Thought some of you might be interested in this.

http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1968413

The main article should be downloaded from the site. There is no charge and no spam.

Thank you!

Great article - thanks! There is no easy answer regarding closing an account. If you close every account where someone has structured, you would probably close a lot of accounts. That is why you need to review all transactions in an account with structuring to determine if the customer is just being stupid or if other activity is happening.

I think a useful question every bank should ask itself is this - if the customer is ultimately caught and convicted of what we think he or she is doing, how would we feel about seeing the bank's name in the news articles?

I think a useful question every bank should ask itself is this - if the customer is ultimately caught and convicted of what we think he or she is doing, how would we feel about seeing the bank's name in the news articles?

The other two useful questions are:

1. Does the activity present any risk of loss to the bank.

2. Is the account relationship unprofitable, including the cost for on-going monitoring.

If the answer to either is yes - then close the account.

Well I was thinking that revenue drain accounts would be a no brainer to close. The difficult part is when an account is also generating some nice fee income - and the push back against closing such an account gets heated.

Interesting...what does everyone else do with regards to continuing the relationship or not? I'm talking procedural wise. It's obvious which ones to get rid of but, how do you go about it with out tipping off the cutomer that his activity is suspicious to us and has been reported. Is it third strike and their out just send them a letter and a cashiers check...it can't be that simple?!?

You need to give them prior at least 30 days) notice before force closing the account

Where is the citation for the 30 days located? I know that if the account is receiving federal benefit payment you have to give 30 days notice (unless it involved fraud), but I didn't realize there was any other regulation that required a 30 day notification.

There is no rule for 30 days. This is a contractual issue.

As a recommendation from an outside counsel.

You need to give a customer enough time to get a new bank and for outstanding checks to clear, or face possible legal action.

Kathleen is correct, if your contact says something different that would apply.

Sorry they get 10 days from me. . .get your xxxx and get out!

Ok...I can figure out the time period but what do you say to the customer? What if the customer raises ****? How do you avoid them find out that SARs have been filed against them? Then there are the account officers to deal with...the ones that are really attached to certain customers and want to protect them.

You stick to your contract language. We have exercised our right under paragraph such and such of our agreement to terminate our relationship. There is no requirement to give them a reason (as if they don't know anyway). As far as the account officers, someone needs to explain to them who writes their paychecks.

I read our account agreement and that works great for me...now how many times do you file before you consider closing the account. I have come up with something like the case will be re-examined by our BSA committee after the 2nd filing and a decision made to close or not by or after the 3rd. Of course those that are of an immediate risk threat can be closed immediately or upon discovery of the suspicious activity, but what about those that you continue filing on and cannot exactly pin point what they are doing but you just know they are doing something not right. Just an industry standard here...

Use this whether for the first or the hundreth:

1. Does the activity present any risk of loss to the bank.

2. Is the account relationship unprofitable, including the cost for on-going monitoring.

If the answer to either is yes - then close the account.

I understand waht you are saying and can totally go with it, however, managment wants to know the million dollar question...what are other banks doing? What is the industry standard? God forbid we go out on our own and do somthing unlike other banks of our size and shape.

Send a letter telling client that effective mm/dd/yyyy the bank will no longer be able to service their account. They should cease making deposits allowing all items to clear. They can close account or on mm/dd/yyyy the bank will send them a cashier's check for collected balance in the account.

As previously mentioned, adjust timeline if pension direct deposits are involved.

I think there may be sample letters in Bankers Tools.

Has the bank ever been threatened by client? Oh yes. In my 30 years, I have been told more than once that they are getting a lawyer and will sue the bank. Have they ever filed suit? No. There is no basis for a suit, disclosure clearly says bank can close at any time.

One personal observation: the dirtier the client, the easier the exit. They generally do not want to make a scene (other than the occasional spouting off that the bank is run by idiots.)