Fraud involving government-issued Treasury checks remains a persistent challenge for financial institutions. To address this, the U.S. Department of the Treasury introduced a new payee verification feature starting November 18, 2024. This enhancement is designed to strengthen protections against certain types of check fraud.
How Payee Verification Works
The new system validates the payee name on Treasury checks, helping to deter common fraud schemes such as:
- Altered or Washed Checks: Changing the payee name to another entity to facilitate unauthorized cashing.
- Counterfeit Checks: Producing fraudulent Treasury checks using purchased check paper.
Steps for Risk Mitigation
To better protect against check fraud, financial institutions are encouraged to adopt the payee verification process:
- Access to payee name verification is available exclusively via the Treasury Check Verification System (TCVS) API — it cannot be accessed through the public TCVS website.
- Financial institutions using the TCVS API can retrieve the updated specifications from the TCVS site.
- Institutions requesting access must complete the Terms & Conditions document provided by the Treasury.
- Existing API processes will remain unaffected; institutions can transition to the new feature at their own pace.
Important Considerations
- This safeguard does not prevent fraud if a legitimate Treasury check is stolen and deposited into an account opened in the original payee’s name. Vigilance is key:
- Review check issue dates against account opening dates.
- For business accounts, verify incorporation dates. A mismatch may signal fraudulent activity.
- The Treasury Inspector General for Tax Administration (TIGTA) offers a dedicated resource for suspicious checks at **checkintegrity@tigta.treas.gov**, aiming for responses within 48 hours.
- There is no legal obligation for financial institutions to cash a check. If accepted, Regulation CC guidelines for holds must be followed, and availability of funds does not guarantee the check’s legitimacy.
Final Thoughts
Fraud evolves constantly, and so must the strategies to combat it. Leveraging tools like payee name verification and maintaining vigilant account practices helps financial institutions safeguard both their customers and their operations against Treasury check fraud.
