So we recently were notified by the Treasury - a year later mind you - that bonds we cashed for a customer had previously been reported lost and were reissued and payment to the Treasury is now required by the bank. Upon researching this, the customer had cashed the original bonds and the reissued bonds at different times. She's elderly and confused and had no ill-intent. Through our research and calls to the Treasury we found that there was no indication that the bonds had been re-issued. The purchase stamp and date stamp were only off by a short period of time - one to two months in our scenario. The rep at the Treasury said that was the only way we would be able to tell if it was a re-issued bond but to be careful because the difference in date stamps doesn't necessarily mean it was reissued. The bond may have been purchased November 29 but the date imprint of the FRB may say December, that the purchase and imprint date could be off by several months in a normal purchase.

So our question was how do we know then if a bond is original or re-issue. We were told the only way would be to send in a form verifying authenticity which takes several months to process. While not normally an issue - a customer could cash bonds and close their account 6 months later in which we then have no recourse.

Has anyone else run into this issue? Do you as an institution hold cash payout for a period of time? Lucky for us in this case the customer still has accounts with us so we are able to recoup the funds but the amount was substantial. Had this account been closed we would have been out the money with the only alternative being legal proceedings.