Typically, “book-entry” CDs do not require physical presentment to the issuing bank.  However, your bank’s book-entry CD agreements and your written policies for them should address the procedures for redeeming these CDs.

As you have indicated, your bank has switched from traditional CDs to uncertificated CDs that are labeled as “non-transferable” and “non-negotiable.” These CDs are not negotiable instruments under the Uniform Commercial Code (UCC). See, 810 ILCS 5/3-104(d). 

For CDs that are negotiable instruments, the “holder” of the negotiable CD is the only “person entitled to enforce” the instrument (with some exceptions for lost or stolen instruments and other situations). 810 ILCS 5/3-301. To be considered a “holder,” the customer must be in possession of the negotiable CD. 810 ILCS 5/1-201(b)(21). The reason for this is that, without the bank collecting a physical copy of a negotiable CD on redemption, the customer or anyone else could re-present the CD to the bank and collect the CD’s funds a second time. This risk is eliminated when a CD is clearly labeled as non-transferable and non-negotiable, and many institutions no longer require customers to present and surrender physical copies of non-transferable, non-negotiable CDs.

Please note that if the CDs include language requiring customers to present and surrender a physical copy of the CD upon redemption, it would not be advisable to permit case-by-case exceptions to this requirement. In addition, we recommend consulting with your bank counsel before altering any language on your institution’s CD documents.