April 28, 2019

The Greatest Threat To Your Check Cashing Business

Stop and think for a minute of what presents the greatest threat to your check cashing business……..

No really—–Stop Reading —– Think —— and then Continue to Read On.

So now that you’ve pondered for a moment, perhaps you thought competition such as a nearby Walmart is the greatest threat. Or you may be most worried about the declining number of checks being issued each year. Maybe it’s the hostile environment and media attacks on check cashing services that we constantly face. The threat of technology siphoning off future customers might be at the top of your threat list.

You might also have thought of the threat that could result in you having to close your doors within the next 30 days or sooner. That threat, the greatest threat, is the loss of your banking relationship. Some causes of the loss of a bank relationship are outside of your ability to control. The bank may have had a change in leadership that no longer wants to bank MSBs. They may have been subjected to a bank examination that found the oversight of their MSB accounts inadequate and they decide to close the MSB accounts rather than go through the time and expense to fix their inadequacies. But another cause for losing a bank relationship is well within your control and that is the quality of your compliance program.


The calls received over the ten years that I’ve been providing compliance services to check cashers and other MSBs usually start with the business owner explaining that they just got a letter from their bank advising that their business’s account will be closed in a couple of weeks. The story begins that the bank requested documents, including the policies and procedures compliance manual and the last independent review. The owner sent them what they had and the bank told them that the manual and/or the independent review were not sufficient. Sometimes the owner might resubmit after doctoring the manual or having their accountant write a letter that they did a review stating everything is okay. The story ends with their efforts being too little, too late and the bank closing their account.

More times than not, I learn that the business is using a principal MSB’s manual (a money transmitter or money order processor etc.) as their own or they might have gotten a manual template off the internet but never bothered to customize it. Sometimes they self-devised a manual that consists of only a few pages. The Independent Review is often just a checklist with ‘YES’ or ‘NO’ boxes marked indicating that everything is being done well. There are no notes indicating how the review was conducted, how the reviewer came to determine the answers to such questions as “Have CTRs been filed for all transactions requiring one” or “Are IDs being taken per policy”, etc. And finally, there is a signature of the person conducting the review with no indication of who that person is or what qualifications they have to conduct the review. I have seen where the reviewer is the compliance office themselves (not allowed by regulation), the spouse or other relative of the owner (with no knowledge or qualifications sufficient to conduct a review), or the off-duty police officer who provides security for the business, among others with similar dubious qualifications.

To add insult to injury, not only did the deficient compliance program result in the loss of the bank relationship, it now needs to be fixed prior to applying for a new account, thereby adding another hurdle as the clock ticks away the time before your current account closes.


As noted previously, some causes of an account closure are beyond your control. Regardless, if you have a well developed and well executed compliance program, you are prepared to respond. This would mean that your compliance manual is comprehensive and specific to your business operations, that you have documented required training and that you have a recent independent review conducted by a qualified person with methodology that will be acceptable to banks. If your bank requests documents, you can promptly send them what they request and feel confident it will be acceptable. And if you have the misfortune of receiving a letter that your account is being closed, you can immediately get to work on applying for a new account.


The first best practice to maintain your bank relationship is, as detailed above, to develop and maintain a strong compliance program. Understand that banks are under pressure from their regulators regarding their oversight of MSB accounts and showing your bank that you’re serious about your compliance obligations is essential. It might also be helpful to be proactive and not wait for your bank to request documents from you. Many banks request documents regularly from their MSB clients but others do not. Do not become complacent if your bank has not asked for any documents for the last several years or even perhaps since you opened your account. In my opinion, this is actually cause for concern. Try to find a contact in the bank’s compliance department and submit your latest independent review, latest compliance manual revision, MSB renewal, or state license renewal, without being asked. Sometimes its difficult to get to the bank’s compliance department, and if so, asked your branch manager to submit the documents for you.

If you get a request from your bank to submit documents, do so promptly and completely. If you don’t have all the documents requested in order or are not sure if what you have is sufficient, immediately seek qualified assistance. Often, you only get one chance to respond so make sure you get it right. Don’t be complacent by sending them what you have and thinking that the branch manager, with whom you have a great relationship, will be able to smooth things out. If you think that, you’re wrong. And please, please, please, don’t push the letter aside, then seek help two days before the documents are due. Contacting a qualified professional promptly is your best chance of avoiding problems. Better yet, get your compliance program in order now, keep it current and avoid panic mode all together. By doing so, you will reduce the risk of the greatest threat to your business.