Earlier this week, we encountered something new for us. A customer had a check stolen out of the mail that was payable to someone who painted his home. The person who stole this check made a fake ID using the painter's name. So when our teller asked for ID when the "painter" came to cash it, there were no red flags. My question is, could we do an ID verification check on non-customers who are cashing onus checks to make sure they are who they say they are? Not ChexSystems, but FIS eFunds Penley has an "ID Verification" option. I don't see why we would run into a compliance issue with this, but I just wanted to get some opinions to make sure I'm not overlooking anything.

No problem with that. Most banks will not cash checks for non-customers anymore and your depositor's agreement should address that fact.

Why would our deposit agreement need to address that since deposit agreements don't affect non-customers?

So your customer does not sue you for "wrongful dishonor".

What would be the point of offering a checking account if your institution is not going to honor the checks your customers or members write? After all, an on-us check is not cashing a check for a non-customer; it is paying out on an instrument drafted off your institution by your customer or member. As to verifying the ID, I suppose it comes down to how much work you want your staff to do. I know we provide access to online references to review IDs that are unfamiliar to our staff, such as out of state Driver Licenses, but they're not expected to verify the veracity of the document unless it is a blatantly obvious forgery, and even then, they would usually ask for additional forms of identification.

Because you always want to have the option to deny cashing the check, if you so choose. Read your deposit agreement and see what it says.