payment". We would hope that having a stop payment on the
item would simply give you a method, operationally, to kick it out
and allow you to process it in a timely fashion. You would not want
to return it marked "stop payment" under the scenario
just described because that doesn't alert the depositary bank to
the real problem - and it makes it look like you have wrongfully
refused to pay the check.
If the check comes in during the 90 day period after it was issued
and it has a valid endorsement on it and has been negotiated over
to a holder in due course, you would need to pay it. Failure to
do so could give rise to a claim against you. If you decide (and
I wouldn't advise it) as an accommodation to the customer, to refuse
payment of the check, even if it appears to have a good endorsement,
you would want the customer to agree to indemnify you for all claims
and charges you incur as a result of not paying the check during
that 90 day period (before the declaration of loss becomes enforceable
and you have a legal right to return the check unpaid). You can
only require the indemnification for the period of time that you
have exposure to liability before the Section 3-312 protection clicks
into place.
As with many other banking matters, it's simply an issue of risk
management. If you are willing to take the risk that the check might
show up validly endorsed and you could end up paying twice - or
if you are willing to take the risk with prudent steps to insulate
yourself from liability by getting an indemnity agreement or a bond,
then you can put the stop payment on. You simply need to understand
the potential liability before you do and you need to make an informed
decision about whether it's worth it - or whether you should wait
it out.
Copyright © 2003 BankersOnline.com. Originally appeared in
Oklahoma Bankers Association Compliance Informer, October 2002.
(Reprinted with permission from the author.)
|
|
You Are Asking.
. . .
Q: A customer has three different businesses and they are
all sole proprietorships “Doing Business As.” Should we
require him to have three separate accounts established for each DBA,
or is it all right for him to combine the funds from each company
into one account?
A: Merging the accounts is not a good idea, though
in reality you have only one actual customer. Not only will consolidating
this activity into one account cause a headache for the customer's
accountant at tax time, your concerns are whether items payable to
all of the trade names can or should be deposited to the same account.
Also, how will your bank monitor customer activity for suspicious
transactions? In addition, it sends the wrong message to tellers and
may lead them to the conclusion that depositing checks payable to
multiple payees into a single account is generally permissible. We
recommend that you require that he segregate the businesses in separate
accounts.
Q: What's your opinion -- should our tellers have their full
name on their name plates?
A: Everyone knows everyone in small towns, but we
would vote no on the matter because of security and the privacy of
the employee. That said, this is entirely a bank decision.
Q: What accounts are covered by the USA Patriot Act?
A: Briefly, an "account" is defined by
the Act as formal banking arrangement established to provide or engage
in services, dealings or other financial transactions. This handy-dandy
chart generally shows what is included and what is not included in
this definition.
|