Confusion on check cashers

We have a mom and pop convenience store that has been cashing checks for thier customers. They are always small checks (less than $1000). When questioned, the owners said that they were just helping out customers "after banking hours" and this in turn helped them because their customers would spend some money in the store.

We have had some discussion here at the bank concerning possible issues that may arise from this. Some argue that as long as they do not exceed $1000 per customer per day, we are fine. Others want the activity stopped right away.

I have tried looking up regulations concerning check cashers in Texas, but I think I just confused myself.

We are in the South Texas oil boom, and some larger stores (Wal Mart, HEB) are cashing payroll checks. Large Checks. Do we need to require something from these stores as far as MSB is concerned?

Any business cashing checks for their customers above $1,000 per their customer per day MUST register as an MSB with FinCEN. Provided the mom & pop place isn't getting ton of chargeback checks, I don't see why there are people that "want the activity stopped right away". Texas does not have their own licensing for check-cashers.

As far as requirements for places like Wal-Mart that cash payroll checks, if they are your customer, it's possible they're an agent for an MSB. If this is the case, you can request a copy of their agent agreement to keep on file.

Agree, however, keep in mind, that you will want to increase monitoring of this account to watch for the over 1000.00 threshold that would trigger the MSB discussion.

The mom and pop store does not get many chargebacks at all. They seem to have a good handle on which checks to cash. I checked and the other check cashers are registered agents for Western Union.

Thanks for the replies!

I would not have expected a "Check Casher to be acting as an agent for a parent MSB. They can sell and redeem checks and transmit funds as an agent, but am missing something if they've been classified as a check cashing agent.

Confusion abounds (with me too) on this subject of MSB's and Agents of...

We had a recent discussion about this on this forum. But to clarify, the question above is simply about a business that is not acting as an MSB agent, who happens to cash a few checks. By definition if they don't go over the $1,000/day/person rule they are fine. The book even says that based on risk, the minimum CDD may only be required.

In our case we have two that are indeed Agents for MSBs (selling MO's), yet their store policy limits to $100/day (far short of the $1,000 trip) and are not MSB's themselves. Some would argue that point. But we simply download a copy of the "parent" MSB registration application (which is all you can get now from FinCEN) and it satisfies our examiners and our auditors. But I still don't think that is necessary. The MSB has their own BSA program they administer it on our customers.

Isn't there something somewhere that says if a business cashes a check exceeding $1,000 and it's a one time incident they don't have to register? Or am I not thinking correctly? Our situation is upon a regular review of a convenience store, they cash checks but always remain under $1,000 except for one check that exceeded $1,000 just once during a six month review of account transactions.

If they are in the business of check cashing, if they exceed $1,000 then they are required to register.

banker1976: You may be thinking of this guidance regarding MSBs that cease cashing checks over $1000/day: http://www.fincen.gov/news_room/rp/rulings/pdf/fincen_ruling2005-3.pdf

FinCEN Guidance, FIN-2006-G006, issued February 3, 2006, states that if a business crosses the $1,000 definitional threshold on a one-time bases, that one-time action, if not repeated, does not make the party in question a check casher, subject to all applicable requirements. If they have crossed this threshold once, there would be significant monitoring involved to ensure they did not cross the threshold again.

I would read that footnote to indicate if you were a business which does not engage in the business of being a "check casher". Also, in order to determine whether or not this is a one time event, it basically relegates the bank to examine every deposit they make to ensure no second occurrence. I would make them register or jettison the account.