MSB unregistered

We have a customer (C-store) the bank told to register as a MSB- monitoring indicates that they are operating as an MSB. The branch employeee was told that the business is being sold- probably to a "cousin" since these types of stores seem to be sold about every 2 years to a family member! This was about a month ago and they continue to use the account- limited number of debits which are primarily ach transactions. My question is, can the bank refuse to accept 3rd party checks in their deposits? I so want to do that!!!!

At least at my bank, that would be up to the branch manager. At the very least, I would suggest them placing uncollected funds holds on every deposit that contains checks.

Thanks BSABecky I appreciate your response.
I'm not asking if I have the authority within my organization to make the decision. I want to know if the bank say state that we will not accept these checks in the deposit. We certainly would do that if a corporation wants to deposit a check made payable to another corporation. Since these checks are issued to individuals and not to our customer I would think that we can refuse to accept them for deposit into the business account.

You can refuse them, but you have been accepting them, so there is some precedent. It might be better to set a time frame, say 30 days, that he either shows you he's registered as an MSB, or the account will be closed. Send it certified/return receipt and also hand deliver him a copy.

Thanks GeorgiaPlum. That's what we normally do so i guess that's what I'll do this time as well.
This account has been so frustrating that I was looking for a quick fix. A gotcha moment