Compliance Question of the Week

Can a credit union stop payment on a cashier’s check, teller’s check or certified check?

The short answer is no. This is because a third party can enforce a cashier’s check if they are a “holder in due course.” In order to be considered a holder in due course, the holder must have taken the instrument for value, in good faith, without notice of any claims against the instrument, and without notice that the instrument was fraudulent. If a credit union wrongfully refuses to pay a cashier’s check, the holder can assert the right to enforce the check and may be entitled to compensation for expenses and possible damages.

An exception is made, however, if the credit union’s member claims that the cashier’s check has been lost, destroyed or stolen. If this happens, the member must identify the check with reasonable certainty, complete a declaration of loss, and promise to indemnify the credit union for any loss. Once the member completes these steps, the cashier’s check can be re-issued. It is important to note that the original check has not actually been stopped. If someone receives the original check under circumstances in which he or she is considered a holder in due course, the credit union must pay the original check.

This even applies when the member has sent a cashier’s or teller’s check to a known Ponzi scheme such as Rex Ventures.

Related Links

RCW 62A.3-104(g), 62A.3-104(h)
RCW 62A.3-302 (a)
RCW 62A.3-312
RCW 62A.3-411
ORS 73.0302
ORS 73.0312


Questions? Contact the Compliance Hotline: 1.800.546.4465,

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