Cashier's check

Characteristics

Cashier's checks feature the name of the issuing bank in a prominent location, usually the upper left-hand corner or upper center of the check. In addition, they are generally produced with enhanced security features, including watermarks, security thread, color-shifting ink, and special bond paper. These are designed to decrease the vulnerability to counterfeit items. To be recognized as a cashier's check, words to that effect must be included in a prominent place on the front of the item.

The payee's name, the written and numeric amount to be tendered, the remitter's information, and other tracking information (such as the branch of issue), are printed on the front of the check. The check is generally signed by one or two bank employees or officers; however, some banks issue cashier's checks featuring a facsimile signature of the bank's chief executive officer or other senior official.

Some banks contract out the maintenance of their cashier's check accounts and check issuing. One leading contractor is Integrated Payment Systems, which issues cashier's checks and coordinates redemption of the items for many banks, in addition to issuing money orders and other payment instruments. In theory, checks issued by a financial institution but drawn on another institution, as is often the case with credit unions, are teller's checks.

Due to an increase in fraudulent activities, starting in 2006 many banks have insisted upon waiting for a cashier's check to clear the originating institution before making funds available for withdrawal. Personal checks thus have the same utility in such transactions.

Legal definition

In the United States, under Article 3 of the Uniform Commercial Code, a cashier's check is effective as a note of the issuing bank. Also, according to Regulation CC (Reg CC) of the Federal Reserve, cashier's checks are recognized as "guaranteed funds", and amounts under $5,000 are not subject to deposit hold (except in the case of new accounts). The length of a hold varies (2 days to 2 weeks) depending on the bank. It is not clear what length of time may pass before a bank can be held responsible for accepting a bad cashier's check.

In Canada, bank drafts carry the same legal weight as standard checks but are provided as a service to clients as a payment instrument with guaranteed funds. Drafts (or money orders depending on the issuing institution) usually have better security features than standard checks, and as such are often preferred when the receiver is concerned about receiving fraudulent payment instruments. However, bank drafts can also be subject to counterfeiting, and as such can be held or verified by depositing institutions in accordance with their hold funds policy, prior to providing access to the funds.

In Canada, the term money order is used non-uniformly: some institutions offer both money orders and bank drafts depending on the amount, while others only offer one or the other for any amount. Generally, bank drafts and money orders are treated the same way with respect to guaranteed funds and hold policies.

Alternatives and risks

In many nations, money orders are a popular alternative to cashier's checks and are considered safer than personal bank checks. However, in the United States, they are generally not recognized as "guaranteed funds" under Reg CC.

Because of US regulatory requirements associated with the Patriot Act and the Bank Secrecy Act due to updated concerns over money laundering, most insurance and brokerage firms will no longer accept money orders as payment for insurance premiums or as deposits into brokerage accounts.

Counterfeit money orders and cashier's checks have been used in certain scams to steal from those who sell their goods online on sites such as eBay and Craigslist.

The counterfeit cashier's check scam is a scheme wherein the victim is sent a cashier's check or money order for payment on an item for sale on the Internet. When the money order is taken to the bank it may not be detected as counterfeit for 10 business days or more, but the bank will deposit the money into the account and state that it has been "verified" or is "clear" in about 24 hours. This gives the victim a false sense of security that the money order was real, so they proceed with the transaction. In many cases, the scammer's "check" or "money order" exceeds the item's price, and the scammer asks the victim to refund them the difference in cash. Then, when the bank eventually discovers that the money order is counterfeit and reverses the account credit many days later, the customer will usually have already mailed the item.

References

References

1. Geva, Benjamin. "Irrevocability of Bank Drafts, Certified Cheques and Money Orders, 1986 65-1 Canadian Bar Review 107, 1986".
2. "Cashier's check".
3. (January 16, 2007). "Avoiding Cashier's Check Fraud: Consumer Advisory CA 2007-1". Comptroller of the Currency.
4. "Frequently Asked Questions about Check 21".
5. "12 C.F.R. § 229.2(gg)".
6. (January 2026). "Certified Check or Cashier's Check – Which Is Better for You?".
7. "Counter check".
8. Bennett, René. "What Is A Cashier's Check? Definitions, Uses, How To Buy One, Cost And Alternatives".
9. Mosch, Shawn. "Our story".
10. "12 U.S. Code Chapter 41 - EXPEDITED FUNDS AVAILABILITY".
11. "Bank Drafts in Canada – What You Need to Know".
12. "Money Orders and Bank Drafts".
13. "Fake check scams". National Consumers League.