A regulatory clampdown in the United States has closed off access points for people trying to quickly cash American checks in Israel.

“There’s a 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.”

Because cashing 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 institution.

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 Tuesday.

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.

The 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 employer.

“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 Tuesday.

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 this way.

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.

As for 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 phone’s camera.

Please LIKE our Facebook page - it makes us stronger