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#2237759 - 06/09/20 02:47 PM Source and Use of Cash??
aBSAlife4me Offline
Junior Member
Joined: Apr 2015
Posts: 29
Are we 'required' by regulation to ask a client the source of where their cash deposit came from? What about how they intend to use it?

This has been a current hot topic at our Bank and it appears our customers are beginning to become upset and are refusing to answer any questions regarding where and how they intend to use "Their Money".

Is this simply a 'best practice' suggested by a regulator eons ago?

Is anyone out there NOT doing this?

Just need a little guidance on this to have a good argument.

Thank you everyone!!

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#2237763 - 06/09/20 03:56 PM Re: Source and Use of Cash?? aBSAlife4me
rlcarey Online
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Joined: Jul 2001
Posts: 79,637
Galveston, TX
Are we 'required' by regulation to ask a client the source of where their cash deposit came from? What about how they intend to use it?

Both are no.

Without information - it just makes more transactions look suspicious.
The opinions expressed here should not be construed to be those of my employer:

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#2237784 - 06/09/20 07:54 PM Re: Source and Use of Cash?? aBSAlife4me
TryingtoComply Online
Diamond Poster
Joined: Apr 2013
Posts: 1,965
The West
Consider the way the questions are being asked. Are your employees explaining the REASON for the questions? Or do they sound like they are grilling the customer?

It is essential that customer's understand that we have an obligation to "know" our customers. This is why we have KYC questionnaires and profiles. As Randy stated, without information, you may think something is suspicious when there is a totally reasonable explanation. If you don't talk to your customers to understand their activity, how will you know the difference?

Perhaps some training on communications skills is what is needed. Show the staff how to communicate properly. Provide scripts, role play.

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#2237810 - 06/10/20 01:04 PM Re: Source and Use of Cash?? aBSAlife4me
Local_Banker Offline
Joined: Jun 2019
Posts: 53
As far as being "required", suspicions about the source of funds (cash deposits) and transactions having no known economic purpose or being out of pattern (cash withdrawals) are categories that might fit certain levels of cash deposit activity, and thus require certain levels of due diligence to mitigate a SAR filing. But not all cash activity will rise to this level, so you need to find a level that balances customer service (not asking too many questions) and your BSA/AML obligations.

I am not sure what levels of cash activity you are asking questions at. By asking about large cash withdrawals that are out of pattern for customers we have interrupted several fraud schemes recently. We have also run into some possible elder abuse situations when POAs or children who are joint owners managing parents accounts withdraw large sums of cash over time that they claim are for home health care payments (we ask them to start writing checks to the workers instead).

You will get a number of customers who tell you to mind your own business about cash withdrawals. The "preventing fraud" angle allows the branch to bring up the subject in a less accusatory manner ("have you been asked to send this money to an old friend, business partner, IRS, SSA, grandchild's lawyer, etc"). If they seem of sound mind, the source of funds is valid, and their reason isn't too wacky we tend to back off at this point.

Cash deposits, particularly to a personal account or a non-cash intensive business account, have a lower threshold for questioning in my opinion. There is a certain level of cash activity that would be expected (that will vary depending on your branch footprint and customer profile), but an unknown source of funds has a lower threshold for questioning than an unknown use of good funds, in my opinion. I don't know of a good way to have these conversations, but they can be necessary if you don't want to default to SAR filing every time a customer deposits a large amount of cash.

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#2237814 - 06/10/20 01:32 PM Re: Source and Use of Cash?? aBSAlife4me
ACBbank Offline
Power Poster
Joined: Jul 2006
Posts: 4,192
New York City
Depends on the amount of cash we are talking about?
"100 victories in 100 battles isnt the most skillful. Subduing the other's military w/o battle is the most skillful." Sun-Tzu

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#2238012 - 06/12/20 05:19 PM Re: Source and Use of Cash?? aBSAlife4me
JennKK2 Offline
Gold Star
Joined: Nov 2006
Posts: 263
I am of the belief it is how we phrase our question so as not to "question" it is in the tone and delivery but knowing your customer's anticipated account activity will provide the baseline for when something is "out of the ordinary" and posing a question is more probable
plan your Work and Work your Plan

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