Fiscal Summary

Increase State Revenue - $5,000,000/FY19-20/Department of Revenue $507,500,000/FY19-20/Money Laundering Prevention Fund $10,000,000/FY20-21 and Subsequent Years/Department of Revenue $1,015,000,000/FY20-21 and Subsequent Years/ Money Laundering Prevention Fund Increase State Expenditures - $340,300/FY19-20/Department of Revenue $507,500,000/FY19-20/Money Laundering Prevention Fund $580,600/FY20-21 and Subsequent Years/Department of Revenue $1,015,000,000/FY20-21 and Subsequent Years/ Money Laundering Prevention Fund Other Fiscal Impact - It is estimated that approximately 50 percent of unencumbered funds deposited to the Money Laundering Prevention Fund, or approximately $126,875,000 in FY19-20 and approximately $253,750,000 in FY20-21 and subsequent years, will be earmarked and utilized by the Tennessee Bureau of Investigation and Department of Safety for the purpose of programs designed to prevent and detect money laundering activities. The remaining 50 percent of unencumbered funds deposited into the Money Laundering Prevention Fund, or approximately $126,875,000 in FY19-20 and approximately $253,750,000 in FY20-21 and subsequent years, will be earmarked to the Department of Homeland Security for the purpose of securing the southern border of the United States. In addition, passage of this legislation could result in additional secondary economic impacts to state and local government as otherwise discretional income is initially removed from the consuming economy, then subsequently expended through state and federal agencies for the purpose of money laundering prevention. Any such impacts associated with these secondary economic impacts cannot be reasonably quantified.

Bill Summary

This bill requires a licensed money transmitter (referred to in this summary as a licensee) or any authorized agent of the licensee, to collect from each customer a fee per transaction consisting of:

(1) $10.00; and
(2) 1 percent of the amount of any transaction in excess of $500.

This bill defines "authorized agent" as an entity designated by a licensee to sell or issue payment instruments or engage in the business of transmitting money on behalf of a licensee. "Transaction" means a sale or issuance of a payment instrument or a transmission of money originating in this state within the United States or to locations abroad by any and all means, including, but not limited to, payment instrument, wire, facsimile or electronic transfer.

The commissioner of revenue will administer and collect the fee imposed by this bill. All fees, penalties, and any interest collected under this bill, less the amounts withheld (as discussed below) will be deposited into the money laundering prevention fund (established in this bill).

For the purpose of compensating the licensee in accounting for and remitting the fee, a licensee will be allowed a deduction of the fee due, reported and paid to the department in the amount 0.5 percent of the fee imposed. No deduction from the fee will be allowed if any such report or payment of the fee is delinquent. For the purposes of implementing and administering this bill, the department will retain 1 percent of the fee imposed.

This bill establishes within the state general fund a special account to be known as the money laundering prevention fund. Fee proceeds, interest, and penalties imposed pursuant to this bill will be deposited into the money laundering prevention fund. Fee proceeds, interest, and penalties collected will be retained in the account until such time as the proceeds are unencumbered. Fee proceeds, interest, and penalties are unencumbered when there is no right to a refund of such proceeds and the time to file suit relative to collection of the fee proceeds or imposition of interest and penalties has expired. Unencumbered amounts in the fund will be allocated as follow:

(A) 25 percent into a law enforcement subaccount that may be accessed by the director of the Tennessee bureau of investigation. The director may direct funds in the subaccount only to programs designed to prevent and detect money laundering activities or in the enforcement of laws related to money laundering. In addition to the use of funds by the Tennessee bureau of investigation for such purposes, funds may be granted by the director to a local law enforcement agency or judicial district task force to be used to prevent and detect money laundering activities or in the enforcement of laws related to money laundering. Applications for grants must be submitted to and approved by the director before funds may be directed to the local law enforcement agency or judicial district task force;
(B) 25 percent into a separate law enforcement subaccount that may be accessed by the commissioner of safety. The commissioner may direct funds in the subaccount only to programs designed to prevent and detect money laundering activities or in the enforcement of laws related to money laundering. In addition to the use of funds by the department of safety for such purposes, funds may be granted by the commissioner to a local law enforcement agency or judicial district task force to be used to prevent and detect money laundering activities or in the enforcement of laws related to money laundering. Applications for grants must be submitted to and approved by the commissioner of safety before funds may be directed to the local law enforcement agency or judicial district task force; and
(C) 50 percent into a border security subaccount. The commissioner of finance and administration must direct funds in the subaccount, to the extent permitted by law, to the United States department of homeland security for the purpose of securing the southern border of the United States. Any funds that are not permitted to be directed for such purposes under state or federal law will be directed instead to the state general fund.

This bill requires a licensee to register for each of the licensee's business locations in this state, including each location of any authorized agent, with the commissioner. The fee imposed by this bill will be payable by a licensee for quarterly periods. This bill requires each licensee and authorized agent to post a conspicuous notice stating that customers may file for a refund from the department of the fee paid and describing the guidelines established by the department, as discussed below.

Under this bill, a customer who pays a fee pursuant to this bill may apply to the department for a refund. This bill establishes quarterly deadlines for applying for a refund. To receive a refund, a claimant must file a single application with the department that includes the aggregate amount requested by the claimant in connection with fees paid. Only four applications per claimant per year will be accepted by the department. The department will make such a refund directly to the claimant. All refunds will be paid from the money laundering prevention fund.

All applications for refund must be submitted as prescribed by the department and include satisfactory proof of payment of the fee and any other information or documentation that the department may require in addition to the claimant's social security number or federal tax identification number. The department will develop guidelines concerning the administration of the refunds and post the guidelines on the department's web site.

This bill authorizes the department to assess a civil penalty not to exceed $25,000 against any person that knowingly files a false or fraudulent application for refund. In addition to any other action authorized by law, the department may bring suit directly on the licensee's security device or may request that the department of financial institutions bring suit on behalf of the department for fees, interest, and penalties due and unpaid as required by this bill.

For the purpose of promulgating rules, this bill will take effect upon becoming a law. For all other purposes, this bill will take effect January 1, 2020.