Our policy is that we don't sell monetary instruments to non-customers; however occasionally a non-customer will come to the bank to cash a check drawn on-us (usually an IOLTA account) and the branch will not have enough available cash on hand so they give a portion in cash and then issue them an official check for the remainder. I feel this is a violation of our policy but am getting resistance; any thoughts?

I would disagree and argue that it is NOT a violation of your policy. The non-customer is not purchasing the official check, per se, but accepting it in lieu of the cash that you would otherwise normally be obliged to supply.

However, I would change the policy to recognize this situation and make it policy (e.g., It is our policy not to sell...however, under the following circumstances an official check may be substituted for cash...).

Just my opinion.

FWIW, I agree with Doug. We have the same policy of not selling official checks to non-customers. However, we do issue official checks in lieu of an on-us check. We see it as a way of negotiating the original check.

Ditto DH & BSAdiva

If this is how you are treating exchanges. . .is the same true for an on us check exchanged for a wire?

We would not exchange an on-us check for a wire. We only exchange for CCs. If the non-customer wants to wire funds, they can take it to their own bank.

same for us

Sorry but I am confused. .. ..both a cashier's check and a wire are treated as a monetary instrument with the same requirements for a non-customer--what is the difference?

You are only required to keep records on monetary instrument sales if they involve cash.

The information you need to obtain for monetary instruments/wires purchased with cash applies to anyone, customer or non-customer. What our policy states is we will NOT SELL monetary instruments or initiate/receive wires for non-customers, period. Exchanging a cashiers check, in my opinion, is not selling a cashsiers check. There is no exchange of cash and it's just an exchange, not a sale.

I hate to beat the proverbial dead horse, but I'm being asked for 'chapter and verse' on this one.

We have a policy that states that we do not sell Monetary Instruments to non-customers for cash. However, we do allow non-customers to take a portion of an on-us check in cash with the balance in one Cashiers' Check. My feeling is that a straight exchange (dollar for dollar)of the on-us for a CC is not a violation of policy because there is no cash involved.
However, doesn't splitting the check, with any amount of cash back, require that the on-us item be 'cashed out' for its full amount? Isn't any MI from the proceeds a 'cash purchase' subject to the record-keeping requirements if the MI amount is between $3000 and $10000?
If so, wouldn't Policy need to address what we'll require from a non-customer to comply? Management doesn't think so and wants no mention of 'sales to non-customers'. I just need something definitive - HELP!!

Semantics. "Cashed out" does not mean that cash ever left the teller drawer. It's strictly an accounting entry. Would it be helpful for your policy to cite examples such as these that would not be prohibited because cash doesn't change hands? Yes. Is it required to have the examples? I don't think so. What is required is that everyone understand what the simple statement "We do not sell monetary instruments to non-customers for cash" means.

I'm not trying to be dense (but I probably am) - I get that part as it applies to a full exchange. My 'hang-up'(if you will) is for the situations where cash does leave the teller drawer in some amount - does that change the rules?

Example: Non-customer presents IOLTA check for $25000 and asks for all cash - we prepare the CTR appropriately, and customer leaves the teller window with the cash. Halfway to his car he decides that he doesn't want to carry all that cash and asks for a $20000 CC instead. If I can't sell him the CC at that point, how is the partial exchange any different?

How often does that really happen?

Hey, once he leaves with the cash, in my opinion, if he walks back in, he then becomes a 'non-customer' and we 'don't sell cashiers checks to non-customers'. He had his chance to do an exchange, refused it, transaction complete.

Amen!

Then I'll go with an entry in Policy that says we will allow a non-customer to exchange an on-us check for either a MI or a combination of cash and MI without taking any information beyond what we require to cash the check and/or complete the CTR- thanks for the insight - I told you I was dense!

I would offer only an even exchange with no cash at all if my policy was that he couldn't cash it. By giving cash at all, you really are "cashing" the check.

I read an article in the ABA Compliance Center, June 2010, titled, Is this "swap" covered by BSA? To summarize the article, if a teller makes an even exchange of an on-us check for a Cashier's Check in an amount between $3,000 and $10,000, for a noncustomer, recordkeeping is required, specifically 31 CFR 103.29, even though no physical cash changes hands.

This was discussed somewhere else in the threads and the consensus was that article is dead wrong.

Is there a written rule??????----------

Management wants to see a written rule that states that banks are required to obtain personal info----i.e. social security number--on NON customers that does NOT involve cash. In this instance a large $ check from another bank brought in to purchase a Cashier's Check. Any help is greatly appreciated.

There is no such rule.

My queestion would be: Why in the world would a bank issue a cashier's check to a non-customer against a check drawn on another bank???

Customer service is the reason, we do a lot of mortgage loans that we sell to the secondary market and our Loan Officers want the service. It is an extra service we do for their customers so they do not have to go another bank and get a CC. We take their personal check and do what they call a “check exchange” for a CC. Their argument in relations to the risk is “we have their bank statements that show the money available and a deed on their house”. Management is ok with the risk and we have not loss any money YET.

YET is the imperative word.

The "customer service" label is used to cover a lot of sins committed by unknowing loan officers.

Attempting to acquire the person's banking business and the President said so-----There are exceptions made to the rule of "we do not sell CC to non customers" and it is stated in policy that an officer has to approve any such transaction for a non customer.

However, our software is set up to require personal information be filled in when a "new person" is created--in this case the remitter is a non customer and had to be created----if the required info is not keyed in an override is required.