We have recently come to suspect one of our customers is not who they say they are. We are wanting to close the accounts but are unsure if we should send the cashier's check to the person that we suspect of identity theft. We are going to file a SAR but what do we do with the funds in the meantime?
We would appreciate any guidance on this as we have been unable to find anything in our research.

You are not the police - you have no right to hold or confiscate the money. You close the account and send them a check and file your SAR.

You can file your SAR and tell them the account is being closed and they can pick up the cashier's check, with ID. That way, if there was any fraud involved, you got a wee bit of CYA.

You don't HAVE to bank someone, especially if there are problems. But be sure that "suspect" is "pretty darn sure" and not an off the wall issue that is unexplained because the bank failed to ask the right questions.

Depending on the deposit, i.e. government benefits, you may have to keep that account open for 30 days, depending on what is known about the relationship, before it can be closed.

We have recently come to suspect one of our customers is not who they say they are.

So have you talked to the customer or asked them about your "suspicions"? Perhaps there is a logical answer for your concerns.