While developing its recommendations for im­proving the regulatory system governing check cashing, the Commission considered a number of approaches that included the possibility, even, of total deregulation. That alternative, however, was quickly abandoned in view of the Commission's investigative findings and public hearing testi­mony that confirmed the misuse of check cashing entities by organized crime and other un­scrupulous elements. The Commission felt that, in view of the circumstances revealed by its hearing record, deregulation might promote rather than stifle such law breaking activities as embezzle­ment, money laundering, tax evasion, involuntary or "bust-out" bankruptcies, check kiting and other evils involving certain check cashers that have unfairly blackened the reputation of the entire in­dustry.

Following the example set by State Banking Commissioner Parell in her concluding statement on regulatory reforms, the Commission also re­viewed other alternatives. These included, as Ms. Parell noted, the possibility of partial deregulation or a two-tier regulatory system that would emphasize State Government's concern that check cashers efficiently and honestly serve their large but special constituency-people who must cash government benefit checks or payroll checks but who don't, won't or can't utilize banks or other established financial institutions for this purpose.

The Commission ultimately decided that its cor­rective proposals should be designed to 1) protect this traditional, almost captive, non-banking clientele of the check cashing industry, 2) improve the regulatory muscle of the State, and 3) crimi­nalize certain activities in order to enhance law enforcement efforts against the incursion of the industry by organized crime.

The following recommendations for statutory and regulatory reform of the system governing check cashers are therefore proposed, with one all-important prefacing request: Grant the State Department of Banking sufficient funding to enlarge its inspection and investigation staffs so that, at the very least, a more thorough review of licensing applications can be made and more spot audits of individual check cashing entities can be conducted. The corrective steps proposed by the Commission can be successfully implemented only if the Department is able to monitor the indus­try more closely than has been the practice.

To curtail the insidious impact of organized crime and fiscal swindlers on the industry, the Check Cashing Law should be strengthened by the enactment of a number of new provisions in the New Jersey Code of Criminal Justice. The Commission urges that the following transactions be made criminal offenses:

1. Any cashing of checks for a fee or gratuity by an unlicensed check casher. (This offense should be graded according to the dollar amount of the checks cashed).

2. Cashing of any check made payable to a payee other than a natural person, thereby eliminating any checks made payable to a business, trade name, trade logo, etc.

3. Operating or utilizing a licensed check casher to further any unlawful activity, includ­ing check kiting or other abuses of the float period required by traditional financial institu­tions for the clearance of checks in transit.

4. Any activity by a person or entity, including banks, which facilitates the commission of a criminal act by a licensed or unlicensed check casher.

5. To further strengthen anti-crime controls over the industry, a criminal money laundering statute should be enacted that would also prohibit check cashing transactions which fa­cilitates criminal activity.

1. Prohibit the cashing of any check in a dollar amount exceding a specified limit, subject to exceptions for instruments such as govern­ment, certified and insurance checks.

2. Increase penalties for "fee gouging" and strengthen their enforcement.

1. Increase the Banking Department's fees for investigations from the present $200 per diem for each examiner, depending upon the com­plexity of an inquiry and the size of the entity under scrutiny.

2. Require that all transactions be either photographed (regiscoped) or microfilmed.

3. Require that the check cashing privileges of any customer who presents checks that bounce more than three times within a year, or who presents bad checks totaling more than $3,000 during the same period, be suspended and that such incidents be re­ported in writing to the Department of Bank­ing.

4. Require that licensed check cashers keep books and records, including Currency Trans­action Report (CTRs), for a minimum of five years. Require that copies of CTRs be filed with the N.J. Division of Taxation.

5. Require that receipts be given to customers showing the check cashing fee paid and amount of the transaction.

6. Simplify the licensing procedure, primarily to increase the number of check casher licensees.