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F
e d e r a l
R
e s e r v e
B
a n k
OF DALLAS
W ILLIAM
H. W ALLACE
FIRST V IC E PR E S ID E N T
FebruaryJ 21,’ 1990
DALLAS, TEXAS 7 5 2 2 2
AND C H IE F O PER ATING O FFIC ER
Circular 90-09
TO:
The Chief Operations Officer of
all financial institutions in the
Eleventh Federal Reserve District
SUBJECT
Amendments t o B u l l e t i n 8
DETAILS
The Federal Reserve Bank of Dallas’ Bulletin 8, "Collection of Cash
Items and Returned Checks," has been amended. The first amendment requires
the routing number address of a cash item to be in the same Reserve Bank
availability zone, or in an availability zone with faster availability in the
same check processing region, as the printed bank address on the item. The
second amendment clarifies that the provisions related to the payment for cash
items on nonstandard holidays also applies to returned checks. These
amendments were effective July 17, 1989.
In addition, the amendments to Bulletin 8 described below were
effective January 1, 1990.
The time frame for presenting a photocopy of an item to a Reserve
Bank after the cash item or return check has been charged back has been
changed from 30 banking days to 20 banking days. The time frame for a paying
bank to dispute an allegation of late return has been increased from 15
calendar days to 20 banking days.
A two year time limit has been set for commencing an action against
a Reserve Bank for negligence, in handling cash items. The Reserve Banks will
generally continue to maintain cash item research records for only one year.
The "Competitive Equality Banking Act of 1987" (CEBA) amended the
statutes governing the time frames for payment of and claims on U.S. Treasury
(government) checks to generally limit payment to checks negotiated to a
financial institution within one year after the date of issue, unless it is
negotiated to a financial institution no later than October 1, 1990. CEBA
also generally limits reclamation claims by the Treasury and claims against
the Treasury to one year after the payment or issuance of a government check.
For additional copies of any circu la r please contact the Public A ffa irs D epartment at (214) 651-6289. Banks and others are
encouraged to use the fo llo w in g incom ing WATS numbers in con tac ting this Bank (800) 442-7140 (intrastate) and (800)
527-9200 (interstate).
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
Exhibits I and II of Bulletin 8, regarding late return item claims,
have also been revised. Changes to Exhibit I, "Banks Claim of Late Return,"
clarify that a late return item claim can be made only once and in respect to
the first time a check of $100.00 or more was returned by the paying bank.
The change to Exhibit II, "Paying Bank’s Response to Claim of Late Return,"
requires the completed form to be returned to the local Federal Reserve office
within 20 banking days after the Reserve Bank sent the claim of late return,
otherwise, the charge will stand.
ENCLOSURES
Enclosed is the revised Bulletin 8. Please file it in your
regulations binder and remove the old version.
MORE INFORMATION
If you have any questions or would like additional information,
please contact Robert L. Whitman, (214) 698-4357 at the Dallas Office,
Eloise Guinn, (915) 544-4730 at the El Paso Branch, Luke E. Richards, (713)
652-1544 at the Houston Branch, or Herb Barbee, (512) 224-2141 at the
San Antonio Branch.
Sincerely,
BULLETIN 8
COLLECTION of
CASH ITEMS
FEDERAL RESERVE BANK OF DALLAS
SCOPE
This bulletin contains the terms and conditions under w hich we will handle
cash items for collection and other instructions regarding the handling, return, and
adjustm ent of cash items.
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
BULLETIN 8
COLLECTION OF CASH ITEMS
TABLE OF CONTENTS
Paragraphs
G eneral...........................................................................................................................................
1-4
Items that w e handle of cash i t e m s .....................................................................................
5-6
Items that w e do not handle as cash items .......................................................................
7-10
Preparation of cash letters and return letters...................................................................
11-16
Indorsements
Responsibility for back of check
Direct sending to other Reserve offices
Time schedules and availability of c r ed it.........................................................................
Immediate credit
Deferred credit
Items payable outside of a State
17-19
Routing Numbers; R e c o r d s....................................................................................................
20-22
Delivery and P resentm ent.......................................................................................................
23-26
Payment for cash le tter s..........................................................................................................
Differences and adjustments
M issent Items
27-33
Returned c h e c k s .........................................................................................................................
Preparation of returned checks
Qualified returned checks; identification of depositary bank
Delivery to depositary bank
Payment for returned checks
34-45
Breach of warranty; cash item s and returned c h e c k s ...................................................
46
Bank’s liability for judgment and e x p e n s e s .....................................................................
47
Disputed return p ro ce d u re....................................................................................................
48-50
N otice of n onp aym ent..............................................................................................................
Content of notice of nonpayment
A cceptance of notice by depositary bank
Provision o f notice from the returned check by this Bank
Telephone notice to this Bank
Fedwire notice to depositary bank
Other provisions
51-63
P ro test............................................................................................................................................
64
Z
FEDERAL RESERVE BANK OF DALLAS
BULLETIN 8
BULLETIN 8
COLLECTION OF CASH ITEMS
TABLE OF CONTENTS (continued)
Paragraphs
C h a rg es.......................................................................................
65
Missing or destroyed cash items and returned checks
Mutilated cash letters and return letters
Cash items discovered m issing or destroyed
Handling o f photocopies o f cash items
Returned checks discovered m issing or destroyed
Handling o f photocopies of returned checks, notices in lieu of return
66-77
Right to amend ...........................................................................................................................
78
A ppendix A - Government Checks
A ppendix B - Postal Money Orders
A ppendix C - Redeemed Savings Bonds and Savings Notes
Exhibit I / Bank's Claim of Late Return
Exhibit II / Paying Bank's Response to Claim of Late Return
Exhibit III / Paying Bank's Notification Agreement
01-90
ii
FEDERAL RESERVE BANK OF DALLAS
GENERAL
1. Subpart A of Regulation J (“Regulation J”) of
the Board of Governors of the Federal Reserve
System (“Board”), Subpart C of Regulation CC
(“Regulation CC”) of the Board, this bulletin, and
our time schedules apply to the handling of all cash
items that we accept for forward collection, all
returned checks that we accept for return, and any
form of payment that we receive for such items.
This bulletin also contains instructions to paying
and collecting banks for handling and paying cash
items received from us, and instructions to return
ing and depositary banks for handling and paying
returned checks received from us. This bulletin is
issued pursuant to Sections 4, 13, 14(e), and 16 of
the Federal Reserve Act, the Expedited Funds
Availability Act, and relating statutes and in con
formity with Regulations J and CC. It is binding on
each party interested in an item we handle.
2. Each Reserve Bank has issued a bulletin sub
stantially similar to this one. W hen we send a cash
item or a returned check to another Reserve Bank,
that Reserve Bank handles the item subject to its
bulletin and time schedules. We give credit for the
item in accordance with our time schedules.
3. The definitions of terms set forth or incorpo
rated in Regulation J, including terms defined in
Regulation CC, apply in this bulletin, except as oth
erwise provided in this bulletin. The term “bank”
includes a depository institution as defined in Sec
tion 19 of the Federal Reserve Act. The term “item ”
includes a cash item and a returned check. The
term “cash item ” excludes a returned check, and
the term “returned check” includes a cash item,
and a check as defined in Regulation CC, that is re
BULLETIN 8
turned by a paying bank. The terms “prior” or
“subsequent” w ith respect to a bank are used in
relation to our handling of an item. For example, a
subsequent collecting bank is one that handles a
cash item after we handle it. Many terms used in
this bulletin have specialized meanings that have
developed through law, custom and commercial
usage. Unless otherwise stated, all references to
this Bank include our Head Office and our San
Antonio, Houston, and El Paso Branches.
4. This bulletin applies to any State or political
subdivision of a State to w hich we present direct, as
cash items, bills, notes, and warrants that are issued
by the State or political subdivision and that are
payable in the Eleventh Federal Reserve District.
Each such issuer is treated as a paying bank and
each day on w hich the issuer is open for the regular
conduct of its affairs or the accommodation of the
public is treated as a “banking day” for the issuer.
ITEMS THAT WE HANDLE AS CASH ITEMS
5.
A sender may send the following items to us
for handling as cash items, unless otherwise pro
vided in this bulletin:
(a) Checks payable in a State,1including post
dated checks, except checks that cannot be
collected at par;
(b) Government checks, postal money orders,
redeem ed savings bonds, and food coupons2;
and
(c) Other dem and items, collectible at par in
funds acceptable to the Reserve Bank of the
Federal Reserve District ("District")3 in which
U nder Section 210.2 of Regulation J, "State" means a State of the United States, the District of Columbia, Puerto Rico, or a
territory, possession or dependency of the United States.
2'
The provisions that govern the collection of Government checks, postal money orders and redeem ed savings bonds are
contained in A ppendices A, B, and C of this bulletin. Provisions governing the collection of food coupons are contained in
Bulletin 5.
3.
The Virgin Islands and Puerto Rico are deem ed to be in the Second District, and Guam, American Samoa and the Northern
Mariana Islands are deem ed to be in the Twelfth District. Regulation J, note 1.
FEDERAL RESERVE BANK OF DALLAS
the items are payable, that we are willing to
accept as cash items.
6. W hen we accept an instrum ent for credit to our
own account, the account of another Reserve Bank,
or any account on our books, we handle the instru
m ent as a cash item if it qualifies as a cash item even
though it is sent to us by one other than a “sender,”
as defined in Section 210.2 of Regulation J.
ITEMS THAT WE DO NOT HANDLE AS CASH
ITEMS
7. A sender should not send to us an item eligible
for handling as a cash item under paragraph 5 if:
(a) a passbook, certificate, or other document
is attached to the item;
(b) special instructions, including a request
for special advice of paym ent or dishonor, ac
com pany the item;
(c) the item consists of more than a single
thickness of paper, except as provided in para
graphs 69 - 70 and 76 regarding photocopies,
but we do handle as a cash item a m utilated, er
roneously-encoded, or other cash item con
tained in a carrier that qualifies for handling by
high-speed check processing equipment;
(d) except as provided in paragraphs 69 - 70
and 76 regarding photocopies, the item has not
been preprinted or postencoded, in accordance
with the American National Standard Specifi
cations for Placement and Location of MICR
Printing, X9.13 (September, 1983), before we
receive it with: (i) the routing num ber4 of the
paying bank (or non-bank payor), and (ii) except
as provided in our time schedule, the dollar
am ount of the item. We handle such an item
as a cash item, however, w hen we judge that
4.
BULLETIN 8
special circumstances justify such handling;
(e) the item does not set forth on its face the
name of the paying bank and a city and state
address of the bank that is located in (1) the
same Reserve Bank check processing region
as, and (2) a Reserve Bank availability zone
that provides the same (or slower) availability
than, the address associated w ith the routing
num ber in magnetic ink on the item; or
(f) except as provided in paragraphs 69 - 70
and 76 regarding photocopies, the item does
not bear (i) the routing num ber of the paying
bank in fractional form in the upper right hand
corner in at least 8-point Gothic type, or (ii)
conform to the dim ension standards of the
American National Standard Specifications
for Placement and Location of MICR Printing,
X9.13 (September, 1983) (between 2 3/4 and 3
2/3 inches in width, and 6 and 8 3/4 inches in
length). We handle such an item as a cash
item, however, w hen we judge that special
circumstances justify such handling.
These items should be sent to us for collection only
as noncash items under our Bulletin 9, “Collection
of Noncash Items.”
8. A sender should not send to us as a cash item
an item that has been dishonored two or more
times, or a returned check. We reserve the right to
return an item or to handle it as a noncash item if it
has been dishonored once, or if we judge that
special conditions require that it be so handled. We
reserve the right to return an item payable by, at, or
through a bank that has been reported closed.
9. Under Section 4-204(1) of the Uniform Com
mercial Code, a collecting bank m ust send items by
reasonably prom pt m ethods. Accordingly, we dis
courage indirect routing of cash items. A sender
should not send to us, or to another Reserve Bank
The term "routing number" means a num ber authorized by the Routing Number Policy of the American Bankers Association.
FEDERAL RESERVE BANK OF DALLAS
•
BULLETIN 8
for our account, an item that is payable in another
District and that bears the indorsem ent of a bank
located in another District if it is evident that the
item has been routed indirectly. Senders should
not send to us an item payable by, at, or through an
office of the sender.
13. We require that cash items be separately sorted
from returned checks, except as otherwise pro
vided by written agreement. We reserve the right to
require separate sorts of cash items and returned
checks, and separate sorts of Government checks,
postal m oney orders, redeem ed savings bonds and
food coupons. We reserve the right to require banks
located in the same city, town, m etropolitan or
similar area to sort, list, and package cash items
payable in the same area according to the office of
the paying bank where the items are payable. Our
time schedules contain other instructions for sort
ing and listing items.
10. If an item that we do not handle as a cash item
is sent to us in a cash letter, we reserve the right, in
our discretion, to charge it back and return it to the
sender. We do not have any responsibility for delay
in handling as a cash item an instrum ent that
should not have been sent to us as a cash item. We
also reserve the right to return and charge back a
cash letter that does not conform to the sorting
requirem ents of this bulletin and our time sched
ules.
Indorsements
14. All cash items and returned checks sent to us
should be endorsed in accordance w ith the require
m ents of Section 229.35 and A ppendix D of Regu
lation CC. If we receive a cash item w ithout the
sender’s indorsement, or a returned check without
a returning bank’s indorsement, we may (a) present
or send the item as if it bore the indorsement, (b)
place on the item the missing indorsem ent and the
date we received it, or (c) return the item for proper
indorsement. We handle an end-point-sorted cash
letter and return letter w ithout indorsing the items
in the letter. We make the warranties stated in
Section 210.6(b) of Regulation J by presenting or
sending a cash item (and the warranties stated in
Section 229.34 of Regulation CC by sending a re
turned check), w hether or not the item bears our
indorsement.
PREPARATION OF CASH LETTERS AND
RETURN LETTERS
11. All cash items and returned checks sent to us
may be listed by am ount w ithout further descrip
tion in tape listings accompanying cash letters or
return letters. All letters and tape listings should be
^ ■ ( d a t e d and identified with the sender’s (or paying or
returning b an k ’s) nam e and nine-digit routing
number, if any.
12. Each sender (or paying or returning bank)
should keep records that perm it it to identify its
depositor or indorser on a cash item or returned
check so that the bank can take appropriate action
if the item is lost or destroyed. We do not usually
keep copies or descriptions of items. We do not
keep any records of items in end-point-sorted cash
letters or return letters that we handle w ithout our
indorsement. We have no responsibility for de
scribing a lost or destroyed item that we charge back
to a bank, or for m aintaining insurance coverage or
obtaining from another person reim bursem ent for a
sender’s (or paying or returning bank’s) costs or
other loss, except as provided in A ppendix A con
cerning Government checks.
01-90
Responsibility for Back of Check
15. (a) A bank issuing checks drawn on us is
responsible for ensuring that the condition of
the back of the check w hen issued does not
adversely affect the ability of a bank to indorse
the check legibly in accordance w ith Section
229.35 and A ppendix D of Regulation CC. The
issuing bank agrees to indem nify us for any
loss or expense incurred by us (including at
torneys’ fees and expenses of litigation) as a
3
FEDERAL RESERVE BANK OF DALLAS
BULLETIN 8
result of the condition of the back of the check
w hen issued.
longest period prescribed in our time schedules for
any item enclosed.
(b) We reserve the right to refuse to accept a
deposit of a check if in our judgment the back
of the check at the time of the deposit adversely
affects our or another bank’s ability to indorse
the check legibly in accordance w ith Section
229.35 and A ppendix D of Regulation CC. If
we do accept the check, the depositor is re
sponsible for the condition of the back of the
check, and agrees to indem nify us for any loss
or expense incurred by us (including attor
neys’ fees and expenses of litigation) as a result
of the condition of the back of the check at the
time of deposit.
18. Because in m any instances our time schedules
do not show the actual time required for collection
or return, our advices cannot be considered advices
of actual paym ent on the dates we make credit
available. Credit is in all instances subject to
chargeback by us in the event we do not receive
paym ent in actually and finally collected funds.
We reserve the right to refuse to perm it a bank to
w ithdraw or otherwise use any credit (immediate
or deferred) for a period of time that is reasonable
under the circumstances, including a reasonable
time for us to receive notice that another bank seeks
to recover from us under Section 229.35(b) of Regu
lation CC.
Direct Sending to Other Reserve Offices
16. A sender (or a paying or returning bank) that
m aintains or uses an account w ith us and that has
cash items (or returned checks) payable in another
District, or in the territory of another office of this
Bank, may send the items directly to the Reserve
office of that District or territory under procedures
we prescribe. Under Sections 210.4(b) and 210.12(f)
of Regulation), items sent direct are deemed to have
been handled by us. A sender or bank that by
arrangement delivers items payable in another
District to us, or to another designated location for
consolidated shipm ent, should give us prior notice
of any deviation from that arrangement.
19. We enter credit at full face value in the reserve
account or other appropriate account on the day we
receive a cash item or returned check as follows:
Immediate Credit
Immediate credit at once qualifies as reserve for
purposes of Regulation D and is available for use by
the bank.
Deferred Credit
The am ount entered as deferred credit does not
qualify as reserve for purposes of Regulation D and
is not available for use by the bank until the time
specified in our time schedule.
TIME SCHEDULES AND AVAILABILITY OF
CREDIT
ROUTING NUMBERS; RECORDS
17. We give imm ediate or deferred credit for all
items that we accept as cash items or returned
checks in accordance w ith our published time
schedules. For letters containing items unsorted as
to credit availability, we m ay defer credit for the
20. We may present or send a cash item, under
Section 210.6(a)(2) of Regulation J, on the basis of
any routing num ber or other designation of a pay
ing bank appearing on the item w hen we receive it.
FEDERAL RESERVE BANK OF DALLAS
BULLETIN 8
We are not responsible for any delay resulting from
our acting on a designation of a paying bank, whether
inscribed by magnetic ink or other means, even if
the designation is inconsistent with another desig
nation of the paying bank on the item.
TR-411 is required. A paying bank may also p ickup
cash items at this Bank by arrangement w ith us.
The paying bank is considered to receive a cash
item w hen it is delivered as requested or made
available for pickup as arranged.
21. If in our judgment processing of an unencoded
or m isencoded cash item requires it, we may in
scribe on the item, in magnetic ink or otherwise, (a)
the amount of the item, or (b) the routing num ber of
the paying bank (or nonbank payor). The sender
assumes the risk of loss resulting from any delay
caused by our inscribing the item and presenting or
sending it accordingly, except in the case of an item
that is not am ount encoded and is classified as a
cash item in our time schedule.
25. A paying bank may request delivery of cash
items to be made at an off-premise location in a
different Reserve office territory from that where
the paying bank is located, as provided in this
paragraph. For arrangements involving delivery of
cash letters to a processing organization, execution
of special presentm ent agreement Form TR-411 is
required.
22. In addition to the record keeping provisions of
this bulletin (see paragraphs 12 and 75), Treasury
regulation (31 Code of Federal Regulations, Part
103) require that banks keep legible records of
m any items. These regulations apply w hether or
not the item is capable of being photocopied.
DELIVERY AND PRESENTMENT
23. We do not by this bulletin, or otherwise, agree
to present, or cause presentm ent of, a cash item
earlier than is required by the Uniform Commercial
Code. We have no responsibility for giving notice
to a sender of anticipated delays in presentm ent or
return of cash items unless the delay is expected to
involve at least ten paying banks and to last at least
three banking days.
24. A paying bank may request delivery of cash
items to be made at an off-premise location in the
same Reserve office territory as that where the
paying bank is located. For arrangements involving
delivery of cash letters to a processing organization,
execution of special presentm ent agreement Form
(a) In appropriate cases, we will attempt to
arrange public transportation, at the paying
bank’s expense, to the out-of-territory location
that ensures delivery in the ordinary course on
the same banking day that delivery would
have been made w ithin the territory where the
paying bank is located (“same-day delivery”).
(b) If we arrange same-day delivery, the pay
ing bank is considered to receive the cash
items w hen the items are delivered to the outof-territory location as requested, or w hen the
items are shipped if the scheduled transporta
tion is cancelled or rescheduled and we do not
arrange alternate same-day delivery.
(c) If we do not arrange same-day delivery,
the paying bank may arrange for transporta
tion of the items to the out-of-territory loca
tion, and is considered to receive the cash
items w hen we make the items available for
shipm ent as requested.
26. We may commingle cash items delivered to or
picked up by the paying bank’s agent w ith other
cash items delivered to or picked up by that agent,
unless otherwise requested by the paying bank. A
FEDERAL RESERVE BANK OF DALLAS
cash item is considered presented w hen received
by the paying bank or its agent (other than a payable
through bank).
PAYMENT FOR CASH LETTERS
27. A paying bank m ust pay for all cash items that
it has received from us and not returned prior to the
close of its banking day of receipt.5 Payment shall
be made at par and by:
(a) a debit to an account on our books;
(b) cash; or
(c) in our discretion, any other from of pay
ment.
BULLETIN 8
days not considered voluntary (“m andatory non
standard holidays”), is set forth in our time sched
ule. We may charge the account on our books m ain
tained or used by the paying bank for the am ount of
the item on the day we make the item available,
unless the paying bank elects to compensate for the
float associated with the item. The paying bank
may elect to eliminate float by “as of” adjustment or
pay for the float by explicit charge, as we prescribe
w ith respect to inteterritory float. An item is
available to the paying bank if we deliver it or are
prepared to deliver it as if the paying bank were
open. A paying bank that pays for an item made
available to it, or compensates for the float associ
ated w ith the item, is not considered to receive the
item until its next banking day, such as for purposes
of determining the deadline for return of the item.
We do not charge a paying bank on a m andatory
nonstandard holiday for items made available on
that day.
The proceeds of any paym ent shall be m ade avail
able to us by the close of our banking day on the
banking day on w hich the paying bank receives the
items. If the paying bank’s banking day of receipt
is not a banking day for us, paym ent shall be made
by the close of our next banking day; we may make
appropriate adjustm ents as of the day of receipt
(unless that day is a Saturday or Sunday) for p u r
poses of com puting reserves under the Board’s
Regulation D. Our terms for payment for cash items
are contained in Bulletin 12 of this Bank.
Differences and Adjustments
28. As provided in .210.9(a)(2) of Regulation J, a
paying bank that closes voluntarily on a day that is
a banking day for us shall, w ith respect to a cash
item made available to the paying bank on that day,
either (a) pay the am ount of the item by the close of
our banking day on that day, or (b) compensate for
the value of the float associated with the item and
pay the amount of the item on the banking day of
receipt of the item by the paying bank. A list of
standard Reserve Bank holidays, and of other holi
30. Unless a paying or depositary bank has other
wise agreed w ith us, a paying or depositary bank
may pay for our cash letter or return letter in an
am ount different from the total of the letter if the
accompanying items do not prove to the amount of
the letter. The bank should furnish at the time of
payment a complete explanation of the difference
on the form we provide. We request that banks not
report adjustments of $1.00 or less. We adjust for an
amount encoding error on a cash item or a qualified
29. A subsequent collecting bank (other than a
Reserve Bank) that is paid for a cash item shall make
the proceeds available to us not later than the close
of our banking day on the day the subsequent
collecting bank receives the proceeds.
A paying bank is deem ed to receive a cash item on its next Banking day if it receives the item:
(1)on a day other than a banking day for it; or
(2)
on a banking day for it, but
(a)
after its regular banking hours;
(b) after a cut-off hour established by it in accordance w ith the Uniform Commercial Code; or
(c) during afternoon or evening periods w hen it is open for limited functions only.
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
•
not send the item to us in a cash letter or return
letter.
returned check (a) upon receipt from a sender or a
bank, w ithin six (6) calendar months from the date
of the entry relating to the item, of a request and a
photocopy of the front and back of the item showing
the error, and (b) subject to receipt from the bank or
the sender of the item, as the case may be, of the
am ount of the requested credit or refund.
33. A check, as defined in Section 229.2(k) of
Regulation CC, that contains the routing num ber of
a bank is considered to be payable by the bank, even
if the check does not contain the name of the bank
or contains the name of another bank. Therefore, a
paying bank shall handle a cash item on w hich it is
identified only by routing num ber as a cash item
draw n on it. The paying bank is encouraged to
invalidate any erroneous use of its MICR routing
num ber on the face of the item prior to return by
obliterating only the start and stop symbols of the
routing num ber (and by cancelling any erroneous
fractional routing number) to prevent redelivery to
the paying bank.
31. We provide a statement of account to each
bank m aintaining an account on our books. An
account holder m ust prom ptly advise us in writing
of an objection to an entry in our statement of its
account. An account holder that fails to advise us
of its objection w ithin one calendar year of the date
of the entry (and any bank that has used the account
and has handled the cash item or returned check to
w hich the entry relates) is deemed to have ap
proved the entry, and the statement of account is
deemed finally adjusted. Reserve Banks generally
keep records for only one year. This paragraph
does not relieve an account holder from the duty of
using due diligence in examining statements of ac
count sent to it and of notifying us immediately on
discovery of an error. Further, this paragraph does
not relieve a Reserve Bank from liability for breach
of warranty on an item to w hich an entry relates.
Section 229.38(g) of Regulation CC requires that
any action for a violation of Regulation CC be
brought w ithin one year after the date of the occur
rence of the violation. Section 210.6(c) of Regula
tion J requires that action on a claim against a
Reserve Bank for failure to exercise ordinary care or
act in good faith under Regulation J be commenced
w ithin two years after the claim accrues.
RETURNED CHECKS
34. A paying bank may return a cash item received
from us and for w hich it has previously made
paym ent only if it returns the item w ithin the
deadline of Section 210.12(a) of Regulation J, Sec
tion 229.30(c) of Regulation CC and the Uniform
Commercial Code. A paying bank may return to us
a cash item received from us w ithout making pay
m ent to us if it returns the item prior to the close of
its banking day of receipt. If the paying bank
receives a settlement from a returning bank for a
cash item received from us and returned by it, but
for w hich it has not previously made paym ent to u s ,
it shall immediately rem it the settlement to us.
35. A paying or returning bank may send to us a
returned check not handled by us for forward
collection only if it sends the returned check w ithin
the deadline of Regulation CC and the Uniform
Commercial Code. A bank shall not commingle
returned checks w ith cash items.
Missent Items
32. If we send to a bank, on the understanding that
it is the paying bank, a cash item that does not
contain either the routing num ber or the name of
the bank as paying bank, and the bank determines
not to pay the item, the bank shall send the item
back to us prom ptly on a w ithout entry basis with
a request for credit or refund and a notation clearly
indicating the reason for nonpaym ent, and we will
prom ptly grant the credit or refund. The bank shall
01-90
36. A paying or returning bank that sends a re
turned check to us and receives settlement for the
returned check (a) warrants to us and subsequent
parties that its return of the check was w ithin the
7
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
deadline of Regulations CC and J and the Uniform
Commercial Code, and (b) agrees to indem nify us
for any loss or expense incurred by us (including at
torneys’ fees and expenses of litigation) as a result
of its breach of this warranty. The paying or
returning bank also makes the other warranties and
agreements set forth in Section 210.12 of Regula
tion J and in Section 229.34 of Regulation CC.
turned check;
(c) the identification of the depositary bank
by nine-digit routing num ber in magnetic ink
on a qualified returned check; and
(d) the identification of the depositary bank
by routing num ber on the face of a returned
check received in a separate sort of items
requiring such identification;
37. We do not by this bulletin, or otherwise, agree
to handle a returned check more expeditiously than
is required by Section 229.31 of Regulation CC, or
to convert a returned check into a qualified re
turned check. We have no responsibility for giving
notice of anticipated delays in return of returned
checks unless the delay is expected to involve at
least ten depositary banks and to last at least three
banking days.
w hether or not the am ount or identification is
consistent w ith any other information on the re
turned check. The paying or returning bank from
w hich we receive the check agrees to indem nify us
for any loss or expense incurred by us (including
attorneys’ fees and expenses of litigation) as a result
of our reliance on such amount or identification.
Preparation of Returned Checks
Delivery to Depositary Bank
38. A paying bank shall clearly write or stamp on
the face of a returned check that it is a returned
check and the reason for nonpaym ent as provided
in Section 229.30(d) of Regulation CC. We may
handle the returned check even if it does not indi
cated the reason for nonpaym ent. We reserve the
right to send back to the paying or returning bank a
returned check if the depositary bank has been
reported closed. Paragraphs 11-19 and 30-31 apply
to the preparation and sending of, and the availabil
ity of credit and adjustm ents for, returned checks.
40. We deliver returned checks to a depositary
bank at the same location and subject to the same
terms under w hich we deliver cash items payable
by the bank, except as follows. If we do not usually
deliver cash items to the bank for payment, we
deliver returned checks to the depositary bank in
accordance w ith Section 229.32(a) or Regulation
CC, w hich may include delivery by mail. If a
depositary bank requests delivery of returned checks
at a location other than the location to w hich we
deliver cash items, or other than by mail, we will
deliver returned checks to a location on an existing
Reserve Bank courier route in appropriate cases, or
will arrange delivery as otherwise agreed w ith the
depositary bank. A depositary bank may also
arrange to pick up returned checks at this Bank.
Qualified Returned Checks;
Identification of Depositary Bank
39. We may rely on:
(a) the am ount of a qualified returned check
encoded in magnetic ink;
(b) the presence or absence of a “2” in mag
netic ink in position 44 of the MICR line as to
w hether the returned check is a qualified re
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41. We deliver returned checks to a depositary
bank separately sorted from cash items, unless we
and the depositary bank agree otherwise.
Payment for Returned Checks
42. A depositary bank m ust pay for a returned
\
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fc-.,-A
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
check in full so that the proceeds are available to us
by the close of our banking day on the banking day
the depositary bank receives6the returned check. If
the depositary bank’s banking day of receipt is not
a banking day for us, paym ent shall be made by the
close of our next banking day; we may make appro
priate adjustments as of the day or receipt (unless
that day is a Saturday or Sunday) for purposes of
computing reserves under the Board’s Regulation
D. A depositary bank that closes voluntarily on a
day that is a banking day for us shall pay for a re
turned check or compensate for the float as pro
vided w ith respect to cash items in paragraph 28 of
this circular.
43. A depositary bank shall pay us for a returned
check in the same m anner it pays us for a cash item
received for payment. If we do not usually send
cash items to the depositary bank for payment, the
depositary bank shall pay by:
(a) debit to an account on our books;
(b) cash;
(c) wire transfers; or
(d) in our discretion, any other form of pay
ment.
44. A subsequent returning bank (other than a
Reserve Bank) that paid for a returned check shall
make the proceeds available to us not later than the
close of our banking day on the day the subsequent
returning bank receives the proceeds, and shall pay
in the same m anner as for cash items received for
payment.
45. If we send a returned check or notice of non
paym ent to a bank on the understanding that it is
the depositary bank, and the bank determines that
it is not the depositary bank, but the bank is able to
identify the depositary bank, we encourage the
bank to send the returned check or notice promptly
to the depositary bank. If the bank is unable to iden
tify the depositary bank, the bank shall promptly
send the check or notice back to us on a without
entry basis w ith a request for credit or refund, and
we will prom ptly grant the credit or refund. The
bank shall not send the returned check to us in a
cash letter or return letter.
BREACH OF WARRANTY; CASH ITEMS AND
RETURNED CHECKS
46. A bank that has received a cash item or re
turned check from us and that had paid us for the
item may request, on a w ithout entry basis, a credit
or refund based on a claim of breach of warranty,
including a claim by a paying bank of forged in
dorsement w ith affidavit of forgery. We make
refund to the requesting bank and charge the bank
from w hich we received the cash item or returned
check only if the latter bank specifically authorizes
us to do so. The bank shall not send the item to us
in a cash letter or return letter.
BANK’S LIABILITY FOR JUDGMENT AND EX
PENSES
47. Under Sections 210.5 and 210.12 of Regula
tion }, we may charge the account m aintained or
used by the bank from w hich we have received a
cash item or returned check for the am ount of any
judgment and attorneys’ fees and expenses in
curred by us in certain actions against us or another
Reserve Bank (or in certain actions where defense
is tendered to us or another Reserve Bank), includ
ing actions alleging breach of warranty, if we have
tendered defense of the action to the bank. We
assume no responsibility for defending the action if
A depositary bank is deem ed to receive a returned check on it next banking day if it receives the item:
(1)
(2)
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on a day other than a banking day for it; or
on a banking day for it, but after its regular banking hours.
FEDERAL RESERVE BANK OF DALLAS
the bank does not accept tender of the defense.
DISPUTED RETURN PROCEDURE
48. If a depositary bank that settles for a returned
check in an am ount of $100.00 or more believes that
the paying bank has returned the check late and
breached its w arranty under Section 229.34(a)(1) of
Regulation CC, the bank may dispute the return by
furnishing us (or its Reserve Bank) w ith the re
turned check and a signed statement that the bank
believes that the paying bank did not return the
check w ithin the paying bank’s deadline under the
U.C.C., Regulation J, or Section 229.30(c) of Regu
lation CC. This procedure m ay not be used unless
the item was handled by this Bank or another
Reserve Bank either for forward collection as a cash
item or for return as a returned check. The proce
dure may be used only once and only with respect
to the first time the check was returned by the
paying bank. The statement m ust be on a form
provided by this Bank and m ust be sent by the bank
w ithin two (2) calendar m onths after the date the
returned check was received by the depositary
bank. Upon receipt of the statement, we credit the
am ount of the returned check to the bank’s account
(or to the account for the forwarding Reserve Bank).
We also charge that am ount to the account of, and
send the returned check and statement to, the
paying bank or the paying bank’s Reserve Bank.
49. We will revoke the credit given to the disput
ing bank and recredit the paying bank or other
Reserve Bank if:
(a) for any reason we cannot obtain the
am ount of the credit from the paying bank or
other Reserve Bank; or,
(b) we (or another Reserve Bank) receive from
the paying bank, w ithin tw enty (20) banking
days of the Reserve Bank after we (or the other
Reserve Bank) sent the check and the bank’s
BULLETIN 8
statement to the paying bank, the returned
check and a statement, on a form provided by
us, that is signed by an officer of the paying
bank and that:
(i) states that the paying bank returned
the check w ithin its deadline under the
U.C.C., Regulation J, or Section 229.30(c)
of Regulation CC, and
(ii) shows the banking day of receipt and
the date of return of the check by the
paying bank, and explains any difference
in dates exceeding one banking day.
50. In handling disputed return forms, we assume
no responsibility for determ ining w hether the
paying bank returned a check w ithin its deadline
under the U.C.C., Regulation J, or Section 229.30(c)
of Regulation CC. A bank may be subject to crim i
nal penalties under Federal and/or State law for
knowingly making a false statement to influence
the action of a Reserve Bank in granting a credit. We
undertake to handle forms and make entries under
the dispute procedure w ithin a reasonable time
after receipt, but not w ithin the time frames for
handling an item.
NOTICE OF NONPAYMENT
51. A paying bank that determines to return a
returned check in the am ount of $2,500 or more
m ust provide notice of nonpaym ent to the deposi
tary bank under Section 229.33 of Regulation CC.
The paying bank m ust ensure that the notice is
received by the depositary bank by 4:00 p.m. (local
time for the depositary bank) on the second busi
ness day following the banking day on w hich the
check was presented to the paying bank. If the day
the paying bank is required to provided notice is
not a banking day for the depositary bank, the
notice m ust be received by the depositary bank on
its next banking day. The following days are not
FEDERAL RESERVE BANK OF DALLAS
considered business or banking days for purposes
of the deadline for notice of nonpayment: Satur
days and Sundays; January 1; the third Monday in
January; the third Monday in February; the last
Monday in May; July 4; the first Monday in Septem
ber; the second M onday in October; November 11;
the fourth Thursday in November; and December
25. If January 1, July 4, November 11, or December
25 falls on a Sunday, the next following Monday
also is not considered a business or banking day for
this purpose. Additional non banking days m aybe
observed by the depositary bank.
52. A paying bank may provide notice of nonpay
m ent by any reasonable means, including:
(a) return of the returned check to the deposi
tary bank,
(b) telephone call, or telex or other form of
telegraph to the depositary bank, or
(c) return of the returned check to us, tele
phone call to us, or Fedwire to the depositary
bank, w ith a request that we forward notice on
nonpaym ent, as provided below.
Content of Notice of Nonpayment
BULLETIN 8
(g) trace num ber associated w ith the indorse
m ent of the depositary bank, and
(h) reason for nonpayment.
The notice may include other information from the
check that may be useful in identifying the check
and the customer. A w ritten notice m ust also
include the name and routing num ber of the de
positary bank from its indorsement. If the paying
bank is not sure of a piece of information, it shall
include the required information to the extent
possible, and identify questionable information
w ith question marks. If the paying bank cannot
identify the depositary bank, it is authorized but
not required to give notice to the earliest collecting
bank it can identify indicating that it questions
w hether the bank is the depositary bank.
Acceptance of Notice by Depositary Bank
54. The depositary bank shall accept notices dur
ing its banking day:
(a) at the telephone or telegraph num ber
indicated in its indorsement, or if the num ber
is not present or legible, at the general purpose
telephone num ber or telegraph num ber of its
head office or branch indicated in the indorse
ment;
53. Notice of nonpaym ent m ust include the:
(a) name and routing num ber of the paying
bank,
(b) at any other telephone or telegraph num
ber held out by the bank for receipt of notice of
nonpayment; and
(b) nam e of the payee(s),
(c)
(c)
am ount of the item,
(d) date of the depositary bank’s indorse
ment,
in the case of written notice:
(i) at a location at w hich presentm ent of
checks for forward collection is requested;
and
(e) account num ber of the customer(s) of the
depositary bank,
(A) at a branch, head office or other
location consistent w ith the name
and address in the indorsement,
(f) branch name or num ber of the depositary
bank from its indorsement,
(B) if no address appears in its in
dorsement, at the branch or head
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
checks as provided elsewhere in Regulations CC
and J and this bulletin. We will provide notice of
nonpaym ent for applicable returned checks re
ceived after our cut-off hour for notice of nonpay
m ent as if the checks had been received prior to our
cut-off hour on our next banking day, and shall
have no responsibility for loss caused by the failure
of the paying bank to meet our cut-off hour. The
paying bank should itself provide notice of nonpay
m ent to the depositary bank if the paying bank
learns that we have not received applicable re
turned checks by our cut-off hours, and should
indicated to the depositary bank that the notice
may be duplicated by us.
office associated w ith the routing
num ber of the bank in its indorse
ment, or
(C) if no routing num ber or address
appears in its indorsement, at any
branch or head office of the bank.
The depositary bank may transfer a telephone call
and may use a recording device.
Provision of Notice from the Returned Check by
This Bank
(Physical Item Service)
55. A paying bank may request us to provide
notice of nonpaym ent on its behalf by signing and
delivering to us a letter in the form attached as
Exhibit III. The request shall apply to all returned
checks in the am ount of $2,500 or more for w hich
notice of nonpaym ent is required, that are returned
by the paying bank to us, and that are separately
sorted and identified as checks for w hich notice is
desired (“applicable returned checks”). If we re
ceive applicable returned checks by our cut-off
hour for physical item notice, as set forth in our
time schedule, on a banking day for us, we will
provide notice of nonpaym ent to the depositary
bank by 4:00 p.m. (local time for the depositary
bank) that day, or on the next banking day if that day
is not a banking day for the depositary bank. For the
paying bank to comply w ith its obligation under
Section 229.33 of Regulation CC, we m ust receive
the returned check no later than our cut-off hour on
our second banking day following the banking day
of receipt of the check by the paying bank.
Telephone Notice to This Bank
(Telephone Notice Service)
56. Upon our acceptance of such a request, begin
ning on an agreed effective date, we will provide
notice of nonpayment for applicable returned checks
received by our cut-off hour on behalf of the paying
bank under the standard of care and measure of
damages set forth in Section 210.38 of Regulation
CC. We will otherwise handle applicable returned
58. Upon our acceptance of such a request, begin
ning on an agreed effective date, we will forward
notice of nonpaym ent received by our cut-off hour
on behalf of the paying bank under the standard of
care and m easure of damages set forth in Section
229.38 of Regulation CC. We will forward notice of
nonpaym ent received after our cut-off hour as if the
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57. A paying bank may request us to forward to the
depositary bank notice of nonpaym ent given by
telephone to us by signing and delivering to us a
letter in the form attached as Exhibit III. The
request shall apply to all returned checks for w hich
notice of nonpaym ent is telephoned to us. If we
receive telephone notice by our cut-off hour for
telephone notice, as set forth in our time schedule,
on a banking day for us, we will forward notice of
nonpaym ent to the depositary bank by 4:00 p.m.
(local time for the depositary bank) that day, or on
the next banking day if that day is not a banking day
for the depositary bank. For the paying bank to
comply w ith its obligations under Section 229.33 of
Regulation CC, we m ust receive the notice no later
than our cut-off hour on our second banking day
following the banking day of receipt of the check by
the paying bank.
12
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
•
telephone notice had been received prior to our cut
off hour on our next banking day, and shall have no
responsibility for loss caused by the failure of the
paying bank to meet our cut-off hour. The paying
bank should itself provide notice of nonpaym ent to
the depositary bank if the paying bank is unable to
meet our cut-off hour.
m ent that is not payable through or at a bank, and
need not be given for a check deposited in a deposi
tary bank that does not m aintain transaction ac
counts.
61. If a paying bank provides or requests us to
forward a notice and subsequently determines to
pay an item, the paying bank should provide to the
depositary bank a second notice as soon as reasona
bly possible. The second notice should indicate
that it is a second notice cancelling a previous
notice and should contain all the information in the
original notice to enable the depositary bank to
match the second notice with the original notice.
Fedwire Notice to Depositary Bank
(Fedwire System Service)
•
59. A paying bank may request us to forward to the
depositary bank notice of nonpaym ent given by
Fedwire in proper format by signing and delivering
to us a letter in the form attached as Exhibit III. If
we receive Fedwire notice by our cut-off hour for
Fedwire notice, as set forth in our time schedule, on
a banking day for us, we will forward notice of non
payment to the depositary bank by 4:00 p.m. (local
time for the depositary bank) that day, or on the
next banking day if that day is not a banking day for
the depositary bank. For the paying bank to comply
w ith its obligations under Section 229.33 of Regu
lation CC, we m ust receive the notice no later than
our cut-off hour on our second banking day follow
ing the banking day of receipt of the check by the
paying bank. We handle Fedwire notice under the
standard of care and m easure of damages set forth
in Section 229.38 of Regulation CC. We will for
ward notice of nonpaym ent received after our cut
off hours as if the Fedwire notice has been received
prior to our cut-off hour on our next banking day,
and shall have no responsibility for loss caused by
failure of the paying bank to meet our cut-off hour.
The paying bank should itself provide notice of
nonpaym ent to the depositary bank if the paying
bank is unable to meet our cut-off hour.
62. A depositary bank that uses an electronic link
with us for purposes of wire transfers of funds
under Subpart B of 12 CFR Part 210 is deemed to au
thorized us to provide notice to it by means of that
link or another electronic link agreed to by us. We
are not responsible for a delay in sending a notice
if the delay results from the depositary bank's
failure to manage its link so as to perm it us to send
notices to it through the close of Fedwire. We may
record telephone calls in connection with a notice
of nonpayment.
63. We have no responsibility for giving or correct
ing notice of nonpaym ent if notice is not properly
given by the paying bank except to the extent
provided above with respect to notice we provide
or forward on behalf of the paying bank.
PROTEST
64. Reserve Banks shall not protest any returned
check, whether or not drawn or payable at a place
not w ithin a State. Each Reserve Bank and collect
ing and paying bank shall disregard any special
instructions on protest noted on cash letters or
otherwise transm itted w ith a cash item. A sender
may instruct a Reserve Bank to provide for protest
of a cash item (other than a Government check,
Other Provisions
60. Notice of nonpaym ent should not be given for
a returned check draw n on the U.S. Treasury, for a
U.S. Postal Service m oney order, or for a check
draw n on a state or a unit of general local govern
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13
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
that a subsequent collecting bank or paying bank
reports to be missing or destroyed as provided in
paragraph 67.
postal money order, redeem ed savings bond or
food coupon) only if the sender sends the item to us
for collection and credit as an individual noncash
item with the instructions noted in the letter of
transmittal.
Handling of Photocopies of Cash Items
69. We handle a correctly prepared photocopy as
a cash item through our adjustment departm ent if
we (or a prior collecting Reserve Bank) receive the
photocopy and a copy of the advice of chargeback
or request w ithin twenty (20) banking days (of the
Reserve Bank) from the day we (or the prior Reserve
Bank) charged back the original item or requested
the photocopy. The prior Reserve Bank should
send the photocopy and advice to us w hen re
ceived.
CHARGES
65. Out schedule of charges shows the charges
imposed for handling cash items, returned checks,
notices of nonpaym ent, and for related services.
We may make the charge to the account m aintained
or used by the bank requesting the service.
MISSING OR DESTROYED CASH ITEMS
AND RETURNED CHECKS
70. If a shipm ent of cash items is lost or destroyed
in transit to the first collecting Reserve Bank, we
handle correctly prepared photocopies of the items
as cash items through our cash item departm ent in
a cash letter if (a) the sender determines that at least
several items in the original shipm ent rem ain
unpaid, and (b) the photocopy cash letter is identi
fied as containing nonm achineable photocopies of
items from a lost or destroyed shipment.
Mutilated Cash Letters and Return Letters
66. A bank that receives from us a cash letter or
return letter in a m utilated condition should tele
phone us before attempting to process any part of it.
Sometimes tracing and identification of m utilated
or destroyed items can be expedited w hen the letter
is returned to us intact.
71. We present or send a photocopy as a cash item
subject to all the rules as to payment and return of
cash items, except for the requirem ent of notice of
nonpaym ent and as otherwise provided in this
paragraph, and except as provided for photocopies
of returned checks in paragraphs 76-77. A paying
bank has the right to return a photocopy through
our adjustm ent departm ent w ithin tw enty (20)
banking days from its banking day of receipt if:
Cash Items Discovered Missing or Destroyed
67. We credit or refund the am ount paid for a cash
item if a subsequent collecting bank or the paying
bank reports that it discovered during initial prov
ing that the item is missing, or knows that the item
was missing or destroyed in transit to a subsequent
collecting bank or the paying bank. We credit or
refund the am ount only if we (or a subsequent
collecting bank that prom ptly sends the report to
us) receives the report w ithin five (5) banking days
(of the reporting bank) from the date of receipt of the
cash letter that listed the item.
(a) the drawer has refused to authorize pay
m ent of the photocopy or the paying bank has
been unable to contact the drawer, and the
paying bank returns the photocopy and a signed
statement to that effect; or
68. We charge back to the sender the am ount of a
cash item (a) that we discover to be missing, or (b)
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(b) the original cash item was paid and the
14
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
reports and photocopies and make entries w ith
respect to missing or destroyed cash items w ithin a
reasonable time after receipt, but not w ithin the
timeframes for handling an item.
paying bank returns the photocopy, a copy of
the front and back of the paid original cash
item and a signed statement that the original
was paid, together w ith the name and routing
number, if any, of the bank or person from
which, and the date on which, the original was
received. If the original was received from us,
the paying bank should include the date of the
cash letter and the am ounts of the items listed
before and after the original item, the total of
the cash letter and the batch or package that
contained the original and the sequence number
of the original.
Returned Checks Discovered Missing or Destroyed
74. We credit or refund the amount charged to a
subsequent returning or depositary bank for a re
turned check if that bank reports that it discovered
during initial proving that the check was missing or
destroyed, or knows that the check was missing or
destroyed in transit to a subsequent returning bank
or depositary bank. We will credit or refund the
am ount only if we (or a subsequent returning bank
that prom ptly sends the report to us) receive the
report w ithin five (5) banking days (of the reporting
bank) from the date of receipt of the return letter
that listed the check.
72. A correctly prepared photocopy m ust be a
legible copy of the front and back of the cash item
and m ust bear the sender’s current indorsement
and the following or equivalent signed legend:
This is a photocopy of the original check which
we indorsed and w hich was reported missing
or destroyed in the regular course of bank
collection. We guarantee all prior and any
missing indorsem ent and the validity of this
copy. Upon paym ent of this copy in lieu of the
original check, we agree to hold each collect
ing bank and the payor bank harmless from
any loss suffered, if paym ent is stopped on the
original check and the original check remains
unpaid.
75. A paying or returning bank (other than a Re
serve Bank) that sends a returned check to a Reserve
Bank shall retain a photocopy of the returned check.
We charge back to the paying or returning bank the
amount of a returned check (a) that we discover to
be missing, or (b) that a subsequent returning or
depository bank reports to be missing or destroyed
as provided in paragraph 74.
Handling of Photocopies of Returned Checks,
Notices In Lieu of Return
73. We assume no responsibility for determining
w hether a return of a photocopy is timely. Nor do
we assum e any responsibility for determ ining
w hether a report by another bank of a missing or
destroyed cash item, a statement regarding the
handling of a photocopy, or a photocopy of a cash
item, is correct. We handle, on a w ithout entry
basis, the return of a photocopy of a cash item
received by us or a subsequent collecting Reserve
Bank w ithin nine (9) m onths of the banking day of
receipt of the photocopy by the paying bank. We
also handle w ithout entry a late report of a missing
or destroyed cash item. We undertake to handle
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76. We handle as a returned check through our
adjustm ent department a legible photocopy of a
returned check (front and back), or, if a photocopy
is not available to the paying or returning bank, a
written notice of nonpaym ent containing the infor
mation specified in paragraph 53. If we charged
back the returned check to the paying or returning
bank under paragraph 75 or requested the photo
copy, we (or a prior returning Reserve Bank) m ust
receive the photocopy or notice and a copy of the
advice of chargeback or request w ithin twenty (20)
banking days (of the Reserve Bank) from the day we
15
FEDERAL RESERVE BANK OF DALLAS
(or the prior Reserve Bank) charged back the re
turned check or requested a photocopy. The prior
Reserve Bank should send the photocopy and advice
to us w hen received. The copy or notice shall
clearly state that it is a notice in lieu of return. By
sending a notice in lieu of return to us for credit, a
paying or returning bank warrants that it has not
received credit for the returned check, and makes
the warranties set forth in Section 229.34 of Regu
lation CC. The depositary bank may return a
photocopy through our adjustm ent departm ent
w ithin twenty (20) banking days from its banking
day of receipt if the original returned check was
paid and the depositary bank returns a copy of the
front and back of the paid original returned check
and a signed statement that the original was paid,
together w ith the information required in para
graph 71(b).
77. We assume no responsibility for determining
w hether a report by another bank of a missing or
destroyed returned check, a statement regarding
paym ent of the original returned check, or a photo
copy of a returned check, is correct. A photocopy
of a returned check shall not be sent to a Reserve
Bank for collection as a cash item. We handle, on
a w ithout entry basis, a late report of a missing or
destroyed returned check. We undertake to handle
reports w ith respect to m issing or destroyed re
turned checks w ithin a reasonable time after re
ceipt, but not w ithin the timeframes for handling an
item.
RIGHT TO AMEND
78. We reserve the right to am end this bulletin,
and any appendix or supplem ent to it, at any time.
BULLETIN 8
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
APPENDIX A
GOVERNMENT CHECKS
1. We handle checks draw n on the United States
Treasury (“Government checks”) as cash items
under Treasury Department Circular No. 21 (31
Code of Federal Regulations, Part 240). Copies of
that Circular will be furnished on request. As to
matters that circular does not cover, Regulation J,
this bulletin, and our times schedules apply.
2. We give imm ediate credit, subject to payment
in actually and finally collected funds, for Govern
m ent checks as provided in our time schedules.
After we handle Government checks as fiscal agent
of the United States under Treasury requirements,
the checks are subject to examination and payment
by the U nited States Treasury. We may reimburse
a sender for its reasonable costs of reconstructing a
Government check cash letter lost or destroyed in
transit between Federal Reserve offices.
•
3. Section 210.12 of Regulation J, relating to the
return of cash items by paying banks, does not
apply to Government checks. If the United States
Treasury refuses payment of a Government check
upon first examination and returns the check, or a
photocopy, to us as outlined in Treasury Depart
m ent Circular No. 21, we charge back the am ount of
the check to the sender and credit that am ount to
the United States Treasury. We have no responsi
bility to the sender or another owner or holder for
the nonpaym ent and return by the United States
Treasury of a Government check or photocopy. The
expeditious return and notice of nonpaym ent re
quirements of Regulation CC do not apply to a
01-90
Government check, and the Government is not a
paying bank under Regulation CC.
4. The Treasury Department is generally not re
quired to pay a Government check (a) issued on or
after October 1, 1989, unless it is negotiated to a
financial institution w ithin one year after the date
of issue, or (b) issued before October 1,1989, unless
it is negotiated to a financial institution no later
than October 1, 1990, as provided in Treasury
Department Circular No. 21.
5. If the Treasury determines that a Government
check has been paid over a forged or unauthorized
indorsement, the Treasury may reclaim the amount
of the check from the presenting bank or prior
indorser w ithin one year after the date of credit by
this Bank, as provided in Treasury Department Cir
cular No. 21. This period is extended by 180 days
if a tim ely claim is made against the Government
under 31 U.S.C. 3702. Under 31 U.S.C. 3702, a
claim on a Government check m ust be made to the
issuing agency w ithin one year after the date of
issuance, or w ithin one year after October 1,1989,
whichever is later. Under 31 U.S.C. 3712, an action
by the government to enforce liability on a forged or
unauthorized signature or indorsement on, or a
change in, a Government check generally m ust be
comm enced w ithin one year after presentm ent of
the check. This period is extended by three years if
the Government gives written notice of a claim one
year after presentm ent of the check.
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
APPENDIX B
POSTAL MONEY ORDERS
1. We handle postal money orders (United States
postal m oney orders; United States international
postal m oney orders; domestic-international postal
money orders) as cash items under an agreement
between the United States Postal Service and the
Reserve Banks as depositaries and fiscal agents of
the United States pursuant to authorization of the
Secretary of the Treasury. As to matters that agree
m ent does not cover, Regulation J, this bulletin, and
our time schedules apply.
2. We give imm ediate credit for postal money
orders as provided in our time schedules. The
credit becomes final as between us and the sender
w hen we debit the am ount of the m oney orders
against the general account of the United States
Treasury under symbol num bers assigned by it.
3. The agreement between the United States Postal
Service and the Reserve Banks provides that: (a) the
United States Postal Service may make no claim
against or through a Reserve Bank for refund or
otherwise w ith respect to a postal m oney order
debited against the general account of the United
States Treasury (other than a claim based on the
negligence of a Reserve Bank); (b) the United States
Postal Service will deal directly w ith the bank or
the party against w hich the claim is made; and (c)
the Reserve Banks will assist the United States
Postal Service in asserting the claim, including
making any relevant evidence in their possession
available to the United States Postal Service. Sec
tion 210.12 of Regulation J, relating to the return of
cash items by paying banks, does not apply to
postal m oney orders.
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
APPENDIX C
REDEEMED SAVINGS BONDS AND SAVINGS NOTES
1. We handle redeem ed Series A, B, C, D, E and EE
Savings Bonds and Savings Notes (“Savings Bonds”)
as cash items under Treasury Department Circular
No. 750 (31 Code of Federal Regulations, Part 321).
Copies of that Circular will be furnished on request.
As to matters that Circular does not cover, Regula
tion J, this Circular, and our time schedules apply.
2. Savings Bonds sent to us as cash items may be
sent in m ixed cash letters containing checks and
other cash items, or in separately sorted cash letters
containing only redeem ed Savings Bonds. Each
cash letter m ust show the name, address, and the
nine-digit ABA num ber of the sender, the date of
delivery to the Reserve Bank, the total num ber of
pieces transmitted, the value of each of the bundles
in the cash letter, and the total value of the cash
letter. The cash letter should be accom panied by a
detailed listing of all items.
3. Each Savings Bond sent to us m ust have the
redem ption value MICR-encoded in the “A m ount”
fceld on the face of the Savings Bond. If Savings
TJonds are sent to us in a m ixed cash letter, the
routing/transit num ber 000090007 m ust be MICRencoded in the “R/T” field on all pre-1985 Savings
Bonds w hich do not contain a preprinted MICRencoded routing/transit number. If a document
carrier or MICR strip is used, the redem ption value
of the Savings Bond m ust be MICR-encoded in the
“A m ount” field and 000090007 m ust be MICRencoded in the “R/T” field. A Savings Bond m ust
not be MICR-encoded w ith any other data in any
field other than the auxiliary “On-Us” field, and
m ust not be MICR-encoded in the “On-Us” field for
any reason.
4. We give imm ediate credit, subject to payment
and adjustm ent upon audit by Treasury, for Sav
ings Bonds as provided in our time schedules.
01-90
After we handle Savings Bonds, as fiscal agent of
the United States, the Savings Bonds are subject to
audit by the Treasury Department. We make an
adjustment required by the Treasury Department
by notifying the sender and charging back or cred
iting the am ount of the adjustment to the sender.
Section 210.12 of Regulation J, relating to the return
of cash items by paying banks, does not apply to
Savings Bonds.
5. Savings Bonds submitted in separately sorted
cash letters are not subject to cash item deposit/
processing charges. We forward paying agent fees
received from the Treasury Department to the sender
on a m onthly basis for Savings Bonds that are
submitted in separately sorted cash letters. Pay
m ent of these fees is m ade only by the automated
clearing house m ethods under 31 Code of Federal
Regulations, Part 210. Inquiries regarding Savings
Bonds submitted in separately sorted cash letters
should be directed to Pittsburgh Branch, Federal
Reserve Bank of Cleveland, P.O. Box 867, Pitts
burgh, Pennsylvania, 15230-0867.
6. Savings Bonds subm itted in m ixed cash letters
are subject to cash item deposit/processing charges.
No paying agent fees will be paid for Savings Bonds
submitted in m ixed cash letters. Inquiries concern
ing Savings Bonds subm itted in m ixed cash letters
should be directed to the sender’s local Reserve
Bank office.
7. A record of the serial num ber and am ount paid
for each Savings Bond m ust be retained by the
sender. Film records of the front and back of a
Savings Bond m ust be kept confidential, and prints
therefrom may be m ade only w ith the perm ission of
the Bureau of the Public Debt or a Federal Reserve
Bank.
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
EXHIBIT I
BANK’S CLAIM OF LATE RETURN1
Date_
TO:
Return Check Division
Federal Reserve Bank of Dallas [ ______________________Branch]
(Local Reserve Bank addressl
The returned check (“item ”) described below and attached hereto is being delivered to you:
1.
A m o u n ts _____ ______________________(Must be S100.00 or more.l
2. D a te d ___________________
3. Paying bank _
4. Paying bank R/T No._
5. Paying Bank location
6. Drawn by (draw er)__
7. Payable to (payee)___
8. Check No.
We sent this item t o ________________________________________________________________________________ , in a cash letter
d a te d ________________________________ , totaling $______________________________ , tape total $______________________________ ,
listed betw een items for $________________________________, and $_______________________________.
This item was apparently returned by the paying bank o n ____________________________________________________________ .
We received the item fro m ________________________________________________________________________________________ ,
on
-----------------------------------------------
. in a (CHECK ONE) <
[ ] intermingled cash letter
r , .
, ,,
> dated
[ J return item letter
totaling $__________________________________________________ , tape total $_________________________________________________ ,
listed between items for $_______________________________ , and $______________________________ .
We claim that, according to our records and the data on the item, the paying bank did not take all action necessary to
recover its paym ent w ithin the deadline in Regulations J and CC, and we certify that, as to notice of non-paym ent of the item, we
received:
(CHECK ONE) [ ] advice bv (method)
] no advise other than the returned check.
This late return caused us to incur financial loss. Please provisionally credit our account and advise.
(Bank)_______________________________________________________
(Officer’s Signature)_
(R/T No.)___________
This form may be subm itted only w ith respect to the first time the item was sent for collection and must be sent in d u p li
cate w ithin two (2) m onths after the date you received the item as a returned check. In addition, the item must have been collected
and/or returned through the Federal Reserve check collection system. Failure to provide all information requested will result in
the claim being rejected.
Knowingly making a false statement to influence the action of a Federal Reserve Bank may subject the signing party to
criminal penalties under federal and/or state law.
01-90
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
EXHIBIT n
PAYING BANK’S RESPONSE TO CLAIM OF LATE RETURN1
Date
TO:
Return Check Division
Federal Reserve Bank of Dallas I
(Local Reserve Bank address)
_Branch]
With your advice of debit dated
, you forwarded to us a claim of late return w ith respect
to a returned check (“item ”) in the am ount o f !
We certify that our records indicate that this item was received by us or our processor from
as a cash item on (banking day)
in a cash letter dated
in the am ount of S
tape total S
listed between items for $
and $
and that the item was returned to
1 ] interm ingled cash letter
in our (CHECK ONE) <
[ ] return item letter
in the am ount of S
> dated
tape total $
listed between items for $
and $
Notice of non-paym ent of this item was given to
by (m ethod)________________________o n ____________
(Enter “n o n e” if no notice was given).
If the num ber of banking days between the banking day of receipt and the date of the return exceeds one banking day, the
explanation for the delay is as follows:
We took all action necessary to entitle us to recover our paym ent w ithin the deadline in Regulations J and CC. Please credit
our account and advise.
(Paying Bank)_____________________________________________________________
(Officer’s Signture)_________________________________________________________
(R/T No.)__________________________________________________________________
Prepare and submit in duplicate. If you fail to send all of the information requested to us w ithin twenty (20) banking days
(of the Reserve Bank) after the date we sent this form to you, the provisional credit given the claimant and our debit to your
account will become final. In that case, you may be able to recover th e am ount of the item from the claimant if your return of the
item was in fact timely, but you m ust deal directly w ith the claimant.
Knowingly making a false statement to influence the action of a Federal Reserve Bank may subject the signing party to
criminal penalties under federal and/or state law.
01-90
BULLETIN 8
FEDERAL RESERVE BANK OF DALLAS
EXHIBIT III
Paying Bank’s Notification Agreement
(to be typed on paying bank’s letterhead)
(Date)
Federal Reserve Bank
of ___________
Attention: Return Check Division
[ ] Head Office
[ ] Houston Branch
[ ] El Paso Branch
[ ] San Antonio Branch
Gentlemen:
We request that, in accordance w ith your Bulletin 8, you provide notice of nonpaym ent for large
dollar cash items that we decide not to pay. We elect to provide the information required by:
□
D
□
returning the physical item to you
telephone notification to you
Fedwire System (RESPONSE Network)
We authorize you to charge our billing account m aintained or used by us on your books and to
make other appropriate adjustm ents w ith this service.
(Name of Paying Bank)
(Nine Digit ABA Number)
B y :----------------------------------------------(Authorized Signature)
(Title)
@FedFRASER