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April 24
BSA/AML Compliance: Writing the SAR Narrative
Ken Golliher

April 29
HSA Basics
Whitney Johnson

April 29
Required Training for Loan Originators
Mary Beth Guard and Jack Holzknecht

May 13
Overdraft Practices in Today's Regulatory Environment
John Burnett

May 14
Reg E Claims - Allocating Liability Correctly
Andy Zavoina

May 15
Managing Electronic Information - From A to Zettabyte
Fred Menge



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#1647370 - 01/06/12 12:45 PM Stop Payments on Official Checks
I_heart_audit Offline
Junior Member

Registered: 06/15/11
Posts: 47
Loc: Midwest, United States
Hello, I'm currently reviewing our bank procedures regarding issuing stop payments on official checks. Our procedures state that to place a stop payment order on cashiers checks, bill payment checks and cd interest checks that a signed indemnity bond should be obtained and a completed stop payment form. Although I worked in a number of areas within banking, this is my first year as an auditor.
- Do bill payment checks or cd interest checks really need an indemnity bond?
- Should an indemnity bond be completed for personal money orders?
- Who signs the stop payment form for cashiers checks? The customer or an employee?
Please offer any assistance regarding how your institution deals with these situations. Thank you!

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Audit
#1647795 - 01/07/12 04:47 PM Re: Stop Payments on Official Checks [Re: I_heart_audit]
rlcarey Offline
10K Club

Registered: 07/16/01
Posts: 48564
Loc: Galveston, TX
I think in all States it would not be legal to place a stop payment order on a Cashier's Check. I'm trying to think why a stop payment order would be issued on a bill payment or CD interest check and I can think of few. Indemnity bonds are a risk management call in any case. I'm not even sure where a person can buy one anymore.
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The opinions expressed are my own, take them or leave them.

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#1651155 - 01/13/12 04:08 PM Re: Stop Payments on Official Checks [Re: I_heart_audit]
Jennifer K Offline
Member

Registered: 07/29/09
Posts: 74
Loc: Pacific Northwest
The UCC (3-312) outlines how a claim for a lost, stolen, destroyed instrument can be perfected. Once perfected, the claim is enforceable.

At our institution, we have the claimant complete a "Declaration of Loss" form after which management will review, determine whether the item is still outstanding and then centrally a stop payment is placed on the item to cause it to reject and prevent duplicate payment of the item since a refund has been processed.

While placing a Stop Payment in general is not permitted, this is how to prevent duplicate payment of an item only after the UCC requirements have been met.
_________________________
The opinions expressed are mine and do not necessarily reflect those of my employer.

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