We've recently encountered a check-cashing customer, and caught them cashing checks in excess of $1,000 in one day for one person....or so it gives the appearance of. What's happening is there are deposits in which multiple items for an individual total over the $1,000 threshold, however the customer is stating that they are truly on different business days, and that one check is cashed after the daily deposit is made, and the other is made the following day prior to the daily deposit.

Based on this, we've informed the customer that they give the appearance of meeting the FinCEN definition of a check casher despite what may actually be happening and to continue the relationship, they will need to register.

The customer has come back and stated that they are unable to register with their state due to the fact that they do not charge a % of the check, and that FinCEN requires at least 3 instances in which the customer has cashed checks in excess of $1,000 for one person in one day in order to obtain MSB Registration. Are these requirements legitimate? I poked around on FinCEN's website, but I was unable to find anything that said this.

My gut says that the customer is full of it, and that how on Earth would a check casher be able to start their business without essentially violating the law? If you need 3 examples of cashing checks in excess of $1,000 per person per day, then you are doing it 3 times without registration, which goes against what they say. Either it's some crazy loophole, or this customer is just blowing smoke. Regardless of what was said, we still informed them we would terminate the relationship if they did not become registered, because there's far too much risk involved if they do not.

Are these requirements legitimate?

FinCEN doesn't give a you know what about State requirements or how many times they do anything.

Much smoke is being blown. I would just close the account at this point as they are 1) uncooperative and/or 2) incapable of understanding their business model and legal requirements.

Thank you for confirming Rlcarey, that's exactly what I figured. Of course I'm sure you know that the account will more than likely remain open because we're in the banking industry, and "he's a good guy", or "that's bad for business", regardless of what I have to say!

I hear you. But remind them of all the additional costs for monitoring and the requirement to file SARs from now until they are registered or leave the bank and the last you checked, "he's a good guy", or "that's bad for business", does not equate to the bank making a profit for the shareholders, which is the duty of the board of directors, and therefor of each and every employee.

Sorry, just had to say it

Go right ahead, as long as you keep saying things I'm thinking, you're more than allowed! They are aware of the costs and the SAR requirements, and I'm sure will happily tell me that's what I'm here for. As for the bank making a profit, we finally told him that regardless of what he told us, he needs to provide proof of registration by 1/20/15 or the relationship would be terminated.

FinCEN doesn't specifically state how many checks cashed over $1,000 per person makes someone an MSB. However, their internal philosophy is that if they cash less than 5-7 over $1,000 then they are not an MSB. If they are cashing an amount much greater than $1,000 then I would be a bit more nervous.

Call the helpline and see what you can get out of them and pray that your examiners agree. 800-949-2732

If you do keep them, ask them to display a sign that they won't cash over $1,000 per person per day and do some heavy monitoring.

CFR31 Ch x, it's interesting you mention a sign because they do have one that states "no personal checks, no checks over $800". Despite the sign however, I've caught them doing both, which of course they've had a sob story for every time. The main complication is that the owner doesn't understand that just because the funds of the checks he is cashing are immediately going back to him for Western Union or Utility Payments, it doesn't mean that the checks aren't still being cashed in aggregate of $1,000. We've given plenty of guidance to the customer, however he doesn't want to understand the rules.

Also, the heavy monitoring has been implemented since day 1, which is why we caught him in the first place. It's just starting to get to the point where it's unfeasible to monitor 100% of his deposits and make Excel sheets to prove that he's going over the $1,000, which is our motivation for the registration. I like your idea about the helpline though, I will certainly give them a call and see what they think!

I would not be trying to thread a needle for any customer. They either are totally cooperative or they are not. You already gave them an ultimatum, the future is in their hands. A sign displayed in a business is, as you pointed out, meaningless.

Regardless of what an individual Helpline employee may think, the Interagency Guidance from April, 2005 set out the proper response:

One recurring question has been the obligation of a banking organization to file a suspicious activity report on a money services business that has failed to register with FinCEN or failed to obtain a license under applicable state law. Given the importance of the licensing and registration requirement, a banking organization should file a suspicious activity report if it becomes aware that a customer is operating in violation of the registration or state licensing requirement.9 This approach is consistent with long standing practices of FinCEN and the Federal Banking Agencies under which banking organizations file suspicious activity reports on known or suspected violations of law or regulation.

If a Helpline representative starts talking about FinCEN's internal, unpublished philosophies or a de minimus standard for the number of checks cashed in order to cross the threshold, ask for a supervisor.

Make good on the ultimatum.

Just out of curiosity - did you end up closing them?

We're a Community Bank, of course we didn't close them!!! After numerous talks with this individual, we finally gave them the ultimatum of register with FinCEN or find a new bank. Much to our surprise, we received the registration paperwork in the mail the following week. This was more than likely due to the fact that we provided him with 4 clear-cut examples of him violating the registration guidelines. So in the end, he gave in to us and registered. Looks like he needed us more than we needed him...

Much to our surprise, we received the registration paperwork in the mail the following week.

I assume to mean that you verified that they registered on the FinCEN website. There is no "paperwork" anymore, it is all electronic.

Correct; they took a print screen and printed out the confirmation they received online as a gesture to show they were serious...I then verified it directly through the FinCEN website as you stated.

I hope that you are being properly compensated for all of the due diligence, past, present and future.

Me personally, or the Bank? I suppose the clarification really wouldn't matter, I don't think either of us are being appropriately compensated for our efforts!