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Home >> Checks/Money Orders
Check Treated as Collection Delays Process
A cashier's check from the Hongkong & Shanghai Bank was deposited into our account at Village Bank & Trust on 2/13/09. On 3/12/09, it was deducted as the international carrier, Bank of New York Mellon, stated that they could not cash this check and it needed to be treated as a collection for a fee of $40.00. Now they are advising that it will take another two to eight weeks to accomplish. Is this the correct procedure, and do they have the right to just deduct the funds from our account without discussing it first?
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 Not all checks drawn on foreign banks can be processed in traditional ways. In some cases, because routine inter-bank correspondent relationships aren't available, checks need to take a different route, that of collection. Because it is not an automated process, collection service normally involves a fee, and $40 is not unreasonable for the service today. Assuming the foreign bank pays the collection item, it may impose its own fee for doing so.
When you deposit a check, your bank acts as your agent in getting it presented and paid. If the bank is unable to obtain payment for you, the bank has no choice but to reverse the credit it originally gave you. For that reason, discussion would not have changed anything. Your account would have been charged. However, a bank could attempt to call its customer in such a situation to provide a "heads up" on the charge-back.
Published on BankingQuestions.com 4/16/09
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