Financial Services Fraud Legislation Clears First Hurdle In U.S. House
Washington
A national database aimed at combating insurance and other financial services fraud would be created under legislation approved by a House of Representatives panel.
The legislation, H.R. 1408, was approved by the House Financial Services Subcommittee on Financial Institutions by a voice vote last week.
The bill next goes to the full Financial Services Committee for consideration, although a date had not yet been announced at press time.
The bill would create a national database that would allow the nations financial services regulators, including state insurance commissioners, to share information on those who commit financial fraud. Insurance commissioners would also have access to the FBIs fingerprint files.
The goal is to prevent those who perpetrate financial fraud in one industry from moving to another without detection.
The legislation is strongly supported by insurance agents, who initially voiced concerns over the amount of information that would be made available to insurance commissioners.
Agents were concerned that commissioners might have access to information unrelated to a decision on agent licensing, such as a misdemeanor conviction for using marijuana while an applicant was in college, said Maria Berthoud, vice president of federal affairs for the Alexandria, Va.-based Independent Insurance Agents of America.
But under a compromise, the information available to commissioners will be limited. Specifically, the available information will include all felonies, all misdemeanors involving violence, and all misdemeanors involving financial fraud or breach of trust.
Ms. Berthoud said the bill represents a careful balance between the information commissioners need to license an individual, and the need to protect an agents personal privacy.
The bill authorizes the Treasury Department to commit $5 million to establish the network in two years.
House Financial Services Committee Chairman Mike Oxley, R-Ohio, a co-sponsor of H.R. 1408, said the bill is vital in the new financial world created by the Gramm-Leach-Bliley Financial Services Modernization Act. "With financial services fraud estimated to cost in excess of $100 billion a year, greater information sharing is imperative if regulators are to do their jobs," he said.
Reproduced from National Underwriter Edition, June 22, 2001. Copyright 2001 by The National Underwriter Company in the serial publication. All rights reserved.Copyright in this article as an independent work may be held by the author.
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