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I took a trip over to the local drugstore to procure a money order. The cashier then asked me for my drivers license so he could scan it in the system. I find this to be an interesting breach of privacy, and I'm curious whether there is a regulation that governs this.

My understanding of a money order is that it is a similar product as a certified check, it is simply a guaranty that the money on the paper is verified to be available?

Are there regulatory reasons for asking for IDs from money orders or is it a store policy rather than a regulation?

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The Bank Secrecy Act of 1970 requires that banks assist the U.S. Gov't in identifying and preventing money laundering. This means they're required to keep records of cash transactions of Negotiable Instruments, and report any such transactions with a daily aggregate limit of a value greater than (or equal to?) $10,000.

Because of this, the business which is issuing the money order is also required to record this transaction to report it to the bank, who then holds the records in case FinCEN wants to review the transactions.

EDITED: Added clarification on the $10,000 rule

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  • Thanks for this, but my transaction was for only $10 USD. Are you thinking that it's easier to blanket-require identification of all transactions for the retailer? – Peter Grace Jun 3 '14 at 15:14
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    BSA requires them to document all cash transactions for negotiable instruments, and are only required report those greater than $10,000. They may choose to report any and all transactions, at their discretion, but they're required to document everything. – Noah Jun 3 '14 at 15:17
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    Isn't the rule that they have to report any transactions from one person that total more than $10,000 per day, as opposed to only individual transactions over $10,000? I know I had to mess with this a few years ago and I thought it went something like that. Otherwise anyone could evade the rules by just saying "I want to make two $5,000 deposits" instead of "one $10,000 deposit". And given that, then they'd have to collect the information on every transaction. Sure, it's unlikely you're going to make 1000 $10 transactions. But where would they set the threshold? Easier to just say "all". – Jay Jun 3 '14 at 20:18
  • @Jay That is correct. I did not clarify that it was a daily aggregate limit of $10,000 – Noah Jun 3 '14 at 20:20
  • Oh, and later thought: If they didn't record the $10, you could come in and do a $10 transaction, then come back an hour later and do a $9,995 transaction. Even the smallest amount could be all it takes to put the total over the top. – Jay Jun 4 '14 at 19:39

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