A regulatory clampdown in the United States has closed off access points for
people trying to quickly cash American checks in Israel.
massive problem with cashing checks,” Isratransfer CEO Doron Seitz said Tuesday.
“There seems to be one place that’s been cashing all these check, and they’ve
been shut down from dealing with American checks.”
American checks through Israeli banks can be costly and take up to several weeks
to process, many Americans turn to money changers, who cash their checks on the
spot using any number of American processors backed by a financial
Only a few US financial institutions have backed those
processors, and a recent increase in pressure to comply with regulations has led
to their shutting down such services.
“The institution that closed down
most of the accounts was under pressure from the regulator,” Jeffrey Sklar,
managing director of the SHC Consulting Group, which advises Israeli money
changers on how to build relationships with US financial institutions, said
According to Sklar, the institution that closed down most of the
accounts was the North Dade Community Development Federal Credit Union, a tiny
credit union in South Florida with only a handful of staff members.
National Credit Union Administration (NCUA), the government agency that
regulates credit unions, said it recently warned the credit union that some of
its practices were out of bounds.
Unlike banks, which serve the general
public, credit unions are limited to serving their members, who typically share
a common bond such as living in the same community or working for the same
“This credit union was offering services outside it’s field of
membership, or FOM, and when we contacted them about it, they began taking steps
to correct that,” NCUA spokesman John Fairbanks told The Jerusalem Post
Cashing checks from abroad may have been one of the services
they cut as a result of the warning. The credit union did not respond to
requests for comment on the issue.
As a result of the decision, people in
Israel (and, likely, other places around the world) found themselves stuck when
they went to cash their American checks.
“It could be a kid studying in
Israel for six months whose grandma sent him a $36 Hanukka check, or anything
like that, and they go to the money changer because it tends to be cheaper,”
Sklar said. He estimated that tens of millions of dollars a year are transferred
Gershon Kayman, a lawyer at Forex Legal Advisors, said forging
new paths to clear up the issue will not be simple.
“Changers are now
scrambling to create new relationships with banks in the US to deposit their
checks, a feat which is quite difficult due to US regulations and the general
shying away by US banks of banking such customers due to the high risk and high
regulation involved,” he said.
Until they do, Americans have several
alternative routes for getting their money, but even some of the traditional
routes are drying up.
“Many Israeli banks also have recently informed
their clients that they are no longer willing to accept overseas checks of other
currencies for deposit,” Kayman said.
He said e-checks, which companies
such as Currency Avenue offer, provide one option for those in a bind, as do
wire-transfer services. Customers can also use debit-like transfers offered by
Seit’s IsraTransfer, but that can take several days to process.
the students studying abroad for a few months who don’t need the cash right
away, many US banks offer smartphone apps that can deposit checks using the
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