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#1932634 - 06/13/14 08:53 PM Swapping checks
Cornfed Turtle Offline
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Joined: Mar 2006
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"...Somewhere in Middle Americ...
Anyone want to play "settle a bet for me?" Or at least direct me to some reading on a beautiful Friday afternoon?

We will swap an "on-us" check for a cashier's check under certain circumstances. The best example coming to mind right now is a payee bringing in a check that has already been returned NSF. The funds are good right now and we swap for a cashier's check.

We have been advised that this is not a "cashing" of the check as no cash changed hands. We took a check....we gave a check. The check we gave is payable exactly as the check we took.

Now the tricky part....

1. What about taking an on-us check and returning cashier's checks that are payable differently? (Grandma issues a check to Grandson. He trades for a cashier's check payable to school and another cashier's check payable to local apartment complex. No cash.)
2. Taking an on-us check and returning differently payable checks and a small cash out? (Local company issues severance check on us. Employee trades for a cashier's check payable to local car dealer, another payable to himself and takes a grand in cash.)

I've been knee deep in the BSA manual but I think my problem is more basic than that. I think our argument amongst ourselves is whether or not we cashed the checks.

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#1932649 - 06/13/14 09:32 PM Re: Swapping checks Cornfed Turtle
BrianC Online
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Joined: Nov 2004
Posts: 6,694
Illinois
For the purpose of you monetary instrument recordkeeping requirement, since the Cashier's Checks were not purchased in cash you have no obligation.

To minimize the risks associated with the sale of monetary instruments, some institutions have implemented a policy that states that they will not sell monetary instruments to non-customers. They can then be cited for violated their own policy for performing the transactions that you describe. Their AML Risk Assessment may also be called into question if they have not accounted for the risks of sales to non-customers.

You also have to consider the monitoring process for monetary instrument sales and looking for patterns of suspicious activity.

Regardless of whether or not cash is involved, the bank negotiated the check.
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#1932695 - 06/15/14 01:34 PM Re: Swapping checks Cornfed Turtle
Elwood P. Dowd Offline
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Quote:
We will swap an "on-us" check for a cashier's check under certain circumstances.


As discussed here many times, this is a self inflicted wound. Your bank is not obligated to do this and the time it spends trying to accommodate non customers who, if they wanted a cashiers check should have asked your customer for one, is poorly invested.
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#1932767 - 06/16/14 02:21 PM Re: Swapping checks Cornfed Turtle
HappyGilmore Offline
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Posts: 19,844
Pulling people out of the ditc...
if a non-customer comes in to negotiate a check and funds are available, why would you not just cash it and be done with it, rather than issue a cashiers check for it? I've never understood that.
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#1932795 - 06/16/14 03:07 PM Re: Swapping checks Cornfed Turtle
John Burnett Offline
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Cape Cod
Not defending the paying bank here, but there are obviously cases where the payee would like to ensure the funds are good and wants neither the risk of depositing the check only to have it bounce nor the risk of carrying a substantial amount of cash back to his own bank for deposit.

But, I refer you back to Ken's comment supra.
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#1932891 - 06/16/14 06:00 PM Re: Swapping checks Cornfed Turtle
charlied Offline
Member
Joined: Oct 2009
Posts: 94
TN
At my previous bank, we put a stop to both practices you mention. We stopped the second one in particular after having a non-customer who came in several times with large checks drawn off a business customer, exchanged it for smaller checks made out to himself and got cash back. After a couple of times, it starts to look remarkably like structuring.

That doesn't answer your question though.

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#1932936 - 06/16/14 07:03 PM Re: Swapping checks charlied
Cornfed Turtle Offline
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Joined: Mar 2006
Posts: 1,323
"...Somewhere in Middle Americ...
Oh in a sense it does charlied! Like you said, you put a stop to it.

We are still arguing, but I appreciate all of the input. I also like calling it a "self-inflicted wound."

Brian, I have started using the verb "negotiating" versus "cashing." Thanks for that, too.

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