Bearer note

Bearer note is a type of financial instrument that is not registered in the issuer's books and is payable to the person who possesses it. It is called a bearer note because it does not specify a payee, and the holder or "bearer" of the note is the owner of the asset. This type of note is used in certain types of transactions, such as money laundering and tax evasion, due to its anonymity and ease of transfer.

History

Bearer notes have a long history in the financial industry. They were first used in the 18th century as a means of transferring wealth. The use of bearer notes increased in the 19th century, particularly in international trade, due to their convenience and the security they provided against theft.

Characteristics

A bearer note has several key characteristics. It is not registered, meaning that the issuer does not keep a record of who owns the note or of any transfers of ownership. The note is payable to its bearer or holder, rather than to a named individual or entity. This means that the note can be transferred without the need for endorsement or registration.

Legal status

The legal status of bearer notes varies from country to country. In some jurisdictions, such as the United States, bearer notes are no longer issued due to their association with illegal activities. However, they are still used in other parts of the world, including certain offshore financial centres.

Risks and criticisms

Bearer notes have been criticized for their potential to facilitate illegal activities, such as money laundering and tax evasion. Because they can be transferred without a record, they can be used to move money anonymously. This has led to calls for tighter regulation of bearer notes, or even for their abolition.

See also

• Bearer bond
• Bearer instrument
• Negotiable instrument