Accepting Paycheck as Form of Payment (MSB)

Answered by:

Question:

Does occasionally accepting a customer’s paycheck as a form of payment and providing them cash for the difference constitute a business as providing check cashing service? My current bank will not accept a third party check. They say that is an indicates we are running a check cashing service and have to be licensed.

Answer:

by Brian Crow:

There are multiple circumstances at work here. First, the Financial Crimes Enforcement Network (FinCEN) requires check cashers to register as a money service business (MSB) if checks are cashed for more than $1,000. However, states have varying requirements for check cashing services to register. Finally, even if a business does not cash checks in excess of $1,000 and is not required to register as a check casher with FinCEN or state law, since the payee of a check has three years in many states to claim a forged endorsement, a financial institution can choose to not accept the risk of monitoring an account to ensure check cashing remains under $1,000 or have the concern that its business customer will not have sufficient funds to cover items for forged endorsement claims.

Answer:

by Ken Golliher:

As Brian indicated, there are reasons not to do it. That is not one of them. Somebody just made that up and your personnel have repeated it so much they have come to believe it's the gospel.

Answer:

by Randy Carey:

Ken - I don't think this is a banker. "My current bank will not accept a third party check. They say "