Cash Services Cos. Hindered by Money Launderers

Federal regulators expressed concerns Wednesday over some check cashers, money transmitters and others being cut off from banking services and said they hope to soon issue provisions to address the problem.

Some banks are closing the accounts of some of these "money-services" businesses out of fear they might run afoul of regulations aimed at catching money-launderers and terrorist financiers. Banks as well as money-services businesses have asked federal regulators for help.

"Money-services businesses (search) are losing access to banking services as a result of concerns about regulatory scrutiny, the risks presented by money-services business accounts and the costs and burdens associated with maintaining such accounts," the banking authorities acknowledged in a joint statement Wednesday.

The statement was issued by the Federal Reserve (search), Federal Deposit Insurance Corp. (search), the Financial Crimes Enforcement Network (search), the Office of the Comptroller of the Currency (search), the Office of Thrift Supervision (search) and the National Credit Union Administration (search).

Regulatory guidance will be issued shortly to address the problem, the statement said. That guidance could come at the end of April, an official from one of the regulatory authorities said.

"We anxiously await their announced federal guidance. This will allow bankers to serve the various communities that have been harmed by the confusion and ambiguity that previously surrounded all money-services business accounts," said John Byrne, director of the American Bankers Association's (search) center for regulatory compliance.

Federal authorities don't expect banking institutions "to serve as the de facto regulator of the money-services business industry," the joint statement said. The authorities said a decision on whether to maintain or accept a money-services business account should be based on a bank's "assessment of risks associated with the particular account and its capacity to manage those risks."