We just opened a new account. The account owner used over $ 10,000 in travelers checks to open the account. No other accounts for this individual, and age of owner is over 50. T/Cs appear to have been purchased at different banks. Several different sequences, with gaps in some of the sequences. Mostly in denominations of $ 50 and $ 100, with some $ 20s and some $ 500s. No CTR would be filed, as it was not cash. Does this seem unusual ??? Seems like a lot of travelers checks, and the customer does not appear to be new to the area, so what brings them to our bank?????

My first thought is money laundering. Is there any other common thread among the checks- most importantly, is your depositor the purchaser of all of the checks? This is the perfect time to invoke information sharing between FIs under the USAPA- see if you can talk to the issuing banks regarding the source of the purchase funds for the checks.

You didn't specify in your post, but I am assuming that this is a personal account, and there is no apparent reason for this customer to be using travelers checks exclusively. If after a preliminary investigation, this still smells like money laundering- then it's SAR time.

The new account owner is back, taking some cash from the T/Cs that were used to open the account. Am Ex has confirmed that the T/Cs are legit. Some say BankBoston, which would lead me to believe that they were purchased over 3 years ago. But this customer apparently just moved to this area from overseas, which makes me uncomfortable. Anyone have any recommendations ???

I am at home and cannot confirm this, but I beleive Reg CC allows for extened holds on new accounts. Not sure if this applies to traveler's checks or if the new account rule is a general exception to the funds availability requirements.

If Reg CC allows generally to hold on new accounts, apply the hold and delay the withdrawal for this reason. This might be a kite, since he just depoited and is now withdrawing.

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This might be a kite, since he just depoited and is now withdrawing.

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Just curious - how do you kite with Traveler's Cheques?

Sorry . . . Traveler's checks are next day items for new accounts. You may hold only the excess over $5,000, and only for 9 business days.

The checks might not clear; may have been reported lost, stolen, etc.

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The checks might not clear; may have been reported lost, stolen, etc.

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While I would call this check fraud, I would not call it kiting.

Just my opinion.

As AmEx has already verified the authenticity of the checks for Security Guy, it also stands to reason that the checks have not been reported lost or stolen, or AmEx would have disclosed that fact. But that's just an educated guess.

Going back to the original facts- the customer had been overseas, some of the checks may have been issued a few years ago, the customer has now returned and is depositing the checks an masse: Perhaps this person spent an extended time in an area that prefers travelers checks over plain old currency because of trouble with counterfeit bills. Perhaps he was getting better exchange rates than he could have gotten with cash. There are logical explanations for this behavior. Of course, I still would not bank on the 'maybes' and I still think it is necessary to determine if the customer is laundering money.

JacFSB - I completely agree with your assesment.

To clearify my statement I merely meant using lost or stolen checks would be check fraud not check kiting.

Ask to see the customer's passport. Compare the entry and departure stamps in the passport with dates on the travelers checks. This is one way of tracing the path to see if it is legitimate.

Lucy,

While this is a great idea -it may not really prove anything. My wife went to Canada twice, Mexico once and France once last year and she has one entry stamp from Acapulco. Most entry posts scan passports in rather than stamping the physical document. It use to be fun to collect all the stamps - now there is nothing but a bunch of wasted pages.

If you decide not to file a SAR right now, you might want to mark your calendar to review the account at a later date. A review of account activity may ease your fears or provide sufficient questions to warrant the SAR filing. Either way, I wouldn't close the book on this one yet.

I've had similar experiences. I've driven over the US-Canada border several times and never been stamped. Just waved at. But when I flew to Montreal, the Canadians stamped by passport. So I finally have a stamp!

We have open borders with Canada and Mexico so those procedures are pretty casual. If this customer has been in and out of more restrictive border countries, there are more likely to be stamps. But, as you point out, this is hardly a foolproof method -- just a possible source for evidence.