Canadian check to US bank. What's the procedure?
September 22, 2015 11:18 AM   Subscribe

I'm a Canadian. I had to pay an Amercian $1000.00 US. A check for approx $1300.00 CAD (the additional $300.00 covered the currency exchange) from our Canadian bank was sent to the American. When over $1700.00 was withdrawn from our account, we discovered that the American had written "US Funds. Not Canadian." on the check before she cashed it, essentially stealing over $400.00.

My Canadian bank is still looking into the mess, but how should this have been handled by the American's bank? She defaced the check by writing "US Funds" on it. Is that not fraud? My bank refunded the entire amount initially, but I'm being told that might be reversed. To clarify - it was unquestionably understood by the American and I beforehand that Canadian funds would be sent and that the currency exchange would be covered.
posted by davebush to Work & Money (16 answers total) 3 users marked this as a favorite
I'm not a banker, but I strongly suspect that, regardless of the agreement between you and the payee, the payee's bank would not have considered treating the check as anything but US$, and probably doesn't have much experience handling checks drawn from outside the USA.

I've been on the other end of this situation (being paid in the USA by a Canadian) and I received conflicting information from my bank (a big bank with international branches, mind you) when I asked what would happen when I deposited it.

As someone once told me, "there's no such thing as a small screw-up at a bank." If anything goes wrong, it gets really complicated.
posted by adamrice at 11:25 AM on September 22, 2015 [2 favorites]

What did the cheque itself say? If its a Canadian Bank, and doesn't state US funds explicitly, my understanding is that it is Canadian funds. Trying to hand write the change to a different currency is about as valid as adding 'Million' to the end of the amount, surely?
posted by Brockles at 11:26 AM on September 22, 2015 [8 favorites]

Depending on it the person used a similar pen and tried to mimic your handwriting, it might have been impossible for the bank to tell that you didn't write the note of "US Funds" tellers aren't handwriting experts.
posted by rainbowbrite at 11:29 AM on September 22, 2015 [1 favorite]

The writing "US Funds. Not Canadian" is meaningless on the check both because you didn't write it and because the proper way to indicate a US funds check is to write the check in USD rather than dollars (which are assumed to be Canadian dollars).
posted by saeculorum at 11:31 AM on September 22, 2015

i know it's frustrating not have someone who actually knows the answer comment (sorry), but an argument no-one else has mentioned yet is that the usa and canada share a (rather porous) border. if this were legal it would become a common, easy scam. and then be made illegal.
posted by andrewcooke at 11:35 AM on September 22, 2015

Fraud usually involves intent. Do you think the payee did this on purpose or that they got confused somehow? This seems like a pretty dumb fraud to commit. You should expect them to cover all the expenses of their act, including fees you have to pay to reverse the check or similar.

Many U.S. district attorney's offices have special check fraud units. You may want to see if the payee's jurisdiction has one and you could have a chat with the staff there.

the proper way to indicate a US funds check is to write the check in USD rather than dollars

There are a lot fewer restrictions on what form a cheque is written in than many people think, and usually things are constructed in such a way that the bank does not have liability for paying out a clearly written instrument even if it doesn't fit a usual form.
posted by grouse at 11:41 AM on September 22, 2015 [1 favorite]

I've done this lots though not in the last few years. If I send a Canadian cheque to a person depositing it in the US there bank does the conversion and it gets deposited to them as an equivalent in US funds (IE: C$1000 cheque, they get ~US$700). If I write a Canadian cheque for $1000 and make a notation that it is $1000 US then my bank does the conversion and the receiver gets US$1000. Basically what occurred with your cheque.

However the receiver writing "US Funds" on the cheque is obvious fraud (in the they could go to jail for it sense) and it is really unlikely your bank is going to pull that money back out of your account now that they have refunded it. The receiver can of course still come after you for what you owe. I would try to settle up (via money order or some other more secure device than a personal cheque) just to keep it clear that you are not attempting to take advantage. I would also file a police complaint in their jurisdiction over the matter if this isn't someone you are friends/ family with. The cops are unlikely to actually do anything but it will make it easier for you to argue the charge if it gets put through again.
posted by Mitheral at 11:42 AM on September 22, 2015 [6 favorites]

It would seem to me that:

* the receiver knew in advance she'd be getting a check in C$, not US$.
* the check is drawn on a Canadian bank with an address in Canada, and with your address (in Canada) printed on it.

... then the receiver's US bank should have assumed the check was written in C$, performed the foreign currency exchange, and deposited the amount minus the exchange fee in US$ in the receiver's account. "US Funds" written on the check is meaningless, as the money in your account is held in your bank in the form of Canadian dollars.

I'd prefer to use PayPal for this sort of thing, since they do foreign currency exchanges automagically, however, if I had to write a check to a Canadian, then in the part where you have to write the amount in words, I'd write "One Thousand Three Hundred Canadian Dollars" (writing a C to the left of the dollar sign in the amount box) or "One Thousand U.S. Dollars" (writing a US to the left of the dollar sign) in order to make it explicit and avoid this sort of mess. All because, in my experience, bank employees are not usually the sharpest knives in the drawer.

That said, it seems like this is a matter for your bank and the receiver's bank to handle. Your bank knows you intended to write the check in Canadian dollars, and should not have honored the transaction for the US bank otherwise.
posted by tckma at 11:53 AM on September 22, 2015 [1 favorite]

Response by poster: Another thing to consider - the fact that Canadian and American currency are both called "dollars" even though they are different currencies from different countries, complicates things further. If the check came from Europe - with an adjusted Euro amount, this wouldn't be happening (I don't think).
posted by davebush at 12:22 PM on September 22, 2015

Response by poster: Trying to hand write the change to a different currency is about as valid as adding 'Million' to the end of the amount, surely?

That's exactly how I see it. We have absolute proof that "US Funds. Not Canadian" was written on the check by the American. Both banks have this proof as well.
posted by davebush at 12:25 PM on September 22, 2015

I would absolutely call the district attorney, as grouse has recommended. I'm (kind of) on the other end of this problem a lot in that I receive checks from a Canadian company's USD account, which then have to be taken into the branch instead of deposited at the ATM since, as I am told, the routing numbers are different and even though it's USD-denominated, it's still a Canadian routing number, so the bank's automated deposit systems see it as Canadian-flavor anyway.

Given all the hassle I have to go through to deposit checks, then, this seems like a really clear cut case of fraud, but you'll have to pursue it, unfortunately.
posted by at 1:07 PM on September 22, 2015

Yeah, this is why we do SWIFT transfers, Hyperwallet, or PayPal for CAD>USD transactions at our business. SWIFT and Hyperwallet are a pain in the ass, too, but the whole CAD cheque thing just seems to be beyond US banks to figure out. Your bank should be able to recommend a more secure method of payment for you.
posted by bluebelle at 1:55 PM on September 22, 2015

Another thing to consider

It doesn't matter. What does is what is written on the cheque. If it doesn't specify that the amount it is to be paid in USD then it is assumed to be in Canadian dollars when being drawn from a Canadian bank (in Canada) when it is sent to a Canadian clearing house to clear the funds (which is why they put holds on those kinds of cheques).
posted by redindiaink at 3:29 PM on September 22, 2015 [1 favorite]

This is simple, the American bank messed up. This isn't fraud, my initial feel is that the recepient just wanted to be sure to get USD rather than CAD upon cashing the check, and whichever brain wizard account manager that got called over decided this is how I'm gonna handle it.

My guess as to the reason their bank is taking so much time is that since it's international, someone in their office will have to get some account manager to get their boss to sign off on it.

If I were you, I'd call my bank and reasonably ask if they can temporarily credit your account the $400 until this is resolved. They might do it, they might not.
posted by Sphinx at 5:23 PM on September 22, 2015

Talk to an account manager at your bank in Canada to see about rectifying the situation and reversing the charges. Doesn't really matter what we say here, it's up to you to get someone from your bank to do something about it.
posted by lizbunny at 6:04 PM on September 22, 2015 [1 favorite]

I'm a Canadian who has dealt with American banks on frequent occasions.

My first guess in this situation would be that the bank happily took the cheque assuming it was in American funds. They would not have looked at the address on it or any other information because they wouldn't need that to enter it into their computer. They would see a cheque for $1,300 as being a cheque for $1,300.

Once entered into their computer a link would be made to the Canadian bank which would inform them that no, this was not a cheque for $1,300, but only a cheque for $1,000. At that point, ooh crud, the day's totals are out of balance and a deposit batch is short by $300. But that is nice and easy to correct - If someone at the bank just writes "US Funds" on the cheque then it matches their deposit batch perfectly. My first assumption would be the person who wrote US Funds on the cheque would be a bank or clearing house employee who was struggling to make it all balance so they could go on lunch.

So then the US bank informs the Canadian bank that they have a cheque for $1,700, so then the Canadian bank removes that much from your account and everybody at the US bank is happy. They have also magically created $400 but the easiest way to make it all balance is to credit that to the account of the person who cashed the cheque.

I wouldn't suspect your cheque recipient of trying to commit fraud before I would suspect the bank of having no idea how to handle FX.

You'd be surprised how often FX gets messed up by bookkeepers who don't know how to do it.

One cannot usually write a cheque in a currency that is not the same as the account the money is being drawn from. If I want to send someone money in Pesos I can't just take a Canadian cheque drawn on my Canadian bank account and write that the currency is pesos or rubles or bhat.

The problem I have encountered most often is when I have a US fund account in a Canadian bank and the cheque is cashed at an American bank which insists on treating the amount as if it is in Canadian funds because any cheque that goes to a Canadian bank HAS to be in Canadian funds - their software doesn't allow them any other options.

It is probable that the bank where your American contact cashed her cheque would have informed her, "We don't accept cheques in foreign currencies" but they didn't know that the US is not the only country that uses dollars. There in the US where the only place you can do anything with a foreign currency is the FX counter at the airport.

My guess is that if you e-mail and call every two or three weeks this will all get resolved in five months or so, but if you don't follow up the bank will simply keep the difference as more efficient that figuring out what the hell went wrong.
posted by Jane the Brown at 10:02 PM on September 22, 2015

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