Question: We have a customer in North Carolina that runs a "Mom and Pop" store in a town where the main street is just two blocks long. During the past month, they cashed a check for a customer - split it for groceries, but nonetheless cashed the check - for $1,001.00 Fed, in their pre-examination says that makes them a MSB and they have to register. Is that so? And if not what argument can I use? Fed is coming back to do a more complete exam in two weeks.
Answer: Our experts were slightly divided on the answer to this question, so I'm passing along both answers.
John Burnett wrote: "In the discussions I've seen on MSB trigger points, it's been pointed out that the customer only pulls the trigger if the transaction involves more than $1000 in cash. The examples given were furniture stores that cashed a check for over $1000 but only gave back $200, the $800 balance being furniture. I think the store is OK if it can document (and the bank can document) that the cash amount was actually less than $1000. The problem is that this sort of documentation is an ongoing need. Each time the store deposits a customer check for over a grand, they'll have to document how much was taken out "in trade" and how much in cash. And I'm not too certain the bank wants to have to monitor that account so closely."
While Andy Zavoina, another BankersOnline Guru wrote: "If you look in http://www.msb.gov/pdf/31CFR10311.pdf there is a definition of a Money Service Business (MSB). In part it says: ' (2) Check casher. A person engaged in the business of a check casher (other than a person who does not cash checks in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions).' If they are "in the business" of cashing checks, they are a check casher and based on the amount, a MSB. Could it be argued that they are not "in this business"?" While I think it might be tough, I also think one occurrence is being very strict ..."
This editor goes with the more strict translation. While it may be inconvenient and even difficult in some cases for a customer to register as a MSB, it's better than what can happen to you. The examiners are in no mood these days to overlook, exempt, or be "understanding" about any exceptions whatsoever. Once the $1,000 line is crossed, tell your customer the rules. Don't expose your financial institution to the very real possibility of violations.
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