What is a Medallion Guarantee Signature?
The world of finance can be complicated, especially when it comes to safeguarding your money. While some financial transactions can be relatively straightforward, there are other aspects of the industry that need to be a little more robust to ensure that your investments are kept safe.
Following the traumatic 9/11, a system was set up in the US that looked to ensure there were no instances of cross-border fraud. What this effectively meant is that stringent measures were taken to ensure the identity of a person is thoroughly ascertained. The financial liability regarding the selling and transferring of hares in the US. The system proved to be so successful, that a number of financial transactions require what is known as the Medallion Guarantee Signature.
How the Medallion Guarantee Signature Works
As advised, the Medallion Guarantee Signature acts as a barrier against liability and fraud. This is done by each stamp containing its own unique barcode. Should the stamp go missing, it is registered automatically so it can’t be used fraudulently. There are many different compliance checks carried out which look to safeguard shareholders and their representatives.
As well as looking to safeguard the interests of shareholders, the Medallion Guarantee Signature should not exceed the value of the stock.
When Would a Medallion Guarantee Signature Be Required?
Although the Medallion Guarantee Signature is used frequently in the US, it’s often a service many financial institutions don’t offer in the UK. However, that’s not to stay that there isn’t a service available, but why would we need it if it’s more a US operation?
Just because we’re based in the UK doesn’t mean all our financial assets are. For example, some have relatives living overseas, so require a service that will allow of the transferring of assets should that person pass away. Others may be working for a company that is based in the US, despite having UK locations. As such, it could be the fact that any shares you’ve invested are actually held in the US, and would again require the Medallion Guarantee Signature to make amendments.
Is There a Fee Involved? What is the Cost of Medallion Guarantee?
Given the complexity around Medallion Guarantee Signature, especially when Federal Tax clearance is required, so it stands to reason that only a reputable company should be used when carrying out such transactions. Generally, there is a fee involved, due to the stringent processes involved, as well as the time it takes to carry out the transaction. However, many find that the fee they have to pay is a flat fee, so those with a large number of shares, or those with a substantial amount of money to transfer don’t have to worry about paying commission although a higher fee is usually charged owing to the greater risk of liability.
The whole affair can seem overwhelming, but in layman’s terms, the provider will take care of the more complex nature of any transfers, so ensuring you use the right provider is all you have to worry about when transferring shares or balances from the US. Call us on 020 8150 2010 for more information, if calling from outside the UK call +44 20 8150 2010.