Okay, here's the story. Our bank recently got stung on a fraud to the tune of over $32,000. The "customer" opened his account in May. He used it frequently depositing cashier's checks and cash. We gained a comfort level w/the account because we had no problems with it. He was also very smooth, in that he used different branches of our bank each time he made a deposit/withdrawal, so we never noticed a pattern. Two months into the account (July), he deposits several money orders drawn on a large, nationally-known bank. The goofy thing about the MO's is that they weren't BANK money orders. Apparently, a "business" opened a checking account w/the large bank, then printed their own checks, making them LOOK like money orders, and even stating the words "money order" on the face each check. Well, I'm sure you can figure out where this is going by now: the checking/money order account was closed - we got all the MO's back after we had paid out on them.

Here's my issue - mgmt. now wants to place holds on all non-US Postal money orders. In other words, anything that says money order on it gets a hold. Reg CC states that we cannot place holds just because a check is a particular "class of checks". So, my question is, how do you all handle this type of situation? Any suggestions would be very helpful. Thank you.

I would agree that Reg CC says you can't place an EXCEPTION hold on a particular class of checks, but I don't see any reason you can't place a case-by-case hold. Would this have given you enough days to prevent your loss? You can also do an exception hold for large deposits that would delay availability longer on amounts over $5,000.

Reg. CC states: "a depositary bank shall make funds deposited into an account by check available for withdrawal not later than the 2nd business day following the banking day on which funds are deposited, in the case of,.....(2) A U.S. Postal Service money order." So I would think that you are safe to place holds on other money orders.

Also, Your state law probably requires registration with the state banking department or some other agency to be able to sell money orders. GA has a complete list of all companies registered and permitted to sell monetary instruments in the state listed on the State Department of Banking and Finance website. Those who issue monetary instruments must now be registered with the Federal Treasury Department as well. I don't know if they have any lists available. You might try to verify the validity of the money order prior to placing a hold on the deposit. If the company selling the money order is not properly registered then you have a fraudulent document.

Don't forget to file that SAR!!!