Answer:
There is nothing in the Uniform Commercial Code or Treasury regulations to prevent the negotiation of a Treasury check to a third party before it is deposited in a bank. However, banks are generally more concerned about third party checks than they used to be. That concern stems from enough fraudulent endorsement claims to capture the attention of bank fraud departments. So it's increasingly the case that a Treasury check (or any other check) that's not being deposited by the check's payee may be rejected for deposit. Because of some of the unique characteristics of Treasury checks, banks tend to scrutinize them more carefully than they do other checks. If a Treasury check is deposited by someone who is not a payee, it is not entitled to the next-day availability requirements in Reg CC. Instead, it could be treated as a local check and availability delayed one extra day.
First published on BankersOnline.com 8/18/08
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