The Business of Check Cashing
Most states have registration and licensing requirements for check cashing. If your business is presently licensed or registered under the laws of your state (or should be licensed based on its activities), it is clearly operating in the business of check cashing for purposes of compliance with the Bank Secrecy Act.
Some states have thresholds below which businesses are not required to register or obtain a license; it is possible that a business may not be required to obtain a registration or license with its state and yet still fall under the federal definition of an MSB. If your business cashes checks and is not required to register or obtain a license at the state level, do not presume that it does not fall within the definition of MSB due to check cashing at the federal level.
Generally, an entity engaged in the business of check cashing:
- Determines which checks to cash for customers;
- Clears checks through their own bank accounts;
- Bears the risk of loss if checks do not clear;
- Pays for the cash that is provided to customers;
- Maintains a customer service relationship with customers wishing to cash checks; and,
- Charges a fee.
If the business cashes one or more checks totaling an amount over $1,000 per person, per day, then it meets the MSB definition of check casher found at 31 CFR 103.11 (uu)(2). As a check casher, that business is required to register with FinCEN pursuant to 31 CFR 103.41, and to comply with applicable BSA reporting and recordkeeping requirements, and the requirement to implement an anti-money laundering program.