Why must identification be provided when purchasing a money order?
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?) ,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 ,000 rule
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