Whether sincere or not, some “organizations” take the position that U.S. dollars are not legal currency because the United States went off the gold standard. They promote the belief that the current medium of exchange is “credit money,” and argue that since a bank loans U.S. dollars, a borrower can repay the debt with credit. Some groups have allegedly attracted individuals to pay for “seminars” in which they are told that the use of certain “financial instruments” (some purchased reportedly for around $100 a check) will pay off debts to banks and other creditors, and that if a creditor rejects such a check, a multi-million dollar lien could be filed against that creditor. These groups may print their own “monetary equivalents” and call them “Certified Money Orders,” “Certified Bankers Checks,” or “Comptroller Warrants.” The instruments are not payable at or through a financial institution and are not, so far as known, redeemable in cash. It has been maintained consistently that these instruments have neither financial value nor legal validity. They often state that they are drawn on, are to be presented to, or are payable through the U.S. Treasury or Treasurer, the U.S. Postmaster or Postal Service, or the Comptroller of the Currency (OCC).
These instruments have been the subject of three recent OCC Alerts (95-33, September 8, 1995; 95-44, November 20, 1995, and 96-3, February 8, 1996) which state that the “Office of the Comptroller of the Currency is a bank regulatory agency and has no authority to draw on funds of the United States or to control any bank accounts of private individuals or corporations.” The OCC further states that “any of these instruments presented for payment will be returned to the sender and copies will be provided to the appropriate law enforcement agencies.” The agency also requests that if any such instruments are presented to the bank for payment or if any information concerning this matter is obtained, the bank should immediately bring it to the attention of the OCC’s Enforcement & Compliance Division in Washington, D.C. and that the bank should prepare a “Suspicious Activity Report.” The OCC warns that “under no circumstances should your institution honor one of these instruments or submit it for payment.”
The groups and their tactics appear to be changing constantly. For bankers, it’s important to know that the documents (be they letters, pleadings, money orders, bankers checks, or other documents) probably will not have the organization’s name on it, but individual names or initials, and that the form of instruments will probably change. It is necessary to understand the concept of what is going on and be alert for unusual or suspicious items. For example, a new twist is an instrument that calls itself an “Unconditional Assignment of Claim to the FBI.” The document tells lenders that the FBI is holding funds per order issued by the Attorney General and that the document must be mailed to the FBI to receive the money to pay off the customer’s debt.
One unaware bank received a $38,000 “money order” with a cover letter stating it was to pay off a mortgage obligation of the bank’s customer. The bank applied $31,000 to extinguish the debt and sent the customer the balance of $7,000 by cashier’s check. The bank attempted to recoup its loss through the courts.
These activities should be reported to the appropriate law enforcement authorities and the FBI. The bank should send any information on these instruments to their primary federal regulator and should also file a Suspicious Activity Report (SAR). Keep in mind that when these activities are reported to governmental authorities, copies of the documents should not be attached. There is a limited exception under the Federal Right to Financial Privacy Act which allows you to notify a federal government authority when you believe you have information that relates to a possible violation of a statute or regulation; but, under the exception, you are only allowed to release the customer’s name or other identifying information, and a brief description of the suspected illegal activity. This gives the government authority the information it would need if it elects to pursue the matter, by obtaining a subpoena for the actual documents and records. To help the government in its pursuit of these perpetrators, you may wish to consider the following issues: