BILL NUMBER:  S352

 TITLE OF BILL :

An act to amend the banking law, in relation to remittances of moneys
by agents of licensed transmitters of money

 PURPOSE :

To authorize treble damages in order to deter agents of licensed money
transmitters from abusing business relationships and consumer trust by
absconding with funds.

 SUMMARY OF PROVISIONS :

Section 1 amends the banking law to impose treble damages for agents
of money transmitters who fail to remit moneys within a time period to
be established by the superintendent.

Section 2 establishes the effective date.

 JUSTIFICATION :

Money transmitters play a critical role in the economy of New York
State, providing consumers with safe and secure financial services
including money orders, bill payments, and secure local, national and
              

international funds transfers. In order to reach a broad spectrum of
consumers, money transmitters transact business through agents who, in
turn, provide direct services to a local customer base. As soon as the
agent receives funds from the customer, the money transmitter is
legally obligated to pay the funds to a beneficiary as directed by the
customer, whether or not the money transmitter ever receives the funds
from the agent. These agents are legitimized in the eyes of consumers
by their relationships with known and reliable money transmitters.
Unfortunately, despite the best efforts at screening, an alarming
number of agents abscond with funds collected from customers and fail
to remit the funds to the transmitter. This leaves the money
transmitter legally obligated to pay for the instrument the rogue
agent sold despite never having received the funds from the agent for
the transaction and forces the money transmitter to take costly
measures to attempt to recoup the funds from the dishonest agents.
Moreover, these bad actors abuse the public trust and drive up the
cost of doing business, which hurts consumers.

This bill, modeled after existing law in jurisdictions including New
Jersey, North Carolina, Illinois and the District of Columbia, would
serve to deter these bad actors by authorizing treble damages against
agents who abscond with funds owed to the money transmitting
companies. This legislation is necessary to protect both money
transmitters and consumers because prosecuting agencies most often
consider these actions to be civil matters, leaving money transmitters
no recourse but to undertake costly litigation and pass at least some
of the costs onto consumers. The threat of treble damages will change
the calculus for potential bad actors, help make wronged money
transmitters whole, and provide potentially significant savings to
consumers.

 LEGISLATIVE HISTORY :

2015-2016 -- S1279
2013-2014: S.3930

 FISCAL IMPLICATIONS :

To be determined.

 EFFECTIVE DATE :
This act shall take effect on the one hundred eightieth day after it
shall have become law; provided that, effective immediately, any rules
and regulations necessary to implement the provisions of this act on
its effective date are authorized and directed to be completed on or
before such date.