One of the larger banks in our area has been sending their customers letters closing their accounts. The business is a seller of prepaid phone cards. No explantion as to why. Has anyone else had inquiries about this with a letter from their bank? This is similar when the larger banks in this area were getting rid of their MSB customers.
Thanks...

Because of the new rules most likely. They just don't want the hassle with performing proper due diligence:

The Rule establishes a more comprehensive approach for regulating prepaid access and requires providers and sellers of prepaid access to (1) file suspicious activity reports (“SARs”), (2) collect and retain customer and transactional information and (3) maintain an anti-money laundering program. These BSA requirements are similar to those that apply to other categories of Money Services Businesses (“MSBs”). The Prepaid Access Rule amends some of the provisions within FinCEN’s MSB regulations.

I see these card wholesalers deposit millions in cash every week in Houston. Tell me that is on the total up and up.

Hey, Randy...That's totally on the up and up.

(Just following directions )

You & Randy already recapped the relevant points; these people bring in tons of money and some banks don't want them. If someone in your bank thinks it's crazy to turn them away then come up with the costs of learning their business and monitoring them as will be essential, then add a hefty profit margin. Then you will be able to have their inital fee schedule approved before they open the account.

Over the years, I've learned that saying "No" just makes the BSA officer the target of the willfully ignorant. I now advise them to say, "Sure, but..."

If we were to perform due diligence on the company selling the cards, what would I be looking for that would trigger a red flag before the account is opened? What types of questions would I ask the business? Would they like MSBs be required to have policies and procedures in place? They seem to be trying to say that they know their customers and they do not just walk in off the street. Again because they are being kicked out of their bank, they seem willing to pay any fee we would charge.