MORRISON E FOÉRSTER LLP 2OOO PEN¡SYLVA}{TA AVE,, N!í to' RsrE R \øASHINGTON,D.c' NE\t YORK, S/.N FRANCISCO, MoRRrsoN LOS ÀNGELES, lALo ALTO, I 200061888 s^CRÀMENTO, SAN DIEGO, DENVER, NORTHERN VIRG¡N¡ At TELEPHONE: 202.887. 1500 \t /tSH¡NGToN, D.C, FACSIMILE: 202 .887.07 63 TOKYO, , DRUSSELS, BEtJING, SHANGHAI, HONG KONG wwwMOFO.æM

Júy22,2011

Via Electronic Delivery

Jennifer J. Johnson Secretary Board of Govemors of the Federal Reserve System 20th Street and Constitution Avenue, NW V/ashington, DC 20551

Re: DocketNo. R-1419 and RIN 7100'AD76

Dear Ms. Johnson:

the Federal The Money Services Roundtable ("TMSRT') submits these comments on 1073 of the Consumer Reserve Bãard's ('Board") Proposed Rulemaking under Section national Financial protection ect oîzot-0. TMSRT is comprised of the following lnoney Travel Related transmittsrs: RIA , SigUe Corporation, MoneyGram services company, Financial services, Inc. ("Vy'estern union"), Systems' International (l'MoneyGram"), Americas,Inc. and lntegrated Payment use of intemet These corporations piovide a'vanety of funds transmission services, including sales outlet agents, kiosks, ATMs, mobile phones, etc'

The Proposed Rulemaking Regulation E, which Section 1073 of the Consumer Financial Protection Act of 2010 amends StaffCommentary impi"*"rrt, the Electronic Fund Transfer Act ('EFTA ), and the Ofñcial consumers to itegulation E. In particular, the proposed rule contains new protections fol through the use of who send transfers to consumers or entities in a foreign country disclosures and enor resolution tights. and,their customers To one degree or another, TMSRT',s members, their respective agents would be ãffected by the proposed rule. Outside of the obvious impact of higher cost- of the increased burdens on remittante transfãr providers, agents and consumers as a result regulatory burden, TMSRT believes that a much more important issue is at stake--national ,"ã*ity. That is, without striking a reasonable balance under the proposed rule that takes it is into consideration the operationJ limitations inherent in the remittance transfer system, hansfer likely that remittance hansfer providers would not be able to offer certain remittance

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As a result, a likely services that are highly valued and relied upon by their customers' underground to may tr tír" atirritrg of a signifrcant volume of retail operate unregulated illicit"onrrqo.rr"e trærsfer operators. Such entities are invisible to law enforcement, consumer Ãd, u, such, are unlikely to comply with safety and soundness requirements, aìsigned to prwent mgney laundering and tenorist froi"ction láws or laws ihat at" - public interest of the hnarrcing. Neither the needs of lawinforcement nor the migrate to illicit-transfer is advanõed by providìn! any regulatory incentive for funds to effect of channeling money operators. Hence, any rãguútory -"**t that would have the the standpoint of consumer transmission transacti,ons"underground is counterproductive from protection, law enforcement and, ultimately, national security. to new technologies Similarly, the promulgation of inflexible rules that cannot be adapted to the use of legitimate and/or customer needimay provide yet another disincentive are offered by illicit transfer remittance transfer proviCårs when other innovative alternatives operators. described above, TMSRT is Therefore, given the possible far reaching consequences the efforts of providing commentsãn the proposed rulã.I Howãver, rather than duplicating the comments ãu, *"*i"rs, TMSRT geneialþ adopts and incorporates by reference TMSRT would like to submitted by Western tirriott *d Mott"yGram' Nevertheless, particularly emphasize the following issues:

1. Proposed Effective Date of time remittance hansfer The Board has specificallyrequested comment as to the length TMSRT believes that piã"i¿.ir wifl nåed to i*pr"*"nt a final rule on remittance transfers. publication of a final rule. As set forth the effective date should Le 1g to 24 months from the month period would be in more detail by westem union and MoneyGram,9ll-S.to 24 and costs r"""r.-y in order to accommodate the technical difficulties, complexities rule' associated with complying and implementing any such final remittance transfer For example, in addition to the complexities that would confront p*"i¿rtrl i*pf.tn""tirrltn" propåsed rule, which would, among other things, entail software platforms and the significant changes ã;;; co*ptiuttc" functions, hardware and transfer agents would possibility of renegotiation of individual agent conhacts, remittance proposed rule'. Because n"ea u*pt" time tõ implement certain requirements under.the majority of providing remittance transfers is not a coie business function for the vast no control over iáitt*ð" transfer agents, and because remittance transfer providers have

statutory terms.of section 1073, we note r while some of our comments focus on issues that a¡e based in the to make exceptions to the statutory that the Board has substarrtial authority under EFTA section 904(c) with the regulatory requirements' requirements, particularly where such changes will facilitate compliance

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changes to agent budgetary constraints and upgrade schedules, implementation of significant hãw remittance transfer agents operate would require considerable lead time.

2. Disclosures and ReceiPts

with an The proposed rule would require remittance transfer providers to provide consumers inidl disclosure, prior to conducting a transaction, and a receipt following a transaction' retained These two disclosures must be in writing and must be capable of being þV 1tt" both the sender. The proposed rule would also pãrmit a combined disclosure containing required information from the initial disclosure and the receipt.

a harbor for rernittance TMSRT supports the inclusion of model forms that provide ¡afe of remittance transfer pro.,ridrrr. Nevertheless, given the flexibility that will be required new technology and transfer providers with respect to new services, new delivery chartnels, forms should be flexible state law disclosure requirements, TMSRT believes that the model and adaptable enough to accommodate such changes'

among other In addition, we note that the proposed rule would require that receþts contain, the things, coniact information fãr ttre remittance provider's plry*y state regulator-and Conîumer Financial Protection Bureau ("CFPB') and a toll-free telephone number in the established by the CFPB. Given the operational hurdles that would be involved individual disclosure of state regulatois for remitt¿nce transfer providers and their a.gents, protection especially those that operate in multþle states, and the negligible consumer in-addition to. båefit that would be âfforded to consumers by disclosing the state regulator receipts should not contact information for the CFpB, TMSRT beiieves that post-transaction lators.Foramoredetaileddiscussionwithrespectto Western Union disclosures and receipts, please refer to the relevant MoneyGram and comments.

3. Foreign Language Disclosures

disclosures arid The proposed rule would require remittance transfer providers to provide ,"""iptri1 English and in "eäch of the foreign languages principally used by the remittance either orallg in tansfer proviãer to advertise, solicit, or market remittance tansfer services, by the writing ôr electronically, at that office," oI "itl the foreign langUage primari]V used (or for written or sendeiwith the remittance transfer provider to conduct the transaction foreign elecfonic disclosures made pursuant to the [error resolution procedures] in the provider to assert the language primarily used by the sender with the remittance transfer princþally used by the remittance hansfer iró't'ided that such ioreign language is writing, pro,,iáår"oõr¡, to advertise, solicit, oimarkét rèmifiance tansfer services, either orally, in or electroni cally, at that office''

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Furthermore, the proposed rule provides that post-tansaction receipts required to be provided to iie r"idðt for transãctions conducted entirely by telephone "shal-l be made in 'English and, if applicable, in the foreign language primarityused by the sender with the remittance hansfer provider to conduct the transaction'"

TMSRT believes that the proposed foreign language disclosure requirements woul! provide wide range a significant disincentive io remittance fiansfer providers to make available the of foreìgn language services that are currently offered to their customers as a convenience and assist beneñt as tñe utitity to print receipts and disclosures in every language utilized to customers is, for many providers and agents, an operational impossibility'

Hence, without the ability to communicate in a customer's language of choice, we believe to send that illicit transfer op.rutorc will appear to such customers to be the "no hassle" way non- money to family anå friends, resulting in the loss of transactions to non-licensed, reguláted underground businesses. For a more detailed discussion with respect to foreign ñg,rd; ¿isctoJures, please refer to the relevant MoneyGram and Western Union cominents'

4. Disclosure of Exchange Rates and Amounts Received

Under the proposed rule, the prepayment disclostues and the post-transaction receþts provided tô a sender *urt ¿"r"¡6e-the fees that will be charged by the remittancg transfer provider, the exchange rate and the amount of currency that will be received by the recþient, will be exchanged. ä11 of *tti"h must beãxpressed in the crurency into which the funds to provide Furthermore, under theþroposed rule, remittance transfer providers would be able do not an estimated exchange t"t¿ zu those countries where local law or other circumstances from permit the remittancõ transfer provider to determine a precise exchange rate. Excepted provide a ihese requirements, however, are and credit unions, which would be able to ,,reasonábly accurate estimate of the amount of foreign culrency to be received" by the recipient if the transfer is conducted through a deposit accounJ that the sender holds with the bani or credit union and the or credit union is unable to know the exact amount of foreign currency that will be received.

TMSRT believes that remittance transfer providers should be permitted to provide senders with estimates for fees, exchange rates and the amount of currency that will be ultimately received by the recipient. As rãmittance transfer providers generally have no knowledge as to the amognts of such fees and whether such fees will be charged in coru-rection with a particular remittance transfer, it is often operationally impossible to predict such fees with aÍry acci)racy.

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Furthermore, a distinction is made between traditional remittance transfers and transfers credit made by banks or credit unions under particular circumstances by permitting banks or in unions io provide an estimate of the foreign crürency that will be received by a recipient the fees an account-to-account wire transfer. Thisdistinction is likely a direct response to the amount that may be assessed by each bank intermediary along the way that may reduce by receiveã. This issue, ho*"u"r, is not only limited to account-to-account transfers made occur banks or credit unions. Instead, acco¡nt-to-account and cash-to-account transfers regularly outside of the bank and credit union context by non-bank remittance transfer prãvideis. Accordingly, TMSRT believes that the bank and credit union exception should banks and äppty to non-bank rráltt*"" transfer providers to the same extent as it applies to rates unions. For a more detailed disõussion with respect to the disclosure of exchange "iê¿itand amounts received, please refer to the relevant MoneyGram and Western Union comments.

5. Designation of a Centralized Addressþr Disputes

that would Under the proposed rule, section 205.33 sets forth error resolution procedures transfers. take the ptäceif tne EFiA's existing error resolution procedures for remittance promised Accordingly, under the proposed rulé, a sender would have 180 days from the provider one of . delivery Jaié of th" r"-'itt*"" transfer to notify the remittance hansfer of a of five spåcifically defined effors. Proposed comment 33(b)-5, however, states that notice is deemed to be .rro, fro1¡ u r"íd", received by a remittance transfer provider's agent elrors' received by the provider for purposes of the 180-day time frame for reporting

TMSRT believes, however, that a notice of error should be required to be sent to an address TMSRT designated by the remittance transfer provider as opposed to its agent. Furthermore, where believes that remittance transfer providers should not be required to investigate effors by the remittance a notice of enor is provided to an agent instead of to the address designated and transfer provider. As opposed to the remittance üansfer provider that is better equþed fained tã process noticäs of error in a timely and efficient manner, the majority of remittance grocery transfer uj"tttt are located in small retail locations such as convenience stores and from stores, arJtypically staffed by younger, inexperienced individuals and typically suffer high tumovei rates. In addition, agents do nòt fpically have access to relevant information a of error needed to resolve disputes. Accordingly, by permitting a sender to provide notice notice would not be to an agent, we believe there would be an increased likelihood that the to this hanileã properly and in a timely manner, For a more detailed discussion with respect and issue anå error iesolutions issués in general, please refer to the relevant MoneyGram Westem Union comments.

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6. Acts of Agents

EFTA Section 919(Ð generally makes remittance transfer providers liable for any violation of EFTA Section 919 by an agent, authorized delegate, or person affiliated with such provider, when such agênt, u.ttttoti""d delegate or afüliate acts for that remittance transfer provider. The proposø *t. provides two altematives to implement EFTA Section 919(f):

o Altemative A - a remittance tansfer provider would be strictly liable for violations by an agent when such agent acts for the provider'

for . Alternative B - a remittance transfer provider would not be liable under the EFTA violations by an agent acting for the provider where the provider establishes and maintains póticieJ*d procedures for agent compliance, including appropriate oversight ireur*"r, anã thr provider corrects any violation, to the extent appropriate'

TMSRT believes that Alternative B appropriately addresses the unique position of agents while still providing superior protection for senders. That is, Altemative B provides an also incentive fõr a remittance transfer provider to train, monitor and audit its agents while ensuring that a sender would be mãde whole in the event of a loss' For a more detailed discussion with respect to this issue, please refer to the relevant MoneyGram and Western Union comments.

TMSRT appreciates the opportunity to comment on these important matters' If you have any questions cän""*ittg these-comments, or if we can otherwise be of assistance in connection with this matter, please do not hesitate to contact me atQ02)778-1665.

Sincerely,

Counsel to TMSRT

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