You do need to hold the items until the money order clears. One of my tellers took 4 counterfeit Postal Money orders a couple of months ago.
they were for a total of almost $2,000.00 and sadly she didn't follow bank policy because they were from the PO and gave the customer immediate credit and cash back. That poor girl spent all the money and was left owing us a lot of money
It is sad we live in a world where you can have no trust...but it is, what it is