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LeoGlossary: Bearer Bond
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Largely defunct today, bearer bonds are considered property of the “bearer,” or person or entity that holds them. As opposed to registered bonds, no record of ownership or sale is kept for bearer bonds, only a physical bond certificate serves as proof of ownership. To receive interest, physical coupons are detached from the certificate and mailed to the bond issuer or the issuer’s paying agent, and the certificate itself is presented at the maturity date for payment of principal.
Historically, the anonymity of bearer bonds made them a popular vehicle for tax evasion and money laundering. As a result, a 1982 federal law prohibited federally tax-exempt and tax-advantaged bonds from being issued in bearer form.
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