We have a number of small grocery stores and gas stations which own private ATMs; however we do not see them taking out cash from their accounts to replenish the machines.

When asked about it they told us that they take the cash from the daily proceeds and deposit the remaining cash in the bank.

Should this be a SAR? If so for what? Tax Evasion?

Thanks,

I wouldn't file a SAR but I would have comprehensive private owner ATM procedures for monitoring the customer's banking activity.

You have no idea if they are evading taxes if you haven't seen their filings.

Many small operators use this method. The bank must gain an understanding of the process, if the store has enough sales for this to make sense, etc. Filling private ATMs is an easy way to launder illegally obtained funds, which is why they are viewed as higher risk.

Agreed Kathleen, thus the reason I mentioned enhancing procedures to understand their activity and monitor them.

Definitely, it is very important to understand the potential risk and establish specific procedures to monitor for that risk.

Part of your due diligence on business customers who also have a private ATM is to see the level of ATM activity and also to understand their business so that if they claim that they use their business proceeds to replenish the ATM you can conclude whether or not the explanation makes sense. We have several customers whose daily ATM volume is a few hundred dollars and we believe that their business volume could easily generate enough bills to replenish. We also have had a few with daily volume of $2-3,000 and we don't see how they can generate enough good quality $20 bills. So it all depends on your due diligence.

I once worked on a case where the store owner was buying his cash from a neighborhood dope dealer. We found this because he was frequently writing checks to the same individual in large even amounts. Turns out he was buying the cash at a discount. He got the cash he wanted at a good price and the dope dealer got his money laundered. A win-win situation for them.

Excellent example, unfortunate experience!

Retread's repetoire contains a lot of intriguing stories. His avatar is appropriate because he was like a dog digging up a bone once they were put on his desk...how is it you think he knows so much?

Thank you all.

I would like to revive this topic and see what the experts suggest.

I was reviewing a convenience store who offers check cashing, lottery, money orders etc. When comparing the cash and checks deposited to the ACH for lottery and money orders there was about $200,000. per month less cash being deposited than expected.

We questioned the customer if he had an ATM machine and was it owned by him; did he supply the cash and did he have any other banking relationships that would explain the discrepancy.

He does own an ATM machine and supplies the cash for it. He supplied 2 months worth of statements that shows about $100,000. per month in activity.

That still leaves $100,000 per month unaccounted for. Would we file a SAR and if so, what would the reason be?