National Conference of Commissioners on Uniform State Laws

211 E. Ontario St., Suite 1300, Chicago, IL 60611
tel 312-915-0195, fax 312-915-0187

For Immediate Release

NEW UNIFORM ACT ON CYBERPAYMENTS AND MONEY LAUNDERING

August 3, 2000 - The National Conference of Commissioners on Uniform State Laws at its Annual Meeting in St. Augustine, Florida, today approved the Uniform Money Services Act. Among the goals of the new uniform act are the suppression of money laundering by requiring money service businesses (MSBs) to register with state regulators and adhere to safety and soundness requirements. The Uniform Money Services Act also places the various forms of non-bank cybercash now emerging in the Internet economy under one law.

Increasingly, a wide range of financial services are available from companies other than traditional banks. These MSBs include money transmitters, currency exchanges, and check cashing companies. In the United States, there are currently over 200,000 MSBs which do not accept deposits like traditional banks or financial institutions. Until now, MSBs have been covered by a patchwork quilt of varying regulations in about of half of the states. The lack of a uniform law has given rise to problems ranging from money laundering to novel issues involving stored value cards and cybercash over the Internet.

The Uniform Money Services Act requires MSBs to obtain a state license to do business. Safety and soundness measures such as annual examinations, surety bonds, and permissible investments are also included in the new legislation. The uniform law's most stringent requirements are reserved for money transmitters, such as wire transfer services, who hold the public's money rather than make immediate payments, as do check cashers and currency exchangers.

"This new law will level the playing field and protect the public," said Virgin Islands attorney and drafting committee chair Tom Bolt, who also noted that, "one of the uniform law's greatest impacts will be in minority and ethnic communities where more people rely on non-traditional financial services."

Professor Anita Ramasastry, Drafting Committee Reporter and Associate Director of the University of Washington's Center for Law, Commerce, and Technology, added "The Uniform Money Services Act is a giant step forward into cyberspace. In our changing world, it recognizes that just like the decline of ancient barter, cash payments are now being rapidly replaced by innovative types of electronic currency transactions."

The Uniform Money Services Act Drafting Committee was chaired by Tom Bolt of St. Thomas, Virgin Islands. Other Committee members included: David A. Gibson, Brattleboro, Vermont; Bion M. Gregory, Sacramento, California; Michael Houghton, Wilmington, Delaware; L. Gene Lemon, Phoenix, Arizona; and Ken H. Takayama, Honolulu, Hawaii. Professor Anita Ramasastry of Seattle, Washington, served as the Committee's Reporter.