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#385825 - 07/14/05 02:43 PM Holds on cashiers checks
Anonymous
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Can you put a hold on a cashiers check for an amount over $5000 for 7 business days? I always thought we should treat cashiers checks the same as cash?

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General Discussion
#385826 - 07/14/05 03:44 PM Re: Holds on cashiers checks
Doris Offline
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Doris
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South Carolina
Because of today's many counterfeit "Cashier", "Official", "Guaranteed" checks floating around, if the check is not local, we will put extended days hold. Now we will put less days hold on them if the account can withstand the amount of the check. We have also been more extensive in reviewing these checks as well as Postal Money Orders and if we have some doubt the check may not be good, but can't really put a finger on it or get authentication from the issuing bank, we'll put the funds on extended holds.

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#385827 - 07/14/05 04:43 PM Re: Holds on cashiers checks
Anonymous
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But I thought this exception hold for over 5000 was 5 business days and only for new accounts. Can you have a blanket policy that all checks, even cashiers checks over 5000, have this 5 day hold?

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#385828 - 07/14/05 04:58 PM Re: Holds on cashiers checks
John Burnett Offline
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I suggest you review the limits of the "large item" hold in Reg. CC subsections 229.13(b) and (h). If it's a local cashier's check, you can hold the excess over the first $5,000 until the 7th business day from the date of deposit; if it's a non-local cashier's check, it's the 11th business day.
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#385829 - 07/14/05 05:42 PM Re: Holds on cashiers checks
RVFlyboy Offline
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Doris, be careful - it sounds like you are pretty close to the line of being in violation of Reg CC.

First, if you can't really put your finger on why you think the check may not be good, other than it is a cashiers check, that is not sufficient reason to apply an exception hold. You can apply a case-by-case hold under those circumstances, but not for a chashiers check.

Second, be wary of the provision in Reg CC that says you cannot apply a reasonable cause exception hold simply by virtue of the check being of a particular class or type. This means that its not enough to simply say that because there have been a lot of counterfeit cashiers checks, we are going to hold all cashiers check under a reasonable cause exception hold. I know that's not what you said, but it seemed you were close to that.

Third, if you've got a cashiers check that seems like it might not be good, but you can't put your finger on it and the customer doesn't have sufficient average balances to cover the item, then why not simply refuse to accept it for deposit and offer to send it for collection instead?
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#385830 - 07/14/05 09:03 PM Re: Holds on cashiers checks
Anonymous
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But you can hold all checks over 5000 for less than 7 days if you want to for both local and non local checks?

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#385831 - 07/14/05 09:10 PM Re: Holds on cashiers checks
Doris Offline
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Doris
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South Carolina
Thank you...no I wasn't putting all cashier checks into classes. Not all checks, of course, are counterfeit. I apologize if that is what was read into my comments. I was only speaking on those large item checks that are presented and are not local and if it doesn't pass the matching of routing # and name test through Lyons. Holds are for allowable # of days. We do verify directly with issuing bank on large (usually over $5000) certified funds. Good point about sending as collection item.

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#385832 - 07/14/05 09:55 PM Re: Holds on cashiers checks
RVFlyboy Offline
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Quote:

But you can hold all checks over 5000 for less than 7 days if you want to for both local and non local checks?



Only the amount over $5,000 can be held. If you've got a $6,000 cashiers check you can't hold $6,000 under the large deposit exception. You can only hold $1,000 and that could be for up to either 7 or 11 days depending on whether the cashiers check is local or nonlocal. The remaining $5,000 would still need to be available next business day (assuming in-person deposit to account of payee) unless some other exception reason applied.
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#385833 - 07/15/05 01:11 AM Re: Holds on cashiers checks
Dolly Nugent Offline
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To add to Jim's comments, consider sticking to with the statutory hold limits when placing holds. (Lest you confuse bank examiners and your own employees.) Keep in mind your can always release the funds early.
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#385834 - 07/15/05 02:56 PM Re: Holds on cashiers checks
BrendaC Offline
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The counterfeit postal money orders are a real problem and they are NOT returned within the normal guidelines, so a "normal" Reg CC hold won't protect the bank. We are now referring personal customers with postal money orders to the Post Office. We don't have to accept them for deposit.
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#385835 - 07/15/05 03:02 PM Re: Holds on cashiers checks
learningbanker Offline
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Posts: 76
Massachusetts
I agree with John on the 7 and 11 days for the exception hold. You can implement this just by the fact that it is over $5,000 (and only to the amount over $5,000 - under is immediate) For checks under $5,000 you can use the other exception items but for most of them I always told our tellers you shouldn't be taking it anyways. We call the banks many times for customers we have not become familiar with.
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#385836 - 07/15/05 07:45 PM Re: Holds on cashiers checks
Anonymous
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different anon poster.
I am just learning, but I thought a cashiers check was a next day item and therefore you could not place a hold in it?
can anyone direct me to what I am missing?

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#385837 - 07/15/05 07:54 PM Re: Holds on cashiers checks
glickstr Offline
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Joined: Jan 2005
Posts: 55
Agree with previous comment. The information I have on Reg CC treats cashiers checks like "cash" not a local/non-local check.

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#385838 - 07/15/05 07:56 PM Re: Holds on cashiers checks
yy2say Offline
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yy2say
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PA
You can also call the bank that the check is drawn on to make sure that it is a valid check. In a past life, we trained our tellers to do just that or at least have a supervisor do it. That way, you can rest assured that a cashier's or official check is good.
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#385839 - 07/16/05 06:47 PM Re: Holds on cashiers checks
RVFlyboy Offline
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Cashiers checks are normally "next-day" items. This means you cannot place a case-by-case hold on them. But you can place an exception hold on any type of item, including items that are normally next-day items. But you must have a valid exception reason when doing so. The valid exception reasons are:

- New account (really new transaction relationship)
- Large deposit (aggregate deposit over $5,000)
- Redeposited item
- Frequent overdrafts (specific mandated criteria)
- Reasonable cause to doubt collectibility (must be specific, not just a bad feeling and not just based on a class or type of check)
- Emergency conditions

Exception hold periods normally add on top of the allowable case-by-case limits, but some are unique time periods depending on the type of exception hold being applied and the type of item being held. For example, a new account exception hold on a $10,000 non-local cashiers check would give you a maximum hold of nine business days on the portion over $5,000. But a large deposit exception hold on the same item will give you a maximum hold of 11 business days on the portion over $5,000.
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#385840 - 07/18/05 01:55 PM Re: Holds on cashiers checks
Oursisnottoreasonwhy Offline
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Central Illinois
I would contend that a Cashiers Check not drawn on your bank can be treated just as you would any other foreign check. The Reg CC definition of Cashiers Check is below, this comes from Appendix E to Part 229--Commentary

I. 229.2(i) Cashier's Check

1. The regulation adds to the second item in the Act's definition of cashier's check the phrase, "on behalf of the bank as drawer," to clarify that the term cashier's check is intended to cover only checks that a bank draws on itself. The definition of cashier's check includes checks provided to a customer of the bank in connection with customer deposit account activity, such as account disbursements and interest payments. The definition also includes checks acquired from a bank by noncustomers for remittance purposes, such as certain loan disbursement checks. Cashier's checks provided to customers or others are often labeled as "cashier's check," "officer's check," or "official check." 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. Cashier's checks generally are sold by banks to substitute the bank's credit for the customer's credit and thereby enhance the collectibility of the checks. A check issued in connection with a payment service generally is provided as a convenience to the customer rather than as a guarantee of the check's collectibility. In addition, such checks are often more difficult to distinguish from other types of checks than are cashier's checks as defined by this regulation.

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#385841 - 07/18/05 02:14 PM Re: Holds on cashiers checks
John Burnett Offline
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I caution you not to try to bend definitions to suit your purpose, ILLBANKER. The definition you have cited is used to describe what is and what is not a cashier's check. It speaks to the purpose of the bank that issues the check, and the reference to "the bank as drawer" refers to the issuing bank, not the bank being asked to accept it for deposit.

While it is absolutely accurate to say that it's not often easy to distinguish a true cashier's check from checks issued to vendors, etc., nor is it easy to distinguish an accurately labeled cashier's check from a check issued by a non-bank that uses the label "cashier's check" inappropriately, a depository bank is required to treat a cashier's check issued by any bank as a next-day item under section 229.10 if it accepts it for deposit (subject to any exception hold that the bank might legitimately place under section 229.13).

The one loophole is the customer who fails to deposit the item in person, with a special deposit ticket, or to an account of a payee of the check.
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#385842 - 07/18/05 09:07 PM Re: Holds on cashiers checks
BankerKB Offline
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So if holding a check for exceeding $5000 is an exception hold can you have a blanket policy that all checks over this amount need to be held x amount of days? You can't do a blanket hold for the other parts that qualify as exception holds right?
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#385843 - 07/19/05 09:12 PM Re: Holds on cashiers checks
RVFlyboy Offline
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You can do a blanket policy for other types of exception holds too. For example, you could set a policy that you will always apply exception holds for all checks deposited by repeat overdrafters. You could also set a policy that you will always apply exception holds to redeposited items. You could set a policy that you will apply exception holds to all items deposited to a new customer relationship account. What you can't do is set a blanket policy under the reasonable cause to doubt collectibility that applies the hold because of a class or type of check. You cannot set a policy that says you'll apply a reasonable cause exception hold on all credit card convenience checks. While it is true that a lot of these checks are returned unpaid and while it is also true that it is nearly impossible to get anyone at the paying bank to confirm that the check is good or not, this is not enough in and of itself to warrant a reasonable belief that the specific item you have will not be paid. Under these circumstances you would be applying the hold based on a class of check and that is not permissible under this section.

Now keep in mind that the "class of check" prohibition only exists with regard to the reasonable cause to doubt collectibility exception. You are still permitted to set a policy that says you'll apply a large deposit exception hold on all credit card convenience checks over $5,000 but still leave the door open for large deposit exception holds to be applied or not applied to other types of large checks. There is no violation with this type of "class of check" policy.
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#385844 - 07/21/05 08:51 PM Re: Holds on cashiers checks
Anonymous
Unregistered

Cashier Checks should always be treated as uncollected funds until verified upon. There are so many erronious checks out there that you can never be too careful when cashing such a check. I always verify a cashier check for an amount greater than $3000.00 to $5000.00.

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#385845 - 07/22/05 01:21 PM Re: Holds on cashiers checks
John Burnett Offline
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John Burnett
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Cape Cod
Quote:

Cashier Checks should always be treated as uncollected funds until verified upon. There are so many erronious checks out there that you can never be too careful when cashing such a check. I always verify a cashier check for an amount greater than $3000.00 to $5000.00.




If you contact the issuer of a cashier's check and receive information that the check is fraudulent, I hope that you will refuse to accept it for deposit. Accepting it for collection would be a possibility, if your customer insists on having it processed. It simply would not make sense to put the check on deposit and have to make the first $5,000 available on a next day basis, knowing that the check will bounce!

Once you accept a cashier's check for deposit, however, you are left with few alternatives.
  • If your customer is a chronic overdrafter, you can use an exception hold to delay availability of the entire check (and other checks in the deposit) until the 7th or 11th business day after deposit.
  • If there is an emergency condition, you can impose a delay (but this really doesn't have anything to do with the nature of the check, and is very rare in any event).
  • If you have received information that leads you to reasonable cause to doubt collectibility, you can delay availability of the entire check to the 7th or 11th business day after deposit (but see above: Why are you accepting the check for deposit anyhow?)
  • If the deposit is to a new customer's account, you can hold the excess over $5000 until the 9th business day
  • If the total of the checks deposited is over $5000, you can hold the excess over $5000 until the 7th or 11th business day


So you can't make a sweeping statement that you treat all cashier's check deposits as uncollected, and comply with Regulation CC. Based on what we read here, you won't be able to verify every cashier's check, because a lot of banks refuse to confirm their checks.
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