Placing a Hold on a Cashier's Check Jim Bedsole, BOL Guru Guru Bios
Question: Can a hold be placed on a cashier's check (not one issued by us)? If not, and the check is returned to us as counterfeit, forged, etc. what should be done? How can we protect our bank?
Answer: Cashier's checks normally require next day availability. That can be extended one business day if the check is not deposited in person. If the check is not deposited into an account held by the payee of the check, then it becomes an ordinary local or non-local item (depending on the routing number) for hold purposes. If the check is deposited in person into an account held by the payee, then the only holds that can be placed are exception holds detailed in Regulation CC, section 229.13. These include holds for new accounts (really means new transaction account relationship), large deposits, repeat overdrafts, redeposited items, reasonable cause to doubt collectibility, and emergency conditions.
If a cashier's check you accepted for deposit is returned, assuming the return is valid and appropriate under UCC, your recourse is against the customer who deposited the item. It should be charged back to the account. You may have remedies under the UCC if the return is late, wrongfully dishonored, etc.
To protect your bank, you need to make sure your tellers are well trained on how to spot counterfeits and forgeries. You should have processes in place to attempt to verify the validity of the check prior to accepting for deposit. This won't always work because some banks will not verify even their own checks. But it is a starting point. You should also consider the account history where the item is being deposited, and factor that into your decision on whether to accept the check for deposit. Remember, you do not have to accept the item for deposit if you have concerns that are not concrete enough to warrant an exception hold.
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