We have just discovered one of our customers (convenience store) is cashing checks over $1,000. We know this makes them an MSB and we are sure this store has never heard the term MSB before. Do they automatically have to register with Fincen and go through the MSB process or can we inform them of what they are doing and give them the opportunity to stop the practice?

It's not just the FinCen requirements, states can have some fairly onerous requirements for check cashers too if they meet the state definition. I would want to help them understand what they are looking at if they want to continue.

How far back did you go with your review?
Is this something they just did once?

We have them at least twice. Once in July and once in August.

But did you review the last six months at least?
I think if it was an honest mistake and you can document it, you will be OK, but you will also have to show that you are reviewing their deposits on an ongoing basis, and that becomes time-consuming. You would not be able to say that you reviewed it, you will have to have the supporting documentation as evidence of your review.

We ran into a similar situation a while back. Every customer is different however I'll give you some insight as to what happened with us: we discovered that they cashed >$1000 as you did, and gave them a soft warning about the requirements. They then did it 1-2 more times, at which time we required that they register with FinCEN, to which they fought us again stating that "it was not their policy to do so, it wasn't normal, etc." and we put them on final warning. It then happened AGAIN, and we gave them the ultimatum, at which time they registered.

Some key takeaways from the situation were 1) the fact that it happened once prompted a 100% review of all deposits, which is quite the cumbersome task (especially with this one, as they cashed TONS of checks), so it will weigh heavily on review staff 2) the fact that it happened once means that clearly there is either no policy or a breach in policy, something that can absolutely happen again, which makes your risk more significant.

I'd say look into why it happened. Do they have a policy at all, and was this just one isolated deviation? If so, how was policy able to be broken in this instance? And is it worth it to provide necessary resources to this customer to ensure they're doing what they say they're doing? Fees are great, but if the cost of monitoring outweighs the benefit, it might be best to give them the ultimatum. Even then you'll still have to monitor, but that will be one less factor to look for.

I suggest you give them two choices:

* repent & go forth and sin no more or
* register.

If they comply with FinCEN guidance, they can unring the bell and they will not be required to register. (You'll still be stuck with monitoring them to make sure they remember what they told you.)

Alternatively, you can send them a copy of one of the brochures that explains MSB responsibilities and give them a very short time frame in which to register.

And, if they fail to repent or to register, your final option is a combination of filing a SAR and an instruction to the MSB to simply "go forth (and take your account with you)."