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Question: We had an individual who came in to open an account who refused to give us any identification. Refused to give us a social security number. Also refused to produce a driver's license. Said he didn't have to produce any of that, that there was no law that said he had to, and he refused to do so. Unfortunately, the new accounts person is fairly new, and caved in to the bullying this man did and opened the account. He proceeded over the past few weeks since the opening to deposit numerous cashiers checks drawn on financial institutions in other states-to the tune of many thousands of dollars. Each time we get one, we have called the out-of-state banks to make sure checks were good. He is now taking out thousands at a time-not enough to fill out a CTR, but enough to make us nervous. Is there now anything we can do about it?
Answer: There are not only things you can do about it, but definitely things you should do.
First, let's look at the refusal to provide identification. The Treasury Department is now putting together "Know Your Customer" rules that will become part of your compliance requirements. If, after they are issued, you open an account with no identification, you will be in violation. The requirement for ID should already be a part of your new accounts procedure.
Secondly, the attitude of your customer tells me you could have a real problem with him. Regulation CC now allows you to put an extended hold even on cashier's checks. If your disclosure has that information in it, you could have been exercising your right. Starting to do it now could create a problem for you. On the other hand, calling the out-of-state financial institutions to see if the checks are good makes handling this gentleman's account pretty expensive.
Lastly, as a matter of good business practices, you should think about closing his account. The law does give you the right to choose your depositors.
As there is a good balance in the account, you'll want to give him ten business days notice to find other banking arrangements. Send two letters to him-one certified, one regular mail. Give as the ONLY reason that you "do not choose to service his account." Accept no check deposits after you send the letters (and tell him that in the letter), and if he hasn't closed the account in ten days, close it and send him a cashier's check for the balance. We've covered account closing in previous issues-in detail on Training Page 20. You might want to review that with your new accounts person.
In Volume V, Number 10, we addressed the problem of opening an account with no identification. Theresa Furnas from the Bank of Elk River, Minnesota, called (and FAXed us the statute) to let us know that in her state it is a law that the social security number must be provided, along with other identification in order to open a transaction account at a financial institution. We'd be interested to know of any other states with the same type of statute.
Copyright © 1995 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 5, No. 10, 7/95
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