Click to return to BOL home page



April 22
A Banker's Guide to Virtual Currency
Andrew Beal

April 24
BSA/AML Compliance: Writing the SAR Narrative
Ken Golliher

April 29
HSA Basics
Whitney Johnson

April 29
Required Training for Loan Originators
Mary Beth Guard and Jack Holzknecht

May 13
Overdraft Practices in Today's Regulatory Environment
John Burnett

May 14
Reg E Claims - Allocating Liability Correctly
Andy Zavoina



Topic Options
Manage Topic
#55162 - 01/16/03 11:50 PM CLOSING ACCOUNT: w/outstanding checks
Anonymous
Unregistered


I am trying to find the relevant law concerning closing a checking account before all outstanding checks have cleared. Believe it or not,the Board of Directors of a social club of which I am a former member,have proposed doing this and is asking members who are in possession of any unpaid checks to hold them while funds are transferred to another bank.

These folks are stoopid.

Many thanks,
Sylvia


Edited by mbguard (01/23/03 04:42 PM)

Top
General Discussion
#55163 - 01/17/03 09:27 AM Re: Closing a checking account w/outstanding checks
John Burnett Online
10K Club

Registered: 10/27/00
Posts: 29448
Loc: Cape Cod
Sylvia, the only law that I can think of is whatever state law there is concerning issuing checks on closed accounts or NSF balances. Done with knowledge and intent, it's a form of theft or fraud.

If the club is doing this for other reasons -- more convenient to have the account at a different bank; problems with the account; whatever . . . if the club intends to cover their outstanding checks by issuing new ones there's no harm here. By asking members to hold on to any checks they might have, they're trying to make the transition smooth. Once the new account is established, they'll probably ask members to bring the old checks in for a "swap meet."

It may be clumsy. But I don't think it's "stoopid."
_________________________
John S Burnett
BankersOnline .com

Top
#55164 - 01/17/03 11:05 AM Re: Closing a checking account w/outstanding check
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 16699
Loc: Another trip around the sun
When Mega Bank bought the bank our firm used, we moved our account. We wrote letters to all holders of outstanding checks giving them the date the account would be closed and asking them to negotiate their checks immediately. Most called back asking us to replace the original check, saying it was lost. We did, with a check drawn on the new account. Then, we closed the old account a few days after we said we would. (It does make more sense to me to ask them to cash the outstanding checks rather than hold them. Those they hold will have to be reissued.)

As John notes, some states assume fraudulent intent when a check is returned "account closed." How you go about closing an account with outstanding checks is important.
_________________________
We are Boston. We are America. We respond. We endure. We overcome...and we own the finish line. Joe Biden

Top
#55165 - 01/17/03 11:16 AM Re: Closing a checking account w/outstanding check
Don_Narup Offline

Power Poster

Registered: 07/13/01
Posts: 3708
Loc: Las Vegas Nevada
Providing a person balances their account each month as they should, its a simple matter of determining which checks are still outstanding and leaving that amount on deposit.

The account will reach a 0 balance as the remaining checks clear. In the meantime you withdraw any excess amount in the account and open your new account elsewhere.
_________________________
Compliance Analysis and Research - Software for your CRA/HMDA analysis needs

Top
#55166 - 01/17/03 12:56 PM Re: Closing a checking account w/outstanding check
Ken_Pegasus Offline
10K Club

Registered: 08/30/01
Posts: 16699
Loc: Another trip around the sun
Yes, but the questioner indicated she wanted to close the account before the checks cleared.
_________________________
We are Boston. We are America. We respond. We endure. We overcome...and we own the finish line. Joe Biden

Top
#55167 - 01/17/03 07:49 PM Re: Closing a checking account w/outstanding check
Anonymous
Unregistered


Ken,

The account in question is *not* mine;it belongs to a social club whose former treasurer embezzled club funds and forged a check (by her own admission). The organization's finances and records are in shambles and closing a checking account while there are outstanding checks seems irresponsible at best.

Pass those oxygen masks to the club's BOD. ;-))

Thanks for all the replies.

Sylvia

Top
#55168 - 01/18/03 12:49 AM Re: Closing a checking account w/outstanding check
Anonymous
Unregistered


But that won't help if the bank charges a monthly service fee. If you leave just enough in the account and a service fee is charged then the last cheque(s) will bounce, and you can't be sure how long it may take the holders of the outstanding checks to present them.

Top
#55169 - 01/18/03 12:48 PM Re: Closing a checking account w/outstanding check
Don_Narup Offline

Power Poster

Registered: 07/13/01
Posts: 3708
Loc: Las Vegas Nevada
Part of leaving enough in the account to cover outstanding checks would be to include any service charges. As a service club its possible the charges have been waived.

Its a moot point however as the records are in a shambles and apparently there is no idea what is outstanding. In that case. Close it now and have the bank return all checks "Refer to Maker" rather than account closed. With the embezzlement this should not be a problem. Let the holders of any return item contact the organization for a replacement check drawn on a new account which hopefully will be maintained accurately.

_________________________
Compliance Analysis and Research - Software for your CRA/HMDA analysis needs

Top