Escheat and Third Party Official Check Vendor

Question:

Our Official Bank Check vendor says that we shouldn't worry about how they handle escheatment (one lump sum with "payees unknown") because they are following the rules regulating their industry. Our question is, if we as a bank have hired this vendor to do a job for us, what is our liability with our examiners? Do we take this vendor at its word?

Answer:

Assuming that the official checks you sell do not show on your general ledger; i.e. they are actually drawn on another entity, you do not hold any funds subject to escheat. How the vendor handles it is beyond your control.

First published on BankersOnline.com 3/21/05