A monetary instrument is a form of domestic or foreign currency that includes, but is not limited to, checks, certain investments, traveler’s checks and money orders, according to the State of Connecticut Judicial Branch. This is the legal definition that government bodies use.
Financial institutions issue monetary instruments in lieu of currency, according to the Federal Financial Institutions Examination Council. Monetary instruments are typically in bearer form, according to Canada Border Services Agency, which means the person who holds the monetary instrument has control of the instrument and no name attached to it.
Money launderers often use monetary instruments for the exchange of funds from criminal activities to avoid reporting regulations, according to the Federal Financial Institutions Examination Council.