A certified check (or certified cheque) is a form of
check
Check or cheque, may refer to:
Places
* Check, Virginia
Arts, entertainment, and media
* ''Check'' (film), a 2021 Indian Telugu-language film
* ''The Checks'' (episode), a 1996 TV episode of ''Seinfeld''
Games and sports
* Check (chess), a thr ...
for which the bank verifies that sufficient funds exist in the account to cover the check, and so certifies, at the time the check is written. Those funds are then set aside in the bank's internal account until the check is cashed or returned by the payee. Thus, a certified check cannot be stopped or bounce, and, in this manner, its liquidity is similar to cash barring bank failure or an illegal act (such as the funds being based on a fraudulent loan, at which point the check will be disavowed).
In some countries (e.g.,
Germany
Germany,, officially the Federal Republic of Germany, is a country in Central Europe. It is the second most populous country in Europe after Russia, and the most populous member state of the European Union. Germany is situated betwe ...
), it is illegal for a regular
bank
A bank is a financial institution that accepts deposits from the public and creates a demand deposit while simultaneously making loans. Lending activities can be directly performed by the bank or indirectly through capital markets.
Because ...
to certify checks.
Art. 4 of the German Cheque Code (Scheckgesetz)
/ref> This regulation is supposed to prevent certified checks from becoming a universal substitute for cash, which is considered the only legal tender
Legal tender is a form of money that courts of law are required to recognize as satisfactory payment for any monetary debt. Each jurisdiction determines what is legal tender, but essentially it is anything which when offered ("tendered") in pa ...
. In the case of Germany, the Deutsche Bundesbank
The Deutsche Bundesbank (), literally "German Federal Bank", is the central bank of the Federal Republic of Germany and as such part of the European System of Central Banks (ESCB). Due to its strength and former size, the Bundesbank is the most ...
(Federal Bank) is the only financial institution authorized to issue certified checks.
Because of the liquidity and certainty of payment of a certified check, it is sometimes considered equivalent to cash such as in the regulation of credit for casino gaming in Macau
Macau or Macao (; ; ; ), officially the Macao Special Administrative Region of the People's Republic of China (MSAR), is a city and special administrative region of China in the western Pearl River Delta by the South China Sea. With a pop ...
where the law explicitly states that, if a casino patron obtains casino chips and pays with a certified check, the transaction is not regarded as credit for gaming (see Law 5/2004, art. 2).
It is possible to counterfeit or forge a certified check in which case it is not binding on the bank and is worthless; see cashier's check
A cashier's check (or cashier's cheque, cashier's order) is a check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier. Cashier's checks are treated as guaranteed funds because the bank, rather than the purchaser, is respo ...
for an exploration of associated risks.
See also
*Cashier's check
A cashier's check (or cashier's cheque, cashier's order) is a check guaranteed by a bank, drawn on the bank's own funds and signed by a cashier. Cashier's checks are treated as guaranteed funds because the bank, rather than the purchaser, is respo ...
* Certified Funds
References
External links
Definition at law.com
Cheques
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