I am seeing/receiving conflicting information regarding the ability to place holds on lost/stolen cashier checks. Thede are checks that have been issued by our Bank either at the request of and paid for by a customer or issued by the bank for a loan (payoff, escrow payment, etc) and then reported lost/stolen either by the payee or payor.

I have seen some posts here and other places where Banks are actually placing holds on these checks for a lengthy period of time (1-2 years) and/or reissuing after 90 days (per IUCC).

However, I have been told by a compliance consultant that the UCC prohibits holds (as well as stop payments) from being placed on these items.

Management is asking what we can do (if we can't place a hold on the check) to prevent the check from being cashed without some sort of intervention or review? (Notes on the system are not being read)

I would start by asking how often the manual reviews of checks more than 90 days old cause you to uncover fraud or an improper presentment. If you find that such reviews have value, then keep them going. But if the reviews aren't adding anything to your fraud detection, consider discontinuing the process.

The important thing to understand is that the bank's responsibility with respect to outstanding cashiers checks is to pay items that are properly payable as they are presented. So even if you are using an internal mechanism (such as a hold or a stop) to kick certain items out for manual review, you still have to pay the ones that are properly payable.

Put another way, the UCC prohibits stop payments on cashiers checks, but if you have to use the same operational mechanism on you core as you would to place a stop payment on a check so that someone has to make a manual pay/return decision, that’s fine.