We have a business customer that operates a gas station/convenience store. The customer cashes checks for its customers and is required to register as a money services business with FinCEN, which it has. Does this customer also need to register with the State of Illinois as a check casher? If so, where do I look to see if they are already registered?

The principal law in Illinois regulating check cashing performed by non-financial institutions is the Illinois Currency Exchange Act (CEA). However, a money services business (MSB) is not automatically required to register as a currency exchange under the CEA. Based on your stated facts, we think it unlikely that this customer would be required to become licensed as a currency exchange under the CEA, notwithstanding that it is an MSB, as the CEA exempts from its registration requirements a retailer that cashes checks only incidentally to its primary business of “selling tangible personal property.”

For example, the Illinois Supreme Court found that a grocery store was not required to be licensed under the CEA because its check cashing services were incidental to its primary business. In that case, the check cashing services were being provided for its customers’ convenience, they were being advertised as an inducement to bring in customers, a flat fee was being charged for check cashing regardless of the amount of the cashed check, and the services were being performed at a substantial loss to the store. If your customer’s check cashing services also are incidental to its primary business of selling gas and other tangible personal property, it should not be required to obtain a currency exchange license under Illinois law.

Additionally, we do not believe that your MSB customer would be required to register as a money transmitter under the Illinois Transmitters of Money Act, which does not require licensure for check cashing services. That law requires a license if an entity is “selling or issuing payment instruments, transmitting money, or exchanging, for compensation, payment instruments or money of the United States government or a foreign government to or from money of another government.” If your customer is only cashing checks and not providing other services (such as bill payment services), it should not be required to obtain a money transmitter license under Illinois law, either.

For resources related to our guidance, please see:

Currency Exchange Act, 205 ILCS 405/1(b) (“Nothing in this Act shall be held to apply to any person, firm, association, partnership, limited liability company, or corporation who is engaged primarily in the business of . . . selling tangible personal property at retail who, in the course of such business and only as an incident thereto, cashes checks, drafts, money orders or other evidences of money.”)
Heidelberger v. Jewel Companies, Inc., 57 Ill.2d 87, 93 (1974) (“The incidental character of the check-cashing service is established by the advertising and operation of the service as an inducement to customers to shop at Jewel, the convenience aspect of the service insofar as customers are concerned, the method of charging a flat fee irrespective of the amount of the check cashed, the fact that the service is operated at a substantial loss and the general procedures followed by Jewel in conducting the service.”)
Transmitters of Money Act, 205 ILCS 657/10 (“No person may engage in this State in the business of selling or issuing payment instruments, transmitting money, or exchanging, for compensation, payment instruments or money of the United States government or a foreign government to or from money of another government without first obtaining a license under this Act. Separate licenses shall not be required, however, for persons acting as authorized sellers of licensees under this Act.”)
Transmitters of Money Act, 205 ILCS 657/5 (“‘Transmitting money’ means the transmission of money by any means, including transmissions to or from locations within the United States or to and from locations outside of the United States by payment instrument, facsimile or electronic transfer, or otherwise, and includes bill payment services.”)
People v. B. Coleman Corp., 57 Ill.App.3d 655 (1978) (A predecessor law to the Transmitters of Money Act “regulates the sale or issuance of said checks, drafts, money orders or other instruments for the transmission or payment of money. . . . The cashing of checks as a separate service is not referred to as being among the authorized activities of a licensee under [the Act].”)