August 12, 2002
Your April 17, 2002 letter addressed to Paul Fazio, Deputy Superintendent of Banks, inquiring about the licensing requirements for a euro check cashing and conversion service has been referred to me for reply.
In your letter, you describe a service in which you will receive euro checks from individuals who wish to cash these checks in US currency. These clients will send these checks to you and you will in turn, send the checks to a correspondent bank in Europe whereupon, the correspondent bank will convert the funds into US dollars and wire the funds to your business account in New York. You then will issue a check to the client for the converted funds and withhold a small fee for this service. The Department views the scenario that you describe as both a check cashing service and money transmission service. Both of these activities require licensing by the Department.
Under Article 9-A, Section 367.1 of the Banking Law, "no person, partnership, association or corporation shall engage in the business of cashing checks, drafts or money orders for a consideration without first obtaining a license from the superintendent." Under the scenario that you described, you will essentially cash euro checks for individuals for a fee, thus for consideration.
Part 406.1 of the Superintendent's Regulations, outlines three categories of the business of money transmission, the third being "the transmission of money on behalf of the public by any and all means or manner including but not limited to transmissions within this country or to locations abroad by wire, check, draft, facsimile or courier." Under the scenario that you described, you will send the euro checks to a correspondent bank in Europe which will then wire US funds to your account.
Under Banking Law Section 373.1, a check casher cannot engage in the business of money transmission. Consequently, you may not engage in the type of business that you outlined in your letter, even if you obtain both check cashing and money transmission licenses.
I trust the foregoing is responsive to your question. Should you have any further questions, please feel free to contact me directly at (212) 618-6591.
Christine M. Tomczak