Page 1 of 2 1 2
Thread Options
#2097663 - 09/09/16 03:00 PM Nibbling checks
J K Offline
New Poster
Joined: Sep 2016
Posts: 1
Our bank, like many banks, will issue Cashier's Checks to "guarantee" funds for noncustomers. Additionally, we don't keep an abundance of cash on hand. We recently had a noncustomer do this with a large >$20,000 check. The branch didn't have the cash, so they issued a check, but let the noncustomer get $3,000 cash out of it. In other words, they issued the Cashier's Check as $3,000 less than the original.

I contend that this equates to nibbling the check. While the noncustomer didn't request this to avoid any reporting, to me, it still seems ... uncool.

Our BSA group disagrees, contending there was no intent to avoid reporting. I countered with, "how would the regulators know that?" I'm told this has been a regular practice for years.

Looking for some input to rest my mind. Is this a common practice out there?

Return to Top
BSA/AML/CIP/OFAC Forum
#2097665 - 09/09/16 03:13 PM Re: Nibbling checks J K
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,584
Galveston, TX
Our bank, like many banks, will issue Cashier's Checks to "guarantee" funds for noncustomers.

What does this mean?
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2097667 - 09/09/16 03:19 PM Re: Nibbling checks J K
thomasj Offline
Power Poster
Joined: Mar 2001
Posts: 5,063
Pennsylvania
I think the original poster means that their customer writes a check to an individual or company that is not a customer of the bank. The individual or company brings the check directly to the original poster's bank instead of cashing it or depositing it at their own bank to ensure that the check is good and will be paid.

In this situation, by policy, you create scenarios that look like structuring so you need to ensure that you properly document your policy and circumstances surrounding the transactions. We have had similar situations that have occurred when a customer wants to withdraw a significant amount of cash, but the branch doesn't have it on hand. The customer is instructed that if they want the additional cash, they will need to visit a nearby branch location. From a back office perspective, it looks like structuring until you know the circumstances behind it.
_________________________
Knowledge is knowing what to say. Wisdom is knowing when to say it.

Return to Top
#2097675 - 09/09/16 03:37 PM Re: Nibbling checks thomasj
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,584
Galveston, TX
Originally Posted By thomasj
I think the original poster means that their customer writes a check to an individual or company that is not a customer of the bank. The individual or company brings the check directly to the original poster's bank instead of cashing it or depositing it at their own bank to ensure that the check is good and will be paid.


If that is the case, then I can tell you that most banks will not do this at all. The non-customer can cash the original check or they can deposit the original check in an account they hold elsewhere. No exceptions.

It is ridiculous for the bank to engage in this practice. There is absolutely nothing in it for the bank, accept headaches.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2097686 - 09/09/16 04:08 PM Re: Nibbling checks J K
edAudit Offline
Power Poster
edAudit
Joined: Jul 2008
Posts: 4,761
You are here
It is ridiculous for the bank to engage in this practice. There is absolutely nothing in it for the bank, accept headaches.

Agreed
_________________________
Opinions can be considered as coming from anywhere but my employer.

CAMS


Return to Top
#2097751 - 09/09/16 06:41 PM Re: Nibbling checks J K
RockChucker, CAMS Offline
Diamond Poster
Joined: Jul 2013
Posts: 1,625
The Country
I originally read the title of this post as nibbling cheeks and was very curious....
_________________________
A successful man is one who can lay a firm foundation with the bricks others have thrown at him.
-David Brinkley

Return to Top
#2097843 - 09/09/16 09:29 PM Re: Nibbling checks rlcarey
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,417
Pulling people out of the ditc...
Quote:
If that is the case, then I can tell you that most banks will not do this at all.


actually, a great number of banks will perform this - they are community banks and believe it serves their customers. agree that it creates all types of headaches, but customer service tops headaches, in their minds.
_________________________
Providing alternative truths since the invention of time

Return to Top
#2097849 - 09/09/16 09:52 PM Re: Nibbling checks J K
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,584
Galveston, TX
How do you give customer service to non-customers??
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2097866 - 09/09/16 10:20 PM Re: Nibbling checks J K
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,417
Pulling people out of the ditc...
my customer wrote a check and gave it to someone...if I refuse to honor the check they wrote on my bank, I am not servicing my customer...regardless of whom the check is written to, my customer as the check writer may suffer if I don't allow it to be cashed, or traded for cashiers check, etc...

not saying it is right or wrong, just that many follow this pattern of thinking
_________________________
Providing alternative truths since the invention of time

Return to Top
#2097867 - 09/09/16 10:23 PM Re: Nibbling checks J K
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,584
Galveston, TX
my customer as the check writer may suffer if I don't allow it to be cashed Yes , or traded for cashiers check No , etc...

It is a strange way to think about customer service.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
#2097894 - 09/12/16 10:49 AM Re: Nibbling checks J K
edAudit Offline
Power Poster
edAudit
Joined: Jul 2008
Posts: 4,761
You are here
my customer as the check writer may suffer if I don't allow it to be cashed

Actually I do not see this either. Your customers responsibility ends when they issue a check

I went to a bank to cash a check that was drawn on the bank. I do not have an account with the bank and they refused to cash the check. Can it do this?

Yes. There is no federal law or regulation that requires national banks to cash checks for noncustomers. Most banks have policies that allow check cashing services only for customers who have an account with them in order to protect both themselves and their customers from forgeries.

Once a national bank cashes a check that has been forged by a noncustomer, they may lose money if they cannot collect from the person who cashed the check.

Also, if a national bank agrees to cash a check for a noncustomer, it may legally charge the presenter a fee

http://www.helpwithmybank.gov/get-answer...cashing-04.html

and before we get into the dishonor issue
http://www.legalmatch.com/law-library/article/dishonoring-of-checks.html

A check is dishonored when it is presented for payment to the payor bank (for situations other than immediate payment over the counter) and the bank makes timely return of the check or sends timely notice of dishonor or nonpayment. - See more at: http://www.legalmatch.com/law-library/article/dishonoring-of-checks.html#sthash.9dfZckWm.dpuf
_________________________
Opinions can be considered as coming from anywhere but my employer.

CAMS


Return to Top
#2098144 - 09/13/16 11:05 AM Re: Nibbling checks J K
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
JK,

"Nibbling" is a new label for me. However, if the suggestion that the payee take part of the proceeds in the form of an official check rather than currency came from your personnel. So, there is no argument that the payee is structuring. There is only an argument that it might look like structuring to someone reviewing the transaction who was not actually present. A $3,000 cash back simply would not suggest that to me.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#2098154 - 09/13/16 12:50 PM Re: Nibbling checks J K
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,417
Pulling people out of the ditc...
Quote:
It is a strange way to think about customer service.


many a community banker would disagree on that point.
_________________________
Providing alternative truths since the invention of time

Return to Top
#2098182 - 09/13/16 02:32 PM Re: Nibbling checks J K
Dog Lady Offline
Member
Joined: Dec 2015
Posts: 74
Completely agree with Happy. I've only worked in Community Banking, and we would never want to disservice our customers by not paying their checks.... however, while our bank might prepare this check if we didn't have the cash, we'd probably tell the non-customer to plan their next visit with us so we can order the cash we need for it. So it would only happen once and couldn't look like structuring. Reading this, I'm mostly shocked that any branch of any bank doesn't keep enough cash on hand to cash a $20,000 check. That's not THAT much cash.

Return to Top
#2098185 - 09/13/16 02:47 PM Re: Nibbling checks J K
Daisy Doodle Offline
Diamond Poster
Joined: Feb 2014
Posts: 1,030
Southern U.S.
All my banks have reluctantly allowed the 'nibbling' mostly for attorney firms that bank with us. We feel most of the attorney's clients are not structuring so much as using the cashier's check as a savings account. Annoying, but not suspicious usually.

Return to Top
#2098198 - 09/13/16 03:14 PM Re: Nibbling checks J K
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,544
Cape Cod
Once you have issued the initial cashier's check, you would certainly be within your rights to tell these non-customers their choices are to (1) cash the check in its entirety (assuming appropriate identification and sufficient cash on hand), or (2) deposit the check at their own bank and "nibble" on the funds from there.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#2098266 - 09/13/16 06:02 PM Re: Nibbling checks J K
HappyGilmore Offline
10K Club
Joined: Jun 2004
Posts: 19,417
Pulling people out of the ditc...
agree 100% John...they have the initial visit, and there in ends the customer service. they want to come back later and cash the cashiers check and take a portion in cash and reissue the remainder in a new cashier check, that is not going to happen (although in many they allow it to occur).
_________________________
Providing alternative truths since the invention of time

Return to Top
#2098362 - 09/14/16 10:03 AM Re: Nibbling checks John Burnett
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
In another thread one poster succinctly indicated their rule is "You cannot buy a cashiers check with another cashiers check, customer or not." While that's not the issue that started this thread, it's the solution to nibbling.
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#2103215 - 10/17/16 02:23 PM Re: Nibbling checks J K
CML LHS Offline
New Poster
CML LHS
Joined: Oct 2014
Posts: 18
WA
Our community bank does this activity as well. Our customers who "nibble" checks use it as a savings, and only take some funds when they want it. We have an examiner who found a check that went three years without being cashed (on our outstanding items report), and when it was cashed, she took $3600 in cash, and got a new check issued for the remaining $7400. We also cash a portion of checks for non-customers, and issue a cashiers check for the balance when the branch does not have the funds to give them at once.

Management already has a notation in our current policy/procedures for check cashing that prohibits this type of activity. This was added by the previous BSA Officer (4 years ago). But the front-line staff still cashes a portion of the check and issues a new check for the balance. The management staff would like some written guidance on this activity, and I cannot seem to find anything specific. Does anyone know where I can find information on this type of activity? I tried searching for structuring with monetary instruments and of course received too much information.

Thank you in advance!

Return to Top
#2103222 - 10/17/16 02:35 PM Re: Nibbling checks CML LHS
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,544
Cape Cod
Originally Posted By BSA LHS


Management already has a notation in our current policy/procedures for check cashing that prohibits this type of activity. This was added by the previous BSA Officer (4 years ago). But the front-line staff still cashes a portion of the check and issues a new check for the balance. The management staff would like some written guidance on this activity, and I cannot seem to find anything specific.


Management staff wants guidance, even though there is already guidance in your policy/procedures prohibiting the activity? Was the policy/procedure that includes that guidance not already approved or accepted by your board or management? Is management re-evaluating that guidance to determine whether it needs to be amended or omitted?

Although there are customers (and non-customers) who "nibble" on cashier's checks for what they believe are legitimate reasons, there are also those who use the practice as a way to structure transactions in attempts to avoid reporting. With that in mind, does the guidance you already have make sense risk-wise? If so, perhaps the only problem is that the policy has been ignored long enough to lack any teeth. That can be easily resolved by management by restating the policy and management's intent to enforce it, with appropriate action taken when someone decides he or she can continue ignoring the policy.
_________________________
John S. Burnett
BankersOnline.com
Fighting for Compliance since 1976
Bankers' Threads User #8

Return to Top
#2103223 - 10/17/16 02:36 PM Re: Nibbling checks CML LHS
Elwood P. Dowd Offline
10K Club
Elwood P. Dowd
Joined: Aug 2001
Posts: 21,939
Next to Harvey
Quote:
I cannot seem to find anything specific. Does anyone know where I can find information on this type of activity?


There is nothing "official" on this; it is not mentioned in examination procedures or any other official publication. It's simply a "gotcha" that is passed on from one examiner to another. Most of the time, the customer's motivation is exactly as you explained it; i.e. the check is a savings account, nothing more.

The response to the examiner that just cannot fathom why someone would not put the funds into an interest bearing account: "Have you seen our interest rates today?" grin

John's comment prompts me to add: If you do prohibit it by policy or procedure and you do not enforce the restriction, I would be first in line to deliver a scathing criticism.
Last edited by Ken_Pegasus; 10/17/16 02:40 PM. Reason: Add last sentence
_________________________
In this world you must be oh so smart or oh so pleasant. Well, for years I was smart. I recommend pleasant.

Return to Top
#2103224 - 10/17/16 02:40 PM Re: Nibbling checks J K
CML LHS Offline
New Poster
CML LHS
Joined: Oct 2014
Posts: 18
WA
Management is re-evaluating that notation in our current procedures about amending or omitting, due to the fact that it has been ignored for so long and the new management staff are not in consensus about the activity being suspicious enough to prohibit the action.

I am trying to bring something written by an authority on the matter to the managers to confirm the need for this procedure. I was hoping someone would know where I can find this, whether written in a FinCEN guidance, or in the BSA Exam Manual.
Last edited by BSA LHS; 10/17/16 02:46 PM.
Return to Top
#2103225 - 10/17/16 02:43 PM Re: Nibbling checks J K
CML LHS Offline
New Poster
CML LHS
Joined: Oct 2014
Posts: 18
WA
Thank you Ken and John! I would agree with you completely.
Last edited by BSA LHS; 10/17/16 02:46 PM.
Return to Top
#2103227 - 10/17/16 02:54 PM Re: Nibbling checks J K
edAudit Offline
Power Poster
edAudit
Joined: Jul 2008
Posts: 4,761
You are here
Management is re-evaluating that notation in our current procedures about amending or omitting, due to the fact that it has been ignored for so long and the new management staff are not in consensus about the activity being suspicious enough to prohibit the action.


Staff ignoring policy should never be the reason for dismissing it. There is also the issue of non-customers nibbling which cost the bank money (teller time accounting time) and exposes the bank to additional Regulatory risk (real or imaged)
_________________________
Opinions can be considered as coming from anywhere but my employer.

CAMS


Return to Top
#2103233 - 10/17/16 03:44 PM Re: Nibbling checks J K
rlcarey Offline
10K Club
rlcarey
Joined: Jul 2001
Posts: 78,584
Galveston, TX
The solution is simple. Implement a $20 fee for every partially redeemed cashier's check involving a re-issue. BSA is one thing, but the bottom line is that there is absolutely nothing in it for the bank in perpetuating this behavior by either customers or non-customers. The problem will solve itself.
_________________________
The opinions expressed here should not be construed to be those of my employer: PPDocs.com

Return to Top
Page 1 of 2 1 2

Moderator:  Andy_Z