Cashing a cashier’s check without having a bank account in the bank that issued the cashier’s check is possible.
However, it is not mandatory that issuing bank should honor such checks. Generally, banks do let people cash
such checks, especially if the amounts involved are not large enough to cause concern.
There are reasons for bankers hesitating to honor such checks. Cashing any check implies that a person
arrives in the bank, presents a check and then the teller gives the cash as indicated on the check. It would be difficult to trace the person who cashed such a check
if the person does not have an account with the bank from where he or she collected the cash.
Under normal circumstances, it is not necessary to trace the person.
However, if the check is of a larger amount and there has been some mistake or fraud, then it becomes
necessary to trace down the person and recover the monies.
In case of conventional checks, the responsibility is partially that of the bank account holder.
A bank account holder is liable to keep the checkbooks issued to him or her in safe custody. This ensures
that others do not use any leaf from the book to cash some amounts.
Banker’s duty is to verify whether the signature on any check presented to it tallies with the specimens of
account holder’s signatures on its records. If they do, then the banker cannot be expected to question the
person who is collecting the cash mentioned on account holder’s check.
Bankers do take precautions though. They have improved the method of verifying the signatures.
They have given serial numbers to checks and maintained a record of checkbooks with sequential
serial numbers issued to each of their customer. This makes it very difficult for any fraudster to identify
which particular check has not been utilized and can be used to cash the check. In addition to these
measures, banks do request their customers to issue bearer checks only to those persons who have
bank accounts with them. This prevents headaches at a later date.
Some banks insist on bearers to sign the check on reverse, and also provide address, and phone numbers.
For all such services, banks charge their customer.
When a cashier’s check is presented, the liability rests entirely on bank’s shoulders.
This is because it is the check issued by the bank and not the customer. It’s a different issue when the
customer purchased the check and may have given it to the person who is presenting it to the bank.
Since the customer pays the entire amount represented by the cashier’s check, there would be no way for
banker to evade the responsibility of releasing the cash. Under such circumstances, bank needs to safeguard
its interests. One way is to insist that the person who is cashing the check open a bank account with the bank.
Other way is collect details about this person so that the person can be traced.
- telephone number,
- social security number
- and copies o f any identification proof such as driver’s license, etc.
The person receiving monies should also confirm from the bank whether such a check has been issued to the
account holder before accepting the cashier’s check. In addition, he or she should confirm whether the
bank’s policy permits people who do not have an account in their bank to cash such checks.
If the bank does not permit such cashing of checks then the alternatives available are checking banks or other banks such as Western Union that take over the relevant risks for a nominal commission. Therefore, Cashier’s checks can be cashed in such banks for a nominal price. The other alternative is to open a bank account and leave a small amount in that account.