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#980222 - 06/23/08 07:07 PM
Re: Check Cashing at a Social Club-MSB?
Ted Dreyer
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Platinum Poster
Joined: Feb 2003
Posts: 962
PA
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To be an MSB as a check casher, they have to be "engaged in the business" of cashing checks. You may need to determine whether they meet that part of the definition. Couldn't that be a way out of being considered an MSB...they just say they do it, but they're not "engaged in the business of such activities". Doesn't the fact that they even do it occasionally make them an MSB?
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#980292 - 06/23/08 07:52 PM
Re: Check Cashing at a Social Club-MSB?
AuditorK
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Diamond Poster
Joined: Apr 2001
Posts: 2,245
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If they do it occasionally as a business then they are an MSB. The point that I'm making is that if a person cashes a check of more than $1000 as a favor for a friend or relative that doesn't necessarily make them an MSB. Also, businesses that cash their own checks are not MSBs. Ruling I just don't know what the details of this situation are with this "social club".
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#982748 - 06/26/08 02:22 PM
Re: Check Cashing at a Social Club-MSB?
renniks
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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That sounds a lot like check cashing is done as part of the club's business, or said another way, the club is in the business of cashing checks, whether or not it charges a fee. If it were a liquor store or local pub, instead of a "club," there would be no question: it's an MSB.
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#982819 - 06/26/08 03:04 PM
Re: Check Cashing at a Social Club-MSB?
renniks
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Gold Star
Joined: Jun 2008
Posts: 285
South
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If you keep the account - where does the social club get the cash to be able to cash the checks? Do you understand the source of funds enough to be able to defend it to examiners? It would not be the first time that a golf club/social club was used to facilitate drug-related money laundering.
In my view, you've got a slam-dunk SAR here. They are operating in violation of federal law if they have not registered as an MSB within 180 days of beginning to operate as an MSB. And many states require a license to cash checks. Will you/your bank have your safe harbor if you tell your board about this situation with this customer? Or will nearly every member of the social club know about it by Sunday? Sounds like you need to present another policy change to the board tomorrow: "In the event that the suspicious activity involves a board member, or a family member or close associate of a board member, then the SAR will not be reported to the board but instead to (fill in the blank)."
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#983517 - 06/26/08 11:35 PM
Re: Check Cashing at a Social Club-MSB?
Maytagman
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Gold Star
Joined: Jan 2007
Posts: 314
CA
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renniks - Perhaps if the decision is made to keep the club, you could propose changing your policy to allow existing customers who are check cashers to stay, while not allowing new MSB accounts to be opened.
Just a thought....
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#984539 - 06/27/08 10:09 PM
Re: Check Cashing at a Social Club-MSB?
Ted Dreyer
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Platinum Poster
Joined: May 2002
Posts: 975
first lily pad on the right
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To be an MSB as a check casher, they have to be "engaged in the business" of cashing checks. You may need to determine whether they meet that part of the definition. I don't mean to hijack this thread but I have a question that relates to this statement. Say there is an individual with a personal account who works for ABC Construction company. Every other week he has 2-3 ABC payroll checks endorsed over to him by his co-workers. He then endorses the checks and presents them to his bank for cash. The presumption is that this guy then gives the cash to his co-workers. It is also assumed that the individuals to whom the checks are written fall into the "unbankable" category. Would this individual be considered an MSB? Or does that designation apply only to business accounts? I've never been able to get a firm answer on this. Any thoughts would be appreciated!
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#985966 - 07/01/08 06:29 PM
Re: Check Cashing at a Social Club-MSB?
Ted Dreyer
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Gold Star
Joined: Jan 2007
Posts: 314
CA
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It sounds to me like a guy doing a favor for his work buddies...unless he's charging them a fee for it.
My concern would be accepting third party checks into an individual account when we have no way of identifying the first endorser. What if the checks are later returned for forged endorsement?
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Of all the things I've lost, I miss my mind the most.
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