I am currently in disagreement with another employee who thinks that we dont have to honor savings bonds by non customers.
my coworker maintains that The Treasury does not maintain a list of which banks will and will not cash savings bonds. Therefore we are under no pressure to not cash them.

This is just odd to me because in banks I have worked at previously, there has never been a problem cashing a savings bond--even for a non customer.

What's the real deal?

If you are an issuing agent for series EE savings bonds, you must also redeem bonds, customer or not. That is my understanding.

If you look in the Department of Treasury The Guide to Cashing SAvings Bonds it states that to cash the bond they must be a customer of your bank for 6 months or you must follow a lot more steps including if they are with a customer of your bank, if the amount is over $1,000 then don't cash, if they have a DL and if it matches the bond then you can. But it states that they really should go to the bank they are a customer of to cash them.

Well, there you have it then.

Many thanks to both of you!!!

Review the guide to fully understand the requirements.

http://www.treasurydirect.gov/forms/sav0022.pdf

From the Preface:

Your Financial Institution’s Responsibility

• Required: Your financial institution is required to cash bonds/notes eligible for payment for a customer with the
proper identification. For purposes of this guide, a customer is any person presenting bonds at your financial
institution, whether or not they have an account.

• Optional: Your financial institution may, but is not required to, cash bonds/notes presented by a parent of a minor, a
beneficiary, or a legal representative.

• Prohibited: Your financial institution may NOT cash bonds/notes presented and signed by an attorney-in-fact (an
individual acting under a power of attorney).

Why Using This Guide Is Important – Liability

If you cash a bond/note for the wrong person, your financial institution is liable for the loss unless the Department of
the Treasury can determine the loss was not due to fault or negligence on the part of the paying agent. Treasury will
be able to make that determination if you follow the instructions in this guide when you cash a savings bond.

What You Should Do

1. Check each bond or note to be sure it’s eligible for payment.
2. Make sure you have a good request for payment.
3. Require adequate identification.
4. Make a notation of the identification used.

And if you read further into the guide, in the section on obtaining ID, there are layers of steps which start with "Does the customer have an account at your financial institution?" If the answer to that question is "No," and the "customer" is not with another person who is an established (6 months) customer who can identify the customer as the individual named on the bond or the bank doesn't feel that the established customer knows the "customer" well enough, then the operative question comes up: "Is the total redemption value of the bond or bonds $1,000 or less?" If it's more than $1,000, the customer has to take the bond to his/her own institution.

So the moral of this lesson is that not all bond cashing "customers" are created equal.

Yes, I found it interesting. If bond is $1,000 or less and they have proper ID as stated in the guide you should cash it. If they are with an account holder of your bank who vouches for them and signs the bond you are to cash the bond even if greater than $1,000.

I would put this brochure into a procedure - it could be less cumbersome!

We simply don't cash them for non customers. of course, we are a very small bank who doesn't do anything for non-customers. From what I'm reading, I take it we are wrong?

As an agent, you should be cashing within the established documentary ID guidelines.

Are we required to cash savings bonds for non-customers? Or are we OK to make the decision not to? We have many non-customers come to our bank because the others banks won't do it for them.

I just recently sent a copy of the US Department of Treasury's "Guide to Cashing Savings Bonds" to our branch managers. It contains language that leads me to believe we are NOT required to cash for non-customers, since they only mention customers:

Your financial institution’s basic responsibilities
Required: Cash savings bonds or notes that are eligible for payment for a customer with the proper
identification.
Optional: Your financial institution may, but isn’t required to, cash bonds or notes presented by a parent
of a minor, a beneficiary, or, in certain circumstances, a legal representative, such as a trustee, guardian,
executor, or other fiduciary representative. If you choose to not cash these bonds, you may refer the
customer to the Treasury Retail Securities Site at FRB Minneapolis or you may forward the transaction
to Minneapolis on behalf of the customer.
Prohibited: Do NOT cash bonds or notes presented and signed by:
n an attorney-in-fact (an individual acting under a power of attorney);
n a step-parent on behalf of a minor;
n someone whose name is the same as, or similar to, the bond owner’s name when you know that the
presenter is not the owner and not entitled to payment; or
n someone whose name appears only in the address in a bond’s inscription after the words “Mail to.”

My only concern, Doug, is whether Treasury understands "customer" to mean "customer of your financial institution." In the step-by-step guide section on verifying the customer's identity, starting on page 14, Treasury uses "customer" in step 3c to describe someone who is not your customer.

Candidly, I don't know what repercussions there might be if you turned away a non-customer customer.

It was so much cleaner when FIs issued savings bonds because as an 'agent' I believe you were required to cash them for customers and non-customer alike.

Here's an FRB Q & A on the topic.

As an agent, am I obligated to redeem bonds?
Yes, qualified paying agents shall redeem eligible savings bonds, savings stamps and savings notes for both customers and non-customers in accordance with the guidelines in The Guide to Cashing Savings Bonds (PD P 0022).

https://www.frbservices.org/files/serviceofferings/pdf/SavingsBondBrochure.pdf

Institutions should only cash transactions for non-customers up to $1,000 cash value.

We limit the encashment of savings bonds for non-customers to $1,000.

I found the guide confusing as well. I called the customer service number for treasury direct this morning, and they told me it was the bank's discretion on whether or not we wanted to cash bonds for non-customers.
Thank-you all for your input.

Hmmm, I think the links to published guidance pretty clearly indicate servicing non bank customers is required and consistent with federal policies toward the unbanked. To a certainty, verbal advice from the government to the contrary means nothing.

However, throughout my life I've been cursed with an auto response that asks: "What are they going to do if I refuse? Take away my pledge pin?"

If my bank only cashes them for its customers, what are they going to do about it?

To me, the water got muddied when we stopped completing savings bond orders, and now you have to order the bonds online. Previously, we ordered savings bonds for people, so we had to cash up to the $1,000 mark for non-customers of the bank. But, now, they are ordered online through treasury direct -- so, the treasury's customers aren't our customers anymore. Since this shift, we don't cash bonds for folks that don't have a loan or deposit account at our institution.

Before you make such a claim, make sure you are officially no longer a paying agent.