Bearer negotiable instruments are financial instruments of whatever form, whether in the form of a bearer document, such as traveler’s cheques, promissory notes and cheques, payment orders, or other forms that can be attractive to illicit actors as alternatives to cash. Bearer negotiable instruments provide the opportunity to move large amounts of funds in bearer form without the bulkiness of cash. They are transferable documents that provide unconditional guarantees of cash payments either on demand or at a future date. The individual who issues a negotiable instrument is known as the ‘payer’ or ‘issuer,’ and the person who receives a negotiable instrument is known as the ‘bearer’ or ‘payee’.

Bearer negotiable instruments often include the instruction 'pay to the bearer', meaning the bearer would be the person in physical possession of the instrument. The risk, in this scenario, is that the holder is a criminal and/or not the intended payee of the negotiable instrument. Bearer negotiable instruments are also unique in that they can also be easily transferred from one party to another, which effectively obscures the paper trail on the ‘payer’ or ‘issuer’, and enables illicit actors to distance the proceeds of crime from the illegitimate source. LFIs should seek to mitigate these risks by continuing accepting cash and third party cheques as long as the due diligence measures regarding the person presenting the cheque have been duly conducted by the LFI.