittal business. The U.S.A. Patriot Act enhanced ICE's ability to combat the international movement of illicit funds through money transmittal businesses by amending 18 U.S.C. Section 1960 statute. As a result of the change in the law, money transmittal businesses in the United States must be registered with the Treasury Department and be licensed by appropriate state authorities. Since the enactment of the U.S.A. Patriot Act in late 2001, ICE agents have aggressively targeted illegal money transmittal businesses and underground hawalas nationwide, given the vulnerabilities they pose. ICE investigations into unlicensed money service business have resulted in the arrest of 155 individuals, 142 criminal indictments and the seizure of some $25.8 million since the Patriot Act became law. TEXAS BANKING DEPARTMENT ENTERS INTO AN AGREED ORDER WITH BANCOSAL, INC. May 2005 - Texas Banking Commissioner Randall S. James entered into an Agreed Order with a Texas licensed money service business, Bancosal, Inc., Houston, Texas, for its systematic failure to properly monitor Texas wire transmissions for compliance with applicable State and Federal laws. Bancosal was first given notice of the wire transmission recordkeeping deficiencies and Anti-Money Laundering program inadequacies by the Department in July, 2003, following a routine examination. Commissioner James issued a Cease & Desist Order against Bancosal on November 9, 2004 relating to these same issues when the company failed to demonstrate improvement after a follow-up examination in July, 2004. The Order, dated April 29, 2005, requires Bancosal to properly monitor Texas wire transmissions for compliance with the Bank Secrecy Act, vigorously enforce its internal Anti-Money Laundering program, including adequate training, appropriate supervision and independent reviews, and ensure that all required suspicious activity reports are completed accurately and filed timely. The Order also requires Bancosal to pay a $250,000 administrative penalty to the Department for its past conduct. Commissioner James stated, “This Agreed Order did not result from infrequent, minor or technical problems. Overall, Texas banks and money service businesses are recognized for their diligence and commitment to compliance with state and federal laws designed to impede money laundering and terrorist financing by criminal organizations and they do an excellent job complying with the substance and intent of these laws. I am pleased that Bancosal has now firmly committed to implement high standards in its own operations, and we look forward to Bancosal achieving its compliance goals.” Bancosal is a wholly-owned subsidiary of Banco Salvadoreño, S.A., a foreign bank based in El Salvador, Central America. The parent organization has no bank organization presence in the United States. MD. CRACKS DOWN ON ILLEGAL MONEY TRANSFER COMPANIES By Krissah Williams Washington Post Staff Writer April 26, 2005 - About half of the 120 Maryland-based money transmitters used by immigrants to carry money abroad are operating without licenses and without the insurance that the state mandates, according to regulators who are cracking down on those operations. "Immigrants that are here working are losing their money," said Susan Clayman, an investigator for the financial regulation division of Maryland's Department of Labor, Licensing and Regulation. The money is sometimes seized by authorities when it is transported illegally by unlicensed companies. Clayman is a former state trooper with a background in narcotics enforcement who was hired last year to root out such unlicensed operations. The small money transmitters are popular with immigrants, especially recent arrivals, because people at these facilities speak their language, know their culture and sometimes will deliver the money right to a family member's door. They also are often cheaper than banks and run by immigrant entrepreneurs. "I almost only use this company," said Juan Palma, 23, who stepped up to the counter at Fito Express International Courier in Langley Park and peeled a handful of $20 bills from his wallet to send to his family in Ipala, Guatemala. Palma, a construction worker, lost money when customs agents seized one of Fito's shipments, but he is willing to take the risk. "We are used to doing things this way," said Angel Pineda, a painter from Chiquimula, Guatemala. He said he began using Fito to send money to his wife in Guatemala when he moved to Langley Park eight months ago. A money-transfer company, unlike a bank, is not insured by the federal government. To operate legally in Maryland, a transmitter must have a $150,000 surety bond, issued by an insurance company, which protects customers from losses. It must also pay a $4,000 licensing fee renewable every two years. Virginia and the District have similar laws. In addition, money-transfer companies must register with the U.S. Department of Treasury's Financial Crimes Enforcement Network, which investigates money laundering. Investigators have focused more attention on unlicensed companies after the 2001 terrorist attacks. Unlike legal companies, which generally operate through electronic networks that can track the flow of funds, unlicensed outlets sometimes carry cash across the border or ship it in boxes. Because it is illegal to leave the United States with $10,000 or more in cash without disclosing it, these funds are at risk of being seized by authorities. The cash can also be stolen. Unlicensed firms do not have insurance to cover those losses. In the early 1990s, the District got tough on unlicensed financial institutions after three Latino money-service firms that were operating illegally went under, costing customers thousands of dollars. Money transmitters have been increasingly cropping up in the suburbs, addressing immigrants' preference to live outside of the District. As of 2000, Maryland's immigrant population had surged to 518,315, or 10 percent of the population. Virginia's was 570,279, or 8 percent, and the District's was 73,561, or 13 percent. Maryland authorities say that at first these facilities operated under the radar but that as their numbers have grown, more problems have emerged. Virginia has not been tracking unlicensed companies because they have not been seen as a major law enforcement problem, according to the State Corporation Commission's Bureau of Financial Institutions. Latinos alone sent an estimated $500 million last year from Maryland to Latin America, the most per capita of any state, according to the Inter-American Development Bank. Immigrants in the District sent $94 million, and in Virginia, $586 million was sent to Latin America last year, according to the bank. About 86 percent of the remittances to Latin America are sent by Western Union, MoneyGram or mid-size money-transfer chains, according to a report by Manuel Orozco, professor at Georgetown University's Institute for the Study of International Migration. About 5 percent are sent using ATMs or other traditional banking services, while 4 percent use facilities run by small immigrant entrepreneurs. Gustavo Torres, executive director of Casa de Maryland, a Latino immigrant advocacy organization with offices in Takoma Park, said immigrants use small transfer companies because the people who work there speak Spanish and the music, television shows and people in the office feel familiar. "We feel like we've come home when we come" to these facilities, Torres said. "It does not mean those kinds of facilities should not have regulation. We know there are abuses being committed against immigrants. We welcome regulation." "Almost every ethnic group has their own set of money transmitters, [and] there are more cases than we can keep up with," said Stephen M. Prozeralik, director of enforcement for Maryland's division of financial regulation, which has begun investigating more than a dozen money-service businesses, including companies that send money to Central America, Africa and the Philippines. Investigator Clayman finds the transfer companies by studying local Latino, African and Filipino newspapers and telephone books, looking for words such as envios dinero or pesos and balikbayan in foreign-language ads. Langley Park, which straddles Prince George's and Montgomery counties, is home to as many as two dozen of those money transmitters, according to Clayman. "They pop up overnight," Clayman said while piloting her sport-utility vehicle through the community, which has a large Hispanic population. She slowed to peer in the windows of storefront operations, which may sell clothes and also advertise themselves as international money transmitters. She has also found unlicensed operations run out of apartments and the backs of pickup trucks or set up in parking lots. When Clayman finds a company advertising itself as a money transmitter, she checks its name against the agency's list of licensees. If it is not on the list, she then sends the company a letter. If the company does not agree to stop sending money or seek a license, she sends a second, harsher letter. Sometimes she also shows up at the companies and warns them to stop operating. She is investigating 14 allegedly unlicensed transmitters and has served a handful of orders telling companies to stop transmitting money. Some companies have agreed to pay their fees and become licensed. Others become agents of larger money-transfer companies, such as Western Union or MoneyGram, that are already licensed in the state. Fito Express's owner, Randolfo "Fito" España, said he learned of Maryland's licensing requirement after receiving a letter from Prozeralik's office. From Chiquimula, Guatemala, where he still lives, he has operations in four U.S. cities. "Most of our [U.S.] customers are undocumented, and they are afraid to use banks," said España, who travels to Maryland every month. Last year, customs authorities at Miami's airport seized two Fito Express shipments of cash and money orders totaling $60,000. España said he took out a loan on his home to make sure the $60,000 was delivered. A few months ago, Maryland regulators warned Fito Express to get a license or stop transmitting cash. España was shipping about $50,000 a week for about 250 customers. He charged $5 to $18 per shipment. Western Union and MoneyGram charges more than $20 to transfer $200 to Guatemala. To get a license, Fito Express would have needed to pay an annual surety bond premium of about $4,500. It is unlikely a company that sends cash by courier would get insured because the risk of financial loss is too high, according to the Surety Association of America. After evaluating the situation, España decided Fito Express would no longer send money. Last week, he had a handwritten sign posted in the lobby, "No se recibe envios de dinero. Solo recibe envios de paquete." (Money transfers are not accepted here. Only packages are sent.) It's not just Latino money-transfer operations that are drawing attention. Across the state line in Northern Virginia, Maria Castro operates Manila Forwarders Corp. Her company is also family owned. After moving to the area from the Philippines in the 1980s, she and two siblings opened the store in Lorton, where they fill boxes with soap, toiletries and used clothes that Filipinos living in the region pay Manila Forwarders to ship via ocean freighter to their families back home. About 10 years ago, she also began sending money. Castro and her siblings often drive to the homes of their clients to pick up the goods or money they want to send. They deposit the money in a U.S. bank account and then transfer the funds to an account in Manila. From there it is distributed. Castro said she charges $10 for any amount of money transferred, compared with $25 charged by larger competitors. The licensing fee and surety bond she pays to be a legal operator in Virginia cut into her profit, she said, but she knows she needs to follow the rules. "It is a nuisance, but if we have to comply, then we have to comply." GUIDANCE ON BANKING SERVICES FOR MSBs April 25, 2005 - The Federal Banking Agencies and FinCEN issued interpretive guidance (see below) designed to help banks manage the BSA risks associated with money services businesses. The release of the guidance coincided with today's Senate Banking Committee hearing on money services businesses during which Diana Taylor, Superintendent of the New York State Banking Department, testified and the state banking agency MOUs with FinCEN and IRS were announced. FinCEN has also issued a concurrent advisory to money services businesses to emphasize their Bank Secrecy Act regulatory obligations and to notify them of the types of information that they will be expected to produce to a banking organization in the course of opening or maintaining account relationships. The FinCEN Advisory to MSBs can be downloaded from: www.fincen.gov/fincenadv04262005.pdf Guidance and Advisory Issued on Banking Services for Money Services Businesses Operating in the United States The Financial Crimes Enforcement Network (FinCEN), along with the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the National Credit Union Administration, the Office of the Comptroller of the Currency, and the Office of Thrift Supervision (collectively, the "Federal Banking Agencies"), today issued interpretive guidance designed to clarify the requirements for, and assist banking organizations in, appropriately assessing and minimizing risks posed by providing banking services to money services businesses. FinCEN also has issued a concurrent advisory to money services businesses to emphasize their Bank Secrecy Act regulatory obligations and to notify them of the types of information that they will be expected to provide to a banking organization in the course of opening or maintaining account relationships. While recognizing the importance and diversity of services provided by money services businesses, the guidance to banking organizations specifies that FinCEN and the Federal Banking Agencies expect banking organizations that open and maintain accounts for money services businesses to apply the requirements of the Bank Secrecy Act, as they do with all account holders, on a risk-assessed basis. Registration with FinCEN, if required, and compliance with any state licensing requirements represent the most basic of compliance obligations for money services businesses. Based on existing Bank Secrecy Act requirements applicable to banking organizations, the minimum compliance expectations associated with opening and maintaining accounts for money services businesses are: Apply the banking organization's Customer Identification Program; Confirm FinCEN registration, if required; Confirm compliance with state or local licensing requirements, if applicable; Confirm agent status, if applicable; and Conduct basic risk assessment to determine the level of risk associated with the account. Through the interpretive guidance, FinCEN and the Federal Banking Agencies confirm that banking organizations have the flexibility to provide banking services to a wide range of money services businesses while remaining in compliance with the Bank Secrecy Act. While banking organizations are expected to manage risk associated with all accounts, including money services business accounts, banking organizations are not required to ensure their customers' compliance with all applicable federal and state laws and regulations. The guidance contains examples that may be indicative of lower and higher risk within money services business accounts to assist banking organizations in identifying the risks posed by a money services business customer and in reporting known or suspected violations of law or suspicious transactions relevant to possible violations of law or regulation. In addition, the guidance addresses the recurring question of the obligation of a banking organization to file a suspicious activity report on a money services business that has failed to register with FinCEN, if required to do so, or failed to obtain a license under applicable state law, if required. The guidance states that a banking organization should file a suspicious activity report if it becomes aware that a customer is operating in violation of the registration or state licensing requirements. This approach is consistent with long-standing practices of FinCEN and the Federal Banking Agencies under which banking organizations file suspicious activity reports on known or suspected violations of law or regulation. The concurrently issued FinCEN advisory to money services businesses emphasizes the importance of compliance with Bank Secrecy Act regulatory requirements by money services businesses. The advisory is designed to assist money services businesses by outlining the types of information that they should have and be prepared to provide to a banking organization in the course of opening or maintaining account relationships. The advisory also makes clear that money services businesses that fail to comply with the most basic requirements of the Bank Secrecy Act, such as registration with FinCEN if required, will be subject to regulatory and law enforcement scrutiny, and that continued non-compliance will likely result in the loss of banking services. 2004-5 LIST OF REGISTERED MONEY SERVICES BUSINESS WITH FINCEN April 15 2005 - The Department of the Treasury's Financial Crimes Enforcement Network (FinCEN) has published a new list of registered money services businesses from December 2001 to April 15, 2005. The list contains 23,481 companies. The list provides information per state/territory and reflects information provided by filers. Each is arranged alphabetically - first, by the selected state, then, by each city within the selected state, and finally, by MSB Registrant name within each city. FinCEN said the list should only be used as a general reference for the public and may contain inaccuracies. The list can be downloaded at: www.msb.gov/guidance/msbstateselector.php. STREAMLINE SUSPICIOUS ACTIVITY REPORTS April 2005 - In its continuing effort to reduce the reporting burden on the Money Services Business industry, FinCEN has taken action to revise the suspicious activity report used by MSB's. Several data elements have been removed from the revised report as well as one entire section. Of particular note is the complete elimination of the "Continuation Sheet" for recording traveler's checks; money orders and wire transfer document numbers. FinCEN is requesting public comment on the recommended revisions. Comments may be sent to the address listed in the Federal Register dated April 18, 2005. REGULATORS SHOULD BE CONCERNED BY J. PHILIP GODDARD, PRESIDENT, MTRA April 2005 - I had been looking forward to attending a recent meeting in Washington, D.C., on March 8, 2005 concerning the issues relating to banks closing accounts of money transmitters. This meeting was sponsored by FinCEN and Chaired by Ezra Levine. It was attended by many from the money transmission industry, bankers and federal regulators. I had been hearing rumors of a "conspiracy" among some federal regulators encouraging banks not to do business with money transmitters due to the serious risks of liability. The fear was that banks would do business with someone who later was determined to be laundering money or tied to terrorist financing. Unfortunately, I could not attend due to family matters but the Vice President of MTRA, Joe Rooney of Maryland, did attend and made a presentation as the regulator from the state of Maryland. Joe expressed concern and displeasure over the fact that this situation existed. While there is no way of knowing the true situation relative to the conspiracy allegations, I nevertheless am offended by the situation in general. Other state regulators who license money transmitters should be equally offended. Whoever is responsible for making the decision that banks not conduct business with money transmitters is in effect scoffing at the license that we, as state regulators, have issued. If a federal agency is unofficially encouraging banks to not have accounts of money transmitters, who are duly licensed by a state regulator, then they ought to be ashamed for contributing to the demise of an industry that state legislatures have acknowledged as legitimate, and subject to regulation by state licensing laws. In effect, a federal agency would be preempting the legitimate goals and efforts of state legislatures. My particular state has stringent licensing requirements. We interview applicants and do background searches. Bonds are posted. Character and fitness are established. Honesty is established. Firewalls are established to ensure against insider transactions and unfounded loans to directors and officers. Applicants have taken as long as two years to get a license from us. We rigorously examine our licensees and no stone goes unturned. For one of our licensees, who has gone through the exercise of establishing themselves as good corporate citizens, to not even rise to the level of being able to have an account with a bank makes a sham out of our efforts to ensure an industry based on safety, soundness honesty and integrity. I believe that state regulators should not only be concerned about this situation but remain vigilant as to what is taking place and who is responsible for fostering this demeaning status of the licenses we issue. MTRA PARTICIPATES IN FINCEN HEARING ON BANKING SERVICES March 2005 - On March 30, 2005, there was a joint statement issued by the Fed, FDIC, FinCen, NCUA, OCC, and the OTS addressing the issues relative to banks maintaining accounts with money transmitters. The MTRA was represented by our Vice President, Joe Rooney of Maryland, at a recent meeting conducted by FinCen who was investigating the issues resulting from banks closing accounts or not maintaining accounts for money transmitters. Hopefully this policy statement will go a long way in resolving misconceptions and unfair conduct. The full joint statement follows: JOINT STATEMENT ON PROVIDING BANKING SERVICES TO MONEY SERVICES BUSINESSES The Financial Crimes Enforcement Network ("FinCEN"), together with the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision, and the National Credit Union Administration (collectively, the "Federal Banking Agencies") are jointly issuing this Statement to address our expectations regarding banking institutions' obligations under the Bank Secrecy Act for money services businesses, such as check cashers and money transmitters.1 Money services businesses are losing access to banking services as a result of concerns about regulatory scrutiny, the risks presented by money services business accounts, and the costs and burdens associated with maintaining such accounts. Concerns may stem, in part, from a misperception of the requirements of the Bank Secrecy Act, and the erroneous view that money services businesses present a uniform and unacceptably high risk of money laundering or other illicit activity. The money services business industry provides valuable financial services, especially to individuals who may not have ready access to the formal banking sector. It is important that money services businesses that comply with the requirements of the Bank Secrecy Act and applicable state laws remain within the formal financial sector, subject to appropriate anti-money laundering controls. FinCEN and the Federal Banking Agencies further believe it is essential that the money services business industry maintain the same level of transparency, including the implementation of a full range of anti-money laundering controls as required by law, as do banking organizations. The Bank Secrecy Act does not require, and neither FinCEN nor the Federal Banking Agencies expect, banking institutions to serve as the de facto regulator of the money services business industry. Banking organizations that open or maintain accounts for money services businesses should apply the requirements of the Bank Secrecy Act on a risk-assessed basis, as they do for all customers, taking into account the products and services offered and the individual circumstances. Accordingly, a decision to accept or maintain an account with a money services business should be made by the banking institution's management, under standards and guidelines approved by its board of directors, and should be based on the banking institution's assessment of risks associated with the particular account and its capacity to manage those risks. Guidance on account relationships with money service businesses will be issued shortly by FinCEN and the Federal Banking Agencies outlining further our compliance expectations for banking institutions. FinCEN will issue concurrent guidance to money services businesses outlining their compliance obligations. We believe this guidance will clarify the Bank Secrecy Act requirements and supervisory expectations as applied to accounts opened or maintained for money services businesses. 1 Under existing Bank Secrecy Act regulations, money services businesses are defined to include five distinct types of financial services providers and the U.S. Postal Service: (1) currency dealers or exchangers; (2) check cashers; (3) issuers of traveler's checks, money orders, or stored value; (4) sellers or redeemers of traveler's checks, money orders, or stored value; and (5) money transmitters. See 31 CFR 103.11(uu). VIRGINIA MAN CHARGED WITH OPERATING A MONEY TRANSMISSION BUSINESS WITHOUT A LICENSE March 2005 - US Immigration and Customs officials arrested a Virginia man on March 15, 2005 at Dulles Airport, Va and charged him with illegally operating a money transmission business. Louay Habbal was arrested as he was returning from Syria and was charged pursuant to the US Patriot Act that requires money transmitters to obtain the required state license and register with FinCEN, an agency of the US Treasury, before engaging in the money transmission business. Habbal was allegedly wiring millions of dollars to Syria, Iraq, Lebanon and other nations under the name Mena Express from his home in suburban Vienna, VA according to an indictment in the U.S. district court in Alexandria, Va. Authorities said no terror charges have been brought against Habbal, but the investigation is continuing. Habbal is a naturalized US citizen. Between November 2001 and July 2004, officials of the HIDTA Money Laundering Initiative said, Habbal deposited funds from worldwide customers in a Virginia bank account. After taking out his fee, Habbal transferred the funds to individuals designated by his customers. U.S. Immigration and Customs Enforcement investigators seized more than $100,000 from the Mena Exchange bank account. Habbal was released after court appearance on condition of wearing an electronic monitoring device. PROPOSED LEGISLATION IN KANSAS February 2005 -  The Kansas Office of the State Bank Commissioner is supporting a bill to modernize the  Kansas Money Transmitter Act. The proposed amendments will clearly define electronic transmission and stored value cards; provide authority to the Commissioner to revoke licenses; and tie the surety bond to the size of the business rather than to the number of locations. If the bill is passed, it would take effect on July 1, 2005. For further information, you may contact Sonya Allen, General Counsel's Office, Kansas Office of the State Bank Commissioner at  785-296-2266. 2005 MTRA ANNUAL MEETING IS PLANNED FOR CHARLESTON, S.C. IN NOVEMBER February 2005 - The MTRA Board of Directors is happy to announce that its 2005 annual meeting and conference will be held at the Francis Marion in the historic district of Charleston, South Carolina. The meeting is scheduled for November 7- 9. Originally planned for Seattle Washington, the conference was moved to historic Charleston after encountering insurmountable difficulties with hotel accommodations. The Board is in the process of organizing the program and is encouraging interested parties to contact one of the board members with their suggestions. CONNECTICUT AND MISSOURI JOIN MTRA February 2005 - MTRA welcomes in its membership the great states of Connecticut and Missouri. This brings the total state membership to thirty-five. AMENDMENTS TO INDIANA'S MONEY TRANSMITTER STATUTE February 2005 - Indiana recently passed amendments to its money transmitter statutes providing for the release of otherwise deemed confidential information to state or federal officials. They are:(a) financial institution supervisory agencies; (b) law enforcement agencies; and (c) prosecutorial agencies or offices. The requirement to give the licensee prior notice before releasing confidential information coupled with an explanation as why the release of such information is necessary for the protection of the public and in the interests of justice was also repealed. The money transmitter statute was also amended to provide for the automatic administrative corporate dissolution of a money transmitter if it has failed to renew its license or pay any fee owed to the Department of Financial Institutions for a period of two consecutive years. Finally, Indiana clarified the fact that agents of exempt entities such as banks, are also exempt from licensing requirements. TEXAS BANKING DEPARTMENT ENTERS INTO AN AGREED FINAL ORDER WITH IPP OF AMERICA, INC. February 2005 - On February 4, 2005, Texas Banking Commissioner Randall S. James entered into an Agreed Final Order (Order) with IPP of America, Inc. (IPP), 330 Passaic Avenue, Suite 1, Fairfield, New Jersey. The Order directs IPP to cease processing bill payments to creditors on behalf of consumers, a practice requiring a money transmission license in Texas. IPP is not currently licensed in Texas to engage in this type of business activity as required by Chapter 152 of the Texas Finance Code. IPP is based in New Jersey and has approximately 53 bill payment center locations in Texas. IPP voluntarily discontinued accepting bill payments as of January 27, 2005, and has filed a license application with the Department. The Order requires that IPP pay a $15,000 administrative penalty for engaging in money transmissions in Texas without a proper license. Inquiries regarding Texas bill payments and money transmission transactions pertaining to IPP should be directed to: Texas Department of Banking Special Audits Division 2601 N. Lamar Blvd. Austin, Texas 78705 Toll free phone (877) 276-5554 At the prompt menu, press "3" for Inquiries/Complaints, then press "5" for the Currency Exchange/Transmission.