Honorable Luis Gutierrez’s Wire Transfer Fairness and Disclosure Act

Send Money International

In order to inform the US public who sends money internationally about the fees and charges in utilizing electronic money transfer, either through financial institutions or online, this act was introduced.

Overview

The Wire Transfer Fairness and Disclosure Act has been introduced in the house by the US 106th Congress in the year 1999. Its main purpose is to amend another Act which is the Electronic Fund Transfer wherein additional disclosures and restrictions relating to exchange rates in transactions involved in sending money internationally.

The Wire Transfer Fairness and Disclosure Act was introduced by Mr. Gutierrez, together with Mr. Vento, Mr. Becerra, Mr. Filner, Mr. Hinchey, Mr. Owens, Mr. Rodriguez, Mr. Romero-Barcelo, Mr. Stark, and Mr. Ortiz. The bill itself was then referred to the Committee on Banking and Financial Services.

The Disclosures

The bill defines International Money Transfer as any money transmitting service involving international transaction which is provided by a financial institution or a money transmitting business. In short, this involves sending international money transfer.

Since the purpose of this act is to provide additional disclosures, hence, the following are the relevant amendments or additional requirements for sending money internationally:

Exchange Rate and Fees Disclosures Required

• Any financial institution or money transmitting business shall disclose the exchange rate being used in sending international money transfer
• Any financial institution or money transmitting business shall disclose the prevailing exchange rate at a major financial center of the foreign country whose currency is involved in the transaction, which is sending money internationally.
• Any financial institution or money transmitting business shall disclose all commissions and fees charged in relation with such transaction.

How the Public is informed

The bill also obliges any financial institution or money transmitting business to prominently display the above mentioned disclosure inside and outside the place of business where the international money sending is initiated. It should be where the public can easily see and should be in the location where the public is admitted for the purpose of sending money internationally.

In addition, the bill requires that the above mentioned disclosure should also be displayed prominently in all receipts and forms used in the place of business where the sending international money transfer takes place. For advertisements in print, broadcast, and electronic media and outdoor advertising, any financial institution or money transmitting business should also display the above mentioned disclosures when informing the public about the charges involved in international money send.

Honorable Gutierrez’s Point of View

Although this bill related to sending of money internationally was introduced in the House in 1999, it was reintroduced in 2001. Honorable Luis Gutierrez, who introduced the act shared his point of view during an oversight hearing on “Accounting and Investor Protection Issues” to the committee of banking, housing, and urban affairs on why he introduced the bill.

Mr. Gutierrez reasoned that there are approximately 28 million foreigners who live in the US, and the majority of them have been contributing enormously to the nation’s stability and security. He added that these people came to the US looking for a much better life and consequently, through their work, their wages, and taxes, they are making the lives of all people in America better. At the same time, these people are working to make life better for the family and people they have left in their home countries by sending money internationally. Their family and relatives using the sent money for basic necessities like food and shelter.

Honorable Gutierrez points out that during the past 20 years, sending international money transfer, specifically to Latin America has increased not only in volume but has also shared in the national income and total imports. In 2002, he expects that there is approximately $9 billion of dollars will be sent to Mexico via remittances, which actually constitutes Mexico’s national income. It is the nation’s third largest source of income. However, he sadly noted that when the public sends money internationally, these transfers are very costly due to various fees, and many of which are hidden.

According to him, wire transfer companies are targeting immigrant communities with ads promising low rates for sending money internationally. He said that these promises are grossly misleading since these companies do not always clearly disclose extra fees and charges for converting dollars into a local currency.

Although, wire transfer companies obtain foreign currency in bargain prices, they still charge a significant amount as conversion fees for their US customers when they send money internationally. The profits from these conversion fees are very staggering, making these companies earn millions of dollars more than their service fees for sending money internationally.

Hence, his reason of (re)introducing the Wire Transfer Fairness and Disclosure Act, which at that time, is supported by 70 members of the House. By enacting the bill, he hopes that this could ensure that each customer who wants to send money internationally through electronic wire transmission is fully informed of all the charges and fees on all transactions, this includes the exact exchange rate of the currency available to them.

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