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#2247876 - 01/20/21 05:12 PM Exam - Outstanding Official Checks
sopuno Offline
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lost in paperwork
We have an exam going on and the BSA examiner is planning to put a finding/recommendation that we are not reviewing outstanding cashier's checks (like purchased in 2018 and still outstanding). The examiner confirmed with me that this is not a requirement of the reg nor the exam manual. Any experience like this?

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#2247878 - 01/20/21 05:26 PM Re: Exam - Outstanding Official Checks sopuno
rlcarey Offline
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Galveston, TX
Yeah - this is some stupid thing that some examiners made up out of thin air and it has perpetuated for a while now. Call the home office and ask them for some sort of regulatory support for such a finding.

Also, ask the examiner just what are you supposed to do when you find one - call the customer? So I have a cashier's check in my safe for an emergency fund. Then what? File a SAR on me?
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#2247879 - 01/20/21 05:35 PM Re: Exam - Outstanding Official Checks sopuno
ACBbank Offline
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New York City
I've seen this before and I while I get the logic (Usually someone holding a Cashier's Check like is hiding funds) I don't get what you're supposed to do about it?
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#2247882 - 01/20/21 06:09 PM Re: Exam - Outstanding Official Checks sopuno
DeeQ Offline
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Turnpike Exit 10
Don't these checks expire after a period of time??
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#2247883 - 01/20/21 06:18 PM Re: Exam - Outstanding Official Checks sopuno
BrianC Offline
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Illinois
Technically, a cashier's check never expires according to the Uniform Commercial Code, but depending on state law, after a period of time the funds must be escheated.
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#2247884 - 01/20/21 06:23 PM Re: Exam - Outstanding Official Checks sopuno
ColoradoAML Offline
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As everyone else said, this should not be a finding. It could at best be a recommendation, and then you can consider if, as part of your risk-based program investigating these is the best use of your time to identify suspicious activity.

For the last few years, FinCEN and the regulators have been attempting to bring clarity to BSA requirements, and there are plenty of statements out there about the role of supervisory guidance and clarifications regarding when regulators will take action against banks. The updates to the FFIEC manual certainly support more clarity and less making up ticky-tacky errors just because they liked that another bank did it. Finally, the FinCEN request for comment on clarity for effective, risk-based programs, followed by the requirement in the NDAA that FinCEN does issue that clarity seems clear to me that this is not what the rule makers intend for their examiners to be doing.

Sorry, that's a bit of a rant and I didn't add to anything anyone said, but I've heard this too, and it's nonsense. FinCEN issues advisories for priority activity, and you should make sure your program reasonably conforms to those. As soon as FinCEN, or any authority in money laundering for that matter, says anything about unredeemed cashier's checks, then it'll be time to start adding processes. I bet there are hundreds of separate red flags tucked away in all of FinCEN's guidance, and I've never once seen this one.

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#2247887 - 01/20/21 07:18 PM Re: Exam - Outstanding Official Checks sopuno
sopuno Offline
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Joined: Jul 2008
Posts: 131
lost in paperwork
Thank you all for your responses! I actually used some of them while on the phone with the examiner. smile

I was able to reason with the examiner that our current monitoring procedures would identify suspicious purchase patterns, and it's being removed from the report. She told me that no one had ever questioned that finding before. It's so good to know your exam manual and have a support community like this.

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#2247888 - 01/20/21 07:23 PM Re: Exam - Outstanding Official Checks sopuno
rlcarey Offline
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rlcarey
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Galveston, TX
She told me that no one had ever questioned that finding before.

And therefor that is why this [censored] keeps perpetuating itself from bank to bank and exam to exam.

The whole industry thanks you smile
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#2247915 - 01/21/21 02:16 PM Re: Exam - Outstanding Official Checks sopuno
rlcarey Offline
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rlcarey
Joined: Jul 2001
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Galveston, TX
The other card that is available to banks that are being cited for either a violation of guidance (either written or in the mind of a specific examiner) are the recent policy statements by the various regulatory agencies. If they cannot boil it down to an actual violation of law or regulation, they are not supposed to be putting these sorts of findings in examination reports.

For example, the FDIC policy statement includes:

Examiners will not criticize through supervisory recommendations (including matters requiring board attention) a supervised financial institution for, and the FDIC will not issue an enforcement action on the basis of, a “violation” of or “non-compliance” with supervisory guidance."
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#2247941 - 01/21/21 06:10 PM Re: Exam - Outstanding Official Checks sopuno
HappyGilmore Offline
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Pulling people out of the ditc...
Quote
The examiner confirmed with me that this is not a requirement of the reg nor the exam manual.


since the examiner confirmed this already, most they can do is make a recommendation, certainly not a finding. They already provided you the way out.
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#2247942 - 01/21/21 06:19 PM Re: Exam - Outstanding Official Checks sopuno
ColoradoAML Offline
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Joined: Mar 2018
Posts: 182
Probably worth noting that if they make the recommendation and you elect not to follow up on it, and they then review outstanding cashier's checks in a future exam and find suspicious activity that you've failed to report, then you COULD be penalized. If this ends up being a formal recommendation, make sure you take it seriously and if you decide not to proceed, then you clearly document how you came to that decision.

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