[2] Cashier's checks are treated as guaranteed funds because the bank, rather than the purchaser, is both the drawee and drawer and is responsible for paying the amount.
Due to an increase in fraudulent activities, starting in 2006 many banks have insisted upon waiting for a cashier's check to clear the originating institution before making funds available for withdrawal.
[9] In the United States, under Article 3 of the Uniform Commercial Code, a cashier's check is effective as a note of the issuing bank.
It is not clear what length of time may pass before a bank can be held responsible for accepting a bad cashier's check.
[10] In Canada, bank drafts carry the same legal weight as standard checks but are provided as a service to clients as a payment instrument with guaranteed funds.
However, in the United States, they are generally not recognized as "guaranteed funds" under Reg CC[10] Because of US regulatory requirements associated with the Patriot Act and the Bank Secrecy Act due to updated concerns over money laundering, most insurance and brokerage firms will no longer accept money orders as payment for insurance premiums or as deposits into brokerage accounts.
Counterfeit money orders and cashier's checks have been used in certain scams to steal from those who sell their goods online on sites such as eBay and Craigslist.
When the bank eventually discovers that the money order is counterfeit and reverses the account credit many days later, the customer will usually have already mailed the item.