Senate Study Bill 1094 - Introduced SENATE FILE _____ BY (PROPOSED COMMITTEE ON JUDICIARY BILL BY CHAIRPERSON HOGG) A BILL FOR An Act relating to funds transfers under the uniform commercial 1 code, and including effective date provisions. 2 BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF IOWA: 3 TLSB 1120XC (3) 85 da/rj

S.F. _____ Section 1. Section 554.12108, Code 2013, is amended to read 1 as follows: 2 554.12108 Exclusion of consumer transactions governed by 3 federal law Relationship to Electronic Fund Transfer Act . 4 1. This Except as provided in subsection 2, this article 5 does not apply to a funds transfer any part of which is 6 governed by the Electronic Fund Transfer Act of 1978, 15 U.S.C. 7 § 1693 et seq. 8 2. This article applies to a funds transfer that is a 9 remittance transfer as defined in the Electronic Fund Transfer 10 Act, 15 U.S.C. § 1693o-1, unless the remittance transfer is 11 an electronic fund transfer as defined in the Electronic Fund 12 Transfer Act, 15 U.S.C. § 1693a. 13 3. In a funds transfer to which this article applies, in the 14 event of an inconsistency between an applicable provision of 15 this article and an applicable provision of the Electronic Fund 16 Transfer Act, the provision of the Electronic Fund Transfer Act 17 governs to the extent of the inconsistency. 18 Sec. 2. EFFECTIVE UPON ENACTMENT. This Act, being deemed of 19 immediate importance, takes effect upon enactment. 20 EXPLANATION 21 SUMMARY. This bill amends Code chapter 554, Article 12, by 22 providing that its provisions apply to a “remittance transfer” 23 as defined in the federal Electronic Fund Transfer Act of 1978, 24 “EFTA”, 15 U.S.C. § 1693 et seq., unless any provision of the 25 federal statute (or associated regulation) also applies. 26 BACKGROUND —— ARTICLE 4A AND THE EFTA. Article 4A of the 27 Uniform Commercial Code, recommended by the National Conference 28 of Commissioners on Uniform State Laws (Uniform Law Commission) 29 and the American Law Institute, regulate the electronic 30 transfer of payment orders made through a wire service between 31 commercial parties, such as from one bank to another. By 32 contrast, the EFTA regulates electronic fund transfers 33 involving consumers (e.g., transactions using automatic teller 34 machines). In Iowa, Article 4A is codified as Article 12 35 -1- LSB 1120XC (3) 85 da/rj 1/ 2

S.F. _____ of the Uniform Commercial Code, and Code section 554.12101 1 provides the exception for the EFTA (i.e., transactions 2 affecting consumers). 3 BACKGROUND —— REMITTANCE TRANSFER. According to the Uniform 4 Law Commission’s official comment, its recommended amendment 5 to Section 4A.108 is in to response to the “Dodd-Frank Wall 6 Street Reform and Consumer Protection Act of 2010” (Public 7 Law 111-203). That Act in part amends the EFTA, and requires 8 the new federal Bureau of Consumer Financial Protection to 9 adopt implementing regulations effective February 7, 2013 (77 10 Federal Register No. 25 (February 7, 2012), p. 6194). Part of 11 the new federal Act and its accompanying regulations create 12 new compliance requirements to protect consumers who transfer 13 moneys from the United States to a foreign destination (15 14 U.S.C. § 1693 et seq.), which is referred to as a “remittance 15 transfer”. Specifically, the EFTA now defines this as an 16 electronic transfer of funds requested by a sender (consumer) 17 located in any state to a designated recipient that is 18 initiated by a “remittance transfer provider” (a person or 19 financial institution) who provides such services in the normal 20 course of business (15 U.S.C. § 1693o-1(g)). 21 EXCEPTION CARVE OUT. While the EFTA regulates some 22 remittance transfers, it does not address all classes of 23 such transactions, including types of a funds transfer which 24 have been covered under Article 4A. Therefore, when the 25 implementing federal regulations become effective on February 26 7, 2013, some remittance transfers will not be covered either 27 by federal law (EFTA) or state law (Article 12 is Iowa’s 28 version of Article 4A). The bill provides that a funds 29 transfer that is a remittance transfer but not an electronic 30 fund transfer under the EFTA will still be governed under 31 Article 4A (Iowa’s Article 12). 32 EFFECTIVE DATE. The bill goes into effect immediately upon 33 enactment. 34 -2- LSB 1120XC (3) 85 da/rj 2/ 2