To: All Member Banks and Others Concerned in the Third Federal Reserve District
Attention: Chief Executive Officer and Chief Financial Officer
Subject: REGULATION J: COLLECTION OF CHECKS AND OTHER ITEMS BY FEDERAL RESERVE BANKS AND FUNDS TRANSFERS THROUGH FEDWIRE; FINAL RULE
Summary:
The Board of Governors of the Federal Reserve System has announced final amendments to Regulation J, which governs Reserve Banks’ collection of checks and other cash items. The final amendments ensure that Regulation J covers the entire range of check processing services that the Reserve Banks will offer after the Check Clearing for the 21st Century Act takes effect on October 28, 2004.
The Check 21 Act permits banks to use substitute checks in place of original checks in the check collection or return process. The Act does not require any bank to accept checks electronically, although it facilitates the use of electronic transmission between banks that choose to do so. In light of the Check 21 Act, the Reserve Banks plan to offer a wider range of electronic check processing services, including accepting items in electronic form for collection and return. The final amendments therefore bring electronic items within the coverage of Regulation J. The final amendments also establish new warranties and indemnities that apply to electronic items handled by a Reserve Bank and that are not subject to warranties and indemnities under other law.
The Federal Register notice, published October 27, 2004, is available here (72 KB, 24 pages).
Date: The final amendments take effect on October 28, 2004, to coincide with the effective date of the Check 21 Act.
For Further Information: Adrianne G. Threatt, Counsel (202/452-3554), Legal Division; or Jack K. Walton, II, Assistant Director (202/452-2660), or Joseph P. Baressi, Senior Financial Services Analyst (202/452-3959), Division of Reserve Bank Operations and Payment Systems; for users of Telecommunication Devices for the Deaf (TDD) only, contact 202/263-4869.