Check Cashing AML Regulation

September 14, 2017

To meet current Know Your Customer (KYC) and Anti-Money Laundering (AML) requirements, check cashers need to leverage cutting edge technology. As the regulatory target continues to shift, compliance programs are struggling to keep pace. Compliant check cashers can stay ahead of the curve by relying on technology to outsmart criminals while keeping immaculate records and sending appropriate reports. The more a check casher can automate their operations and rely on AI, the better a chance they have of staying compliant and keeping fraud out of their business.

Threats to the Check Cashing Industry

Money launderers, criminals, and terrorists are part of the risk that check cashers manage every day. KYC guidelines are designed to help check cashers identify fraudulent behavior before it blossoms into full blown financial crime. A comprehensive check cashing process can help tellers properly vet new customers and identify suspicious patterns of behavior. Technology can aid the process by collecting customer data, checking the data against databases, recording transaction details, and automatically sending the necessary reports.
In addition to illegal activity, check cashers also need to protect against crimes tied to their physical location, such as robbery and theft. Rigorous employee training, a secure location, and safe opening and closing procedures can help minimize physical risks. The cash register should always be visible from the windows, the building should be well lit from the inside out at all times, and large bushes or trees should be trimmed to maintain optimum visibility around the building. Staying on top of these details can minimize risk and help the check casher operate safely and efficiently.
The threats to the check cashing industry extend beyond criminal and physical risk. Evolving regulation keeps check cashers on their toes. The punishment for violating a regulation is not a simple fine, it is the closure of your check cashing business. Unlike big banks, check cashers aren’t typically able to pay a fine and move on from the experience. As a result, staying compliant is critical for check cashing operations. Unfortunately, even the most compliant check cashers are not immune from the threat of derisking. Thanks to Operation Choke Point and the unintended consequences of AML regulation, check cashers continue to battle their reputation as risky industry.
Derisking occurs when a bank shuts down the bank account of a check casher or money service business. In many cases, the account closure is abrupt and the bank does not provide a full explanation. Without a reliable check cashing business bank account, check cashers can’t perform their essential operation of cashing checks. In the face of derisking, check cashers are forced to shut down their businesses.

AML Regulation and Compliance Trends

AML regulation is rooted in the Bank Secrecy Act of 1970. Since their debut, the original BSA regulations have been strengthened by subsequent AML laws. The USA PATRIOT Act, for example, amended AML regulation with an additional focus on terrorist financing. AML guidelines and rules are designed to help financial institutions, law enforcement agencies, and government officials work together to detect, prevent, and prosecute financial crimes.
AML seeks to create a system of detecting suspicious behavior, recording transactions, and reporting on transactions to appropriate regulatory bodies. Transparent and open communication is the cornerstone of AML processes. The Financial Crimes Enforcement Network (FinCEN) directs the associated regulations for check cashers and other money service businesses. FinCEN hands down new compliance standards and regulations in addition to providing information on MSB licensing. Check cashers rely on FinCEN for the latest AML and KYC requirements.
Financial criminals continue to invent new and innovative ways to game the system and move illegal funds through financial institutions undetected. The financial services industry’s best chance at staying ahead of these criminals is through the use of technology and machine learning. Since there is a limit to the accuracy and speed with which humans can process data, computers are being brought into the fold. We can train computers through machine learning to detect anomalies and suspicious patterns in financial transaction data. This knowledge can be used to create algorithms and systems for sifting through large quantities of data with great speed and accuracy.

AML Solutions for Check Cashers

Bank branch closures, higher bank fees, and an increase in the number of low income households are driving demand for check cashing. As check cashers work to meet this demand with alternative financial services, they are met by the challenges outlined above. How can a check casher stay compliant, operate efficiently, and meet the demands of their customers? NCC was founded over 10 years go to answer this exact question. NCC serves the check cashing industry with secure banking, compliance expertise, advanced technology, and 24/7 operational support.
NCC provides their clients with:

  1. Real check cashing business bank accounts
  2. Extended deposit times
  3. Rapid deposit turnaround
  4. Advanced POS technology
  5. Compliance consulting
  6. Flexible and affordable national cash logistics
  7. 24/7 customer service

These services work together to keep your check cashing business up and running in the face of evolving threats and new regulation. NCC’s new capabilities for national cash logistics are causing a stir in the check cashing industry. Check cashers are now able to expand beyond the geographic constraints of their business bank and contracted armored cash courier. NCC forged a partnership with TransGuardian and Rapid Armored to allow check cashers to access cash from their deposited items in 1-3 business days, regardless of where their home bank is located. This means that check cashers can expand into new cities and save time spent driving to and from the bank to collect cash.
NCC’s team of check cashing compliance and AML experts will work with your business to develop and implement a robust compliance program. Their 24/7 customer support ensures that you have an ally, whenever you need one. NCC keeps you ahead of AML regulation for check cashers so that you can focus on running your business and serving your customers.

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