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Mutilated Currency: Now What?

It’s singed. It’s brittle. It’s moldy. It’s torn. It is disintegrating.

Let’s talk about this. Do you have a procedure for your mutilated currency? Do you even accept mutilated currency? Exchanging damaged bills (§100.5 Mutilated paper currency) for your members can enhance service. And while the public may submit their own mutilated currency for exchange to the U.S. Department of the Treasury, our members turn to us for guidance. So how can we help our members and minimize risk?

Here are some guidelines on what to look for before you accept mutilated currency (§100.7 Treasury’s redemption process):

  1. More than half. Look for more than 50% of the bill to be intact. It is obvious, that this ensures a member cannot get double credit for a single bill.
  2. Genuine. In addition to obtaining the sufficient remains of a legible banknote, you should require some remnant of the bill’s security features. Security features may include the security ribbon woven into the bill, the security thread that runs vertically to the left of the portrait, watermarks, or color-shifting ink.
  3. Value. The banknote’s value must be identifiable so that the treasury can determine how much money to reimburse, if the claim is determined to be valid.

If you have accepted mutilated currency, here are some next steps (§100.8 Packaging and shipping of mutilated currency):

  1. Minimize further damage. Allow tellers accepting mutilated currency to sell it the vault the end of the day it was deposited. Less handling can minimize damage and preserve the elements you have already validated.
  2. Pack and Ship. Once you have a considerable amount of mutilated currency, you may prepare it for submission/redemption.
  3. You’ll get credit. Several months later you’ll receive a check. If the value exceeds $500 the redemption will be made through Electronic Funds Transfer (EFT).

Failure to follow directions outlined in 31 CFR 100 Subpart B—Request for Examination of Mutilated Currency for Possible Redemption will result in a denial of redemption. If you don’t accept mutilated currency and you don’t have a policy or procedure, you may consider educating members on how to submit mutilated currency for exchange: How to Submit a Mutilated Currency Claim.

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