I'm auditing my Bank's Deposit Operations area and am confused about whether Bank personnel are handling stop-pays correctly. Here's what I'm finding:

A. The stop-pays placed on ACH trans (having no item #) are only "stopped" once, then removed (e.g., allowing the next month's insurance premium to stick)...this seems correct.

B. The checks that are stopped are also removed after the first time presented EVEN IF THE 6 MONTH TIMELINE HASN'T ELAPSED!...this seems to be a breakdown that would allow a merchant to re-present a stopped check and recieve benefit.

When I raised this to the departmt manager, she indicated that re-presenting a "stopped" check is against the law (or I imagine UCC), but not something that the Bank should be attempting to stop more than once. I disagree with her.

Does anyone have clarification to how these should be handled?

Thanks!

I disagree with her, too. I can tell you from experience that checks that have been stopped and returned also at times get re-submitted and pay if you release the stop pmt from your system. Your customer will want and expect their money returned and you as a bank have an obligation to give it back. Now you, the bank, must try to collect the money from whoever re-presented the item. Ask the department manager why she would want to risk impacting the customer and putting the bank in a position of having a loss if they are unable to collect on the item while leaving the stop pay on the system, at best, only generates an occasional suspect to review.