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#2259280 - 09/04/21 01:50 PM Cashing checks for non-customers
Amy S Offline
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Joined: Sep 2020
Posts: 44
I've been in my position for a year and just discovered we are cashing payroll checks for two non-customers in which the business is also non-customer. The checks are drawn off a different financial institution. The reason we are cashing the checks is because one of the business owners has a good relationship with us. Thoughts on this please? I'm uncomfortable with it as the BSA officer. I'm told it was originally CEO approved and has been going on for years.

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#2259282 - 09/04/21 03:30 PM Re: Cashing checks for non-customers Amy S
BrianC Online
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BrianC
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Illinois
There is nothing illegal about the practice, but if those paychecks bounce, you have no recourse since there is no account to which you can legally charge the checks back. The question I would ask if, "If this is such a good customer, why hasn't a relationship manager worked with them to move their payroll account to your bank?"
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#2259290 - 09/07/21 11:57 AM Re: Cashing checks for non-customers Amy S
edAudit Offline
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edAudit
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In addition, there is the cost of processing these checks and Inconvenience to your customers who have to wait on line for these non-customer transactions.

As a BSA officer I am sure you are also aware of the cost of potentially monitoring these checks. Since you do not have the account is this a valid business, 314 concerns...
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#2259404 - 09/08/21 08:53 PM Re: Cashing checks for non-customers Amy S
Anonymous
Unregistered

OOOOOH girl. Time to stop that practice. Like others have mentioned, if the check goes bad (and in this day and age?), there's no recourse for recovery. Also, I liked the comment above: if they're THAT good of a customer, why aren't they banking with us (you)?

I'd be curious to know when and how this practice started?

We have 'sort-of' a similar situation here: we're located in a complex with other businesses. From time to time, employees of the other businesses will come here to break bills, or buy quarters for laundry. We try to be "neighborly, but where do you draw the line?

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#2259414 - 09/09/21 12:35 PM Re: Cashing checks for non-customers Amy S
InFairness, CRCM Offline
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InFairness, CRCM
Joined: Nov 2010
Posts: 549
USA
On the other hand, my bank does this (but more broadly than just a single business) to boost our CRA services. Over time, a reasonable number of the workers for whom we cash checks become customers.
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#2259433 - 09/09/21 02:39 PM Re: Cashing checks for non-customers InFairness, CRCM
Anonymous
Unregistered

What do you do in an instance if a check comes back?

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#2259468 - 09/09/21 05:05 PM Re: Cashing checks for non-customers Amy S
HappyGilmore Offline
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Joined: Jun 2004
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Pulling people out of the ditc...
we charge a fee for a non-account holder to cash a check, and that check must be drawn on our bank. we will not allow a non-account holder to cash a check drawn on another bank.

don't bother trying to get these guys to open an account with you, they will deposit their check and withdraw the entire amount, or leave $1 in account. not worth the time and effort, deny moving forward and they'll go elsewhere
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#2259478 - 09/09/21 06:15 PM Re: Cashing checks for non-customers Amy S
JWills, CRCM Offline
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Joined: May 2013
Posts: 1,724
The Mitten State
We will allow a non-account holder to cash a check drawn off of our bank without assessing a fee. We do not allow non-account holders to cash checks drawn on another bank. There are no means of recourse if the check were to come back.
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#2259519 - 09/10/21 02:47 PM Re: Cashing checks for non-customers Amy S
Anonymous
Unregistered

We'd never charge a non-customer to cash a check drawn from us! I guess maybe we're not as fee hungry as others.

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#2259564 - 09/10/21 06:39 PM Re: Cashing checks for non-customers Anonymous
Anonymous
Unregistered

Quote: "We have 'sort-of' a similar situation here: we're located in a complex with other businesses. From time to time, employees of the other businesses will come here to break bills, or buy quarters for laundry. We try to be "neighborly, but where do you draw the line? "

Curious: does your bank OFAC and get ID from each of these "non-customers" for bill breaking and quarter rolls? What if it's a business employee who is not your customer doing a transaction for a business that is your customer?

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#2259592 - 09/10/21 10:27 PM Re: Cashing checks for non-customers Anonymous
fmissle Offline
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Joined: Jul 2007
Posts: 953
Pac NW
Originally Posted by Anonymous
We'd never charge a non-customer to cash a check drawn from us! I guess maybe we're not as fee hungry as others.

It's less about being fee hungry for us, and more about taking in some income to cover losses that will eventually happen.

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#2259596 - 09/11/21 02:01 AM Re: Cashing checks for non-customers Amy S
Rocky P Offline
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Joined: Jun 2003
Posts: 7,208
Florida
Also the inconvenience of potentially hiring additional tellers, or having your customers wait while non-customers take up bank employee time.
BOA for a while on branches with a lot of corporate accounts would have a separate teller line open for non-customers (and charge them for cashing the check) so as not to inconvenience the regular clientele.
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#2259623 - 09/13/21 04:09 PM Re: Cashing checks for non-customers Anonymous
Anonymous
Unregistered

Originally Posted by Anonymous
Quote:

Curious: does your bank OFAC and get ID from each of these "non-customers" for bill breaking and quarter rolls? What if it's a business employee who is not your customer doing a transaction for a business that is your customer?

We do not OFAC and ID these non-customers, simply based on the amount of the transaction. $10.00 bill for $10.00 in quarters seems a minimal risk, and it's only ever so often.

We have now encountered a change shortage, so we may be eliminating this "neighborly gesture" altogether.

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#2259632 - 09/13/21 06:00 PM Re: Cashing checks for non-customers Amy S
burkemi Offline
Gold Star
Joined: Nov 2013
Posts: 463
There was a similar conversation some time ago regarding this. I really don't think there is any perfect blanket answer. I don't think refusing to cash non-customer checks is wrong. I don't think cashing non-customer checks is wrong. I think it all depends on the situation and circumstances.

Our bank does cash non-customer checks - depending on the check. We charge a fee unless the check is drawn on us. And yeah, we sometimes take losses - but not nearly as much as what you're probably thinking.
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#2259666 - 09/14/21 02:24 PM Re: Cashing checks for non-customers Amy S
Amy S Offline
Junior Member
Joined: Sep 2020
Posts: 44
Thank you all for your feedback! Great discussion to have. I posted this and then went on vacation lol! We do charge them a fee to cash the check. The other owner of the business lives in another town and this is where the payroll account is. I did discuss this with our CEO and he agrees with the risk but is willing to make an exception in this instance. I have it documented, should it ever come up. We have done OFAC on the business multiple times due to loan proceeds being paid to them (construction company) so I'm not worried about that. I will be doing OFAC on the two cashing the checks to make sure we at least have it once on them.

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#2259677 - 09/14/21 03:41 PM Re: Cashing checks for non-customers Amy S
P*Q Offline

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We fingerprint non-customers cashing a check, it's a pretty good fraud deterrent.

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