The Justice Department officially ended Operation Choke Point in August 2017. The program was originally designed and created by President Obama in 2012 to cut off banking access for legal businesses deemed “risky.” Many of these risky businesses (including check cashers) are applauding Trump’s firm removal of the program as a part of his promise to roll-back regulation. How will this affect the check cashing industry and check cashing friendly banks in the US? When it comes to banking, a lot of damage is already done.
The current check cashing banking climate is unlikely to change drastically. Banks, however, are likely to catch a break in regulatory pressure. The withdrawal of the elevated risk classification by the FDIC is supported by the Department of Justice. As a result, all current bank investigations related to cybercrime and tied to Operation Choke Point are suspended indefinitely.
Hopefully this ease in pressure will encourage them to bank check cashing businesses. As banks themselves move into the business of check cashing, it is uncertain how they will handle check cashing accounts moving forward. While we can’t predict exactly how this change will affect check cashers, we know that the Trump administration plans to cut additional regulation. The one certainty is that there will be additional change.
Check cashers should take steps to become more agile and able to respond to shifting regulation in a timely manner. Savvy check cashers will also embrace new technology to reduce cost while improving accuracy in their compliance programs. Regular ongoing audits can help your check cashing business assess risk and readiness for regulatory change. Any further regulatory changes will likely only strengthen AML requirements as terrorist-financing remains a threat.
The now defunct Operation Choke Point fueled rampant derisking across the check cashing industry. Essentially, banks decided to terminate banking access of existing check cashing clients and refuse to open accounts for new check cashing clients based on the perceived risk. This perception was a direct result of the list of “risky businesses” published by the Financial Crimes Enforcement Network (FinCEN) as a part of Operation Choke Point.
Derisking is one of the main reasons that it’s so difficult to find check cashing friendly banks in the US. If you are a check casher, then you know that finding and maintaining a reliable bank account weighs heavily on your mind. Without one, your business can’t operate. When banks terminate accounts without warning, check cashers are left scrambling to keep their businesses open so that they can continue to serve their customers.
NCC client, Katherine, found this out the hard way. Her check cashing business, Loch Raven Check Cashing, is located in Towson, MD. After 7 years in business, she received a termination letter from her bank just before Thanksgiving. Katherine was shocked to learn that they were shutting down all check cashing bank accounts without explanation or adequate notice. Katherine approached a dozen local banks and credit unions to open a new account with no luck.
Finally, late one night she entered “msb bank account” into her Google search box and found NCC among the results. She remembers calling NCC around 11pm at night and being shocked that they answered. Katherine notes that her bank termination was extremely stressful due to its timing just before the holidays. Her clients are primarily families with whom she has long standing relationships. These families would be relying on her services to finance the expensive holiday season.
She recalls that when she called the bank, the representatives didn’t know about the letter and seemed cold. Katherine couldn’t believe that they would effectively close a business right before the holidays and then not provide an explanation. Unfortunately, Katherine’s situation is not unique. So many check cashers fall victim to derisking and most are not prepared.
Luckily for Katherine, the team at NCC was able to step in and help her solve the problem. NCC helped Katherine get her ducks all in a row in order to secure a new check cashing bank account. The experts at NCC moved so quickly that Katherine never had to shut down and was able to serve her clients the entire holiday season and beyond. While derisking might be on the decline thanks to the termination of Operation Choke Point, plenty of other dangerous banking trends are waiting on the horizon.
Big banks are now entering the check cashing game by offering to cash checks for a fee to non customers. Many are balking at the fees, mainly because the banks already make so much money through arbitrary fees. Why do they need to add more fee-based services? Banks say that the fee will help control crowds at branches, protecting their account-holding customers. This, of course, is not entirely based on reality as bank branches are seeing all time lows for foot traffic.
Artificial intelligence and technology are also making their mark on the banking industry. Consumers are accustomed to a certain level of customization in their digital worlds. Facebook customizes your Newsfeed based on stories you are likely to enjoy and Google predicts where you need to go without you ever asking. Why then, can’t your bank predict your future financial needs? They are about to be able to through machine learning. By feeding a computer data, banks can train a system to predict which financial products you need before you even request them.
This technology is also improving accuracy in compliance programs for check cashers. A computer can comb through mountains of data to find the needle in the haystack, so to speak. Technology can help check cashers catch red flags before they become full blown financial fraud. This boost in data-processing capabilities strengthens your compliance program and allows you to focus on the human element of the check cashing process.
In addition to a check cashing friendly bank, you also need supported banking services. Your bank account is the heart of your operations and the strategic services are the major arteries, helping you pump cash throughout the business. Since check cashing relies on a flow of cash, extended deposit times, rapid deposit turnaround, and armored cash logistics are vital for circulating funds.
NCC supports your entire business with a comprehensive lineup of check cashing services in addition to real check cashing business bank accounts. Call us today to learn how we can help your business secure a reliable check cashing bank account while strengthening your compliance.