AUGUST 2005

cashing out
Banks are dropping convenience store clients
BY KEN MARTEN
The war on terror has hit home, as close as the
Chaldean-owned corner convenience store. On April
26, the U.S. Department of Treasury issued new
Patriot Act regulations under the Bank Security Act to
“money services businesses” and the banks that maintain their
accounts. Its aim is to prevent money laundering for terrorists
but one consequence is that many major banks are dropping
convenience stores as clients.
“Money services businesses,” or MSBs, are those that cash
checks, issue and redeem money orders or travelers checks,
offer money transmissions or currency exchange. Many
Chaldean-owned stores throughout metro Detroit provide at
least some of these services. Other businesses that are considered
MSBs are travel agencies, car dealerships, casinos, racetracks
and the U.S. Postal Service.
But rather than comply with the new regulations, which
require banks to ensure their MSB clients understand the
Bank Secrecy Act and report cash transactions, many major
banks are instead opting to close their MSB accounts. In most
cases, store owners receive a letter notifying them that their
account will be closed in a month or so.
THANKS BUT NO THANKS
“I don’t know what’s going on,” said the Chaldean owner of a
convenience store in Detroit, who asked that his name not be
used. “I got the letter in early June. Then I talked to a guy at
the bank, and he said they didn’t want to deal with it anymore.
How are we to do business?
“If you’ve done business with a bank for 20 years,” the owner
36 CHALDEAN NEWS AUGUST 2005
added, “and they suddenly close your
account, what does that say?”
His sentiments echoed those of
other store owners contacted by the
Chaldean News, all of whom received
similar notifications but declined to
make public comments.
Among the new requirements,
MSBs must register with the federal
Financial Crimes Enforcement
Network (FinCEN). Store owners
must file a Suspicious Activity Report
(SAR) whenever they suspect illegal
activity involving a customer who
makes cash-in or cash-out transactions
of at least $2,000 on the same
business day. They must also file a
Currency Transaction Report (CTR),
regardless of suspicion, involving
transactions more than $10,000.
Failure to comply could result in fines
in the thousands of dollars and the
loss of banking services.
Mike George, owner of
Farmington Hills-based George
Enterprises, a food manufacturing and
distribution company, supplies several
store owners who have been forced to
find a new bank.
“Basically, what they’ve done is
said, ‘we don’t want your accounts
anymore,’” George said. “Not that
they’re doing anything illegal, but the
banks are just lazy. It’s a business decision, not prejudice or
anything. Still, businesses are being neglected.”
Department of Treasury statements issued in April
acknowledge the importance of MSBs in places where banking
in a traditional financial institution is often unavailable,
such as rural areas and urban pockets in which the majority of
the population doesn’t speak English. But however cumbersome
the new regulations may be, the nation’s security, say
the feds, can’t be compromised.
FILLING A VOID
“The Treasury (Department) will randomly go in and audit
their stores,” said George Mochmar, president and CEO of
Bank of Michigan in Farmington Hills. “From a bank standpoint,
the Bank Secrecy Act is really the hottest button out
there. Banks run a tremendous risk because it’s so burdensome
to monitor.”
Rather than drop MSB accounts, Bank of Michigan is
accepting new ones. An employee acts as its Bank Secrecy
Act officer but juggles the responsibility with other duties.
Thus, the bank is in the process of hiring a full-time officer.
“If we end up with a lot of these types of accounts, we need
someone internally who has this down cold,” Mochmar said.
“If the examiner even finds a technical error, they can fine the
bank. But we see a real opportunity because they’re a part of
the community who needs and deserves to be served.”
For more information on Bank Secrecy Act compliance, call the
Detroit Computing Center hotline at (800)800-2877, or visit
www.msb.gov.
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FILING A
CTR
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Here is what’s required for
money services businesses
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each time they cash a check
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or write a money order:
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• Verify and record
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customer identification
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• Record customer transaction
information
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• Make a copy of the completed
CTR and keep it
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for five years from the
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date of filing
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• Send original to IRS
Detroit Computing Center,
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Attn: CTR, P.O. Box
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33604, Detroit, MI
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48232-5604
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• CTRs must be filed within
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15 days of the transaction
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ALPHABET
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SOUP
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Abbreviations are common
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in government jargon, and
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there are many associated
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with the BSA (Bank
Secrecy Act):
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AML:
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Anti-Money
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Laundering
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CTR:
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Currency Transaction
Report
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FinCEN:
Financial Crimes Enforcement
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Network
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MSB:
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Money Services
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Business
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SAR:
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Suspicious Activity
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Report
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