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#1748687 - 10/11/12 08:15 PM NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC?
MollyD Offline
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A customer opened a checking account in only her name. I noticed she has a direct deposit to the account referencing another individual. Her employer direct deposit is also going into her account.

We do not have any information on the other individual. Is this a potential OFAC violation or can I assume the originator of the ACH direct deposit reviewed against OFAC?

Other concerns?

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#1748710 - 10/11/12 08:37 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
devsfan Offline
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To begin with I would be less interested in OFAC and would want to know why she is getting someone else's direct deposit and would contact her to find out why and possiblly stop it. Going back to OFAC, does your system filter ACH through OFAC? If so, this would be filtered.

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#1748715 - 10/11/12 08:45 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
rlcarey Online
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I would just contact the customer and tell her that you will return any such future deposits and they need to make other arrangements.
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#1748717 - 10/11/12 08:47 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
Cape Codder Offline
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It's not an OFAC violation unless any of the other names match to the SDN list. What you do have is a customer allowing a non-customer to conduct transactions through your bank. No CIP has been performed on the non-customer, and unless you maintain a unique database for non-customers, don't see how you'd be able to scrub this individual against any OFAC or 314(a) lists. There's probably a nderlying reason why the non-customer doesn't/can't have his/her own account . . . IMO your customer should be told that the transactions must be stopped or the relationship will be closed.
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#1748773 - 10/11/12 10:40 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
WonderWoman Offline
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Curious - how did you discover this? Makes my brain swim how many people do this & I have no idea who ....
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#1748781 - 10/12/12 12:16 AM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
Deputy Dawn Offline
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I just locked an account at the end of today so we can return the ACH direct deposit that will try to post tomorrow.

I discovered the direct deposits for a non-account holder, informed the customer they needed to be redirected or the person needed to be added to the account. Ample time had elapsed and the direct deposits have not ceased. Sent a letter advising they will be returned.

I find them most of the time by reviewing account activity for non-related issue.

Like Wonder Woman, I wonder how many more are out there

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#1748790 - 10/12/12 11:20 AM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
Elwood P. Dowd Offline
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This is the consumer equivalent of a "payable through account." As noted, the issue is that you have no idea who this "ghost" customer is. Deputy Dawn provided a polite template for your actions.

Particularly with a new account, my response would probably not involve advance notice, I would just send the item back.
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#1748863 - 10/12/12 02:29 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
Matt_B Offline
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We've found this issue a few times, usually it's related to people that have levy/garnishment issues, or have caused us losses in the past so can't have an account in their own name. Often they get with a spouse, child or other relation and have the direct deposit set up, then the customer takes out the cash.

When we identify this happening and are sure of what's going on, we block prior to notice and explain the issue to the account holder when someone calls/shows up angry.
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#1749765 - 10/17/12 01:40 AM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
MollyD Offline
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Thanks to all for the help! This was found by chance. We subscribe to Chexsystem. They alerted of an account in her name & TIN closed at another FI because of NSF activity. I reviewed her activity and found two direct deposits with different names in the details.

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#1749774 - 10/17/12 11:06 AM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
Kathleen O. Blanchard Offline

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I have found that branches are often aware of this type of activity and can describe what is going on when BSA trips over it. It might be worth mentioning in training because, aside from the murky reasons for using your customer's account, you have people who have not been vetted via CIP and CDD/EDD using your bank. You want branches to know this is not acceptable and should be reported to BSA.
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#1749813 - 10/17/12 01:27 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
Iowa Girl Offline
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We have numerous accounts that have transactions going thru them and the transactions don't belong to the owner. Why? This is due to the ACH rules. Any ACH that matches either the account number or name can be deposited. Our banking rules state only transactions that belong to the customer can be ran thru. We are finding this to be especially popular with the Non U.S. population. They have one owner on the account but several family members are having their tax returns being deposited into that individuals account by giving the account # only. Until the ACH rules change, how do you stay on top of this?
Then when the non customers name hits the OFAC Suspect Report we have no way of reviewing if they are a match or not.

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#1750096 - 10/17/12 09:11 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
rlcarey Online
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"Any ACH that matches either the account number or name can be deposited."

The important term in this sentence is "can". which is not "must" or "have to". Many banks are now just returning them and have programs to match both name and number.
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#1750136 - 10/18/12 02:47 AM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
John Burnett Offline
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One bank I know of doesn't have a front-end facility to identify name/number mismatches automatically, but it reviews manually each batch of IRS refunds coming in and returns each mismatched entry.
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#1750141 - 10/18/12 09:16 AM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? Iowa Girl
Elwood P. Dowd Offline
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Quote:
Until the ACH rules change,


Actually, they did change. At one time the government ACH rules required that the name on the account conform to the name on the credit. Bankers complained at the impossibility of the task and the requirement was removed. Some irony, huh? wink

Some banks have taken the FinCEN advisory on fraudulent income tax refunds as an instruction to actively look for "mismatches" and they are finding a lot more than they expected.
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#1789820 - 02/27/13 08:11 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
SonnyGirl Offline
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I would like to bring this old post back to life. With the advisory that FinCEN issued yesterday, I sent an email to branches advising them to be on the alert for these situations and to inform me of any that arise. One came up today. Customer had two ACH deposits into their account, for two different individuals, not account owners. Customer came in and withdrew the funds. My question with this is - do we file SAR's? That seems to be the indication from the FinCEN Advisory. For this particular situation, it appears the customer is allowing someone else to have tax refunds sent to their account. How would we know if this could be tax fraud or identity theft simply by ACH tax deposits? We plan to return any others we come across - teller processed withdrawal on this one, so too late. If customer asks how the individual is to receive tax refund, I realize it is not our problem but how would they if it is a legitimate refund? Go back to the tax preparer?

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#1789852 - 02/27/13 08:40 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
WonderWoman Offline
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Can you link to the FinCEN advisory that was issued yesterday?
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#1789859 - 02/27/13 08:43 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
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#1789866 - 02/27/13 08:46 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
WonderWoman Offline
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Thank you Randy! smile
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#1789898 - 02/27/13 09:50 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? SonnyGirl
Elwood P. Dowd Offline
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Quote:
My question with this is - do we file SAR's?


You must file a SAR if you suspect that it is income tax fraud as described in the FinCEN guidance and the appropriate dollar threshold is crossed.


Quote:
If customer asks how the individual is to receive tax refund, I realize it is not our problem but how would they if it is a legitimate refund?


Remember, this person is not your customer; that's the issue. Refer him or her to the IRS' friendly toll free number, 1.800.829.1040. There, they can explain how and why they did not follow the instructions on the form to someone who really does not care. It's a personal problem...
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#1789941 - 02/27/13 11:08 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? MollyD
WonderWoman Offline
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I just got off the phone with our ACH guru ... I guess NACHA is rolling out a pilot program to allow returns, with a specific code, to alert the IRS that the money is being returned because the name didn't match.

I don't have all the info yet - but it sounds promising!
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#1789942 - 02/27/13 11:11 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? Elwood P. Dowd
SonnyGirl Offline
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Thanks, Ken! It's difficult to know if customers are simply allowing family members/friends to have refunds deposited to the customer's account or if true fraud is involved. Obviously, whether to file a SAR is a decision we will have to make.

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#1789943 - 02/27/13 11:13 PM Re: NON-CUSTOMER USING A CUSTOMER ACCOUNT - OFAC? WonderWoman
SonnyGirl Offline
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That's great news, Wonder Woman! Thanks for the info!!

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