Answer:
Under Reg CC you can put an extended hold on checks, non-local up to 11 days, due to reasonable expectation of the check not being paid. But if I truly suspected a person of an illegal kite, where I was sure of my facts, I simply put all activity on the account on referral to me, removed the funds in the account, put them into a general ledger account, and wrote two letters - one regular mail, one certified mail/return receipt requested - that said: "Due to irregularities in your account, we have removed all funds. Please contact the writer immediately regarding your account number ........" This letter will get there long before your time is up for the hold. If both letters come back to you undeliverable as in "No such address", you'll still have the money there when the checks come back! If they are delivered and the customer contacts you, and realizes you're on to what he/she is doing, they'll become agitated (I can't use the word here I'd like to...) and will most likely close out their account with you and take it to a bank that is a little less observant. Either way, you've solved your problem.
First published on BankersOnline.com 1/7/02
print
share