BSA FAQs 14 - Is a state-licensed check-cashing business exemptible under the BSA?

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Q:  Is a state-licensed check-cashing business exemptible under the BSA?
 
A:  The CTR exemption regulations do not distinguish between a “licensed” or “non-licensed” business. In determining whether any check-cashing business is eligible for exemption from currency transaction reporting requirements, a depository institution must determine whether the business falls into either of two categories described below: (12/2017)

1. An entity listed on one of the major national stock exchanges, or a subsidiary of an entity listed on those stock exchanges as described in 31 CFR § 1020.315). If a customer falls under one of the categories identified in 31 CFR § 1020.315, the depository institution does not need to determine if the business activity is considered ineligible for exemption as identified in 31 CFR § 1020.315(e)(8). Once the depository institution has determined that the customer qualifies for an exemption based on the above criteria, the depository institution may file a one-time DEP form.

2. A non-listed business, if the criteria of 31 CFR § 1020.315 are met. Determining if a business can be considered a non-listed business depends, in part, on whether the customer is primarily engaged in one or more of the ineligible business activities listed in 31 CFR § 1020.315. If primarily engaged in such ineligible business activities, then the customer cannot be treated as a non-listed business.

a. One of the ineligible business activities listed in 31 CFR § 1020.315 is serving as a financial institution. Under the BSA, the definition of “Financial Institution” includes money services businesses (MSBs) [31 CFR 1010.100(ff)]. A check casher is defined as an MSB if it cashes checks in an amount greater than $1,000 in currency or monetary instruments for any one person in any one day in one or more transactions [31 CFR 1010.100(ff)(2)]. Consequently, if the check casher meets the definition of an MSB, it is considered to be serving as a financial institution. Therefore, if the check casher is defined as an MSB and is primarily engaged (see item b. below) in the business of cashing checks [or other ineligible business activity listed in 31 CFR § 1020.315, then it is ineligible for treatment as an exempt person.

b. If a business engages in multiple business activities (e.g., money transmission in addition to check cashing), it may be treated as a non-listed business so long as no more than 50% of its gross revenues is derived from one or more of the ineligible business activities listed in § 1020.315.

Example 1: A check casher (whether licensed or non-licensed) that cashes checks in an amount less than $1,000 in currency or monetary instruments for any one person on any one day and is not involved in any other ineligible business activity, or derives no more than 50% of its gross revenue from any such business, may be exempted from CTR reporting requirements as a non-listed business (assuming that all other criteria listed in 31 CFR § 1020.315 are met).

Example 2: A check casher (whether licensed or non-licensed) that cashes checks in an amount more than $1,000 in currency or monetary instruments for any one person on any one day and derives more than 50% of its gross revenue from cashing checks (and/or other ineligible business activity) may not be exempted from CTR reporting requirements as a non-listed business because it is serving as a financial institution under the BSA regulations.

 
 
 
ADDITIONAL INFORMATION:
This FAQ was obtained from FinCEN’s website, in the section for Answers to Frequently Asked BSA Questions, which may be found here: 
 

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