We have a customer who opened up two accounts (1 personal / 1 business) within the last year. Since that time it was noticed that cash deposits into the personal account were increasing, in amount and number, and that the deposits were followed up by an ACH pmt to "Associated Foreign Collection". This was brought to my attention for research and I have found that in addition to this, they appear to be cashing payroll checks and then depositing the items to the business account. I don't see evidence of other business related activity other than this.

This has brought several questions to my mind:
1 -He and most of the payees are hispanic, which in this area is not alarming becuase a lot of the hispanic population will not maintain checking accounts. However, accepting this volume of third party checks for deposit does have a higher level of risk. Do any other BOLers have any similar situations or thoughts about what we should or can do to decrease the risk.
2> Since we have know way of knowing who they are exchanging foriegn currency for, what is our liability and risk level, and, can we require anything from them?

Am I being overly cautious or paranoid? Any thoughts or suggestions would be appreciated.

Compliance compliance compliance. If you want to keep your customer and your banks integrity go through all the "know your customer" precesses with you customer. Remember that if they are cashing checks they need a FINCEN business number and be sure to visit them regularly. Do they have all their licences and are they doing money transfers.

This is my personal observation...

Also keep in mind that cashing checks for third parties, then depositing the checks is one of the simplest way to launder money.

Or to have a legitimate check cashing business. This is why compliance is the name of the game...BSA/Patriot/FINCEN the works. These types of accounts are usually very lucrative to a bank but they are high maintenace when it comes to compliance.