To amend the Electronic Fund Transfer Act to extend certain consumer protections to international remittance transfers of funds originating in the United States, and for other purposes.

February 17, 2005

Mr. GUTIERREZ (for himself, Mr. FRANK of Massachusetts, Mrs. MALONEY, Mr. HINOJOSA, Mr. MEEKS of New York, Ms. SOLIS, Ms. WATERS, Mr. CROWLEY, Mr. AL GREEN of Texas, Ms. LEE, Mr. ACKERMAN, and Ms. WASSERMAN SCHULTZ) introduced the following bill; which was referred to the Committee on Financial Services, and in addition to the Committee on International Relations, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned

To amend the Electronic Fund Transfer Act to extend certain consumer protections to international remittance transfers of funds originating in the United States, and for other purposes.

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled,

SECTION 1. SHORT TITLE.

This Act may be cited as the `International Remittance Consumer Protection Act of 2005' .

SEC. 2. FINDINGS.

The Congress finds as follows:

(1) In 2003, worker remittances from the United States to Latin America reached $31,000,000,000 and that volume is expected to rise as the region is both the fastest growing remittance market in the world and has the highest volume of remittances in the world.

(2) Of the $31,000,000,000 in remittances to Latin America, $14,000,000,000 went to Mexico: an amount exceeding the country's total revenues from tourism, and representing more than 2/3 of the value of petroleum exports and roughly 180 percent of the amount of agricultural exports.

(3) Remittances account for at least 10 percent of the gross domestic product of 6 countries in Latin America: Haiti, Nicaragua, El Salvador, Jamaica, the Dominican Republic, and Guyana.

(4) The Declaration of Nuevo Leon from the January 2004 Special Summit of the Americas recognized that `. . . remittances are an important source of capital in many countries of the Hemisphere . . .'.

(5) The Declaration of Nuevo Leon also committed the countries of the Americas to `. . . take concrete actions to promote the establishment, as soon as possible, of necessary conditions, in order to achieve the goal of reducing by at least half the regional average cost of these transfers no later than 2008'.

(6) Studies have shown that that, on average, around 10 percent of remittances received are saved or invested by the recipients which supports 2 conclusions: That some percentage of recipients are therefore in a position to use remittance money to create new businesses and that financial institutions can also use remittances as the basis of credit for entrepreneurs starting small or micro-enterprises.

(7) Since affordable, long-term mortgages are not widely available in many countries of the Western Hemisphere, financial institutions can increase the number of mortgages they provide to poor people in the region by using remittances as the basis for credit.

(8) The Multilateral Investment Fund of the Inter-American Development Bank estimates that in February of 2004, the average cost in the United States of sending a remittance to a Latin American country was roughly 8 percent of the amount remitted.

(9) The Multilateral Investment Fund also estimates that roughly 61 percent of adult foreign-born Hispanic persons living in the United States, about 10,000,000 people, send remittances to their countries of origin in Latin America and that the amount of the average remittance to Latin America ranges between $200 and $300.

(10) The Multilateral Investment Fund estimates that the States of California, New York, Texas, Florida, Illinois, and New Jersey each remit more than $1,000,000,000 annually to Latin America, and will account for $21,700,000,000, or roughly 70 percent of the $31,000,000,000 in remittances going to Latin America in 2004.

(11) Recent surveys show that nearly 80 percent of individuals sending remittances use international money transfer companies, and fewer than 10 percent use banks and credit unions.

(12) Roughly 1/2 of Latin American immigrants in the United States hold bank accounts, and only 10 percent of the recipients in Latin America of remittances from the United States hold bank accounts.

(13) Individuals and families without access to the banking system, in the United States and elsewhere in the Americas, pay higher fees, have difficulty conducting financial transactions, and lack the ability to establish credit records or obtain other benefits from financial institutions.

(14) The Federal banking agencies (as defined in section 3 of the Federal Deposit Insurance Act) recently agreed to notify financial institutions that the remittances services they offer to consumers can receive consideration in any evaluation under the Community Reinvestment Act of 1977 as both a retail service, and as a community development service if remittances serve to increase access to financial services by low- and moderate-income individuals.

(15) The Federal banking agencies also agreed that current regulations under the Community Reinvestment Act of 1977 provide for a distinction between the mere provision of remittances services by a financial institution and the `responsiveness' of such services to the financial services needs of low- and moderate-income individuals--thereby allowing for the consideration of lower cost remittances services in an evaluation under such Act.

(16) The increased participation of regulated financial institutions, such as banks, savings associations, and credit unions, holds the potential for reducing the costs of remittances while at the same time offering the opportunity to `bank the unbanked' in Latin American immigrant communities in the United States.

SEC. 3. TREATMENT OF REMITTANCE TRANSFERS.

(a) In General- The Electronic Fund Transfer Act (15 U.S.C. 1693 et seq.) is amended--

(1) in section 902(b), by inserting `and remittance' after `electronic fund';

(2) by redesignating sections 918, 919, 920, and 921 as sections 919, 920, 921, and 922, respectively; and

(3) by inserting after section 917 the following:

`SEC. 918. REMITTANCE TRANSFERS.

`(a) Disclosures Required for Remittance Transfers-

`(1) IN GENERAL- Each remittance transfer provider shall make disclosures to consumers, as specified by this section and augmented by regulation of the Board.

`(2) SPECIFIC DISCLOSURES- In addition to any other disclosures applicable under this title, a remittance transfer provider shall clearly and conspicuously disclose, in writing and in a form that the consumer may keep, to each consumer requesting a remittance transfer--

`(A) at the time at which the consumer makes the request, and prior to the consumer making any payment in connection with the transfer--

`(i) the total amount of currency that will be required to be tendered by the consumer in connection with the remittance transfer;

`(ii) the amount of currency that will be sent to the designated recipient of the remittance transfer, using the values of the currency into which the funds will be exchanged;

`(iii) the total remittance transfer cost, identified as the `Total Cost'; and

`(iv) an itemization of the charges included in clause (iii), as determined necessary by the Board; and

`(B) at the time at which the consumer makes payment in connection with the remittance transfer, if any--

`(i) a receipt showing--

`(I) the information described in subparagraph (A);

`(II) the promised date of delivery;

`(III) the name and telephone number or address of the designated recipient; and

`(ii) a notice containing--

`(I) information about the rights of the consumer under this section to resolve errors; and

`(II) appropriate contact information for the remittance transfer provider and its State licensing authority and Federal or State regulator, as applicable.

`(3) EXEMPTION AUTHORITY- The Board may, by rule, and subject to subsection (d)(3), permit a remittance transfer provider--

`(A) to satisfy the requirements of paragraph (2)(A) orally if the transaction is conducted entirely by telephone;

`(B) to satisfy the requirements of paragraph (2)(B) by mailing the documents required under such paragraph to the consumer not later than 1 business day after the date on which the transaction is conducted, if the transaction is conducted entirely by telephone; and

`(C) to satisfy the requirements of subparagraphs (A) and (B) of paragraph (2) with 1 written disclosure, but only to the extent that the information provided in accordance with paragraph (2)(A) is accurate at the time at which payment is made in connection with the subject remittance transfer.

`(b) Foreign Language Disclosures- The disclosures required under this section shall be made in English and in the same languages principally used by the remittance transfer provider, or any of its agents, to advertise, solicit, or market, either orally or in writing, at that office, if other than English.

`(c) Remittance Transfer Errors-

`(1) ERROR RESOLUTION-

`(A) IN GENERAL- If a remittance transfer provider receives oral or written notice from the consumer within 365 days of the promised date of delivery that an error occurred with respect to a remittance transfer, including that the full amount of the funds to be remitted was not made available to the designated recipient in the foreign country, the remittance transfer provider shall resolve the error pursuant to this subsection.

`(B) REMEDIES- Not later than 90 days after the date of receipt of a notice from the consumer pursuant to subparagraph (A), the remittance transfer provider shall, as applicable to the error and as designated by the consumer--

`(i) refund to the consumer the total amount of funds tendered by the consumer in connection with the remittance transfer which was not properly transmitted;

`(ii) make available to the designated recipient, without additional cost to the designated recipient or to the consumer, the amount appropriate to resolve the error;

`(iii) provide such other remedy, as determined appropriate by rule of the Board for the protection of consumers; or

`(iv) demonstrate to the consumer that there was no error.

`(2) REGULATIONS- The Board shall establish, by regulation, clear and appropriate standards for remittance transfer providers with respect to error resolution relating to remittance transfers, to protect consumers from such errors.

`(d) Applicability of Other Provisions of Law-

`(1) APPLICABILITY OF TITLE 18 AND TITLE 31 PROVISIONS- A remittance transfer provider may only provide remittance transfers if such provider is in compliance with the requirements of section 5330 of title 31, United States Code, and section 1960 of title 18, United States Code, as applicable.

`(2) APPLICABILITY OF THIS TITLE-

`(A) EXCLUSIONS FOR CERTAIN REMITTANCES- A remittance transfer that is not an electronic fund transfer, as defined in section 903, shall not be subject to any of sections 905 through 913.

`(B) FULL APPLICABILITY FOR CERTAIN REMITTANCES- A remittance transfer that is an electronic fund transfer, as defined in section 903, shall be subject to all provisions of this title that are otherwise applicable to electronic fund transfers under this title.

`(3) RULE OF CONSTRUCTION- Nothing in this section shall be construed--

`(A) to affect the application to any transaction, to any remittance provider, or to any other person of any of the provisions of subchapter II of chapter 53 of title 31, United States Code, section 21 of the Federal Deposit Insurance Act, or chapter 2 of title I of Public Law 91-508, or any regulations promulgated thereunder; or

`(B) to cause any fund transfer that would not otherwise be treated as such under paragraph (2) to be treated as an electronic fund transfer, or as otherwise subject to this title, for the purposes of any of the provisions referred to in subparagraph (A) or any regulation prescribed under such subparagraph.

`(e) Publication of Exchange Rates- The Secretary of the Treasury shall make available to the public in electronic form, not later than noon on each business day, the dollar exchange rate for all foreign currencies, using any methodology that the Secretary determines appropriate, which may include the methodology used pursuant to section 613(b) of the Foreign Assistance Act of 1961.

`(f) Agents and Subsidiaries- A remittance transfer provider shall be liable for any violation of this section by any agent or subsidiary of that remittance transfer provider.

`(g) Definitions- For purposes of this section, the following definitions shall apply:

`(1) EXCHANGE RATE FEE- The term `exchange rate fee' means the difference between the total dollar amount transferred, valued at the exchange rate offered by the remittance transfer provider, and the total dollar amount transferred, valued at the exchange rate posted by the Secretary of the Treasury in accordance with subsection (e) on the business day prior to the initiation of the subject remittance transfer.

`(2) REMITTANCE TRANSFER- The term `remittance transfer' means the electronic (as defined in section 106(2) of the Electronic Signatures in Global and National Commerce Act) transfer of funds at the request of a consumer located in any State to a person in another country that is initiated by a remittance transfer provider, whether or not the consumer is an account holder of the remittance transfer provider or whether or not the remittance transfer is also an electronic fund transfer, as defined in section 903.

`(3) REMITTANCE TRANSFER PROVIDER- The term `remittance transfer provider' means any person or financial institution that provides remittance transfers on behalf of consumers in the normal course of its business, whether or not the consumer is an account holder of that person or financial institution.

`(4) STATE- Notwithstanding the definition contained in section 903, the term `State' means any of the several States, the Commonwealth of Puerto Rico, the District of Columbia, and any territory or possession of the United States.

`(5) TOTAL REMITTANCE TRANSFER COST- The term `total remittance transfer cost' means the total cost of a remittance transfer expressed in dollars, including all fees charged by the remittance transfer provider, including the exchange rate fee.'.

(b) Effect on State Laws- Section 919 of the Electronic Fund Transfer Act (12 U.S.C. 1693q) is amended--

(1) in the 1st sentence, by inserting `or remittance transfers (as defined in section 918)' after `transfers'; and

(2) in the 2nd sentence, by inserting `, or remittance transfer providers (as defined in section 918), in the case of remittance transfers,' after `financial institutions'.

SEC. 4. FEDERAL CREDIT UNION ACT AMENDMENT.

Paragraph (12) of section 107 of the Federal Credit Union Act (12 U.S.C. 1757(12)) is amended to read as follows:

`(12) in accordance with regulations prescribed by the Board--

`(A) to provide remittance transfers, as defined in section 918(h) of the Electronic Fund Transfer Act, to persons in the field of membership; and

`(B) to cash checks and money orders for persons in the field of membership for a fee;'.

SEC. 5. AUTOMATED CLEARINGHOUSE SYSTEM.

(a) Expansion of System- The Board of Governors of the Federal Reserve System shall work with the Federal reserve banks to expand the use of the automated clearinghouse system for remittance transfers to foreign countries, with a focus on countries that receive significant remittance transfers from the United States, based on--

(1) the number, volume, and sizes of such transfers;

(2) the significance of the volume of such transfers, relative to the external financial flows of the receiving country; and

(3) the feasibility of such an expansion.

(b) Report to Congress- Before the end of the 180-day period beginning on the date of the enactment of this Act, and on April 30 biannually thereafter, the Board of Governors of the Federal Reserve System shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the status of the automated clearinghouse system and its progress in complying with the requirements of this section.

SEC. 6. EXPANSION OF FINANCIAL INSTITUTION PROVISION OF REMITTANCE TRANSFERS.

(a) Provision of Guidelines to Institutions- Each of the Federal banking agencies (as defined in section 3 of the Federal Deposit Insurance Act) and the National Credit Union Administration shall provide guidelines to financial institutions under the jurisdiction of the agency regarding--

(1) the offering of low-cost remittance transfers and no-cost or low-cost basic consumer accounts;

(2) the availability of agency services to remittance transfer providers; and

(3) specific options for financial institutions to use to take advantage of automated clearing systems, including the FedACH International Services offered by the Board of Governors of the Federal Reserve System and the Federal reserve banks, to transmit remittances at low cost.

(b) Content of Guidelines- Guidelines provided to financial institutions under this section shall include--

(1) information as to the methods of providing remittance transfer services;

(2) the potential economic opportunities in providing low-cost remittance transfers; and

(3) the potential value to financial institutions of broadening their financial bases to include persons that use remittance transfers.

(c) Assistance to Financial Literacy Commission- The Secretary of the Treasury and each agency referred to in subsection (a) shall, as part of their duties as members of the Financial Literacy and Education Commission, assist that Commission in improving the financial literacy and education of consumers who send remittances.

(d) Multimedia Campaign- The Secretary of the Treasury shall, as part of the national public service multimedia campaign established under section 518(a) of the Fair and Accurate Credit Transactions Act of 2003, undertake a multilingual multimedia campaign to inform populations that are remittance users of the low-cost options for remittance transfers available to them, such as services provided by depository institutions and credit unions.

SEC. 7. AID ASSISTANCE TO INCREASE CAPITAL AND LOWER REMITTANCE TRANSFER COSTS.

(a) In General- Part I of the Foreign Assistance Act of 1961 (22 U.S.C. 2151 et seq.) is amended by adding at the end the following:

`CHAPTER 13--SOCIAL INVESTMENT AND ECONOMIC DEVELOPMENT FOR THE AMERICAS

`SEC. 499H. FACILITATING FLOWS OF PERSONAL REMITTANCES.

`(a) In General- The President, acting through the Administrator of the United States Agency for International Development, shall provide assistance to leverage personal remittances and reduce the cost of remittances sent to Latin America and the Caribbean by--

`(1) increasing access to financial institutions for the poor and working with local financial institutions to reduce fees and other costs associated with sending or receiving remittances;

`(2) working with local financial institutions to develop programs whereby personal remittances could be used as the basis of credit for mortgages and loans for small business, microenterprises, housing, and other enterprises; and

`(3) providing matching funds for United States' private entities that send remittances for development projects in Latin America and the Caribbean.

`(b) Implementation- The United States Agency for International Development shall follow the best practices of the Inter-American Development Bank and other appropriate organizations when designing and implementing programs that leverage personal remittances and reduce the cost of remittances sent to Latin America and the Caribbean.'.

(b) GAO Study Regarding the Effectiveness and Success of Pilot Projects Implemented by the United States Agency for International Development-

(1) STUDY- The Comptroller General of the United States shall conduct a study on the effectiveness and success of the pilot projects that have been implemented by the United States Agency for International Development's missions in Mexico, El Salvador, and Jamaica, and through the United States Agency for International Development's Global Development Alliance.

(2) REPORT- Before the end of the 1-year period beginning on the date of the enactment of this Act, the Comptroller General shall submit a report to the Congress on the findings and conclusions resulting from the study conducted under paragraph (1), together with such recommendations for legislative or administrative action as the Comptroller General may determine to be appropriate.

SEC. 8. INTER-AMERICAN DEVELOPMENT BANK ASSISTANCE TO FACILITATE FLOWS OF PERSONAL REMITTANCES.

The Inter-American Development Bank Act (22 U.S.C. 283--283z-10) is amended by adding at the end the following new section:

`SEC. 39. FACILITATING FLOWS OF PERSONAL REMITTANCES.

`The Secretary of the Treasury shall instruct the United States Executive Director at the Bank to use the voice, vote, and influence of the United States to urge the Bank to provide assistance to--

`(1) increasing access to financial institutions for the poor and working with local financial institutions to reduce fees and other costs associated with sending or receiving remittances;

`(2) working with local financial institutions to develop programs whereby personal remittances could be used as the basis of credit for mortgages and loans for small business, microenterprises, housing, and other enterprises; and

`(3) providing matching funds for United States' private entities that send remittances for development projects in Latin America and the Caribbean.'.

SEC. 9. STUDY AND REPORT ON REMITTANCES.

(a) Study- The Comptroller General of the United States shall conduct a study and analysis of the remittance transfer system, including an analysis of its impact on consumers.

(b) Areas of Consideration- The study conducted under this section shall include, to the extent that information is available--

(1) an estimate of the total amount, in dollars, transmitted from individuals in the United States to other countries, including per country data, historical data, and any available projections concerning future remittance levels;

(2) a comparison of the amount of remittance funds, in total and per country, to the amount of foreign trade, bilateral assistance, and multi-development bank programs involving each of the subject countries;

(3) an analysis of the methods used to remit the funds, with estimates of the amounts remitted through each method and descriptive statistics for each method, such as market share, median transaction size, and cost per transaction, including through--

(A) depository institutions;

(B) postal money orders and other money orders;

(C) automatic teller machines;

(D) wire transfer services; and

(E) personal delivery services;

(4) an analysis of advantages and disadvantages of each remitting method listed in subparagraphs (A) through (E) of paragraph (3);

(5) an analysis of the types and specificity of disclosures made by various types of remittance transaction providers to consumers who send remittances; and

(6) if reliable data are unavailable, recommendations concerning options for the Congress to consider to improve the state of information on remittances from the United States.

(c) Report to Congress- Before the end of the 1-year period beginning on the date of the enactment of this Act, the Comptroller General shall submit a report to the Committee on Banking, Housing, and Urban Affairs of the Senate and the Committee on Financial Services of the House of Representatives on the results of the study conducted under this section.

END