The House Committee on Financial Institutions and Pensions heard testimony on HB 2337, a bill that would assess a fee on international money‑transfers handled by nonbank money remitters and use the revenue to fund criminal investigations and grants for prosecutors and local law enforcement.

The bill, explained to the committee by Jason Thompson of the reviser’s office, would impose a $7.50 fee on each international transaction of $500 or less and a charge equal to 1.5% of the amount on transactions exceeding $500. Thompson said remitters would file monthly reports with the director of taxation and that the bill establishes a tax‑credit mechanism tied to fees paid.

Supporters, led by Kansas Bureau of Investigation (KBI) Director Tony Mativi, framed the proposal as a tool to combat drug trafficking and money laundering associated with fentanyl distribution. "Fentanyl poisonings ... are the leading cause of death of Americans under 40. Let that sink in for a minute," Mativi told the committee, and he said the KBI and prosecutors need sustained funding to pursue cartels that, he said, rely in part on money remitters to move proceeds out of the United States. "There is not a single fentanyl pill that's trafficked into this state that isn't ultimately attributable to 1 of 2 major Mexican drug cartels," Mativi said, and argued the fee would capture some of the funds moving south to Mexico and direct them to law enforcement.

What the bill would do

- Fee and tax credit: Section 1 would set the fee levels and require monthly remitter reporting. HB 2337 directs an amount equal to the tax credits certified by the director of taxation to be reserved in the State General Fund first; remitter customers would receive tax credits for fees paid, and Thompson said those credits may be carried forward (he said credits appear to expire after the fifth tax year).

- Fund distribution: After reserving funds for the tax credits, the remainder would be distributed 30% to a criminal litigation fund (section 2), 45% to a wire transfer fee fund for complex drug and white‑collar investigations (section 3), and 25% to a prosecutor and law‑enforcement grant fund administered by the Kansas Criminal Justice Coordinating Council (section 4). Thompson noted the criminal litigation fund would not be used for activities tied to the Medicaid fraud and abuse division, which has separate funding.

- Criminal provision and definitions: Section 6 creates a misdemeanor offense described in the bill as unlawful transmission of a wire transfer by persons who are not U.S. citizens or aliens lawfully present; Thompson characterized the provision as making certain acts class C nonperson misdemeanors. Section 7 contains definitions and a list of exceptions, which Thompson said exclude federal and state depository institutions and certain government transfers. The bill also includes a confidentiality clause to facilitate information sharing between the Department of Revenue and the state banking commissioner.

Supporters' case and examples

Mativi told the committee that federal estimates indicate large remittance flows from the U.S. to Mexico and cited federal agencies’ numbers to estimate the portion used for cartel activity. He offered recent examples from federal prosecutions in Missouri and Kansas in which defendants allegedly used money‑remitter businesses to transmit drug proceeds in many small transfers. Mativi acknowledged the fee will not stop the activity but said it would provide a funding stream for investigations and grants to local jurisdictions.

Industry and regulator responses

The Office of the State Bank Commissioner, represented by Brock Roller, said the office regulates money transmitters and had worked with the bill’s drafters to narrow the definition so it applies to transfers sent from Kansas to a foreign country rather than capturing domestic digital transfers. Roller said the office sought — and secured — an amendment proposing that the attorney general rather than the state bank commissioner enforce the act, and he recommended adding a surety bond requirement to protect consumers if a remitter fails.

Kelly Van Swall of the Kansas Bankers Association said banks and credit unions are heavily regulated and that the bill as drafted should not affect bank wires, but she raised concerns about the new misdemeanor offense for unlawful transmission and potential liability for banks when noncitizen account holders make transfers.

The Money Services Business Association, represented by attorney Eli Rosenberg, opposed the bill. Rosenberg said the industry is already regulated — money transmitters are licensed by the state bank commissioner and registered with FinCEN and must operate Bank Secrecy Act/anti‑money‑laundering programs. He warned the fee could increase costs for consumers and small retail outlets that provide remittance services, burden unbanked and underbanked residents, and push customers toward unregulated channels such as informal networks or cryptocurrency, which would reduce law‑enforcement visibility. "The bill will hurt Kansas consumers, business, and law enforcement, and not bring about the desired outcomes," Rosenberg said.

Committee questions and fiscal notes

Committee members pressed witnesses on several operational points. Representative Williams and others probed whether the tax credit would go to remitting businesses or to individuals who paid the fee; Jason Thompson clarified the text intends the tax‑credit amount to correspond to fees paid and that individual taxpayers would claim credits when they file, though he said the director of taxation would certify the amount to be reserved each year. Representative Rivas asked about a fiscal note that the Department of Revenue submitted, which the transcript cites as requesting roughly $995,000 from the general fund (including money for customer‑service positions); Thompson said those costs were not allocated in the bill text and could be considered a separate expense.

Several members raised equity and practical concerns: Representative Roser and Representative King noted large numbers of international students and campus communities who regularly use remitters; Representative Shipp cited Oklahoma data and said the Oklahoma statute's existence has not reduced fentanyl deaths there. Witnesses acknowledged the bill would not address transfers routed by cryptocurrency or cash apps, which some committee members flagged as an emerging channel.

Formal action

At the end of the hearing Chair Hall Heisel moved to suspend the rules to allow the committee to work HB 2337 before the legislative turnaround deadline. The motion was seconded by Vice Chair Steens. The chair called for the ayes and noes; the motion to suspend the rules failed on the committee vote (the transcript does not record a formal roll‑call tally). As a result, HB 2337 remained in committee. The chair said he would consider requesting the speaker to “bless” the bill for further action, but the transcript records no agreement and no floor referral.

Why it matters

Supporters framed HB 2337 as a targeted revenue source for investigations and grants to counter drug trafficking and money laundering linked to fentanyl. Opponents cautioned that the fee could impose immediate costs on ordinary Kansans (including students and the unbanked), increase compliance costs for small businesses, and push transactions into less‑monitored channels, potentially reducing law‑enforcement visibility.

Next steps

No further committee vote on HB 2337 occurred during the hearing. The bill remains in the Committee on Financial Institutions and Pensions for potential amendment or future action; the chair indicated he would consider asking the speaker to allow continued work on the measure.