A signature guarantee is a verification process where a bank or financial institution confirms the legitimacy of a signature and the request made by the person who provided it, reducing the chances of fraud. Only authorized entities can offer signature guarantee services, and the process involves examining the signature and comparing it to verified signatures related to the same individual. The guarantee is often in the form of a seal affixed to the document, indicating that the party selling or transferring the securities is the legal owner. Buyers should always request a signature guarantee to avoid substantial loss.
Also known as signature authentication, a signature guarantee is a form of verification in which a bank or other qualified financial institution confirms the legitimacy of a signature, as well as the request made by the person who provided the signature. The intent of the guarantee process is to reduce the chances of fraud when it comes to the transfer of various types of financial instruments. In many situations, the institution that guarantees the authenticity of the signature becomes responsible if the signature is found to be false.
Only authorized entities are recognized as acceptable guarantors and can offer signature guarantee services. Most banks and similar financial institutions have the ability to authenticate signatures. It is also possible for a member or a stock exchange to authenticate signatures and issue a guarantee. There are also independent agencies that have the ability to examine the signatures and determine if they are genuine or false. In many cases, the actual process of examining a signature and determining whether or not it is legitimate can be completed in a very short period of time.
The actual process involved in examining signatures may vary from guarantor to guarantor. Today, many guarantors make use of technology to examine every facet of the signature, making sure that it has the same qualities as verified signatures related to the same individual. For example, a bank would use the electronic copy of the signature obtained when the individual opened a checking account and compare it to any signature on a recent document that needs verification. Only after the guarantor is satisfied that the signature is not a forgery is the signature guarantee issued.
The actual signature guarantee is often in the form of a seal that the guarantor affixes to the document. In some cases, the guarantor may use a seal as an indication that the signature is authentic. The seal or stamp serves as a guarantee that the party selling or transferring the securities is the legal owner and has the right to transfer the assets as they see fit. With today’s increasing potential for fraud, not requiring a signature guarantee can result in substantial loss to the recipient. For this reason, buyers should always request and receive a signature guarantee when receiving securities.
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