I have a couple of questions regarding liability and counterfeit checks.

We had three checks clear a client's account that were a different check style. These checks were deposited at other banks. The signature matched our client's signature card and we had no way of knowing, or reason to see, that the check style was different. We missed our midnight deadline. We had duplicate check number flag on a good check which alerted us to the bad checks.

Where is the liability? I believe it's us and we would have to TRY to do a Without Entry claim and cross our fingers.

One of the checks was deposited at another bank and immediately wired out of the country. Does the depositing bank bear any liability on this?

The Bank of First Deposit bears no liability under the Uniform Commercial Code so unless you are both part of a correspondent clearing network that requires member banks to share liability, you have no recourse. The Bank of First Deposit would only have liability if they violated a presentment warranty for accepting an altered check or a forged endorsement. (Your customer didn't actually write the check so it's not altered and I doubt the crook or money mule to whom the check is payable is going to contact your customer claim their endorsement was forged.)

Thanks for confirming Brian.