Bank entitled to ask for ID to cash open cheque

Home Guides & cases Case notes Payment systems - 46262

Bank entitled to ask for ID to cash open cheque

Categories:

Clearing cheques,

Summary:

Hana tried to cash an open cheque for $800 at her local branch. A staff member asked her for identification. Hana refused, believing the bank had no right to this information in order to cash an open cheque. The bank declined to cash the cheque, saying its policy required those presenting such cheques to supply identification.

Published:

September 2015

Our investigation

Hana complained to us that there was no legal requirement to supply identification when presenting cheques of less than $1,000, and the bank was unlawfully collecting information about her.

We considered the bank’s policy was lawful. The Financial Transactions Reporting Act 1996 requires banks to verify the identity of those conducting certain transactions. Mostly, this relates to transactions of $10,000 or more, but it does not prevent a bank from verifying the identity of those conducting transactions involving lesser amounts.

Also, the Privacy Act 1993 allows an agency to collect personal information for a lawful purpose. We considered the detection or prevention of fraud to be such a purpose. The bank’s policy could help prevent both the bank itself and its customers from suffering losses as a result of fraudulent activity.