When Eva Rosenberg received a check from Vancouver, British Columbia, she mailed it for deposit in her business account at Wells Fargo in Las Vegas.
Two weeks later, she got the check back, along with a form and a letter from Wells Fargo explaining that the bank had recently revamped its policy on foreign checks.
If Rosenberg still wanted to deposit the check, she would have to sign and return the enclosed form, which said she understood that it could take three to eight weeks for the check to clear and she wouldn't have access to the funds until then.
Rosenberg was livid.
"I spent this money. Checks were bouncing. I didn't even know they were bouncing. It wasn't because there were no funds in the account. It was because they wanted me to sign this document saying I would give them the right to hang on to my money for three to eight weeks with no recourse."
Rosenberg, who lives in southern California and is best known as
TaxMama, contacted Wells Fargo and got them to reverse the bounced check fees.
Wells Fargo says the policy was prompted by the bank's "heightened awareness of fraud with respect to checks in foreign currencies."
Spokeswoman Julia Tunis says the year-old policy involves a lengthy process, but the money is made available to the customer as soon as the check clears.
"It's not always as easy to verify a foreign account as it is to verify a U.S. account," Tunis says.
First Union Wachovia also tells customers to expect a lengthy wait when depositing foreign checks, although in their case it's an estimated four to six weeks.
"The physical check has to be mailed overseas for collection," says spokeswoman Mary Beth Novarro.
"We send it to our international group, and they send it to our correspondent bank in the country involved. If that's the bank it's drawn on, it would stop there. But if it's not, the correspondent bank sends the check to that bank, and then it has to be sent back to the correspondent bank and then back to our international division."
Bank of America customers may have to wait three to eight weeks, but that's not a given, says spokeswoman Gillian Breidenbach.
"We don't have a policy to automatically put a hold on foreign checks. It would depend on the size of the check and the customer's relationship with the bank. We put it through a scoring process and a hold is either recommended or not. If it's not recommended, we give the customer their money right away.
"If a hold is recommended, the collections department sends the check by mail to the issuing bank in the foreign country. If it's a "slow pay" country, we can tell the customer how long it will take, and it may take three to eight weeks. We're dependent on the responsiveness of the issuing bank."
Chicago-based Bank One has a policy of holding foreign checks for up to 30 days if necessary, says spokesman Stan Lata.
"It depends on where the check is drawn, and if it's from a bank or an individual," Lata says.
Checks from Canada, Lata notes, usually clear Bank One's system within five business days.
There are ways to get around the potentially lengthy wait for a check to clear.
Some of the financial institutions we spoke with had tips for avoiding the wait, or at least reducing it significantly, when you're expecting money from foreign countries.
Be aware, most methods will cost you some money. If a check is submitted for collection, as many foreign checks are, you may have to pay a collection fee. At Wells Fargo, for example, that fee is $35.
- Wire transfer -- Ask the overseas bank to wire funds directly to your account. You will have to pay your bank's wire fees, and the correspondent bank may also apply fees.
- Cashier's check -- Consider asking for a cashier's check drawn on the foreign bank. Fees are charged for cashier's checks.
- Foreign bank draft in U.S. dollars -- Ask the overseas payer to make payment through a U.S. dollar draft drawn on a bank in the United States. Wells Fargo says the payer incurs the expense of the draft.
If you receive a check from a foreign bank account, take the check to your bank and ask the teller how long the check will be held, and if you can have access to any portion of the funds.
If you're a good customer -- no bounced checks, etc. -- and if the bank has no reason to suspect the check won't be cleared, you may receive the entire amount or a portion of the check within the same time frame as an American check.
If you have questions about your bank's policy for clearing foreign checks, you'll have to ask. Financial institutions are not required to post their policy on clearing foreign checks. Banks have considerable latitude and more often than not, the policy will be that you'll get the money when the check clears.
Timely payment of checks drawn on banks on American soil is under much tighter scrutiny.
All U.S. financial institutions and foreign bank branches located in the United States are required to comply with the Federal Reserve's
Regulation CC, which says institutions must "provide customers who have transaction accounts with disclosures stating when their funds will be available for withdrawal."