Laundering laws, terror policy hurt check-cashers

The Baltimore Sun reported recently that some national and regional banks are dropping as check-cashing operations and other money-service businesses as customers over concerns that such firms aren't following federal guidelines meant to thwart money laundering and terrorist financing. Without banking services, a handful of money services businesses have closed in Maryland, according to the state Department of Labor, Licensing and Regulation. Those businesses often operate in low-income neighborhoods where residents rely on them to cash paychecks and transfer money to families in other countries. Regulators fear those residents might be forced to turn to loan sharks and other illegal means for their banking needs, should more financial institutions follow suit.

Nationally, check-cashing and related money service businesses cash more than 180 million checks a year with a total value of more than $60 billion, generating almost $1.5 billion in fee revenues, according to the Financial Service Centers of America, a trade group.

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