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#2133030 - 06/05/17 01:40 PM Suspicious Use of Multiple Accounts?
Jennifer Offline
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Jennifer
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I would appreciate any insight with business customer activity. Scenario: Two individuals own multiple businesses together. Each business is either an LLC or corporation. There are three business accounts as an example.

Company A, LLC
Company B, Inc.
Company C, Inc.

The deposit activity is unusual: Deposits into Company A, LLC will contain checks issued Company B.
Deposits into Company B will contain checks issued to Company C
And Company C, Inc. will have checks issued to them from various other businesses in which the bank doesn't have the account.

The work up indicates there are small businesses they own, however, I have nothing that determines which goes with what. Also, WHY would the business switch around the deposits in such a way? Accounting nightmare. Discussions with branches indicate the customer will straighten in out, then gave an excuse of "secretary isn't the brightest". The secretary isn't making the deposits - the owners are. Large amounts of cash is also deposited.

Given the continued activity, I feel a SAR is warranted - for Suspicious Use of Multiple Accounts?? Is there anything else I may be missing? Appreciate feedback.

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#2133034 - 06/05/17 01:59 PM Re: Suspicious Use of Multiple Accounts? Jennifer
rlcarey Online
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Galveston, TX
First question, why would any bank accept checks made payable to another business for deposit in the first place? There are two parties with shovels in this hole digging.
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#2133036 - 06/05/17 02:09 PM Re: Suspicious Use of Multiple Accounts? rlcarey
Jennifer Offline
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Agree 100% - and I am attempting to make that point.
Any reason why the business would choose to do so? Suspicious in nature that I may be missing.

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#2133037 - 06/05/17 02:19 PM Re: Suspicious Use of Multiple Accounts? Jennifer
rlcarey Online
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rlcarey
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Galveston, TX
Who knows - either stupidity or doing something illegal. You say there is a large amount of cash - what generates it and what payments are these checks supposed to represent and who are they coming from? Hard to say with such limited information: Money laundering, complex kiting scheme?
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#2133039 - 06/05/17 02:21 PM Re: Suspicious Use of Multiple Accounts? Jennifer
Daisy Doodle Offline
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It is always possible they are trying to hide something in all the noise, but generally my take on this is if we can make the problem go away quickly by applying proper banking procedures, I would look for something pretty specific to proceed to a SAR filing. Small business owners with multiple LLC's do not always abide by the boundaries of the corporate veil. They should, but they often do not. That's my experience, anyway.

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#2133046 - 06/05/17 03:10 PM Re: Suspicious Use of Multiple Accounts? Jennifer
edAudit Online
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edAudit
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You are here
A good attorney can make the protections afforded by opening up different companies go away by the company acting in this manor. but this is not your concern.
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#2133054 - 06/05/17 03:30 PM Re: Suspicious Use of Multiple Accounts? Jennifer
Elwood P. Dowd Offline
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Asking them what they are doing would likely be more productive than asking us, but you have no real need to figure it out. One of the mandatory filing triggers is:

(iii) The transaction has no business or apparent lawful purpose or is not the sort in which the particular customer would normally be expected to engage, and the bank knows of no reasonable explanation for the transaction after examining the available facts, including the background and possible purpose of the transaction.

Aggregate their cash for CTR filing purposes as if it was all deposited or withdrawn for a single entity
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#2133327 - 06/07/17 03:16 PM Re: Suspicious Use of Multiple Accounts? Jennifer
TryingtoComply Offline
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The West
Your front line should not be accepting checks for deposit unless they are payable to the legal name on the account. If however you meant that checks from the other entities are being deposited to other entities, then I would inquire with the customer about the activity.

I've seen this many times. Common owner with several businesses moving money around between several accounts for the purpose of "lending" money to the other or to cover anticipated overdrafts. Have you looked at the activity to determine if the deposits may have been for the purpose of preventing an overdraft?

Also, you didn't mention who the members of the LLC were. Are they the other corporations? That may explain deposits from the corporations (if that is happening).

I agree with the other posters. Don't assume that just because someone has an LLC or corporation that they are smart. People do really stupid things with their finances, but that doesn't always equate to being suspicious. This is why it is important to talk with the customer to understand the activity.
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#2133782 - 06/09/17 07:44 PM Re: Suspicious Use of Multiple Accounts? Jennifer
John Burnett Offline
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Cape Cod
Get the customers to conform to accepted business practice and deposit checks into the payee's account or close the accounts. And in the meantime, definitely combine the cash activity for CTR filing purposes. You do not want to keep banking customers like this. It's too costly to monitor and manage, and there's too much potential for skulduggery that can put the bank at risk.

Think about an IRS summons asking for copies of all checks payable to Company A, LLC negotiated through the bank, and where you'll have to look for those checks.
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