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"Yes, That Check Will Clear," Violating the USAPA?
by John Burnett, BOL Guru
Guru BIOS
Question: Will telling someone that a check will or will not clear violate the USA PATRIOT Act? Some larger banks are telling me it will and won't help us help our customers.
Answer: Most controversy on the question of verifying checks has arisen around the privacy provisions of the Gramm-Leach-Bliley Act, rather than the Patriot Act. But it makes no difference.
Neither of these laws prevents or makes more difficult the answering of the simple question, "Will a check for $x.xx on account xxxxxxx clear?" Regulators have offered that opinion several times with regard to Regulation P (Privacy of consumer financial information).
The sharing provisions of USAPA have absolutely no effect on banks' ability to verify checks.
Check verification only becomes a problem for banks if the process is used to obtain information from the bank that the caller is not entitled to. The caller is always entitled to know whether a check is good. But some callers have used nefarious methods to determine the balance in a person's account, through the check verification route.
So banks need to satisfy themselves the caller is actually holding a check on the account in question.
First published on BankersOnline.com 4/4/05
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