Negotiable Instruments Purchased with Cash

Posted By: Curious in Kansas

Negotiable Instruments Purchased with Cash - 07/14/21 05:27 PM

At my bank, we require all negotiable instruments to be purchased with a debit from their account. We do not sell negotiable instruments to non-customers. We recently had a BSA audit that stated that even if our customer deposited the cash into their account, we should still be logging those on our negotiable instrument log ($3K-$10K) because even though technically the payment was made by a debit from their account, the customer's intent was to pay for it with cash.

Does this sound right to anyone else?

We're thinking about changing our process where we no longer require the customer to deposit the cash into their bank account and just pay for the negotiable instrument with cash. This makes my radar go off but I don't know if it's because that doesn't sound right or if it's because it's changing the way we've done it for 20+ years.

Any help/guidance is appreciated.
Posted By: rlcarey

Re: Negotiable Instruments Purchased with Cash - 07/14/21 05:33 PM

It has been a requirement since 2002: https://www.fincen.gov/sites/default/files/guidance/monetaryinstrumentsales3a.pdf
Posted By: Curious in Kansas

Re: Negotiable Instruments Purchased with Cash - 07/14/21 06:28 PM

Is there any point in having the customer deposit the cash into their bank account and purchase the negotiable instrument with a debit from their account? It seems like an added step.
Posted By: RockChucker, CAMS

Re: Negotiable Instruments Purchased with Cash - 07/14/21 06:38 PM

I am not aware of any benefit to depositing the funds first unless your system has no good way to reference the purchaser of the instrument.
Posted By: Susan

Re: Negotiable Instruments Purchased with Cash - 07/14/21 06:46 PM

We require customers to deposit the cash first. That allows the core system to properly link the cash to the customer within our BSA/AML software. Otherwise, the BSA/AML software thinks the deposited cash is linked to the bank, since it "deposited" into an account belonging to the bank.
Posted By: praBSA

Re: Negotiable Instruments Purchased with Cash - 07/14/21 07:12 PM

We also require a deposit first, this is how the transaction gets linked to our customer, core system, and transaction monitoring system. We would catch it for MIL purposes looking at our cash reporting log every day.
Posted By: edAudit

Re: Negotiable Instruments Purchased with Cash - 07/14/21 07:14 PM

Originally Posted by Susan
We require customers to deposit the cash first. That allows the core system to properly link the cash to the customer within our BSA/AML software. Otherwise, the BSA/AML software thinks the deposited cash is linked to the bank, since it "deposited" into an account belonging to the bank.

This it is easier to track with your AML software unless they can link it by TIN or other means.
Posted By: Curious in Kansas

Re: Negotiable Instruments Purchased with Cash - 07/15/21 01:35 PM

Thank you, All!