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Remittance reforms are on House agenda
WASHINGTON (6/4/09)--Rep. Luis Gutierrez (D-Ill.) in a Wednesday House subcommittee hearing said that he would soon introduce legislation aimed at remittance-related reforms. Speaking during a House subcommittee on financial institutions and consumer credit hearing entitled "Remittances: Regulation and Disclosure in a New Economic Environment," Gutierrez said that his to-be-introduced legislation would address disclosure and transparency issues faced by the remittance industry. Gutierrez also hinted that larger reforms, including the possible creation of a federal regulatory regime for the remittance industry, could be part of pending financial industry regulatory reorganization. Remittances are currently regulated on the state level, although financial institutions that are involved in the remittance industry still must comply with federal regulations, including the Bank Secrecy Act. In a joint letter submitted during Wednesday’s hearing, the Credit Union National Association (CUNA) and the World Council of Credit Unions (WOCCU) asked members of Congress to investigate the abusive and potentially monopolistic business practices of some money transmitter firms. Specifically, the letter asks Congress to research competition-limiting practices such as one-way exclusivity clauses used by some U.S.-based money transmitter organizations (MTOs). In some instances, these firms also assess early termination penalties on their partner financial institutions. CUNA and WOCCU believe that these practices can limit the scope of remittance distribution networks and narrow access to financial services in the developing world. These anti-competitive actions are ultimately detrimental to consumers both in the U.S. and abroad, the statement said. These firms have also been known to present their contracts to partner financial institutions in highly technical versions of the English language, rather than using English and the native tongue of their business partner, which oftentimes is Spanish. However, U.S. credit unions currently offer remittance disclosures in both languages. IRNet, a remittance service created by WOCCU, has facilitated the transfer of $2.6 billion in remittance transactions between credit unions in the U.S. and the developing world since its inception in 2001.


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