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Washington State Regulator Testifies on MSB Supervision on Behalf of CSBS


June 21 - Deborah Bortner, director of non-depositories at the Washington State Department of Financial Institutions, has testified on behalf of the Conference of State Bank Supervisors before the Financial Institutions and Consumer Credit Subcommittee of the House Financial Services Committee on supervision of money services businesses.

In her testimony, Bortner summarized state efforts to supervise MSBs, a term that includes money transmission, money orders, travelers checks, check cashing, currency exchange, currency dealing and prepaid access products. Bortner indicated states have been overseeing MSBs through licensing and by conducting on-site examinations for a number of years. In addition, state regulators – through CSBS and the Money Transmitter Regulatory Association – are currently engaged in efforts to further enhance supervision of these entities. 

“The distribution of money is a highly personal transaction for consumers,” Bortner said. “As such, our focus is to protect consumers, ensure businesses operate in a safe and sound manner, and bring those who commit crimes to justice.”

Bortner also indicated state regulators are applying some components of the mortgage regulatory framework to other non-depositories, such as MSBs. In particular, the development and launch of the Nationwide Mortgage Licensing System and Registry, coupled with passage of the Secure and Fair Enforcement for Mortgage Licensing Act of 2008, created a comprehensive state-federal approach to licensing and registration of mortgage loan originators. According to Bortner, there are certain elements of the mortgage supervisory framework that could improve supervision of other non-depositories, including MSBs.

“The evolution of state mortgage regulation demonstrates that uniform infrastructure and federal policy should support – not supplant – state regulation,” she testified. “As the SAFE Act has shown, combined state-federal regulatory regimes can promote consistent and comprehensive regulation without losing the benefits of having states serve as the ‘cops on the beat.’”

Bortner also spoke on the close coordination between state and federal regulators. 

“MSBs are local in touch and national in scale, so state and federal regulators must work together to ensure effective and consistent supervision which benefits regulators, licensees and consumers,” Bortner testified.