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#347708 - 11/22/05 02:18 PM
Re: Holds on cashiers checks
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Anonymous
Unregistered
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Then why do the regulators make this distinction in the commentary betweeen Cashiers Checks drawn on other banks and Cashiers Checks a bank draws on itself?
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#347709 - 11/22/05 02:24 PM
Re: Holds on cashiers checks
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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They don't, you are misreading it. They are saying that not all of the items that a bank may draw on itself are cashiers checks for the purposes of next day availability; e.g. Quote:
The definition excludes checks that a bank draws on itself for other purposes, such as to pay employees and vendors, and checks issued by the bank in connection with a payment service, such as a payroll or a bill-paying service.
Please review your interpretation with your regulatory agency.
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#347711 - 12/01/05 11:29 AM
Re: Holds on cashiers checks
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10K Club
Joined: Aug 2001
Posts: 21,939
Next to Harvey
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You are to be congratulated on your good fortune to date, but placing holds on cashier's checks until the bank verifies their validity is a patent violation of federal law. There is no risk of being fined. The actual risks are outlined in great detail in prior posts in this thread.
I occasionally drive too fast. I've gotten my share of tickets, but never had an accident. However, my anecdotal experience does not put me in a position to even suggest that others following the same course will have the same result. So, I am careful not to do that.
Prior thread
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#347712 - 12/01/05 01:51 PM
Re: Holds on cashiers checks
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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When it comes to cashier's checks, here are your permissible choices: - Accept the check for deposit and provide next day availability. This choice will be fine if the check is valid and legitimately negotiated. Cautious bankers will make this choice only if they are comfortable with their customer relationship and don't have any reason to doubt the validity of the check (lottery scam, Web auction scams, alterations, etc.)
- Accept the check for deposit and apply an exception hold for repeat overdrafts (in the unlikely event that your depositor is in this select group).
- Accept the check for deposit and apply a "reasonable cause" exception hold. This only works if you have information that would cause a reasonable person to form a well-grounded belief that the check won't be paid. That belief can't be based on a "class" of checks (all cashier's checks, because we've had a spike in cashier's check fraud). It has to be a set of facts concerning the check in question (the drawee bank tells you it's probably a counterfeit, or hasn't issued the check in question), or facts surrounding the transaction (the customer's actions or conversation lead you to believe the check is part of a scam). Since the holds in these cases normally only run 7 or 11 days, this option is not always the wisest choice, particularly if you suspect fraud.
- Accept the check and place an exception hold on the amount over $5,000. The reason for the hold might be that the check is being deposited to a new account, or that it's part of a large check deposit (over $5,000). This exception reason has always bothered me. Isn't losing $5,000 to a check fraud only marginally more acceptable than losing the full amount of the check?
- Accept the check only for collection. Sure, this involves extra work and costs. But it provides the only guarantee of good funds once the deposit is finally made (if it is).
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#347713 - 12/02/05 05:05 AM
Re: Holds on cashiers checks
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Member
Joined: Aug 2003
Posts: 94
Texas
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My sister just sold her house. She got a check from the title company, drawn on a local bank. She went to the local bank and got cash for part of the check and a cashier's check for the rest. She then deposited the cashier's check into her account at the credit union. They put a hold on it until the local bank faxed them something stating that the cashier's check was good. They said they do this because they have had a lot of "cashier's check fraud." If I'm reading the rest of this thread right, the credit union violated federal law. Did I miss something? 
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#347714 - 12/02/05 02:13 PM
Re: Holds on cashiers checks
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10K Club
Joined: Oct 2000
Posts: 40,086
Cape Cod
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Although I sympathize with the credit union's concerns about bogus cashier's checks, if the facts are as you have presented them, they appear to have violated the law.
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John S. Burnett BankersOnline.com Fighting for Compliance since 1976 Bankers' Threads User #8
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#347716 - 12/02/05 03:21 PM
Re: Holds on cashiers checks
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Member
Joined: Aug 2003
Posts: 94
Texas
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I just called my sister, and the hold was released. I assume this is because they received the fax.
We will know better next time, though. 
Last edited by GoCowboys; 12/02/05 03:27 PM.
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