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#2257805 - 08/06/21 06:40 PM Employee Banking
Anonymous
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Can an employer (financial institution) require an employee to open an account for the purpose of direct deposit?

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#2257808 - 08/06/21 06:50 PM Re: Employee Banking Anonymous
MNCompliance Offline
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This is my understanding. So in some states (this is state specific), employers can require employees to receive payroll through direct deposit. However, even in states where employers can mandate direct deposit, employers cannot require employees to use a specific bank for the direct deposit. So in other words if you require direct deposit (if your state allows it), you cannot make an employee open an account at a specific financial institution for purposes of receiving their direct deposit. This would apply to the financial institution as an employer.

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#2257811 - 08/06/21 06:58 PM Re: Employee Banking Anonymous
BrianC Online
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Illinois
No. You can require that they only receive direct deposit at your institution, but if they refuse you must provide an alternative.

1005.10(e)(2) Employment or government benefit. No financial institution or other person may require a consumer to establish an account for receipt of electronic fund transfers with a particular institution as a condition of employment or receipt of a government benefit.

Commentary:

1. Payroll. An employer (including a financial institution) may not require its employees to receive their salary by direct deposit to any particular institution. An employer may require direct deposit of salary by electronic means if employees are allowed to choose the institution that will receive the direct deposit. Alternatively, an employer may give employees the choice of having their salary deposited at a particular institution (designated by the employer) or receiving their salary by another means, such as by check or cash.
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#2257812 - 08/06/21 06:58 PM Re: Employee Banking Anonymous
burkemi Offline
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And from a regulatory standpoint - You can require direct deposit if your employee is permitted to chose the bank.

Commentary to 1005.10(e)(2)

1. Payroll. An employer (including a financial institution) may not require its employees to receive their salary by direct deposit to any particular institution. An employer may require direct deposit of salary by electronic means if employees are allowed to choose the institution that will receive the direct deposit. Alternatively, an employer may give employees the choice of having their salary deposited at a particular institution (designated by the employer) or receiving their salary by another means, such as by check or cash.
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#2257813 - 08/06/21 06:59 PM Re: Employee Banking Anonymous
burkemi Offline
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You JUST beat me to it!!! lol
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#2257857 - 08/09/21 02:45 PM Re: Employee Banking Anonymous
Anonymous
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OP here; thank you for your help and direction!

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#2257879 - 08/09/21 05:26 PM Re: Employee Banking Anonymous
Anonymous
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Another anon here - there is something to be said for keeping your personal banking data separate from your work life. If I had an employer require me to take direct deposit into an account held by the employing financial institution, I would do so. Then I would use online banking to immediately transfer the full amount of each direct deposit to my own bank. Having been in BSA/AML for a long time, I see no reason to subject any person's own financial transactions to additional scrutiny (of the "This is higher risk because she is an employee!!" hysterical variety) merely due to the choice of conducting the activity at the same bank where the person works.

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#2257898 - 08/09/21 07:21 PM Re: Employee Banking Anonymous
DeeQ Offline
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Turnpike Exit 10
^^^ Agreed.
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#2257929 - 08/09/21 10:35 PM Re: Employee Banking Anonymous
Anonymous
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About a decade and a half ago, I worked at a financial institution where I also banked.

I was very young, and very dumb. I took out a car loan, and was determined to have it paid off in no time. I think my monthly payment was $105.00. Rather than pay $105.00 all at once, I would make many small payments throughout the month. $5.00 here, $10.00 there, $15.00, whatever. Apparently my excessive amount of payment triggered something on the back end, which got the Fraud Department suspicious. I totally take responsibility for that.

HOWEVER, this "activity" gave the bank a pass to look at every transaction on my account. Where I was shopping, where I was eating, where I was writing checks. I had to sit in a meeting and explain why I was writing checks to this business for this dollar amount, or why I was using my debit card so many times a month at this business. Why was I eating at this restaurant so often? It was a Fking nightmare, and of course my business quickly got around the bank. I put my tail between my legs. If that had happened today, you'd have one big a$$ lawsuit on your hands.

[censored] in my own backyard again, and never bank where I work. And I haven't since.

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#2258052 - 08/11/21 03:38 PM Re: Employee Banking Anonymous
Anonymous
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Interesting Topic.

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#2258077 - 08/11/21 06:42 PM Re: Employee Banking Anonymous
SmallBankBSA Offline
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I agree with not banking where you work. Years ago I worked at a mid size institution and being a member of a certain department we had access to everyone's accounts....well one employee would "spy" on the ex girlfriend of her husband, she had access to her direct deposit amount, where she spent her money etc. It was ridiculous. A report was eventually created monitoring employee account access and if you viewed an employee account you better have a good explanation other than "I was just looking".

I keep a small account I use for incidentals (ordering lunches, girl scout cookie orders etc). but everything else is far far away.

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#2258088 - 08/11/21 07:35 PM Re: Employee Banking Anonymous
Anonymous
Unregistered

Another anon here again - by the way, when transferring the funds out from the employing bank to the elsewhere bank, I would typically use the elsewhere bank's online banking system. In other words, have the other bank pull the funds, rather than the employing bank sending the funds. Even the transfers can lead to internal alerts and absurd scrutiny and discussion (with or without you) for these unimportant triggers like:

Why was the online banking login done at 12:48am (or, why was it done at 315pm during work hours)
Why was the login done from a new PC or device not previously used to access online banking
Why are there 3 transfers this month rather than 2
Why is the "velocity of funds" so high (direct deposit in on a Friday, amount transfers out on same day = big red flag, for some systems, especially if it's a pattern)

If you choose to bank where you work and you ever deposit cash in any amount....well...good luck to you.

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#2258094 - 08/11/21 08:14 PM Re: Employee Banking Anonymous
Anonymous
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I also found that banking where you work can lead to some uncomfortable requests, a "bending of the rules" perhaps, especially to the teller line.

We had an employee that would ask "favors" of the tellers.....like cashing a check for a spouse that wasn't a signer on the (or any) account. Because, you know, I work here!

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#2258117 - 08/12/21 01:13 PM Re: Employee Banking Anonymous
Anonymous
Unregistered

It sounds like a lot of these places have very weak control systems in place imo.

Also to the person who mentioned the employer/bank would have a big lawsuit on their hands - I would think that's unlikely. A) I'm guessing you agreed to such reviews via your employee handbook and B) if not, the bank is allowed to investigate the transactions of any other customer so what makes a customer who happens to also be an employee any different?

With that said, if that's what your bank is wasting resources on, then I wholeheartedly agree that you should leave them for banking purposes. From an employer perspective, I think I would also question the relationship.

But I think it comes down to one simple rule: you don't want your employer/bank to know what you are doing, then bank elsewhere.

Interesting thread.

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#2258245 - 08/16/21 03:25 PM Re: Employee Banking Anonymous
John Burnett Offline
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John Burnett
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Cape Cod
Originally Posted by Anonymous
If I had an employer require me to take direct deposit into an account held by the employing financial institution
... the employer would be violating federal law and regulations.

But I agree that, if you don't want your employer (or coworkers) to have access to your account history, don't use the bank where you work.
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#2258255 - 08/16/21 06:40 PM Re: Employee Banking Anonymous
Amy S Offline
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Joined: Sep 2020
Posts: 44
I'm curious as to where this information can be found in regards to Credit Unions. My previous employer (CU) wouldn't give you an option, so I wrote myself a check every payday and used mobile capture to move the funds. Having gone from Bank to CU back to Bank, I just thought is was a CU thing.

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#2258257 - 08/16/21 06:49 PM Re: Employee Banking Anonymous
BrianC Online
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Illinois
Credit Unions are subject to the same sections of Regulation E that banks are.
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#2258953 - 08/30/21 07:27 PM Re: Employee Banking BrianC
Amy S Offline
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Joined: Sep 2020
Posts: 44
Interesting. I'll have to look into that more.

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#2258987 - 08/31/21 02:17 PM Re: Employee Banking Anonymous
John Burnett Offline
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John Burnett
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Cape Cod
Credit unions have their own version of a Truth in Savings regulation because of the unique ways in which accounts are handled and dividends are paid by CUs. But they don't have a separate regulation for the Electronic Fund Transfer Act. Regulation E regulates CUs just as it regulates banks.
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#2258997 - 08/31/21 02:58 PM Re: Employee Banking Anonymous
TMatt87 Offline
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TMatt87
Joined: May 2011
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Idaho
I bank where I work, but I never use my debit card except for ATMs. So my account history is my payroll, credit card payments, transfers to an online savings account, and ATM withdrawals. Not a lot to scrutinize.
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#2259435 - 09/09/21 02:43 PM Re: Employee Banking Anonymous
Anonymous
Unregistered

^^^^^ So you pay cash for everything?

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#2259463 - 09/09/21 04:51 PM Re: Employee Banking Anonymous
RockChucker, CAMS Offline
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The Country
My guess is he uses his credit card for purchases to get rewards and pays off the balance of that credit card. I am also guessing that his credit card is not owned by the bank he works for.
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#2259525 - 09/10/21 03:21 PM Re: Employee Banking Anonymous
Anonymous
Unregistered

Originally Posted by TMatt87
I bank where I work, but I never use my debit card except for ATMs. So my account history is my payroll, credit card payments, transfers to an online savings account, and ATM withdrawals. Not a lot to scrutinize.

Another anon here. The above statement, for me, is a pretty good illustration of why you shouldn't bank where you work. While a person may feel that there is nothing much to scrutinize because they aren't using debit cards (or because they only withdraw cash and never deposit any), the above scenario may actually be of interest to an internal reviewer, depending on volume, amounts, frequency, etc. (As illustrated in the thread, an anon poster questions, "So you pay cash for everything?" and RockChucker pops up with a theory; so if they were your co-workers, yeah, you'd be getting discussed and scrutinized if your account was flagged for review or was subjected to an automatic periodic review merely because you are an employee.)

For instance, if a bank employee withdraws $300 in cash once a month, we wouldn't even notice. But if a bank employee visits an ATM once a week, we would notice. We would have internal discussions about it: is so-and-so a gambler? Why all the cash withdrawals? Does he ever deposit any cash, any at all? Why? Does he pay any bills through this account? Why aren't there any "normal" transactions here? Who lives on cash? What doesn't he want his bank to see? What is he buying that he would want to only use cash? etc. It's a very short walk from "This employee's activity is weird" to "We have to file a SAR."

Being an employee lowers the SAR threshold to zero, and raises the interest in cash usage considerably. While there might not be a lot to scrutinize, there would be zero to scrutinize if there was no account at the employing bank.

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#2259530 - 09/10/21 03:33 PM Re: Employee Banking Anonymous
Skittles Offline
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Skittles
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TN
I have found this thread fascinating. I have always banked where I work without question.
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#2259542 - 09/10/21 04:51 PM Re: Employee Banking Anonymous
HappyGilmore Offline
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Pulling people out of the ditc...
Originally Posted by Anonymous
But if a bank employee visits an ATM once a week, we would notice. We would have internal discussions about it: is so-and-so a gambler? Why all the cash withdrawals? Does he ever deposit any cash, any at all? Why?

we have an ATM in our operations center, i see people hitting it daily, some people daily before going to lunch. why would you waste time scrutinizing how frequently an employee takes out cash simply because they are an employee? wasted time by the bank
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#2259546 - 09/10/21 04:59 PM Re: Employee Banking HappyGilmore
raitchjay Offline
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OK
Originally Posted by HappyGilmore
Originally Posted by Anonymous
But if a bank employee visits an ATM once a week, we would notice. We would have internal discussions about it: is so-and-so a gambler? Why all the cash withdrawals? Does he ever deposit any cash, any at all? Why?

we have an ATM in our operations center, i see people hitting it daily, some people daily before going to lunch. why would you waste time scrutinizing how frequently an employee takes out cash simply because they are an employee? wasted time by the bank

The only reason i can think of is that a lot of people are nosy. But yeah, i agree with Happy....wasted time by the bank.
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#2259547 - 09/10/21 05:04 PM Re: Employee Banking Anonymous
P*Q Offline

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P*Q
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Hey, if anyone at the bank wants to look at my account (at my own bank) and question my transactions to the package store "once or twice per week"? Go ahead, have at it. Come spend a day with me in my department and all the roles I have and you'll understand why. laugh

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#2259550 - 09/10/21 05:13 PM Re: Employee Banking Anonymous
raitchjay Offline
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OK
I'm not a BSA guy, but aren't SARs supposed to be activities with suspicion of breaking the law? What law is someone breaking by gambling or paying cash for their lunch?
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#2259556 - 09/10/21 05:35 PM Re: Employee Banking Anonymous
#Just Jay Offline
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#Just Jay
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Cheeseheadland
^^^exactly.

I am a BSA guy, and this:

For instance, if a bank employee withdraws $300 in cash once a month, we wouldn't even notice. But if a bank employee visits an ATM once a week, we would notice. We would have internal discussions about it: is so-and-so a gambler? Why all the cash withdrawals? Does he ever deposit any cash, any at all? Why? Does he pay any bills through this account? Why aren't there any "normal" transactions here? Who lives on cash? What doesn't he want his bank to see? What is he buying that he would want to only use cash? etc. It's a very short walk from "This employee's activity is weird" to "We have to file a SAR."

Being an employee lowers the SAR threshold to zero, and raises the interest in cash usage considerably.


...is a poor understanding and application of one's BSA responsibility.

All the more reason to do the majority of your personal banking anywhere but where you work.
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#2259563 - 09/10/21 06:28 PM Re: Employee Banking Anonymous
Valley girl Offline
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Posts: 279
TX
I have the honor of sitting closest to our island ATM. Sometimes I may perform several transactions in one day because we will have members tell us it is not working and I step out to check the ATM. Or service will have been performed and our vendor will ask me to perform a couple of transactions to make sure all cassettes are functioning properly. Especially with the quality of the some of the bills going into our ATMs.

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#2259577 - 09/10/21 07:59 PM Re: Employee Banking Anonymous
Anonymous
Unregistered

If gambling was a suspicious activity, our entire office would be fired.

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#2259578 - 09/10/21 08:01 PM Re: Employee Banking Anonymous
Anonymous
Unregistered

Originally Posted by Anonymous
Originally Posted by TMatt87
I bank where I work, but I never use my debit card except for ATMs. So my account history is my payroll, credit card payments, transfers to an online savings account, and ATM withdrawals. Not a lot to scrutinize.

Another anon here. The above statement, for me, is a pretty good illustration of why you shouldn't bank where you work. While a person may feel that there is nothing much to scrutinize because they aren't using debit cards (or because they only withdraw cash and never deposit any), the above scenario may actually be of interest to an internal reviewer, depending on volume, amounts, frequency, etc. (As illustrated in the thread, an anon poster questions, "So you pay cash for everything?" and RockChucker pops up with a theory; so if they were your co-workers, yeah, you'd be getting discussed and scrutinized if your account was flagged for review or was subjected to an automatic periodic review merely because you are an employee.)

For instance, if a bank employee withdraws $300 in cash once a month, we wouldn't even notice. But if a bank employee visits an ATM once a week, we would notice. We would have internal discussions about it: is so-and-so a gambler? Why all the cash withdrawals? Does he ever deposit any cash, any at all? Why? Does he pay any bills through this account? Why aren't there any "normal" transactions here? Who lives on cash? What doesn't he want his bank to see? What is he buying that he would want to only use cash? etc. It's a very short walk from "This employee's activity is weird" to "We have to file a SAR."

Being an employee lowers the SAR threshold to zero, and raises the interest in cash usage considerably. While there might not be a lot to scrutinize, there would be zero to scrutinize if there was no account at the employing bank.

Is that the same for customers? If a customer uses an ATM several times a week, that would be suspicious?

Our BSA would be from floor to ceiling with SARS if that were the case.

Seems to me it's just being nosy.

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#2259615 - 09/13/21 02:23 PM Re: Employee Banking Anonymous
Anonymous
Unregistered

I'm the anon who posted the "ATM several times a week" example. Some have opined it's a waste of BSA's time and/or "just being nosy."

I can't disagree, and yet, it happens that you are illustrating my point. The activity doesn't have to be suspicious to you, or be criminal in nature, to end up being discussed by BSA staff or by an entire group of management that, with BSA, makes the decisions for SARs. So while I personally wouldn't care a bit if a branch employee got $20 out every day for lunch, here is a real-life scenario that crossed my desk in recent history:

Employee A uses our ATMs for the max allowable withdrawal limit ($400 a pop) multiple times per week, at multiple other branches other than where she works. Timing indicates leaving work as often as twice a day (mid-morning and mid-afternoon) to make a run to another branch for a withdrawal. This was referred to BSA on a suspicious activity notice sent to BSA.

Our process is that whenever something potentially suspicious is referred, it goes to a group for deciding on a SAR. That group happens to include Employee A's boss. So, all imaginary "nosiness" aside, that employee's transactional choices are now getting talked about internally, and could end up on a SAR. Easiest thing that she could have done is choose to bank somewhere other than where she works. She doesn't like getting cash where she works anyway (at her branch) but drives to other areas of the city to do it. Is there anything criminal there? Probably not. Is it weird? That's subjective. Weird enough for a SAR? Subjective also. If an examiner finds this activity and asks us whether we filed a SAR, would we want to say yes or no? Is this employee creating risk for the bank, merely by banking here? I'd say, Yes.

Now throw in what happened with another employee a few months before that, at a different branch: in addition to arguably "excessive" ATM use for large amounts withdrawn, that one was also making frequent cash deposits of $500 to $1,000. So you check to see if the branch is in balance, and it does seem to be. This leads to the "Are they a frequent gambler?" discussion. It's not nosiness, but looking for information that may make a SAR avoidable. We don't want to see a lot of cash taken out plus a lot of cash deposited, for any customer, unless we know why.

As far as whether gambling and banking are compatible pursuits: my opinion is that bankers should certainly not be habitual gamblers. For one thing, serious gamblers may get into debt situations in which, on the low end of risk, they may end up in dire financial straights or end up at risk of losing their homes and life savings, all because of a gambling addiction. For initial and continued employment, we expect our bankers to be in a sound financial situation personally, and capable of managing their own finances without high-risk financial behavior being a factor. A financially desperate person is not someone who you want to be in a position to have to resist bribes or other financial incentives to make bad decisions on behalf of the bank. On the high end of risk, a gambler may end up feeling driven to "borrow" cash from their branch hoping to earn it back through gambling and pay it back without anyone noticing. I've known two bankers over the years who were fired for exactly that issue. A "first thing in the morning" cash audit revealed a different cash count than what was done at end-of-day, and their blubbering defense was "I was going to pay it back..." Turns out they were habitual gamblers who were desperate to finally transform themselves from losers into winners. In my experience the vast majority of gamblers are losers (financially); the house always wins.

It's also a reputational risk issue. If your customers are at the casino every weekend, do you really want them seeing your Senior Loan Officer at the same craps tables, every weekend? One adage is that the appearance of impropriety is almost as bad as the impropriety itself. If a customer decides (wrongly) that the banker is probably gambling with money from the bank vault, that dangerous rumor can spread quickly. And as we all learned in 2020, people these days will believe literally anything.

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#2259618 - 09/13/21 02:44 PM Re: Employee Banking Anonymous
rlcarey Offline
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Galveston, TX
Nothing what you described (outside of the two past employees that embezzled money) have anything to do with BSA. Does your security department maybe want to watch for this sort of activity for the reason that you stated? That is a business decision. SAR filings only come into play when a law has or is suspected to have been broken. If gambling is legal in your State, the fact that an employee gambles is neither here nor there. BSA comes into when a law is broken. The rest of this is an Human Resources issue that should be handled through your employee code of conduct.
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