When a money transfer agent (e.g., Western Union agent)cashes the check for the money transfer (in an amount of $1,000 per day), do they become a "check casher" under the MSB rules?

I would think that part of their business as an agent would be to cash those checks for the customers. Any thoughts?

I believe an agent is an MSB, just not one that needs to register. However, if theya are cashing checks over $1,000 then they need to register.

I agree. I believe that Western Union is only registered as a money transmitter, so any agents that wanted to cash checks would have to register as a check casher as that would be considered a service of the individual agents and not Western Union.

But these are not checks per se. When a recipient of a WU wire transfer comes into an agent to claim the funds the agent prints a WU money order from the WU terminal and then the customer can either walk out of the agent's store with the money order (rarely happens) or has it cashed by the WU agent. In my opinion this would not make the WU agent a check casher who must register separately with FinCEN. Do any others out there see this WU-related activity and how do you consider it?

I ran into this with one of my customers and was able to verify through reviewing their agent agreement (and talking with WUs compliance officer) that cashing "checks" that were created as a result of their receipt of the money transfer was allowed under their "eligible" activities. Check your customer's WU agreement to see if it addresses this for your customer.

Per a member of WU's senior management at last year's ABA MLES, WU agents are prohibited from providing copies of their agreement to their depositary banks. WU believes it contains propriety information. Nevertheless, that agreement does not require WU agents to cash the checks they issue as payment for wires; i.e. it is something the agent elects to do.

From my perspective, that makes check cashing firmly outside their agency relationship for money transmission or selling money orders and would require registration if the dollar threshold is exceeded.

I have a copy of a WU agreement signed by one of my account-holders and it says the following:

"With respect to Money Transfers received by consumers at any Agent's locations, Agent shall use its best efforts to pay out the principal amount of such Money Transfers entirely in cash, but in any event, shall pay in cash no less than the minimum cash payout specified in Attachment 1 for that location (or the face amount if less)". Attachment 1 outlines the days and hours of operation and also "Minimum Cash Payout for $1,000.00 Money Transfers: [blank]".

My interpretation of the above is that the agent is obligated to pay the funds in cash so I cannot see how doing so is in any way outside of their WU Agent status and requires them to register separately as an MSB.

What do you think?

I think a call to FinCEN is neeeded.

On the one hand, I can see if the funds transfer is simply paid out in cash, that would not trigger the agent as being a check casher.

But if the funds transfer is instead put into a check drawn on Western Union, and the agent cashes that check for $1,000 or more, then the agent has just cashed another party's check.

Maybe there is something to that!

Businesses that cash their own checks are not required to register as an MSB according to FinCEN's FAQs. Another example given in the FAQs says that income tax preparation firms (businesses) can cash their anticipation refund checks for their customers.

Using these examples in the FAQs, aren't they similar to, or the same as the agent cashing the moneygram checks? If the agent is issuing the moneygram checks and cashing them, does that equate them with businesses that cash their own checks, or am I stretching this?

To me, it seems to be part of the money transmitting process. If I send money to the local agent for payment to a relative, I would expect that the cash would be readily available when he goes to that location, instead of running around to find a bank that will cash the item for a non-customer.

What d'ya think?

It's a slippery slope when you try to port a ruling to a slightly different fact scenario, or when you start trying to decide whether a customer needs to be registered as an MSB!

I recommend you tell this customer that it needs to get a determination in writing from FinCEN that what it does not trigger a requirement to register. Without such a determination, I think you have to consider the possibility that this customer is in technical violation.

"Attachment 1 outlines the days and hours of operation and also "Minimum Cash Payout for $1,000.00 Money Transfers: [blank]"."

That statement in the agent agreement alone tells me that they are under no obligation to exceed $1,000 and therefor any activity above that limit is up to the agent acting alone and would subject them to the MSB requirements.

Devsfan,

I agree with the rlcarey's interpretation of the contract language that the agent is not automatically required to pay out in cash anything above the amount specfied in the blank in its individual contract; i.e. if it is required to cash checks, they are not checks above $1000. Beyond that, I've sought some guidance...

You've participated in this discussion before, so I know you're not working off a hypothetical. Can you answer a few questions about your customer's operations?

1. Does the WU agent maintain a separate account for all of its WU activities or does it commingle the WU activity with its own business activity in a general account?

2. Does the WU agent always disburse wire proceeds using checks or does it sometimes just ask the recipient to sign a receipt and then distribute cash?

3. When the WU agent disburses proceeds via check who is the check drawn on; i.e. is it a dedicated WU account at your bank, on another bank, or some other account relationship?

4. When the WU agent cashes the check it issued is it deposited deposited into a WU account or the agent's general account?

This appears to be fact sensitive; no one of the above questions would resolve the issue. What is being sought is a factual context that indicates whether the activity is a limited extension of the agency relationship or a separate activity altogether.

Based on all the WU agent accounts that I have seen, the majority operate in this manner:

1. Settlements are via ACH into their general account.

2. They can give you cash and they sign a receipt, However, see the agent agreement regarding minimum cash amounts required to be given by the agent. Even according the WU website: "Money transfers will normally be paid to the Receiver in cash, check or a combination thereof, or in select U.S. Agent locations, with a Western Union® payout card (which permits the Receiver to withdraw money from select ATMs) subject to currency availability and the conditions applicable to the selected payment location."

3. The checks are drawn on a master WU account (not sure who is their clearing bank)

4. They are deposited into the agent's general account.

Ken,

I will try to answer your questions:

1) The few accounts of WU agents that we have are co-mingled accounts with their other business activity (convenience stand sales, lottery agent, etc).

2) I have been told by more than 1 agent that they cannot simply give funds to a beneficiary of a money transfer and that they must first print a money order (or multiple MOs if the transfer amount is more than $1,000). These money orders that I then see deposited to the account all say "Issued at [name of my customer] and have a current date. This confirms to me that the money orders are the product of a money transfer and not some other MO cashed.

Let me know if this information is sufficient or if any follow-up questions arise.



3) These MOs are just like all other WU MOs in that they are drawn on the account of Integrated Payment Systems at Wells Fargo, Colorado.

4) The agent then deposits these items to his account with us.

Ditto here - this is exactly how it works with us as well. I am also curious to see what the answer to this issue is.

I contacted the BSA compliance area of WU directly and first left a voicemail message and then called back a short while later hoping to speak with someone. The person with whom I spoke had to refer the issue to a supervisor so I put all of my questions in an e-mail so it would be clear what I was looking for. This was 3 days ago and I have not yet heard back. A person then returned by voicemail and confirmed that their agents are obligated to pay out funds to beneficiaries in cash and the printing of these MOs is the only way that this can be done. She further stated that their agents are covered by WU's FinCEN registration (which we all know) and that WU does not feel that the cash payments for the money transfers makes the agents responsible for separate FinCEN registration. I still hope to get this in writing in reply to my e-mail.

To me, this confirms my understanding all along about these transactions and I hope that the written confirmation from WU, while not from a regulatory party, should allay our concerns.

I will share with you their written reply when received.

Thanks Devsfan - this will be a great help

Agents use the money orders to document who the funds were paid to. The payee endorses the check and then receives the cash. This is their record of the transaction.

I will be VERY surprised if we find out that agents need to register as check cashers.

RE: MSB Agents-I called FinCEN regarding the cashing of checks/vouchers/money orders (over $1,000) that are issued in connection with a Western Union (or other money transmitter)transaction.

FinCEN's view is that the MSB agents are not considered a check casher in these cases. They explained these "cash-outs" as part of the money transmitting process. However, if the MSB is cashing payroll checks or other monetary instruments for customers outside of the money transmitting process, they would have to register.