Check Cashers Scramble to Comply

Check Cashers Scramble to Comply

October 05, 2017

The latest Thomson Reuters Anti-Money Laundering Insights Report reveals that new AML regulation is overwhelming the check cashing and money service business industry. While most check cashers fear compliance, only 62% of AML professionals are confident that their organizations can meet new regulations that will go into effect under FinCEN in 2018.

Current Compliance Goals

Know Your Customer (KYC) guidelines are designed to help check cashers and financial institutions identify financial criminals. KYC hinges on gathering accurate data for every new customer that enters your check cashing business. Since money launderers and criminals typically try to disguise their true identity, they often use accounts opened by associates. This type of behavior makes identifying and tracking criminals a challenge.

Even with these barriers, 89% of organizations can accurately identify ultimate beneficial ownership (UBO) information. About 58% of these organizations still note that the inability to verify UBO data is their greatest operational hurdle. In order to collect and verify adequate data, AML experts are hoping to improve data management, increase data quality, invest in new technology solutions, automate their processes, and train their employees.

Filing Suspicious Activity Reports (SARs) is a key part of any compliance program. Out of all organizations filing reports, roughly three quarters of them have no idea whether their reports are false negatives or false positives. Without this information, they can’t fully understand the successes and failures of their compliance programs. The lack of communication outside of regulatory rules is partly responsible for the fear of check cashers over noncompliance.

Machine Learning and Check Cashing Compliance

Good data is the key to increased compliance. Gathering data on check cashing customers is no small task. Everything from personal identity to transactional details must be recorded, checked against massive databases, reported on, and stored for future reference. Check cashers must rely on POS technology, systems automation, and strict check cashing processes to gather all necessary data points.

Once the data is collected, what do you do with it? BSA requirements govern record keeping and reporting. Outside of these obligations, the data continues to pile up for your business. Machine learning allows compliance professionals to analyze data and learn from every customer interaction. In this situation, the computer continues to learn how to detect anomalies in the data and continues to improve its accuracy in identifying fraud. Since criminals are always inventing new workarounds, it can be difficult (impossible) for humans to keep up. Machine learning helps check cashers stay ahead of the criminals.

Check Cashing Regulation

Check cashing regulation is also working to stay ahead of criminal activity. The Financial Crimes Enforcement Network (FinCEN) is the bureau of the U.S. Department of the Treasury responsible for combatting financial crime. FinCEN works to protect the financial system from illicit activity. According to their website, the bureau “combat[s] money laundering and promotes national security through the collection, analysis, and dissemination of financial intelligence and strategic use of financial authorities.”

All licensed money service businesses and check cashers must register with FinCEN in order to operate legally in their area. Unlicensed check cashers who cash less than $1,000 per day per customer are not required by law to register. It is still in their best interest, however, to remain compliant and reduce their risk for fraud.

The Currency and Financial Transactions Reporting Act of 1970 gives FinCEN the power to act in a regulatory function. The USA PATRIOT Act of 2001 and the Bank Secrecy Act further amend FinCEN’s role into the regulatory authority it is today. Check cashers rely on FinCEN to hand down regulations and compliance guidelines. When FinCEN issues a new order, check cashers often scramble to comply in time. In some cases, entire business processes need to be reworked in order to meet new requirements.

Part of the value NCC provides to their clients is the ability to stay ahead of the curve when it comes to new regulation. NCC’s experts stay up to date on all current and pending regulations. When the time comes to implement new regulation, NCC is there to ensure a smooth transition.

NCC’s Check Cashing Services

NCC offers a variety of banking and logistics services for check cashers. For starters, NCC offers real check cashing business bank accounts. Every account is reliably backed by an entire network of check cashing friendly banks. This means that even if one bank decides to engage in derisking, there is another bank ready to accept that account. This model does not exist anywhere else in the check cashing industry.

In addition to real bank accounts, NCC offers a team of MSB compliance experts. This team will support you in the development of a robust and effective compliance program. NCC tracks trends and regulatory chances for you. When the time comes, NCC rolls out new technology and protocols to keep you compliant and always operating within the scope of the law. The entire support team at NCC is available 24/7 to assist you whenever you may need it. When surprises and hurdles arise, NCC works tirelessly to keep your business up and running.

NCC offers advanced technology, including POS systems, to support your compliance program. As discussed above, effective use of technology is your best chance to catch financial crime before it enters your business. These systems also streamline your business operations and reduce human error. NCC trains their clients on the use of systems and will help you develop check cashing processes and business procedures.

After a bank account and a compliance program, cash logistics is the most important part of your check cashing business. NCC offers armored cash delivery in select markets across the United States and now nationwide cash logistics via the USPS. This means that any check cashing outlet can send and receive cash to and from their operating account or financial institution. The nationwide service is made possible through a partnership with TransGuardian and Rapid Armour.

Extended deposit times and rapid rotation of your working capital are additional reasons that check cashers choose to work with NCC. As banks continue to shed risk and financial criminals become more savvy, it’s important to have a strong ally for compliance. The efficient systems and support are added bonuses that help your business run smoothly.

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