We have an ATM customer that is replenishing his ATM machine with funds from unknown source of funds (daily receipts or perhaps illicit sources) Our process is to require them to maintain an account for ATM where we can track the receipts from their processor compared to the cash withdrawals to fill the machine. Since this customer doesn't want to follow our process I have recommended closing the relationship (One ATM acct and 1 Op acct) I'm getting push back as to why we would close the op account. I say based on the behavior of the customer by not having the whole relationship we are increasing our BSA risk as we wouldn't see how much money is dispensed from the ATM and how it is being replenished. Can anyone make a stronger argument for exiting the whole relationship or argue the other side that we wouldn't have any increase in risk or may even have less risk.

It's been my practice to require tax returns for both MSB's and Private ATM's if they do not have a dedicated account that balances out. Somehow the gross sales on the tax return often don't jive with the inflow of funds to the account and I have ammunition for a recommendation to terminate the relationship. And we commence filing SARS.

I'm curious to understand what process they are not following. Is it your policy that they must deposit all cash and withdraw funds to replenish the machine so that you can reconcile the withdrawals to the incoming ACH from the ATM processor?

We had several low/moderate volume ATM owners that replenished machines themselves. When reviewing them, I would look at the incoming ACH from the ATM processors over a period of time and add that amount onto the cash deposited during that same period. If I felt that the cash deposited plus the cash they put in the machine was excessive then I would investigate further, but if the total was within reason, I documented and moved on.

I agree that having only part of the relationship makes it much more risky since you are now in the dark about the ATM volume in relation to the cash they are depositing.

I monitor the credits to the account from the processor and then look to see that the customer withdrawals an amount of cash to replenish the machine that is in line with the outflow funds from the machine (i.e. the amounts of processor credits). So if in a month's time the customer receives credits from processor of $225,000 I assume this is the amount of funds withdrawn from the machine look to see the customer has made cash withdrawals in that range (allowing for timing differences) If I only see that $50,000 came from the ATM account I would wonder how the customer is replenishing the machine that it was able to have $225,000 withdrawn.

In your example, I would look at the cash deposits of the customer and add the $175,000 difference in ACH credits from the ATM processor and cash withdrawn by the customer to the cash deposit totals for the month and see if that was in line with their business. If the customer's business was not one that I would expect to generate that volume of cash I would investigate further to see if I could determine what the source of the additional cash. If I couldn't find a logical explanation, I would file a SAR and exit the entire relationship.

An ATM owner is an ATM owner regardless of whether or not you have the ATM account. Not having all of their accounts makes them even more risky and virtually impossible to monitor.