How To Open A Bank For Your Cheque Cashing Business?

A cheque cashing business is classified as a money service business (MSB) in Canada. Such businesses must register cautiously and follow all FINTRAC compliance requirements.

Opening a bank account for your cheque cashing business also requires following different rules. Let’s talk about this in more detail.

Why Is Opening A Bank Account For A Cheque Cashing Business Heavily Regulated?

A cheque cashing business has to maintain FINTRAC compliance when opening a bank account because of:

Regulatory Pressure

All Canadian Banks face constant scrutiny by regulations under the Proceeds of Crime And Terrorist Financing Act (PCMLTFA). They have to implement additional measures when accepting applications for opening a bank account for cheque cashing MSBs.

If your cheque cashing business is non-compliant with the PCMLTFA, your bank can face challenges such as:

Fines
Credibility damage
Bank license revocation

That’s why banks in Canada will perform thorough checks before allowing your MSB to open an account.

Perceived High Risk

Cheque cashing MSBs are cash-intensive businesses with clients who may not have proper financial footprints. These factors lead to these businesses being grouped under high-risk companies.

For Canadian banks, your business is automatically at risk of:

Money laundering
Fraud
Other financial crimes

To open a bank account, you must prove your cheque cashing business doesn’t pose any risk to the relevant bank. One way to prove your credibility is by ensuring you have a FINTRAC MSB license.

De-Risking Trends

Many banks in Canada avoid taking MSBs such as cheque cashing businesses as their clients. Such a step is part of de-risking strategies by those banks.

No matter how diligently you maintain FINTRAC compliance requirements, you will always be at risk of bank rejection. Keeping this in mind will prepare you for various outcomes when opening a bank account for your cheque cashing business.

Requirements To Open A Business Bank Account In Canada

Let’s look at the key requirements to open a business bank account in Canada:

1. FINTRAC MSB License Status

All cheque cashing businesses in Canada must now get a FINTRAC MSB license to operate legally. If you don’t have an approved status, banks will reject your request to open a bank account.

You must also ensure your registration is not only approved but complete, accurate, and currently valid. An expired FINTRAC MSB license will do you no good in opening a bank account.

2. Comprehensive FINTRAC Compliance Program

Banks expect you to have a detailed, written FINTRAC AML compliance program, including:

Internal policies and procedures
Appointed Compliance Officer
Risk assessment documentation
Staff training records
Independent two-year compliance review reports

The more thorough your AML compliance program is, the easier it will be to open a Canadian bank account.

3. Transparent Mode Of Operation

Banks want to understand your:

Business operation methods
Expected transaction volumes
Sources of startup capital

A well-prepared business plan can go a long way, especially when banks perform background checks on your cheque cashing MSB.

The Complete Process Of Opening A Bank Account For A Cheque Cashing Business

Opening a business bank account for a cheque cashing business involves multiple steps:

Step 1: Pre-Application Preparation

Before you approach a bank, ensure you have assembled all necessary documents, including:

Business registration/incorporation documents
FINTRAC MSB registration confirmation
Detailed AML compliance program
Cheque cashing business plan
Financial projections
Personal identification documents for owners and directors

You must also offer a clear plan on how you report suspicious or large cash transactions.

Step 2: Finding the Right Bank

All banks in Canada are not open to onboarding a cheque cashing business, no matter how clean your record is. You will have to approach multiple banks to ensure you have various backup options in case of rejections.

It is also better to choose banks that have experience in maintaining relations with MSBs, such as:

Small banks
Credit unions
Fintech-focused banks

A Fintech law firm can help you find such institutes to ensure you don’t face much trouble when opening a bank account.

Step 3: Application Submission and Interviews

Once you find a willing institution, you will submit your application package. Be prepared for:

In-depth interviews with compliance officers
Requests for additional documentation
Follow-up questions about your operations, clients, and compliance practices

Transparency and preparedness are crucial at this stage.

Step 4: Due Diligence Review

The bank’s compliance team will conduct a thorough due diligence review, including:

Verifying your compliance program
Checking your FINTRAC MSB license status
Conducting background checks
Assessing your financial crime risk level

This stage can take several weeks or even months, depending on the institution.

Step 5: Account Approval and Onboarding

If your application is approved, the bank will onboard you, but often with conditions such as:

Ongoing monitoring and periodic reviews
Lower transaction limits initially
Higher service fees
Strict reporting obligations

Failure to comply with these conditions can lead to fines or account closure.

Common Reasons Banks Reject Cheque Cashing Business Accounts

Understanding the common reasons for rejection can help you avoid pitfalls:

Incomplete or poor-quality AML compliance programs
Inconsistent information during application
Unregistered MSB or expired license
High-risk owners or directors
Lack of clear business plan or financial transparency
Previous banking issues or account closures

Anything that suggests you may expose the bank to regulatory, financial, or reputational risk can trigger a rejection.

How To Improve Your Chances Of Opening A Bank Account For A Cheque Cashing Business

While no strategy guarantees success, you can significantly improve your chances by:

Investing In A Professional Compliance Program

Work with experienced fintech compliance professionals to build a customized AML/CTF program that not only meets FINTRAC requirements but also exceeds banking expectations.

Building A Relationship

Approach your bank relationship as a partnership, not a transaction. Stay in communication with your account manager, be transparent about your operations, and treat compliance as an ongoing priority.

Seeking Professional Assistance

Many cheque cashing businesses engage legal and compliance professionals to get banked. Experienced counsel like ours can help you:

Prepare your documentation
Coach you for interviews
Identify the best banking partners
Troubleshoot potential issues early

Investing in expert help often means the difference between account approval and repeated rejections.

Be Strategic To Succeed: Consult Renno Co. & Fintech Now For Opening A Bank Account

Securing and keeping a bank account for your cheque cashing business is an important but challenging task. Renno Co. & Fintech specializes in helping MSBs across Canada with opening bank accounts, FINTRAC compliance, and more.