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#347707 - 11/21/05 10:50 PM Re: Holds on cashiers checks
RVFlyboy Offline
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Quote:

That the ONLY items deemed to be Cashiers Checks are those Cashiers Checks drawn on itself.

All other Cashiers Checks (those drawn on other banks) are either local on non-local items for hold purposes.



Man, I am amazed at the amount of bad information out there about what Reg CC means. As Ken says, this is WRONG, WRONG, WRONG! This comment is meant to differentiate a check a bank draws on itself from a check drawn on some other bank. But once it is a cashiers check (by virtue of being drawn by a bank on itself) it is a cashiers check whereever it may be deposited or negotiated.
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#347708 - 11/22/05 02:18 PM Re: Holds on cashiers checks
Anonymous
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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
Elwood P. Dowd Offline
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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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#347710 - 12/01/05 05:25 AM Re: Holds on cashiers checks
Pup Offline
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After 8 months and an exam, we've taken VERY FEW losses on counterfeit cashier's checks and have also not been fined for holding "cashier's checks" during the time when we are trying to verify them. Even banks that don't verify checks have fraud investigators whom can be reached eventually. As far as backlash from the customer base, an explanation of the losses that US customers have sustained because holds had not been placed on cashier's checks, and other checks, which turned out to be countefeit, have always turned out well.

Has anyone else seen the words "cashier's check" printed on Versa check stock? I have one that I use in my Orientation training and that one check, I believe, backs up my thought that just because it says "Cashier's Check" doesn't mean it is one.

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#347711 - 12/01/05 11:29 AM Re: Holds on cashiers checks
Elwood P. Dowd Offline
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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
John Burnett Offline
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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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#347713 - 12/02/05 05:05 AM Re: Holds on cashiers checks
GoCowboys Offline
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Texas
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
John Burnett Offline
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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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#347715 - 12/02/05 02:16 PM Re: Holds on cashiers checks
Elwood P. Dowd Offline
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...if the cashiers check was deposited to a transaction account. The law limiting holds on cashiers checks does not apply to any type of a savings account, including a MMDA.

In any case, requiring a fax from the drawee bank wins my "over the top" award for the day.

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#347716 - 12/02/05 03:21 PM Re: Holds on cashiers checks
GoCowboys Offline
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Texas
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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#347717 - 12/05/05 04:13 PM Re: Holds on cashiers checks
Oursisnottoreasonwhy Offline
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Central Illinois
I would like to thank Magicbanker and Ken Pegasus for setting me straight. Sometimes when you read these regulations you read what you want it to say instead of what it really means.

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