Amendments and expansion of the Uniform Money Services Act (UMSA) presented by the Money Services Committee of the National Conference of Commissioners of Uniform State Laws (NCCUSL) were approved by the conference last August at its annual meeting in Portland, Oregon. The amendments included an interstate reciprocity for states adopting the UMSA.
The Money Services Committee, headed by Virgin Islands Commissioner Tom Bolt, met in Arlington, Virginia in March 2004 and in May by telephone and explored the possibility of amending the UMSA in light of anti-terrorist measures suggested by a federal agency. It also considered revisions of the UMSA in light of the enactment of the US Patriot Act, which expanded the definition of money services business to include “hawala” or underground banking. Several other suggestions were also considered, including interstate licensing reciprocity. Former MTRA president and currently director Nick Kyrus and MTRA president Phil Goddard represented MTRA as advisors.
The Committee rejected a proposal to expand the UMSA to require the fingerprinting of money transmitters (employees and agents). A similar suggestion failed in New York State in 2002. A representative from US Treasury told the committee members that the Administration is not in favor of the proposal and did not want to impose an unnecessary burden on the industry and the states. The Committee also found the UMSA compatible with the U.S. Patriot Act and saw no need for major amendments. Although the UMSA was passed two years before the passage of the U.S. Patriot Act, it gives the states the ability to regulate effectively the entry of new money transmitters into the market place and to supervise their activities for both safety and soundness and anti- money laundering purposes. For example, the UMSA’s definition of money transmission includes informal transfers, such as hawala and hundi and many other forms of “underground banking” and was not necessary to amend the definition.
The Committee also considered a proposal to provide for an exemption from the licensing requirements for money transmitters operating on the internet if licensed in the home state. After considerable discussion, the proposal was rejected. However, the Committee agreed to propose interstate reciprocity for all money transmitters rather than just for internet transmitters. Since only Vermont adopted the UMSA, the interstate reciprocity provisions will not apply to other states.
The approved amendments as well as the Uniform Money Services Act (UMSA) can be found at: http://www.law.upenn.edu/bll/ulc/ulc.htm#msba