There's a bit of a difference between referring someone and recommending someone, but unless specified, a referral is implied to be a recommendation. HR and/or the hiring manager will assume that you can vouch for this person to a certain extent, which means having first-hand or second-hand knowledge about his work ethic and skills. When you provide such a referral it's assumed that you'd be happy to work with them as a colleague. Some people recommend terrible employees for the bonus money but that's not something you ever want to do.
Now, if you can't speak to a person's work, you can still refer them and get the referral bonus. You just have to make it absolutely clear that you're only introducing the person and can't speak to the quality of their work. HR doesn't have a problem with that as an external recruiter does exactly the same thing for a much higher fee.
Bad recommendations can have a dramatic impact on your credibility and the value of any future recommendations you make. For that reason you should never recommend someone unless you have worked with them before or know someone who has and who's judgement you trust. A referral that doesn't work out shouldn't have the same effect as long as you're clear that you only introduced the connection.
Never provide a character reference when referring someone if you don't know their work ethic. Someone can be a perfectly nice person but a terrible employee and you risk that being taken as an outright recommendation.