Under normal circumstances, my bank sends "payable through" drafts for collections. We don't have them very often. On the 21st, one of our customers brought in for deposit what looked like a regular, personal check. It had his information pre-printed at the top left corner and he signed the front of the check. Where the bank information usually is are the words "Payable through The Bank of New York Mellon", "Pittsburg, PA" and "UNUM Retained Asset Account". It has a MICR line with a routing number, account number, and check number.

Because this wasn't a cashier's check, we sent it off for collections, only to receive a letter from The Bank of New York Mellon today, requesting that we run the check through as a normal transit item through the Federal Reserve Bank. The letter isn't signed or dated.

The customer doesn't have near enough to cover the check in his accounts with us, so I'm unsure with how to proceed. The check is for $100,000 and his account total about $30,000. He has never deposited a check like this with us before and certainly nothing of this amount. We could do an exception hold but I'm not sure that's good enough at this point. Am I over-thinking this?

Thanks in advance.

Retained Asset accounts are life insurance proceeds from an insurance company. They retain the funds instead of issuing the beneficiary a lump sum. The beneficiary receives checks for the account.

Unum is an Insurance Company

The Bank of New York Mellon is the intermediary bank.

Okay, but it's signed by the customer, filled out by the customer, like a personal check. It's not a cashier's check, and it says 'payable through'. I am failing to understand why we can't send it for collection rather than putting a measly hold on it. Am I just missing something?

It's signed by the customer because it's his account. It is a checking account that supposedly pays a higher rate of interest. He's the owner.

The check is the same as any other check for a checking account. Some insurance companies have started doing this rather than pay out in one sum. They encourage the beneficiaries to use the funds as needed. The insurance companies are trying to retain funds rather than having them walk out the door.

It would be similar to a customer having a CD at your bank with a beneficiary. Instead of issuing a check for the CD proceeds upon the death of your customer, you open a checking account for the beneficiary.

There have been some lawsuits filed against the insurance companies for this practice.