Money Laundering, Terrorism & Financial Institutions
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USA PATRIOT ACT MONITOR NEWS RELEASES

USA PATRIOT Act Monitor: Check Cashers, Money Transmitters
1/8/2003 4:27:03 PM Eastern Standard Time

Check Casher "Greater Than $1,000" Threshold Explained in Treasury Guidance

[MLT prior coverage: pars. 2.5-6, 2.5-8]

Check cashers are, under 31 CFR 103.11(uu)(2), money services businesses (MSBs) "engaged in the business of a check casher (other than a person who does not cash checks in an amount greater than $1,000 in currency or monetary or other instruments for any person on any day in one or more transactions)." Thus, a business that implements a policy that restricts the dollar mount of checks cashed per person per day to under $1,000 is not a check casher under the BSA regulations. Some examples are provided in a released posted today on FinCEN's website (www.fincen.gov/definition_of_check_casher.pdf). No reason for this Guidance on Definition of Check Casher and BSA Requirements (January 2003) is given, but the nonregulatory guidance in the area has been sparse, making this release useful.
Since the definition provides that the business would be a check casher where the combination of currency and monetary instruments provided a customer exceeds $1,000, a business is a check casher if it provides a customer $901 in cash and $100 in money orders. Thus, the business must comply with the registration, recordkeeping, reporting, and anti-money laundering compliance program requirements.
Wire transfers, however, are not monetary or other instruments, and a business that provides $101 in cash and makes a $900 wire transfer in exchange for a $1,001 check is not a check casher for BSA purposes. It is, however, a money transmitter under 31 CFR 103.11(uu)(5). The definition of money transmitter does not contain a minimum dollar threshold. Money transmitters must comply with registration, reporting, recordkeeping, and anti-money laundering program requirements.
To be distinguished from the cumulative effect of monetary instruments in determining the status of a check casher is the situation of filing a currency transaction report where a financial institution cashes a check for $10,001 and provides the customer with $9,001 in cash and a $1,000 money order. A CTR need not be filed because the physical transfer of currency to the customer was under $10,000. CTRs are filed on transactions in currency, which 31 CFR 103.11(ii) defines as--

involving the physical transfer of currency from one person to another. A transaction which is a transfer of funds by means of bank check, bank draft, wire transfer, or other written order, and which does not include the physical transfer of currency, is not a transaction in currency for this purpose.

Check cashers do not have to file suspicious activity reports, but may do so voluntarily in such a situation. Caution should be exercised that the customer's activity does not reflect structuring to avoid currency transaction reporting.


 

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