ughhh...we are a small community bank and MSBs are rare in our neck of the woods(thankfully) but.....

One of our customers is a convenience store business. It has recently began selling money orders. The business has placed a $300 limit on each money order and also set a limit of $1900 per customer, per day. The business manager states the business is not currently registered as a MSB.

I have read 31 CFR 103.11 (uu) and all the threads I could locate on MSBs to determine whether this business should indeed be registered. I think the business should be registered because it crosses the $1000 threshold.

I would apprepricate anyone's thoughts on this, especially if these types of customers are the "norm" for your bank.

Thanks!

I believe the $1000.00 threshold is for cashing checks. If they cash even one check for $1000.00 they become a MSB.

Bsanewbie, I manage over 200 MSBs. You don't have to have them register if they are only selling money orders. Typically, the stores are only "agents" for the MO vendor. They would register if they cash over $1,000 per day per individual. If we see that they sell MO's and cash checks but the checks are under the threshold of $1,000, we still have them register because the two combined can go over. If you need any help, send me a personal message and I can help you out.

Is your customer an agent of Western Union, MoneyGram or any other MSB? If so, and if their only MSB-related activity is for WU (for example) your customer does not have to register with FinCEN. However, if they sell their own money orders (hard to believe) they would need to register as an MSB irrespective of any limits they place on the sales.

the business will occasionally cash a check for their customers. the money orders are western union money orders, so i guess i need to check with business to see if they have an agent agreement with western union first.

I should have added that you should request a copy of your customer's agent agreement with WU (or other). If they cash checks for over $1,000 in a day for a customer they would certainly be considered as a check casher and would have to register with FinCEN.

From a prior post "I believe the $1000.00 threshold is for cashing checks. If they cash even one check for $1000.00 they become a MSB."

We have a potential convenience store customer who states they will cash checks for $1,000 or less. I always used the $1000 theshold, but is this technically like the CTR reporting, which is for $10,000.01 or more? So if they will cash a $1,000 check, they are not an MSB?

Pardon my ignorance, but is the threshold for MSB designation related to the check amount or the cash given back to customer, as with CTR? For example -the business 'cashes' a check for $1500 in order for the payee to purchase a $1200 Money Order or money transfer (both under agency agreements)with $300 cash back - is he a check casher requiring registration? If not, does that extend to a convenience store, liquor store, etc., who 'cash' the check (at no additional cost) to facilitate the purchase?
As I've said in other threads, New Jersey requires check cashing license where there is consideration (fee, cost expense, or other consideration)We're seeing more and more second endorsements from businesses who claim to do it as a convenience.

Another factor is that if they are truly only an agent of say, Western Union, Western Union has an entire BSA program that is very thorough. It would include a BSA program, appointment of a BSA Officer and they even provide training. We have a seller of money orders that isn't an MSB, but we made sure that customer had all the compliance pieces in place as an agent and retained copies for the bank.

I doubt seriously that anyone is accepting a 'check' for the purchase of a money ordder or to wire money. If they are, then they are taking a huge risk. I would treat the entire amount of the check as cashed and if it is $1000 or more, then they are an MSB.

Thank you all - I'm running into reluctance to classify these businesses as MSBs and your comments will help.

I agree with Georgia. It would be very difficult to track what each cashed check was used for and how much cash was actually given out. What the bank can verify is the third party check in the convenience store deposit.

My previous question was poorly framed - I'm asking from the standpoint of the customer. FIN 2006-G006 Guidance (2/3/2006) says a 'business that cashes checks in amounts sufficient to reach the definitional threshold of more than $1000 returned (stress added)to a customer in one day is a money services business.' There is no mention of face amount.

So,if he chooses to cash checks to facilitate a purchase (groceries, liquor or transfer/money orders under an Agency agreement - for discussion's sake, the commodity doesn't make a difference) and doesn't give back more than $1000 in cash per day, is he considered an MSB or not? The guidance would indicate he is not, since he doesn't meet the threshold for check casher, and his other MSB activities are under Agency agreements which eliminate MSB registration.

I'm trying to eliminate second endorsements wherever possible -just looking for more ammunition, or at least be able to tell the customer what we need as his 'written policy' for accepting checks.

Just to clarify something -- An MSB whose activities are under agency agreements with another registered MSB (such as a Western Union agent) is still an MSB, although it may not need to register with FinCEN.

Agreed

dickr: Actually the commodity does make a difference if you're talking about money orders. Here is some guidance from FinCEN indicating that "the definition of check casher only applies to a business that engages in the cashing of 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" (emphasis added). For purposes of BSA regulations, a "monetary instrument" includes, among other things, money orders. See 31 CFR 103.11(u). Therefore, an entity that provides a customer with money orders, or a combination of currency and money orders, in exchange for a check, in an amount greater than $1,000 on any day in one or more transactions, is a "check casher" and must comply with BSA regulations applicable to check cashers including registration, recordkeeping, reporting, and anti-money laundering compliance program requirements."

Check casher guidance

But I think that monitoring an MSB whose qualifying activity is under an Agency Agreement is a bit easier.

Thanks - my interpretation is the same. The argument comes from my customers who only want to read the parts that support them (Surprise!) I've been insisting on a written policy with a $1000 face amount limit for any who deposit second endorsements because that's the only thing I can verify, whether or not the activity is that of a MSB.

I have a question regarding this: "Just to clarify something -- An MSB whose activities are under agency agreements with another registered MSB (such as a Western Union agent) is still an MSB, although it may not need to register with FinCEN."

Example: a convenience store has set a limit that they will not sells more than $1,000 in money orders per person per day. The convenience store is an agent of an MSB. I thought since the convenience store is staying below the threshold that defines an MSB, then they are not an MSB.

By what I've read above, regardless of the amount that they sell, are they by default an MSB just because they are an agent of an MSB?

Thanks for any help.

I think technically they are considered an MSB, but since they are acting as an agent they do not have to register as an MSB.

Yet ANOTHER MSB question - we have a customer who is an agent for Fidelity and in reviewing their activity, it doesn't look like they cash checks or provide any other money services. When the account was opened, however, they provided us with an MSB registration (only indicated Money Order sales as a service) and in looking at FinCEN's List - they're currently registered, but yet again, the only service provided is Money Order sales.

Would you require a copy of the Acknowledgement letter from this customer even though technically they didn't have to register?

ColorfulCasey,

FYI - I called FinCEN today and they confirmed that if the customer does not transact above the prescribed limits (over $1,000), they do not meet the definition of MSB. In other words, working as a agent for an MSB does not necessarily make the agent an MSB. If anyone has information to the contrary, please post.

To answer your question, I would suggest that you find out more from the company and a site visit may be warranted. You said "it doesn't look like" they do certain activities so it makes you wonder why they registered. Did they think they needed to even though they didn't? I think some questions need to be asked of the customer. If they truly registered even though they didn't need to, I wouldn't require a copy of the Acknowledgement letter. If you find out they really are required to be registred, I would require a copy. Hope that helps.

Thanks for passing that information along!

I'm just going to go ahead and get the Acknowledgement from the customer...just to be safe.

You may want to call FinCEN yourself. As John said above several months ago, per the 2005 Guidance the grocery store that acts only as an agent of an MSB is still an MSB for your purposes. The only difference is that it is not required to register.

Right - we consider businesses that act as an agent for another MSB as MSB's at our bank; we require a copy of their agent agreement and we have them sign an MSB Certificate which states that they currently do not participate in any other money services and do not plan to in the future, etc.

This customer is just throwing me for a loop because he registered with FinCEN when he didn't have to.

How far do you go back to determine if a customer is an MSB and has cashed a check for $1000 or over? We suspected a customer might be a MSB and went back 4 months and found 1 check over $1000.