Topic: Suspicious Activity Reports (SARs)
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An elderly woman and her adult daughter are joint owners on a demand deposit account. The daughter believes that her brother is taking advantage of their mother and would like to prevent her mother from making withdrawals from the account. The daughter also has a power of attorney for the account. What documentation do we need to comply with the daughter’s request? Do we need a court order declaring the mother’s incompetency before we can restrict her access to the account?
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We recommend reviewing the daughter’s power of attorney document and the documentation setting up the account to determine whether the daughter has the authority to completely control the mother’s interest in the account. The Illinois Statutory Short Form Power of Attorney for Property provides the power to execute “financial institution transactions” in line item (b).…
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Are we authorized to put a stop payment on a cashier’s check payable by our bank that has not yet been submitted for payment? We discovered that one of our customers had purchased the cashier’s check as the result of a scam.
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No, we do not believe that your bank may stop payment on the cashier’s check without risking liability for the check. The Illinois Supreme Court has held that a cashier’s check is the equivalent of cash. As a general rule, once a cashier’s check enters the stream of commerce, the issuer (your bank) is liable…
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Is a memorandum prepared as part of our process for drafting a suspicious activity report (SAR) discoverable in a civil suit? We received a subpoena seeking documents created “in connection with” a recent incident of check fraud. We know that a former bank employee has stated in a deposition that we filed a SAR related to the check fraud. We suspect that this subpoena is an attempt to obtain internal documents created by that employee in connection with the SAR filing.
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We believe that an internal memorandum prepared as part of your process for filing a SAR should be treated as confidential and not produced in response to a subpoena. SARs and “any information that would reveal the existence of a SAR” are confidential and should not be disclosed to third parties, even in response to…