Thread Options
#1996751 - 02/18/15 10:26 PM What do you think, is cash activity reasonable?
BSAkpo Offline
Junior Member
BSAkpo
Joined: Jul 2014
Posts: 43
US
Apparently I'm on a roll with BSA questions this week. crazy

A food distributor with five locations in a few states on the east coast brings in between $5 and $7 million in cash every month. The majority of their clients are ethnic restaurants and mom/pop grocery stores. Your first reaction - does the cash activity appear consistent with this business type?
Thank you for your time.

Return to Top
BSA/AML/CIP/OFAC Forum
#1996778 - 02/19/15 02:18 AM Re: What do you think, is cash activity reasonable? BSAkpo
rlcarey Online
10K Club
rlcarey
Joined: Jul 2001
Posts: 77,247
Galveston, TX
How would we know without looking at their financial statements or knowing more about what they do. Do some wholesalers in some areas deal in cash - the answer to that is yes. Cash comes in and cash goes out - where does it go??
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#1996804 - 02/19/15 02:01 PM Re: What do you think, is cash activity reasonable? BSAkpo
PrimeTime Offline
100 Club
PrimeTime
Joined: Nov 2014
Posts: 173
In addition to what rlcarey stated, is it known whether or not a discount is given for customers that pay the distributor in cash? Many places offer a 5%, 10%, 15% etc for customers that pay in cash, ranging from the local gas station to a food wholesaler such as this. I'd say that in order to make your determination, more due diligence would be required. Does the customer have a website that you could browse to see if anything is stated? If not, consider giving the account manager a call to see if they know anything further about the business. If they don't, maybe it's time to call the customer directly.
_________________________
Life is like a bicycle. To keep your balance, you must keep moving.
-Albert Einstein

CAMS

Return to Top
#1996805 - 02/19/15 02:02 PM Re: What do you think, is cash activity reasonable? BSAkpo
BSAkpo Offline
Junior Member
BSAkpo
Joined: Jul 2014
Posts: 43
US
Thank you for your response.

Return to Top
#1997138 - 02/19/15 11:03 PM Re: What do you think, is cash activity reasonable? BSAkpo
CantBeShocked Offline
Gold Star
Joined: Apr 2006
Posts: 260
MS
Some distributors will require cash payments from locations who have written them bad checks to pay invoices. Therefore they will require cash only. However my experience has been small distributors who do not have millions in cash.....so not sure on this one.
_________________________
]

Return to Top
#1997281 - 02/20/15 04:47 PM Re: What do you think, is cash activity reasonable? BSAkpo
BSAkpo Offline
Junior Member
BSAkpo
Joined: Jul 2014
Posts: 43
US
This type of business is new to me. I figured there would be some cash since the majority of their clients are ethnic restaurants. But, the cash is 60% of their sales, which concerns me. Thanks again for responding.

Return to Top
#1997546 - 02/23/15 04:27 PM Re: What do you think, is cash activity reasonable? BSAkpo
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,336
Cape Cod
A thought -- find out whether the wholesaler offers an incentive for cash on delivery rather than payment by check or on trade terms. The merchandise is certainly not of a type that can be reasonably recovered in the event an account goes past due.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top

Moderator:  Andy_Z