Question

A customer comes into a bank with a suspicious check from a Mr. Smith. An inexperienced teller doesn't think twice about cashing this large check and handing over the cash to the customer without checking with a supervisor. As it turns out, Mr. Smith doesn't really exist, and neither does the capital that was supposed to back the check. Which ensuring agreement would protect the bank from the teller's blunder?

Answer 1

A signature guarantee and indemnification agreement are ensuring agreements that could protect the bank.

Step-by-step explanation:

In order to protect the bank from the teller's blunder, an ensuring agreement that would be useful is called a signature guarantee. A signature guarantee is a type of agreement where the bank guarantees the authenticity of a signature on a check or other financial document. This ensures that the bank will not be held responsible if the signature turns out to be fraudulent or unauthorized.

Another ensuring agreement that could protect the bank from this situation is called an indemnification agreement. This is an agreement where the customer agrees to compensate the bank for any losses resulting from the cashing of a fraudulent check.

Both of these insuring agreements provide a layer of protection for the bank in case of a teller's blunder, helping to minimize the risk of fraud or financial loss.