A check casher is a business that gives customers cash, or cash combined with other monetary instruments, in exchange for checks. In the United States the term has a specific regulatory meaning: under the Bank Secrecy Act rules administered by FinCEN, a check casher is one of the categories of money services business (MSB), covering a person that accepts checks or other monetary instruments in return for currency in an amount greater than $1,000 for any person on any day, in one or more transactions.
Check cashers serve customers who are paid by check but have no bank account, or who need cash immediately rather than waiting for a deposited check to clear. Many operate storefronts that also sell money orders, prepaid cards and bill payment, and some act as agents for remittance companies.
Federal definition and exclusions
The federal definition appears in FinCEN's regulations at 31 CFR 1010.100(ff). The $1,000 threshold is applied per person per day, so a business that occasionally cashes small checks may fall outside the category, while a business that regularly cashes payroll or government checks above that level falls within it. The rules exclude, among others, a business that only accepts checks as payment for goods or services other than check cashing, such as a grocery store accepting a check for groceries, and a person selling prepaid access in exchange for a check. Banks are excluded from the MSB definitions generally.
Federal obligations of a check casher
A check casher that meets the definition must:
- Register with FinCEN within 180 days of beginning operations and renew every two years, as described under FinCEN registration, and keep a list of any agents.
- Maintain a written, risk-based AML program with a compliance officer, training and an independent AML review, as required of MSBs under the Bank Secrecy Act.
- File a currency transaction report (CTR) for cash transactions over $10,000 in a business day, including multiple transactions by or for the same person that add up to more than that amount.
- Watch for structuring, in which customers split checks to stay under reporting or identification thresholds.
One notable difference from other MSB types is that the mandatory suspicious activity report rule for MSBs does not cover businesses that only cash checks, although they may file voluntarily and must still meet their other obligations, including sanctions compliance with OFAC. A check casher that also sells money orders or transmits funds takes on the obligations of those activities, including SAR filing.
State licensing
Federal registration is not a license, and it does not authorize a business to operate. Most states regulate check cashing separately, typically through a check cashing or check casher license issued by the state banking or financial regulator, sometimes with caps on the fees that may be charged, bonding requirements, posted fee schedules and location-by-location licensing. Rules and fee limits vary widely, and some states fold check cashing into broader money services statutes.
A check cashing license does not cover money transmission. A business that wants to send money on customers' behalf needs a money transmitter license in each relevant state, or must act as an authorized delegate of a licensed principal MSB. Federal MSB registration and the state check-cashing license are therefore two separate requirements, and neither one substitutes for money transmission licensing.
Risks and industry issues
Check cashers handle large volumes of cash, which brings robbery and cash-management risk as well as money laundering risk. Typical fraud risks include counterfeit and altered checks, stolen government benefit checks, and checks drawn on closed accounts; because the business pays out cash before the check clears, it bears the loss if the check is returned. Banks have historically been cautious about serving check cashers and other MSBs, so access to an MSB bank account can be difficult, a problem often described as de-risking.
The industry is also the subject of consumer-protection debate. Supporters say check cashers provide convenient services to people poorly served by banks; critics point to fees that can amount to a meaningful percentage of a paycheck, particularly for low-income customers. Growth in direct deposit, payroll cards and mobile check deposit through remote deposit capture has reduced demand in some segments. For FinCEN's wider role, see the FinCEN regulator profile.