When Compliance Goes Wrong: Lessons from the Galaxia Case

The latest enforcement action out of New Jersey demonstrates just how high the stakes can be for money service businesses (MSBs) and check cashers who fail to comply with the Bank Secrecy Act (BSA) and related state licensing requirements. On October 15, 2024, Ali Hassanein, the owner of Galaxia International Services Inc., admitted to filing false Currency Transaction Reports (CTRs) covering more than $325 million in transactions and to operating and aiding an unlicensed money transmitting business.

This was not a paperwork oversight or a technical slip. It was a sustained compliance breakdown that highlights the risks every MSB faces if they treat reporting and licensing as optional or burdensome.

What Happened

Galaxia was licensed to provide check cashing services at its East Orange, New Jersey location. Yet transactions also occurred at Jersey City and Kearny branches where the business was not licensed to operate. Despite this, CTRs were filed as if every transaction occurred only in East Orange. Further, reports failed to disclose that a co-conspirator, not identified on the filings, was conducting many of the transactions.

The result: more than $325 million in activity was misreported over a span of nearly four years. The U.S. Attorney’s Office, with support from the IRS and federal task forces, brought charges that carry potential prison terms of up to five years per count, plus fines that can far exceed $250,000. Sentencing is scheduled for April 2025.

The Bigger Picture for MSBs

For MSB owners and compliance officers, this case is a warning shot. Enforcement agencies are paying close attention, and falsifying or omitting details in BSA filings can quickly escalate to criminal prosecution. Even if a business believes it is “covering its bases” by filing reports, inaccuracies in location, conductor identity, or licensing status transform a compliance form into an incriminating document.

Beyond the courtroom, the consequences for an MSB in this position are severe. Loss of licenses, termination of banking relationships, reputational damage, and permanent regulatory scrutiny can all follow an enforcement action. In an industry where trust and credibility are already difficult to maintain, being linked to false filings is often fatal.

Compliance Lessons

The Galaxia case offers clear lessons for MSBs:

• Accuracy matters. It is not enough to file a CTR. The information in every field; who conducted the transaction, where it occurred, and how it was processed, must be truthful.

• Licensing is jurisdiction-specific. An MSB may have one licensed location, but if transactions are occurring elsewhere without the proper license, those activities are unlawful.

• Supervision and training are essential. Compliance cannot be left to chance. Staff must understand not only how to fill out reports, but why the details matter.

• Independent reviews are protection, not a burden. Regular audits by qualified compliance professionals can identify gaps before regulators or prosecutors do.

Where ComplyCheck Fits In

At ComplyCheck, we help MSBs and check cashers avoid these exact pitfalls. Our compliance tools and consulting services are designed to provide a clear, defensible framework for:

• Tracking and verifying transaction locations against licensing status.

• Maintaining a jurisdiction-by-jurisdiction license registry with automated reminders for renewals.

• Validating data fields before CTRs and SARs are filed, ensuring accuracy in every report.

• Providing staff training and ongoing compliance monitoring that scales with transaction volume.

• Offering independent oversight so MSB owners can demonstrate a proactive approach to regulators and banks alike.

The truth is that MSBs cannot afford to cut corners. The cost of compliance may seem high, but the cost of non-compliance; prison time, fines, license revocation, and lost relationships, is much higher.

Final Word

The Galaxia case underscores a hard reality: in the world of money services, compliance failures are business failures. But with the right systems in place, MSBs can operate confidently, meet their obligations, and protect both their reputation and their bottom line.

If you operate a check cashing business or MSB and want to avoid becoming the next headline, now is the time to strengthen your compliance program. Contact ComplyCheck today to learn how we can help you build the policies, procedures, and monitoring you need to stay safe.