We have deposited a treasury check a few days back with no hold. The owner came back today to withdraw some of it and presented a fake ID. Can we place an indefinite hold on the funds in the account now because of this. Help!

Is this a new account? Did the "owner" use the fake ID to open the account or are they trying to steal funds from an existing account holder? One of my first calls would probably be to law enforcement (and I would definitely not release any funds).

Yes, it is a new account. Is this allowable under Reg. CC since the check itself may be "good" and therefore subject to next day availability. It is under $5,000. This could be a case of stolen SS# and ID by an illegal immigrant, in which case the check may be "good", but not really legitimate.

Contact law enforcement immediately. I can't say for certain (I don't have time to look right now) but I believe that fraud trumps Reg CC. If it were me? I would take the chance on violating Reg CC and put a hold on the full amount in the account.

Reg CC isn't going to help you. It could take months for a fraudulent check to come back from Treasury.

I would also point out that the government is well aware of the issues regarding immigration and has even provided a way for these indivduals to file taxes. They may have obtained employment in the U.S. with a fake or stolen SS#, but are encouraged to apply for an individual tax identification number (ITIN) and file taxes on that number for the income earned using the bogus SS#. They will then receive a refund check based on that return.
I agree with notifying law enforcement on the ID, but as for the check, all you can really do at this point in hold your breath and hope for the best.