• Strict check cashing rules are meant to prevent fraud.signing check image by jovica antoski from Fotolia.com
  
  Check cashing is a term that is used to describe surrendering a check to a financial institution in exchange for cash. Check cashing can be troubling for those with insufficient knowledge of what the federal laws require. Strict regulations have been put in place to avoid abuse and prevent fraud.
  
  

Disclosures

• Banks list the amount needed to cash large checks in the account agreement disclosures you receive when you open your account. Banks are required by law to communicate with their customers regarding time schedules, such as when the cash deposited into their account will be available for withdrawal.
  
  

Records

• Because of the security threat identified after the terrorist attacks against the United States on Sept. 11, 2001, the federal government moved to ensure records in depository institutions are secure. Before cashing, financial institutions take the details of the person who has written the check and the person to whom it is being cashed. This is done to ensure the source of money is traced in case of future investigations on matters such as fraud or terrorism funding.
  
  

Transactions

• National banks are not required to cash checks for noncustomers. If you cash a check at a bank where you are not a member, federal law allows that bank to charge you a fee to complete the transaction.
  
  

Endorsements

• The law regulates endorsement in all states. In accordance with the Internal Revenue Service, a check may not be cashed or split-deposited if your endorsement is restrictive, such as "for deposit only." Banks accept checks that feature blank endorsement, which is when you present the check by only signing your name.