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Regs Covering Non-Signer Depositing Checks

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Can you allow funds payable to someone to be deposited in an account that they have no ownership or withdrawal rights? What reg covers this? We have customers ask us to deposit checks payable to "John Doe" into account for "Jane Doe" where Jane is the only owner/signer. We always explain to them that we do not allow it because John would not be able to withdraw the funds and we do not want to take a chance on John holding the bank liable because he did not receive benefit of the funds. There is often a suspicion that John is trying to hide the funds from the IRS or because of legal judgments. We would like to know which regulation or act specifically addresses this so we can have a basis for our policy. Does this fall under money laundering under the BSA?

There is no specific regulation, but you are on the right track. You would have to examine your recourse options if something went wrong with the deposit and any recourse available to the bank would be governed under your State's version of the UCC.

First published on 6/20/11

First published on 06/20/2011

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