Are there laws restricting corporations from making cash withdrawals out of their accounts?

-Kevin

Not aware of any law or regulation against it but you have the risk of not being able to establish the money was withdrawn by an authorized company representative. Cash withdrawals are a handy form of embezzlement.

When a corporaton open an account you obtain a corporate resolution and a copy of corporate by laws which establishes the perameters the signers of the account operate under.

Different combinations of signatures may be required for different dollar amounts, and two or more signatures may be required to cash a check, or not allowed at all. Some corporations have a petty cash account for this purpose.

Always check who's authorized, and for how much on a corporate cash transaction.

The best way is to have the corporation make a check out to the individual (or to CASH, but that's risky), and then the individual can cash the check. In this manner, you have a paper trail and an endorsement in case the question of embezzlement comes up.

Is there a regulation or code that says that financial institutions cannot cash corporate checks written out to cash? Or is that just a policy that the financial institute adopts?

There is no regulation or code that I am aware of that would prohibit cashing any check that is made payable to "Cash."

However, from a control standpoint for the corporation, it is a risky practice because the check becomes a bearer instrument and anyone who has possession is entitled to cash it. It makes for poor controls and a poor audit trail.

Too many checks of this nature, and the corporation will most likely fall in the BSA/AML suspicious activity radar.

Check the standard resolution that your institution uses for the opening of a corporate bank account. It is common for lawyers who draft those resolutions to include language that authorizes any authorized signer to cash checks made payable to the corporation. This is done to avoid the liability claims that may follow if the employee is embezzling the money. If your standard resolution does not contain such language it should - it will provide a good defense to a lawsuit and may help your institution save a lot of legal fees. Of course, you may consider contacting the head of the corporation to verify all is OK if you have suspicions and you have to complete a CTR and/or SAR if the facts so warrant.