Certified check

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A certified check or certified cheque is a form of check for which the bank verifies that sufficient funds exist in the account to cover the check, and so certifies, at the time the check is written. Those funds are then set aside in the bank's internal account until the check is cashed or returned by the payee. Thus, a certified check cannot "bounce", and, in this manner, its liquidity is similar to cash, absent failure of the bank or illegal act (such as the funds being based on a fraudulent loan, at which point the check will be disavowed).

In some countries, e.g. Germany, it is illegal for a regular bank to certify checks.[1] This regulation is supposed to prevent certified checks from becoming a universal substitute for cash, which is considered the only legal tender. The Deutsche Bundesbank (Federal Bank) is the only financial institution authorized to issue certified checks.

The liquidity and certainty of payment of a certified cheque explains the fact that it is sometimes considered equivalent to cash, such as in the regulation of credit for casino gaming in Macau, where the law explicitly states that if a casino patron obtains casino chips and pays with a certified cheque, the transaction is not regarded as credit for gaming (see Law 5/2004, art. 2).

It is possible to counterfeit or forge a certified check, in which case it is not binding on the bank and is worthless. See entry on cashier's check for discussion of risks. Mostly all Federal Reserve Bank Checks are Certified Checks due to the fact that most Accounts have millions in collateral at the Reserve Bank. Individual account holders at the reserve bank are called subaccounts i.e. (secondary router numbers) to keep account numbers simple.

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