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#1720972 - 07/18/12 12:43 PM Cashiers check purchased by non-customer?
AuditorK Offline
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Our BSA Policy states that we do not sell cashiers checks or money orders to non-customers.

Here's the situation: A non-customer brings in a personal check drawn on one of the bank's customers. This non-customer asks the teller for a cashier's check in the same amount - payable to him. The teller complies.

Isn't this a violation of our policy?? I'm getting differing opinions.

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#1720975 - 07/18/12 12:50 PM Re: Cashiers check purchased by non-customer? AuditorK
Dani York, CRCM Offline
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I don't know that offering a direct exchange for on on-us item would violate the no sales to non-customer policy. Your bank is paying the on-us item, which you are obligated to do if the on-us item is good.

However, I have wrestled with the same questions, so I just wrote into our policy when we would sell to non-customers. Below is the verbiage I used:

Generally, the bank does not sell monetary instruments to non-account holders, except in limited circumstances, including but not limited to the following:
• A direct exchange for an on-us item payable to the exact payee on the presented item.
• Issued for any partial amount of an on-us item that is presented for cashing when the branch does not have a large enough cash supply to pay the entire amount of the item.
• Purchases by an authorized signer on behalf of the account holder.
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#1721467 - 07/19/12 01:55 PM Re: Cashiers check purchased by non-customer? Dani York, CRCM
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Dani,

Who monitors to ensure those purchases???
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#1721484 - 07/19/12 02:19 PM Re: Cashiers check purchased by non-customer? AuditorK
John Burnett Offline
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If those customer checks are payable to businesses, and the businesses are bringing them in to exchange for cashier's checks, you should consider turning them away with a suggestion that they need to deposit the checks in their business accounts and let them clear. In that way, your bank isn't taking the risk that the endorsements on those checks are either fraudulent or unauthorized.
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#1721486 - 07/19/12 02:21 PM Re: Cashiers check purchased by non-customer? AuditorK
Elwood P. Dowd Offline
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Quote:
Our BSA Policy states that we do not sell cashiers checks or money orders to non-customers.


At the end of the sentence in your policy add: "for cash." Dani's examples are more explanatory and may be preferable.

If you allow me to purchase a cashiers check with an "on us" check payable to me I've seen both examiners and auditors conclude that you sold me a cashiers check. I agree. It's the cash sales to non customers that banks want to prohibit so their policies and procedures should be worded accordingly.

P.S. John's post wasn't there when I clicked "reply." While his example is not central to your question, I feel compelled to add that exchanging a check payable to a business for a cashiers check is a really lousy idea regardless of the type of band-aid you put on it. I can identify the individual across the counter. The "business" is never, ever across the counter.
Last edited by Ken_Pegasus; 07/19/12 02:30 PM. Reason: Add P.S.
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#1721969 - 07/20/12 06:04 PM Re: Cashiers check purchased by non-customer? AuditorK
devsfan Offline
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Would you permit an exchange of a personal check to a cashier's check if the checks are payable to a business that is not our customer after confirming the transaction with the maker of the check (our customer)? On 1 hand the payee is not being changed but how do we know that the individual requesting the exchange on behalf of the business is authorized to do so? What are our risks if we do this?

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#1722001 - 07/20/12 06:58 PM Re: Cashiers check purchased by non-customer? AuditorK
John Burnett Offline
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That's exactly the risk that Ken and I alluded to. The individual across the counter isn't the business, as Ken carefully pointed out. If the individual isn't authorized to exchange the check for a cashier's check, and the check ends up deposited in a "like-name" account fraudulently established, your bank is likely to be confronted by a ticked-off customer who is being pestered for a replacement check (because the intended payee never got paid), and left holding the bag. Do you really want to incur the costs of attempting to bring the forger of the indorsement to justice?

Put more simply -- why do you think your bank owes the service to the non-customer business payee of the customer check?
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#1722094 - 07/20/12 08:57 PM Re: Cashiers check purchased by non-customer? AuditorK
devsfan Offline
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I do not, but it has been done and I just wanted to get other opinions before I tell the branch folks (who don't report to me) that they are idiots.

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#1722105 - 07/20/12 09:31 PM Re: Cashiers check purchased by non-customer? AuditorK
Dani York, CRCM Offline
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I think it boils down to a risk decision your bank needs to make. My bank would exchange the checks payable to businesses. But we have decided to assume the risks involved, mostly because we very, very rarely have exchanges to business payees (I can count on one hand how many we've had in the 3 years I've been here). Most of our direct exchanges are to individual payees (we have an attorney's office that tells their clients to come cash their lawsuit settlement checks). Your bank needs to make a risk decision on if you will allow direct exchanges to business entity payees, and if so will they limited to a dollar amount, will it be on an ad hoc basis with an officer sign off, etc?
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#1722152 - 07/22/12 11:05 AM Re: Cashiers check purchased by non-customer? AuditorK
rlcarey Online
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And make sure you can track and identify them appropriately for responding to that subpoena investigating any alleged misappropriation of funds.
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#1722220 - 07/23/12 01:39 PM Re: Cashiers check purchased by non-customer? rlcarey
Elwood P. Dowd Offline
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If a payee on an on-us check wanted a cashiers check that's what he should have told your customer, not you.
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#1751930 - 10/24/12 04:39 PM Re: Cashiers check purchased by non-customer? Elwood P. Dowd
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We had this happen recently where the teller exchanged a large personal check drawn on our bank for part cash and part cashier's check to a non-customer. Although she noted some of their ID info, she didn't get SS# and address because I'm sure she didn't consider it a "sale". We don't sell monetary instruments to non-customers. However, I do think this situation will need to be addressed for the future should it happen again. Is the consensus to tell them we won't give them a cashier's check (only cash) or to get the required personal information if we do?

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#1751952 - 10/24/12 05:11 PM Re: Cashiers check purchased by non-customer? Compliance Lover
John Burnett Offline
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On what basis are you saying that you were "required" to obtain the SSN and address? Was more than $10,000 in cash received by the payee (thus necessitating the filing of a CTR)?
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#1752013 - 10/24/12 06:06 PM Re: Cashiers check purchased by non-customer? John Burnett
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No,the amount of cash back wasn't. I guiess I'm overthinking this. Thanks.

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#1752182 - 10/24/12 10:17 PM Re: Cashiers check purchased by non-customer? AuditorK
WonderWoman Offline
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RE: Non-customers.

We only fully cash the check or exchange "check for check". No cash purchases or splitting allowed.

Only I am authorized to allow for splitting checks into part cashiers check and part cash back. I only approve this when the branch doesn't have enough cash on hand, safety for the non-customer, AND it is apparent there is no structuring going on.
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#1752277 - 10/25/12 02:34 PM Re: Cashiers check purchased by non-customer? WonderWoman
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We do pretty much the same as WW - cash in full or check for check. The only other option is for payee if branch doesn't have the cash is to wait for cash to be ordered/received.
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#1752294 - 10/25/12 02:54 PM Re: Cashiers check purchased by non-customer? AuditorK
gacompliancegirl Offline
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We handle as WW does, as well.
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#1752318 - 10/25/12 03:08 PM Re: Cashiers check purchased by non-customer? gacompliancegirl
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Ok, thanks. That sounds like a good practice to me.

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#1752448 - 10/25/12 06:25 PM Re: Cashiers check purchased by non-customer? AuditorK
WonderWoman Offline
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Our "official" procedures:

BANK does not sell cashier’s checks for cash to individuals that are not customers of the Bank.

• NOTE: BANK only allows “check for check” transactions when considering non-customers. (e.g. a personal or business check made payable to John Smith for $20,000 must only be exchanged for a cashier’s check made payable to John Smith for $20,000) Any exceptions must be approved by the BSA Officer or member of Senior Management, and must be submitted in writing to the BSA Officer.

• Should BANK sell a cashier’s check to a non-customer for cash (any exceptions must be approved by the BSA Officer), the Bank will gather the following additional information on the purchaser:
o Physical Address
o Driver’s License or other Identification acceptable for Large Currency Reporting
o Tax Identification Number
o Date of Birth
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#1752599 - 10/25/12 09:57 PM Re: Cashiers check purchased by non-customer? AuditorK
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One more question. If you do a direct exchange for $3,000 or more are you gathering the "CIP" information as well? It was stated earlier that some examiners consider that a cashier's check sale.

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#1752601 - 10/25/12 10:03 PM Re: Cashiers check purchased by non-customer? AuditorK
John Burnett Offline
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I suggest you avoid the use of "CIP" in this connection, although I see you've got it in quotation marks.

As for what "some examiners" think, I can suggest that "some examiners" don't understand the regulation. It applies when real cash of $3,000 to $10,000 inclusive is paid for a cashier's check. Period. It does not apply to the "swaps" we've been discussing in this thread. I would resist strongly any examiner's or auditor's attempt to re-characterize such a transaction as a cash transaction. Looking at a camel and calling it a cat doesn't make it so.
Last edited by John Burnett; 10/25/12 10:04 PM.
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#1752746 - 10/26/12 02:17 PM Re: Cashiers check purchased by non-customer? John Burnett
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Ok, thanks.

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#1753135 - 10/29/12 03:41 PM Re: Cashiers check purchased by non-customer? AuditorK
BrendaC Offline
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It is always a good idea to build in some "wiggle room" when drafting these hard and fast rules so that when the exception occurs (and it will), you have a clearly defined process.

"The bank does not as a general rule sell cashiers checks for cash to non-customers (non-customers should be defined in your policy). In the event that such a sale is anticipated, the transaction MUST be approved prior to being conducted by one of the following bank officers: BSA Compliance Officer," etc....

It is often a good idea to add Q&A boxes in your procedures and periodic training modules to esure complete understanding of this rule. For example:

The president of the bank has asked you to accommodate a well-known individual by selling him a cashier's check for $18,000 cash (cash proceeds from the sale of an automobile). You explain to him that the bank does not generally do these transactions; however, the president wishes to conduct the transaction as a security measure for this individual. You should:
a) Hold your ground and tell the president the bank cannot do the transaction.
b) Conduct the transaction and hope you don't get caught.
c) Contact the BSA Officer or xxx to obtain approval to conduct the transaction and document the purchaser's identifying information in your cash sale records.

I don't know about you, but I've found that such wiggle room will serve you well eventually. President is happy and you haven't violated you BSA policy.
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#1782378 - 02/01/13 10:07 PM Re: Cashiers check purchased by non-customer? AuditorK
WonderWoman Offline
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OK - new scenario.

Customer (a business)sends in their bookkeeper (a non-customer) with $3,000 in cash to purchase a cashiers check on behalf of the business ...

now what? My policy says we don't sell to non-customers (unless my approval & we gather all their info).

So what about bookkeeper who brings in $50 in cash to purchase a cashiers check?


Does anyone have anything written in policy for these types of scenarios? I want to make sure we're not shooting ourselves in the foot.
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#1782405 - 02/01/13 11:38 PM Re: Cashiers check purchased by non-customer? AuditorK
rlcarey Online
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A business cannot purchase a cashier's check with cash, only the warm body standing in front of you. Unless the bookkeeper has a personal account with the bank, they are a non-customer. Same with any authorized signer, trustee, fiduciary, etc.
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