Ok, looking for thoughts and guidance on this. Situation is as follows:

A new account is disbursing checks to individuals for payroll or other expenses (home construction related). These individuals come into the branch to negotiate these checks and they do not have proper ID, or at least that is what has been said to us. Therefore the business owner is coming in and counter signing the back of these checks for these payees, the check are then cashed out to him and he then gives the cash to those parties who have no ID.

I am looking for guidance on this that I can point to in hopes of getting this stopped. I prefer to have ID on all people recieving cash for any reason, especially non-customers.

Concerns I have so far.
1. OFAC on the payees, if no ID, how can someone clear a potential hit.
2. Procedural for allowing this scenario to happen knowing the payees do not have ID
3. Possible employer tax avoidance and other IRS concerns in paying employees in cash (from irs.gov)
4. Likely paying undocumented workers in the US illegally

What are you alls thoughts? I am against doing transactions this way for a number of reasons... I know this used to be more common back when I was a teller in the 90s, but we did not have the same AML concerns as we do in the world today.

Anyone know of any additional guidance on this scenario or something else I can point to in addition to the IRS.Gov page I already printed regarding employee payroll income tax avoidance?

I appreciate the thougths and discussion points.

Thanks!

1. The business owner's anomalous endorsement on those checks would make him personally liable, but would not bind the business.
2. As to your OFAC question, if your bank does OFAC checking on payees, the lack of ID for a payee can present problems clearing false hits.
3. I don't see the connection with tax avoidance -- these people are being paid by check, not cash.
4. I'll let others add their comments.

Thanks John,

I should also clarify, he has also paid them in cash just before he started cutting them checks. He would make a check out to himself and then put their names in the memo lines so he knew who that cash would eventually go to. It seems I left that out from above as I had so many thoughts running through my mind at the time.

I truly appreciate the insight and response! Thanks!