Topic: Suspicious Activity Reports (SARs)
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We have a customer that is a pension trust fund for a labor union. This customer issued a number of checks throughout this year to an individual who died more than two years ago. We have already paid the checks, which were cashed at a Walmart and a credit union by someone who must have forged the deceased payee’s endorsement. What can we do? We can’t have the payee fill out a fraudulent endorsement. Can we return the checks? The customer is not disputing the payments, but has asked for our assistance.
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No, we do not believe that you may return the checks. Generally, your bank must return a check, including a forged check, by midnight on the next banking day after receiving the check, as required by the Uniform Commercial Code (UCC) (with certain limited extensions permitted under Regulation CC). In this case, where several weeks…
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An unidentified individual recently cashed several checks totaling about $10,000. The individual used a customer’s ID to cash several forged checks that were drawn on another person’s account. We reimbursed the payor bank for the losses but are not charging the customer. This incident prompted us to review our identity theft policy. When a customer is a victim of identity theft, we generally require them to fill out an ID Theft Affidavit. However, our policy is not clear on whether this incident constituted identity theft. Are there any regulations that would clarify when identity theft occurs? Also, do we need to file a SAR?
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If your institution’s ID Theft Affidavit is used for purposes of fulfilling the FCRA’s obligations to provide certain records to consumers who are victims of identity theft, we recommend using that law’s definition of an identity theft victim: “a consumer whose means of identification or financial information has been used or transferred (or has been…
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We fired an employee for falsely inflating the hours she worked, resulting in overpayment. Do we need to file a suspicious activity report (SAR) regarding her conduct? We are a national bank.
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In our view, a SAR is not required in this situation, but it might be prudent to file one in any event. The OCC regulations require a SAR when a bank detects that an “insider” — such as a bank employee — has committed a federal crime against the bank, regardless of the amount involved.…
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Thirty days ago, we discovered that a former loan officer sent emails from her bank email account to her personal email account (possibly related to her search for future employment with another bank). We still are sifting through hundreds of emails, but so far we know she sent herself at least one individual’s W-2 form. The loan officer quit as soon as we questioned her about the emails. We suspect that the loan officer obtained the W-2 from a loan applicant, and that the loan officer intended to steer the applicant to her new employer, but we have not been able to confirm this suspicion. Our attorney told us to notify the affected individual and any others that we discover. We are almost certain we also will file a Suspicious Activity Report (SAR). Is that something we should do? Should we also contact our primary federal regulator (the FDIC)?
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We recommend filing a SAR, but at this point, we do not (and from what you have told us, the bank does not) have enough information to determine whether a data breach has occurred that would require your bank to notify its primary regulator or any affected individuals. The SAR regulations require a bank to…
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We have a customer who recently was the victim of check forgery. A fraudster forged the customers’ signature to write two different $6,000 checks drawn on that customer’s account. We plan to file a Suspicious Activity Report (SAR), and we also want the customer to fill out an affidavit of forgery to verify the fraud. The sample affidavit of forgery form that we found online includes a space to identify a state and county. In that space, should we list the county where the forged checks were presented, or the county where our main office is located? Also, should we contact local law enforcement? We believe we may have surveillance footage of the fraudster.
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Yes, we recommend contacting your local law enforcement regarding the forgeries, particularly if you may have information that could assist police in identifying the fraudster. In addition, we are not aware of any form requirements regarding affidavits of forgery for checks, although you should check for any clearinghouse rules that might require an affidavit or…
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A fraudster sent one of our customers a cashier’s check and told the customer to return excess funds by wire (that cashier’s check subsequently was returned and charged back to the customer’s account). Our customer instead purchased a cashier’s check and sent it to the fraudster. The fraudster is using this check, including the signature of our teller, to create fake cashier’s checks, which are being sent all over the country. We have received dozens of calls from the recipients, and one recipient took the story to a local news channel (we declined to comment on the story). We also are returning several of these checks daily. So far, our bank has not suffered a loss, but is there anything else that we should be doing? Should we contact our local law enforcement?
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This is serious fraudulent activity, and we recommend consulting with your bank counsel immediately to discuss a strategy for safeguarding against potential monetary, regulatory and reputational risks. Meanwhile, we would recommend that you contact local law enforcement, as well as the FBI. In addition, you should contact your primary federal regulator (the FDIC) to report…
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One of our customers just notified us that several counterfeit checks have been drawn on her checking account, starting over six months ago, with the most recent check paid about a month ago. We have copies of the checks, which state “signature not required” and that “customer authorization was obtained using Quick Pay Office Pro.” Are we liable for paying these checks? Our account agreement requires customers to report unauthorized checks within 60 days.
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Based on the facts provided, we believe these checks are remotely created checks (defined in Regulation CC as a check “that does not bear a signature applied, or purported to be applied, by the person on whose account the check is drawn”). We do not believe that your bank should be liable for the unauthorized…
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We have an elderly customer who we think is being scammed. We see repeated charges on his checking account from a computer repair company (these are remotely created checks rather than physical checks). Each new charge is usually around $600. We have tried to explain to the customer that we think he is the victim of a scam, but the charges keep appearing. We know about our reporting obligations under state and federal law regarding suspected elder financial abuse, but can we also stop payment on these charges?
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Your bank may stop payments on these charges provided your customer’s account agreement grants you this authority under these circumstances. Demand deposit account (DDA) agreements typically include a provision permitting the bank to decline a transaction if the bank suspects fraud or otherwise finds it necessary to protect the customer or the bank. Such a…
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We had a customer who wrote a check to a company for a large amount, and the check was deposited and cleared yesterday; however, while the check was made out to the company, an individual signed the check. Can we ask the depositing bank to guarantee the endorsement? If so, what is our deadline for making that request?
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Typically, if your bank suspects that an endorsement is forged or is otherwise unauthorized, you must send notice of dishonor to the depositing bank by the midnight deadline established in the Uniform Commercial Code. You also must return the check in an “expeditious manner” to the depositing bank using the two-day/four-day test established in Regulation…