The Trouble with Cash

If you run a business that performs a lot of large cash transactions, you may be running into more hassles at your bank. Banks and other financial institutions trying to abide by tighter, post-9/11 anti–money-laundering regulations are asking more of their customers. Difficulties in complying with these stiffer statutes have even caused some banks to sever relationships with certain types of commercial customers, including check-cashing businesses and money transmitters.

These types of businesses, called money-services businesses (MSBs), are considered targets for money launderers, because they have a large volume of transaction activity. Most of them easily surpass the minimum volume that defines an MSB: conducting more than $1,000 in transactions with the same person in one day.

We’ve definitely had to invest more money into people and systems.

However, this low threshold means that some businesses find themselves lumped into the MSB category unexpectedly, such as convenience stores, bars, and grocery stores that cash checks or sell money orders and travelers checks.

“We have some clients who own bars,” says Mark Novitzki, president and CEO of Premier Bank, based in Maplewood. “Some of them are the typical biker bars, where people go after work and cash their paychecks. These bars are now considered MSBs. That’s where the rules changed quite a bit.

“I think we’re frustrating our customers by saying, ‘You’re now classified as a money services business, and you’ve got to do X, Y and Z,’” Novitzki explains. “That frustrates their relationship with us when they’re thinking, ‘Is it the bank’s responsibility to tell me how to run my business or how to cash checks?’ A lot of these regulations were always there, but since September 11, the government is enforcing them with more enthusiasm, and the banks are paying much more attention to them.”