BWM H.B. 2436 75(R)BILL ANALYSIS


FINANCIAL INSTITUTIONS
H.B. 2436
By: Keel
4-11-97
Committee Report (Unamended)



BACKGROUND 

Currently, there is some disagreement whether the Sale of Checks Act,
Article 289d, Vernons Texas Civil Statutes, applies to a person who
maintains a bank account in Texas and then engages in the business of
selling checks written on that account at a place of business located
outside of Texas.  There is increasing suspicion that this loophole in the
law is used by some outof-state businesses to launder illegal drug
profits.  A money launderer operating such an account simply allows a drug
trafficker to deposit cash from narcotics sales into the Texas account in
exchange for checks that can be negotiated by the drug trafficker through
seemingly legitimate business transactions.  By conducting this type of
business outside Texas, the money launderer successfully evades Texas law. 

By requiring out-of-state businesses to comply with the same regulations
as their in-state counterparts, illegal money laundering through such
businesses will be substantially reduced. The licensing requirement has
proven to be a significant deterrent for in-state businesses because money
launderers seek to avoid providing the government with any information
that might reveal the existence of their illegal enterprise.  This
amendment, therefore, would put an end to a money laundering threat
currently existing in Texas without increasing the regulatory burdens
facing legitimate businesses located in this state. 

PURPOSE

To require a person engaged in the business of selling checks written on a
Texas account to obtain a license, regardless of where the check-selling
business is located.  The change in the law merely expands existing law to
cover out-of-state businesses.  In-state businesses are already required
to obtain a license and would, therefore, be unaffected by this
legislation. 

RULEMAKING AUTHORITY

It is the committee's opinion that this bill does not expressly grant any
additional rulemaking authority to a state officer, department, agency or
institution. 

SECTION BY SECTION ANALYSIS

SECTION 1. Amends Section 3, Article 489d, Vernons Texas Civil Statutes,
by prohibiting a  person from maintaining, utilizing or controlling an
account in Texas for the purpose of  engaging in the business of selling
checks, unless that person has obtained a license. 

SECTION 2.  Severability clause.

SECTION 3. Effective date:  September 1, 1997.

SECTION 4. Emergency clause.