Certified Anti-Money Laundering Specialist (CAMS) 2025 – 400 Free Practice Questions to Pass the Exam

A cashier's check is an instrument drawn on the account of a bank, making it a secure form of payment. When a customer requests a cashier's check, the bank essentially guarantees the payment because the funds are drawn directly from the bank's own funds rather than an individual's account. This provides reassurance to the recipient that the check will not bounce, as it is backed by the bank, making it a preferred method for large transactions or when verifying the legitimacy of the payment is important.

The other options do not accurately define a cashier's check. A personal check issued by a customer involves funds from that individual’s account, which does not carry the same level of guarantee as a cashier's check. A negotiable certificate of deposit is a different financial instrument that represents a time deposit held at a financial institution and is not the same as a cashier's check. Lastly, a check issued for online transactions does not specifically refer to a cashier's check and lacks the bank guarantee inherent in a cashier’s check. Therefore, the definition of a cashier's check as an instrument drawn on the account of a bank is the most accurate representation of what it is.