BY J. PHILIP GODDARD, PRESIDENT, MTRA
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.