I noticed that four or five of our customers have purchased official bank checks payable to themselves. They later came back to the bank and used the check to purchase another bank check payable to themselves for a lessor amount and received the difference in cash. Once I looked at the entire history of this activity, I found that numerous checks had been issued in this manner since the initial check was purchased. I have two questions - 1) Should a SAR be filed for structuring, multiple transactions below BSA recordkeeping threshold (since the cash received back was sometimes less than $1000), multiple transactions below CTR threshold, transactions with no apparent economic, business, or lawful purpose? 2) Should we direct our tellers that this type of activity is suspicious and should not be allowed? Any other advice you can provide regarding this type of activity is greatly appreciated.

There has been much discussion on this issue.

1. Structuring may be one sort of SARable offense. It is going to be transaction and customer specific however.

2. Holders of official checks should be given two options. a) Deposit the funds into an account or b) obtain cash. Daisy-chaining official checks should just not be allowed.

The objective part of the response is that you can put a stop to it by simply saying that a cashiers check cannot be used to purchase a cashiers check. There have been prior discussions on this topic and some BOLer's have made and enforced such a policy.

The subjective element deals with the customers' intent. You seem to believe they are using it as a bank account. Based on experience, I might agree with you if I knew a bit more about the facts. However, I also note that they could be using the technique to hide from their creditors. I've seen that happen.

Some examiners, one in particular in my area, believe the practice is indicative of money laundering or income tax evasion. Without additional facts that conclusion is nothing short of ridiculous, but he enforces it against the institutions he examines, threatening to write them up if they do not file a SAR. (He says they only have to file one, no continuing SARs are necessary even though one of the descendants of the original check is still outstanding. Hey, when you're making stuff up you can make up anything you want!)

Your best practice is to simply not to allow it to happen...

I've seen this several times here. Most recently we had a business customer deposit a 12,500.00 check to the business account and then purchase four bank checks payable to himself (he owns the business) totaling 11,000.00. He's done it before a couple times over the last two years. We also got a tax warrant last month for him for a small amount. I hadn't seen this in my previous jobs so wasn't sure what to make of it. Now that I read this thread, it seems like maybe he's simply trying to hide from creditors. Doesn't sound like a SAR is warranted.

We did, however, file a SAR on someone else who did this. But it was a LONG daisy chain and there appeared to be some structuring involved also.