	Introduction

Check cashers are nonbank businesses that cash checks for a fee. To provide these services, a check cashing enterprise establishes a business relationship with a bank to clear checks, transfer funds, and open lines of credit for liquidity purposes. The Bank Secrecy Act regulations define check cashers as money services businesses (MSBs). Concern is twofold: (1) widespread termination of account relationships could result in the loss of access to financial services and products by the significant market segment currently served by check cashers and (2) if these businesses are consequently forced "underground" the potential loss of transparency could damage ongoing efforts to safeguard the U.S. financial system. Many states require a license for check cashing enterprises and/or regulate their fee structures. A customer's funds are immediately available while banks may impose check clearing holds. Conversely, it is estimated that 58% of the check cashing industry's clientele are bank account holders. BSA reporting and record keeping requirements apply to both banks and MSBs. 2005 Interagency Guidance

The intent of the interagency guidelines was to clarify the supervisory expectations of banks to remain in compliance with the requirements of the BSA while providing services to check cashers and other MSBs. Banks' relationship with Check Cashers

Check cashers require specific banking services to operate. These financial services include depository accounts, check collection and clearing operations, funds transfer, and access to lines of credit for liquidity purposes.
A check cashing enterprise is a fee-based business that will cash a customer's check without requiring an account relationship. The U.S. check cashing industry underwent a significant expansion in the 1990s. Customers are attracted by the immediate access to funds, availability of service without a bank account, and convenience of extended hours of operation. In general, the industry is viewed as a provider of valuable financial services to an under served market segment.
Check cashers are dependent on access to bank services to operate. Banks provide depository accounts, check collection and clearing operations, funds transfer, and access to lines of credit for liquidity purposes. Banks and check cashers are both subject to Bank Secrecy Act (BSA) regulations. The BSA is an anti-money laundering and anti-terrorism financing statute. Federal regulators have cautioned banks that nonbank money service businesses (an umbrella term that includes check cashing enterprises) can present heightened money laundering risks. Consequently, some banks have discontinued their business relations with check cashers. The discontinuance of services to check cashers brought about complaints to regulators and increased lobbying of Congress. Bank regulators have issued guidance to clarify BSA compliance expectations. Congress held hearings on the concerns of banks and check cashers. This report will be updated as events and legislation warrant.