Questionable Deposits by Business

Question:

I work in the BSA Department. My bank was just acquired by another bank and we found a customer of theirs who runs a factoring company under his personal TIN. His activity consists of depositing checks payable to other businesses (in the week period I have access to - databases not merged yet - the checks range from $25 to $12,500) and withdrawing cash (about $250,000/month) to pay his clients. From what I can tell, based on online research, the debtor businesses should be remitting payment directly to the factor, not the original vendor, and the factor should not be dealing in cash in any way. It appears that he may be acting as an unregistered check casher for businesses. How can I determine if this is the case? Do you agree that he should not be depositing third party business checks?

Answer:

I agree that he should not be depositing third party checks. I suggest that you first contact the institution's legal counsel for guidance. Then consider contacting your local office of the IRS - Criminal Investigation Division (found in the white pages of your local telephone book) for guidance. Based upon what you've shared, you may have enough cause to file a SAR and the IRS will help you make that determination. Be sure to document your investigation well.

First published on BankersOnline.com 8/16/10