We have an individual (not a business) customer who is depositing a lot of checks from individuals through his personal account. Some of the checks are $1,000. After several discussions with him about this activity he now "claims" he is loaning money to people. In my opinion he is an MSB. We have filed SARs (and 90 days updates) for possible money laundering and "activity the customer would normally not be expectetd to engage....". But now based on the customer's comments, in my future follow-up SARs do I now add in the narrative that the bank suspects him of being an MSB? Do I mention he is an unregistered MSB? Can and individual cashing checks even register as an MSB? I would like to get mgt. to close the account. Would REALLY appreciate some comments on this nightmare.

Attached is the web page from Fincen
http://www.fincen.gov/financial_institutions/msb/

Thery may be additional state laws he/she may be in violation see your states usuary laws.

Yes, an individual person can be an MSB. An individual conducting a business that is not formed as a partnership, LLC, corporation, etc. is a sole proprietor. If you look at the definition of an MSB and the FINCEN related definition of "person", you will see:

Person - A "person" is an individual, a corporation, a partnership, a trust or estate, a joint stock company, an association, a syndicate, joint venture, or other unincorporated organization or group, an Indian Tribe (as that term is defined in the Indian Gaming Regulatory Act), and all entities cognizable as legal personalities.

While an individual can be an MSB by cashing checks as a business, I note that you said "Some of the checks are $1000". To meet the definition of an MSB they must be greater than $1000.

Could still be one under state law, that varies of course.

Just asking isnt the 1,000. for cashing checks. It was stated that they were deposited.

We have seen other checks slightly above the $1,000 mark (not many) and again the customer claims he "is loaning" the money. So it appears these individuals are writing him checks and he is giving them cash for the checks. Then he deposits the funds into his acct to "pay himself back" for the loans. So he is acting (to me) like a check cashing/check-into-cash business would operate. But his account is an individual account.

I so appreciate all these comments.

Your life would be easier, and the AML risk to your bank would be lower, if you close the account. Also, is he withdrawng cash to cover the payments he is making to the other people?

Oh please I agree! Thankfully no cash w/ds involved.......thats another issue....where is getting all this cah to loan out? Thats why we keep filing SARs.

Well, the fact that no cash is involved only makes your job harder. If you keep this account, you should require that all transactions go through your bank. Otherwise you have no way of knowing if cash withdrawn bears any relation to checks cashed (loaned).

As the song says, that's the heart of the matter.

The cash has to come from somewhere...perhaps an illegal business and his check cashing operation allows him to dispense it without depositing it and drawing attention to himself.

Don't do the MSB dance; he is operating a business through a personal account and you need to put a stop to it by terminating the relationship.

A personal account cannot cost justify multiple SAR filings.

Thanks to all.........I am really pushing hard to get this one closed. Then one more SAR update and hope we never see them again. Sheesh!