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#1609042 - 09/27/11 12:05 PM on us check exchange
BSA all the way Offline
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An on us check presented to exchange for a bank check (no cash out)by a non customer. Is this logged as a sale of a monetary instrument to a non customer?
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#1609043 - 09/27/11 12:13 PM Re: on us check exchange BSA all the way
rlcarey Offline
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Not for BSA monetary intrument recordkeeping purposes if that is what you mean.
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#1609177 - 09/27/11 03:06 PM Re: on us check exchange rlcarey
BC78a Offline
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I am not sure I agree, we handle it as a sale for cash to a non-customer, and I know of other banks that do the same.

The logic being that the non-customer as a non-customer, all we are legally required to do is cash the check. Since the non-customer does not have an account with us, the only way he can get a MI is for cash. In addition, we charge a check-cashing fee.

I would love to hear what others have to say on this.
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#1609184 - 09/27/11 03:10 PM Re: on us check exchange BC78a
BrianC Offline
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If cash did not physically cross the counter, then the reporting requirements are not triggered. Similarly, if the check amount were greater than $10,000, you would not file a CTR.
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#1609295 - 09/27/11 04:16 PM Re: on us check exchange BrianC
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I agree with Brian. There was no cash involved.
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#1609321 - 09/27/11 04:27 PM Re: on us check exchange Skittles
Kathleen O. Blanchard Offline

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Agree - not a cash purchase.
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#1609361 - 09/27/11 04:50 PM Re: on us check exchange Kathleen O. Blanchard
Princess Romeo Offline

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Also agree - not a cash purchase and let us hope a rogue examiner does not pick up on that logic!

Quote:
The logic being that the non-customer as a non-customer, all we are legally required to do is cash the check. Since the non-customer does not have an account with us, the only way he can get a MI is for cash. In addition, we charge a check-cashing fee.
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#1609368 - 09/27/11 04:54 PM Re: on us check exchange Princess Romeo
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I should elaborate - the idea of the Monetary Instrument Log is to provide the "audit" trail for folks bringing in anonymous cash and using it to purchase a monetary instrument in the Placement phase of money laundering.

When a non-customer brings in one negotiable instrument and exchanges it for another negotiable instrument, there is no "Placement" of cash and no anonymous source of funds, therefore the record keeping requirements are not triggered.
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#1609371 - 09/27/11 04:56 PM Re: on us check exchange Princess Romeo
edAudit Offline
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Agreed but why do you exchange it in the first place?

http://www.helpwithmybank.gov/get-answer...cashing-03.html

Answers about Cashing Checks
I received my payroll check and went to the bank the check was drawn on to cash it. The bank refused to cash the check since I do not have an account with them. Is this legal?
There is no federal law or regulation that requires national banks to cash checks for noncustomers. Most banks have policies that allow check cashing services only for customers who have an account with them in order to protect both themselves and their customers from forgeries.

Once a national bank cashes a check that has been forged by a noncustomer, they may lose money if they cannot collect from the person who cashed the check.

Also, if a national bank agrees to cash a check for a noncustomer, it may legally charge the presenter a fee.
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#1609492 - 09/27/11 07:12 PM Re: on us check exchange edAudit
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#1609561 - 09/27/11 08:21 PM Re: on us check exchange edAudit
Princess Romeo Offline

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Originally Posted By: EdAudit
Agreed but why do you exchange it in the first place?




Typically it's an accommodation for the bank's customer.

Example: Customer issues a deposit check to a contractor. Contractor wants to ensure he has good funds before purchasing supplies for the job. Contractor tells customer he needs a Cashier's Check or he must cancel the job, so the customer asks the bank to accommodate.
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#1609605 - 09/27/11 09:09 PM Re: on us check exchange Princess Romeo
edAudit Offline
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But then the transaction is for the benefit of the customer and not the non-customer. I would do on an exception basis.
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#1609638 - 09/27/11 11:37 PM Re: on us check exchange edAudit
rlcarey Offline
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Isn't it always for the benefit of your customer if they are exchanging an on-us check for a cashier's check? Plus:


§ 4-402. BANK'S LIABILITY TO CUSTOMER FOR WRONGFUL DISHONOR; TIME OF DETERMINING INSUFFICIENCY OF ACCOUNT.
•(a) Except as otherwise provided in this Article, a payor bank wrongfully dishonors an item if it dishonors an item that is properly payable, but a bank may dishonor an item that would create an overdraft unless it has agreed to pay the overdraft.
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#1609690 - 09/28/11 12:37 PM Re: on us check exchange rlcarey
edAudit Offline
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but don't you have unitl midnight.

§ 4-301. DEFERRED POSTING; RECOVERY OF PAYMENT BY RETURN OF ITEMS; TIME OF DISHONOR; RETURN OF ITEMS BY PAYOR BANK.
•(a) If a payor bank settles for a demand item other than a documentary draft presented otherwise than for immediate payment over the counter before midnight of the banking day of receipt, the payor bank may revoke the settlement and recover the settlement if, before it has made final payment and before its midnight deadline, it
◦(1) returns the item; or
◦(2) sends written notice of dishonor or nonpayment if the item is unavailable for return.
•(b) If a demand item is received by a payor bank for credit on its books, it may return the item or send notice of dishonor and may revoke any credit given or recover the amount thereof withdrawn by its customer, if it acts within the time limit and in the manner specified in subsection (a).
•(c) Unless previous notice of dishonor has been sent, an item is dishonored at the time when for purposes of dishonor it is returned or notice sent in accordance with this section.
•(d) An item is returned:
◦(1) as to an item presented through a clearing house, when it is delivered to the presenting or last collecting bank or to the clearing house or is sent or delivered in accordance with clearing-house rules; or
◦(2) in all other cases, when it is sent or delivered to the bank's customer or transferor or pursuant to instructions.

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#1609691 - 09/28/11 12:39 PM Re: on us check exchange edAudit
edAudit Offline
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You are here
http://www.bankersonline.com/articles/bhv07n01/bhv07n01a1.html


Although there are a few isolated decisions to the contrary, the generally accepted view is that the payee of a check has no cause of action against a bank for refusing to cash a check.
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#1609703 - 09/28/11 01:15 PM Re: on us check exchange edAudit
rlcarey Offline
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Yes, but unless you have the provisions referenced in your depositor's contract that this attorney recommended, the risk is there none the less. What good is having a checking account if I can't write a check to someone and have the bank honor it when properly presented? For the banks that do a cashier's check exchange but not cash the check, it is a foolish practice, as all it does is increase your processing costs and is the equivalent of the same thing.
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#1609802 - 09/28/11 03:08 PM Re: on us check exchange rlcarey
John Burnett Offline
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If you separate out the comments about the advisability of the practice (which is a valid side issue), and stick to the original question, my answer is there's no cash involved and no §1010.415 requirement.
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#1610354 - 09/29/11 12:10 PM Re: on us check exchange BSA all the way
Elwood P. Dowd Offline
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Agreed:
* No cash, no record retention requirement.
* Banks are not required to do this and, unless the payee is a well identified individual, it's a foolish assumption of risk.

Banks that voluntarily limit official check sales in policies and procedures, but who engage in this practice, should make certain their wording prohibits sales of checks to non customers for cash.
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