Commerical Check Cashiers, MSBs (Money Service Business)

COMMERCIAL CHECK CASHERS AN MONEY SERVICE BUSINESSES

INTRODUCTION

New businesses are introduced to the market every year . One such business that has gained much popularity lately is that of the check cashing and money services businesses . These newcomers offer the service of cashing checks or making monetary transactions quickly for individuals who cannot or prefer not to use a traditional bank Unfortunately , along with this legitimate business has come an illegitimate consequence - money-laundering . To minimize this illegal activity , a system of risk analysis and compliance has been put into place

with the hopes that these businesses will not be adversely affected by the recent negative actions of a few

DEFINITION OF COMMERCIAL CHECK CASHERS AND

MONEY SERVICE BUSINESSES

A commercial check casher (CCC ) is defined by the Civil Code of California as A person or entity that for compensation engages , in whole or in part , in the business of cashing checks , warrants , drafts money s or other commercial serving the same purpose (Check Casher Business , 2006 . It does not include any retailer that might cash checks for a flat fee , such as a grocery story or convenience store . A money service business (MSB ) is defined as a financial institution under the Bank Secrecy Act (BSA ) that offers one of more of the following : money s , traveler 's checks , check-cashing , currency dealing or exchange , or stored value .The business must conduct more than 1000 in activity with the same person on the same day in to qualify as an MSB (Burt , 2005 . While an MSB is an institution of finance , it is not a bank

RISKS OF CCBs and MSBs

Legitimate Users of CCBs and MSBs

Every business has risk and therefore undertakes risk identification and risk management studies frequently . However , CCBs and MSBs would not exist at all if they did not fill a legitimate need in the industry . A CCB provides a check cashing service to millions of low and middle-income people . Because a risk exists that the checks they cash may be returned unpaid , the CCB generally charges a fee of its customers . They may also limit their check cashing services to only paychecks issued by businesses or the government . If the CCB does cash a personal check , it usually charges a higher fee because the risk is higher . Twenty-five states regulate these fees , and thirty do not (Caskey , 2002

The Office of the Comptroller of the Currency (OCC ) is an agency that oversees national banks and financial institutions . In 1998 , it conducted a survey of CCB users to create a type of demographic pro The OCC sampled households in Chicago , Los Angeles , New York City and found that the primary reason that individuals used CCBs was because they did not have a bank of their own . Among this group , the use of CCBs was 68 .4 compared to the 15 .6 of individuals who did have a regular bank . Most of these individual have little or no savings , rent their homes and have only a...