What is a Medallion Stamp and Why Do I Need One?
A medallion stamp verifies your identity and authorization to transfer securities, and is issued by financial institutions participating in the Medallion Program such as banks, credit unions and brokerage firms.
Gaining access to one requires identification verification, and not every bank offers this service. Why is obtaining a medallion stamp so difficult?
The Banks Are Reluctant
Medallion stamps are endorsements that certify the signatures of individuals or institutions participating in transactions, typically issued by banks, broker dealers, and large financial institutions that participate in programs designed to facilitate transfers of securities.
Given their potential liability concerns, financial institutions typically refrain from issuing medallion signature guarantees freely or to just anyone; instead they issue them to existing customers at a nominal fee.
Financial institutions typically require medallion signature guarantees when transferring investment accounts or redeeming bonds, to confirm the legitimacy of signatures being used and that account or bondholders have permission to make these transfers. This helps establish that all necessary steps have been taken for their transfer.
Credit unions sometimes provide this service, though membership may require proof of identity and the certificate being transferred. They are an excellent solution for people without access to banks that offer this service.
The Requirements Are High
Acquiring a medallion stamp is essential to secure financial transactions. The stamp serves to verify signatures on documents related to securities transfers, helping reduce fraud. Acquiring one requires meeting stringent verification requirements and providing pertinent documents; unfortunately this process can be time consuming and frustrating.
Financial institutions that provide medallion services typically charge a fee, which varies based on the amount of money being transferred. Banks, credit unions, brokerage firms or even other financial companies often stamp transactions with medallion stamps to facilitate money transfer services.
Individuals seeking medallion stamps should visit a bank or financial institution participating in the STAMP program and provide verification of identity. Usually this involves providing identification documents and an account statement as proof. Once verified, financial institutions affix their stamp on documents that reinforce transaction security by showing liability in case of forgery.
The Process Is Time-Consuming
Accessing a medallion stamp may take longer than anticipated due to financial institutions’ reticence in offering them out to anyone – and often only provide them to long-standing relationships or those able to cover any potential losses themselves.
Process involves verifying an individual’s identity. Individuals seeking medallion signature guarantees must present government-issued identification like driver’s licenses or passports as well as financial documents like account statements to prove who they claim to be. Furthermore, notarized signatures may also be needed as additional verification that they are the person they claim they are.
Transferring securities requires stamps to verify the authenticity of signatures and identify of individuals who claim ownership of securities. Similar to notary seals, but more powerful because institutions provide backing that covers losses caused by fraud.
The Fees Are High
Individuals often need medallion signature guarantees when making high-value investments such as switching brokers or changing ownership, which must be verified as genuine investments.
Banks and credit unions that belong to either STAMP (Securities Transfer Agent Medallion Program) or ESMP (Employee Segregated Account Program) programs can offer this service; however, they will charge a fee.
To issue you a stamp, an institution compares your signature on a document to that on file and verifies both your identity and that you executed this document voluntarily.
If a bank or credit union doesn’t offer the service, other institutions do. Notaries and financial firms provide verification services to verify your signature and identity – although these may not offer as much security as medallion signature guarantees, but can still help complete transactions while being more cost-efficient and time efficient.
Comments are closed here.