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F
ederal
Reserv e Bank
DALLAS, TEXAS
of
Dallas
75222
C i r c u l a r No. 76-12
J a n u a r y 23, 1976
American Revolution Bicentennial
PROPOSED REVISIONS TO AMEND REGULATION J
TO ALL BANKS IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
T h e B o a r d of G o v e r n o r s of th e F e d e r a l R e s e r v e S y s t e m is
p u b l i s h i n g fo r co m m e n t r e v i s e d p r o p o s e d a m e n d m e n t s to R e g u l a ti o n J
concerning w ire tra n sfe rs .
T h e p r o p o s a l a l s o i n c l u d e s t h e a d o p t io n of a n i n t e r im p o lic y on
a c c e s s to F e d e r a l R e s e r v e a u t o m a t e d c l e a r i n g f a c i l i t i e s . In t h i s c o n n e c
t i o n , a t t a c h e d is a c o p y of t h e p r e s s r e l e a s e a n d FEDERAL REGISTER d o c u
m e n t.
I n t e r e s t e d p e r s o n s a r e i n v i t e d to s u b m i t r e l e v a n t d a t a , v i e w s .
o r a r g u m e n t s c o n c e r n i n g t h e p r o p o s e d a m e n d m e n t s in w r i t i n g to t h e S e c
r e t a r y , B o a r d of G o v e r n o r s of t h e F e d e r a l R e s e r v e S y s t e m , W a s h i n g to n ,
D . C . 20551, to b e r e c e i v e d n o t l a t e r th a n M arch 19, 1976.
S incerely y o u rs .
T . W. P la n t
F i r s t V ice P r e s i d e n t
A tta c h m e n t
This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)
FEDERAL
press
RESERVE
release
f* A L RE**; •
ADVANCE for morning papers
of Monday, January 19, 1976
January 15, 1976
The Board of Governors of the Federal Reserve System today Issued
for comment a revised proposal to amend its Regulation J to deal with clearing
and settlement of wire transfers and payment instructions recorded on
magnetic tape.
The Board provided a comment period of 60 days -- through March 19 -
to allow time for the newly established National Commission on Electronic Fund
Transfers, as well as other interested parties, to submit their views.
In addition to the Regulation J proposal to deal with the electronic
transfer of funds, the Board also:
--Announced adoption of an interim policy on the
deposit and delivery of payments on magnetic tape
that are cleared by depository institutions through
Federal Reserve facilities.
— Announced the Board's intention to publish for comment,
in the near future, a pricing schedule for users of
Federal Reserve check and electronic clearing settlement
facilities.
The three subjects covered in the attached Federal Register notice
pertain to wire transfer and automated payment operations that the Federal
Reserve has performed for some time.
The Federal Reserve has operated wire transfer services since 1915.
This service allows member banks to transfer funds instantaneously from their
reserve balances to the reserve accounts of other member banks, on their own
account or on the order of a customer.
Automated electronic payment operations were initiated in 1972.
Essentially, they parallel the existing system for payment by paper checkt
-2except that the payment instructions are contained on a magnetic tape.
At the
present time, the Air Force and the Social Security Administration, some State
and local governments, and some corporations are using automated payment
operations to effect payroll deposits and other recurring payments.
Most of
these payments are now being cleared and settled through Federal Reserve
facilities.
The proposed amendments to Regulation J were originally published for
comment in November 1973 and have been refined in light of the responses
received on that original proposal.
They would assemble, in regulatory
form,
the duties and liabilities of participants in the Federal Reserve's wire
transfer and automated payment services .
These duties and liabilities have
been prescribed under rules and procedures contained in Reserve Bank operating
circulars and legal agreements with associations of financial institutions
which have become known as automated clearing house associations.
The increased use of these services has led to numerous questions
concerning the relationships among depository institutions and their customers.
It is in the light of these developments that the Board has concluded that it
should propose a regulatory framework that defines the rights and
responsibilities of all users of such Federal Reserve services.
Payments exchanged on magnetic tape, in a mature automated clearing
house system, can be made at considerable cost savings to depository institu
tions, the U.S. Treasury and the Federal Reserve System compared to the cost
of exchanging payments by check. Further, consumers
are afforded greater
convenience and security in making payments in this manner.
-3The second element in the attached notice is an announcement of an
interim policy on access to Federal Reserve clearing and settlement facilities
used by depository institutions in exchanging payments on magnetic tape.
policy is to be reviewed later as described below.
This
It indicates the manner in
which various types of depository institutions may use Federal Reserve facilities
for the deposit, delivery, and settlement of automated payments.
Use of these
services has progressed beyond the experimental stage, and the Board has
received numerous requests for clarification of the Federal Reserve System's
policy governing participation in the automated payments area.
To deal with
these requests, the Board believes that an interim statement is necessary,
setting forth temporary rules under which depository institutions may use
Federal Reserve facilities while further study continues.
Finally, the Board intends to establish a pricing schedule to be
applicable to the users of Federal Reserve check and automated clearing and
settlement
facilities.
When such a pricing
structure is established, the
Board also
intends to review the interimpolicy announced today regarding access
to these facilities.
Attached is a summary of the Board's proposal to amend Regulation J
and of its
interim guidelines for access to Federal Reserve electronic clearing,
settlement
and delivery services.
There is
also attached a copy of the Board's
formal notice of these actions to be printed in the Federal Register.
0 -
ADVANCE for morning papers
of Monday* January 19, 1975
J a n u a r y 1 5 , 1976
Supplemental memorandum with respect to proposed revision of the
Federal Reserve Board's Regulation J and guidelines adopted by the Board for
use of Federal Reserve facilities for electronic fund transfers:
The proposed revisions of Regulation J would:
--Leave unchanged present rules governing Federal Reserve handling
and clearing of checks, but make the present regulation on this subject
Subpart A of the proposed amended regulation.
--Codify in regulatory form -- as Subpart B —
rules for credit
transfers -- i.e., forwarding of credits by wire over Federal Reserve communi
cations facilities as has been done for decades under operating rules issued
by Federal Reserve Banks.
Subpart B would also establish rules for the handling
of recurring preauthorized deposit instructions recorded on magnetic tape, such
as recurring payroll, interest and dividend payments.
— Add a proposed new section to Regulation J that would be known as
Subpart C .
Subpart C would provide rules for the use of Federal Reserve
facilities for debit transfers of funds on magnetic tape.
Those transactions
generally involve the payment of recurring bills, such as utility and
mortgage payments.
The proposed rules cover only transactions cleared through Federal
Reserve facilities.
They do not pertain to such electronic funds transfer
facilities as point-of*sale systems or use of automated teller facilities.
A typical payroll deposit under Subpart B would work in the following
manner.
If a company offers the option of direct payroll deposit, and an
employee enrolls in the program, he completes a form which authorized his
company to deposit his pay in his bank or other depository institution.
Prior
*2to payday, the comp&h^ delivers a magnetic tape of payroll information to its
depository institution.
The company's depository institution delivers the tape
to the Federal Reserve.
The Federal Reserve sorts the information according to
the depository institutions designated to receive deposits.
The employee's
depository institution, in turn, credits the employee's pay to his account, on
the payment date.
Under Subpart C , a typical debit transfer, such as a mortgage payment,
would be made as follows.
A homeowner would sign a form authorizing his
mortgage company to request a transfer that would move money from the homeowner's
bank or other depository institution to the mortgage company's depository
institution.
Before the mortgage payment date, the mortgage company would
deliver to its depository institution a magnetic tape containing the debit trans
fer that the mortgage company's customers have authorized. The
depository
institution would deliver the tape to the Federal Reserve, which sorts the
transfer requests on the tape according to the various depository institutions
which are to pay the amounts authorized.
They, in turn, effect the transfer
from its customer's account on the payment date.
The interim guidelines adopted by the Board and announced today cover
the handling by the Federal Reserve of payments instructions on magnetic tape
received from depository institutions.
The interim guidelines are listed below:
Depository institutions eligible to deposit magnetic tapes:
--Member banks of the Federal Reserve System.
--Depository institutions that are members of an automated
clearing house association.
Delivery will be made, under conditions apeclfied in the Federal
Reserve's formal announcement attached, to;
--Member banks of the Federal Reserve System
--Depository institutions that are members of an automated
clearing house association.
Settlement
— Settlement for payments cleared under the interim
arrangements will be made by credit and debit entries
to reserve accounts of member banks of the Federal
Reserve System.
Other provisions
--Items deposited on magnetic tape may originate from any
account having third-party payment powers, e.g., savings,
NOW, and share draft accounts.
— Volume floors for the direct delivery of items will be
set by the local Reserve Bank to insure a cost-effective
operation.
--However, all financial depositories have the options of
receiving their items through another bank or other
depository institution, or of picking up directly from
the Federal Reserve.
In providing clearing and settlement services for autocated clearing
house associations the Board anticipates that these services will be made
reasonably available on a comparable basis to depository institutions having
need for such services.
TITLE 12— BANKS AND BANKING
CHAPTER II— FEDERAL RESERVE SYSTEM
SUBCHAPTER A— BOARD OF GOVERNORS OF THE FEDERAL RESERVE SYSTEM
REGULATION J— COLLECTION OF CHECKS AND OTHER ITEMS BY
FEDERAL RESERVE BANKS
[12 CFR PART 210]
Under Section 16 of the Federal Reserve Act (12 U.S.C. 248(o)),
the Board of Governors of the Federal Reserve System is authorized
to promulgate regulations governing the transfer of funds through
Federal Reserve Banks, their Branches, and regional facilities.
On
November 19, 1973, the Board of Governors issued for comment a revision
of Regulation J, incorporating two new Subparts (see 39 FR 32952).
After review and consideration of all comments received, the Board
has substantially revised the Subparts and is republishing them for
further comment.
The proposed rules, which delineate in regulatory form the
rights and responsibilities of financial institutions using existing
Federal Reserve facilities for what have become known as “electronic fund
transfers,1’ are in the form of an amendment to Regulation J (12 CFR 210).
Such transfers are already being handled by the Federal Reserve System
and consist of (1) large dollar credit items which are transmitted over
the Federal Reserve Communications System and are commonly known as "wire
transfers," and (2) smaller dollar amount credit and debit items generally
In recurring amounts that are contained on magnetic tape and processed
through Federal Reserve clearing and settlement facilities, commonly
-
2
-
known as "ACH transactions.1' The rules regarding such transfers of funds
through Federal Reserve facilities would be designated as Subpart B,
Credit Items, and Subpart C, Debit Items.
The present provisions of
Regulation J relating to check collection would become Subpart A of
the Regulation.
The Regulation does not establish rules regulating commercial/
consumer electronic payment systems, such as point-of-sale systems or
customer bank communications terminals, nor does it govern liabilities
of parties involved in the Department of Treasury's Federal Recurring
Payments Program (for a discussion of that program, see 40 FR 47492).
The Regulation does not attempt to establish the rules by which consumers
will transfer funds.
Regulation J only governs the transfers of funds
among financial institutions through existing Federal Reserve facilities.
Currently, the rights and liabilities of parties using Federal Reserve
System facilities are defined by operating circulars, separate contracts,
and other agreements, and this proposal would establish a common regulatory
framework for all items received by a Reserve Bank.
Subpart B
As provided in Subpart B, the originator initiates the action
to transfer funds from the originator to the recipient.
An originator
is defined as a financial institution or government agency eligible
to deposit items directly with a Federal Reserve Bank in accordance
with Federal Reserve System operating circulars.
The originator sends
a credit item to the Federal Reserve office with which it maintains
- 3 -
or causes to maintain an account in the media specified in the regulation.
(But under special arrangements, an originator may directly send items
to another Federal Reserve Bank.)
Also, under special arrangements, an
originator may request by telephone its Reserve office to transfer
funds.
By sending or requesting a credit item, the originator warrants
to the recipient that it has the authority to perform this action.
The originator also authorizes the Reserve office to debit its account
and to act upon the item by forwarding it to the recipient; the origi
nator indemnifies the Federal Reserve Bank for losses sustained for
actions taken by the Reserve Bank within its scope of authority in
handling the item.
The recipient, defined as a party
authorized by Reserve Bank
operating circulars to receive items, authorizes the Reserve Bank to
handle the item and agrees that it will credit its customer on the day
of payment.
Final payment for items occurs when the credit item is sent by
the Reserve Bank, but for credit items deposited on magnetic tape, final
payment occurs according to the date and time specified in the time
schedules in Federal Reserve Bank operating circulars.
The duties
and liabilities of a Reserve Bank are outlined in several sections and
basically impart a duty of reasonable care to the Reserve Banks.
The new proposal is different in a number of aspects from the
earlier proposal, as follows:
- 4 -
210.52— amended to revise and include
additional definitions
210.54— new paragraph to clarify the provisions for tele
phonic requests for credit items
210.55— amended to require the originator to warrant to the
recipient that the originator is authorized to send or
request the item
210.56— amended to provide different procedures should a
member bank not be able to credit a customer for the amount of an item
210.57— amended to clarify the amount of the balance which
a member
bank must hold with its Federal
Reserve Bank
210.60— amended to provide that an originator may receive
one advice for the net transfers for that day
210.61— amended to modify revocation provisions and clarify
return of fundB provisions
210.62— amended to include that final payment
sending
is final upon
of an item or in the case of items deposited on magnetic tape
in accordance with the date of the item and the operating circular
Subpart C
As detailed in Subpart C, the originator initiates the action
totransfer funds from the recipient
to the originator.
Reserve Bank
operating circulars will outline which depository institutions will be
authorized to be originators and recipients.
The originator warrants to
the recipient that the originator is authorized to issue the debit item.
The originator also indemnifies the Reserve Bank for losses sustained
- 5 -
by the receiving Reserve Bank resulting from any action taken by
such Reserve Bank within its scope of authority.
debited on the payment date.
The recipient is
The debit may be reversed if the item is
returned to its Federal Reserve Bank by close of the recipient's business
day next following the payment date.
The time of payment is effective
in accordance with the time schedule specified in Reserve Bank operating
circulars.
The Reserve Bank liability is basically one of due care.
The new proposal materially changes certain provisions in the
earlier proposal as follows:
210.72— amended to revise and include additional definitions
210.73— amended to require the originator to warrant to the
recipient that the originator is authorized to send the debit item
210.77— amended to clarify when final payment occurs
The Reserve Banks will process debit items only if such items
are in the form of an ACH transaction.
It should be noted that, as an additional provision in both
Subparts, all banks shall maintain adequate safeguards to insure the
privacy and confidentiality of all account information.
Operating circulars will be issued by Federal Reserve Banks
governing the details of funds transfer operations and will detail which
institutions may deliver and receive items directly.
In regard to access to Federal Reserve facilities used in the
above operations, on June 10, 1975, the Board published for comment proposed
arrangements for the deposit, delivery, and settlement of ACH transactions—
i.e., those payments contained on magnetic tape that would be cleared
-6-
through Federal Reserve clearing and settlement facilities.
The Board
proposed on June 10 that only financial organizations with demand deposit
powers could deposit magnetic tapes with the Federal Reserve.
The Board
also proposed that payments would be delivered directly to financial
organizations currently serviced by Federal Reserve courier services and
to high volume endpoints located alcng existing courier routes (see
40 FR 25641).
The proposal did not apply to access to other System
facilities, such as the wire transfer facilities.
The Board, by publication of these proposed regulations, is not
finally adopting a policy in regard to access and pricing.
In the near
future the Board intends to publish a pricing schedule based on the
fully allocated costs of providing System check and ACH services.
In
developing the pricing schedule, consideration would be given to the bur
den of required reserves maintained by member banks. In the interim, pending
the development of a final pricing schedule in respect to so-called ACH
transactions, the System will basically maintain its current policy with
regard to the processing and handling of such transactions and will, in fact
broaden its services concerning'delivery.
Such interim policies may be modi
fied at the time a pricing schedule is adopted.
During the interim period,
the Federal Reserve Banks will handle and process ACH transactions for
all member banks and any nonmember financial organization that is a
member of an automated clearing house association and that is sending
ACH data pursuant to association rules.
- 7 -
The Federal Reserve will deliver ACH items under the
following guidelines:
(1) Items for beneficiaries maintaining accounts at a financial
institution offering demand deposit acc0unts may be delivered
directly to that institution in the same manner that checks
are presented.
(2) Items for beneficiaries maintaining accounts at a financial
organization not offering demand deposit accounts may be
delivered directly to that institution provided such insti
tution receives sufficient volume of such items to warrant
separate delivery and is located on an existing check courier
route.
(3) Items may be delivered to a data processing service bureau
provided the service bureau receives sufficient volume of
such items to warrant separate delivery and is located on
an existing check courier route.
(4) Any financial organization may pick up items at the local
Federal Reserve office provided that its volume is
sufficient to warrant such actions.
(5) Any financial organization may have items delivered to an
endpoint that currently receives checks directly from the
Federal Reserve office (i.e. the pass-through method).
(6) Items may be mailed to any financial organization by the
Federal Reserve regardless of its location.
-8-
Settlement
Settlement for items cleared under the above arrangement
will be made by credit and debit entries to reserve accounts
of member banks of the Federal Reserve System
In providing clearing and settlement services for ACH associations,
the Board anticipates that these services will be made reasonably available
on a comparable basis to depositary institutions having need for such
services.
The above provisions apply only for the use of Federal Reserve
facilities in clearing and settling payments exchanged on magnetic tape.
Use of the Federal Reserve communications system for transmitting large
dollar credit items will continue to be limited to Federal Reserve member
banks and Government agencies.
Other financial institutions may utilize
this system through facilities of a member bank.
In view of the many changes occurring in the electronic payments
area, Federal Reserve policy will be subject to periodic review.
In par
ticular, further review would be undertaken as a result of the study by
the National Commission on Electronic Fund Transfers.
These proposals, if
adopted, will provide uniform standards for electronic transactions handled
by the System.
In such an environment, considerable cost savings to
financial institutions, the U.S. Treasury, and the Federal Reserve may be
realized and consumers can be afforded greater convenience and security.
This notice is published pursuant to § 553(b) of Title 5, United
States Code, and § 262.2(a) of the Rules of Procedure of the Board of
Governors.
These Regulations are issued pursuant to and under the authority
of §§ ll(i), ll(j), 13, 16, and 19(f) of the Federal Reserve Act (12 U.S.C.
-9-
248(i), 12 U.S.C. 248{j), 12 U.S.C. 342, 12 U.S.C. 248(o), and 12 U.S.C.
464,. respectively) and related provisions of the law.
To aid in the consideration of the Regulation J proposal by the
Board, interested persons are invited to submit relevant data, views, or
arguments.
Any such material should be submitted in writing to the Secre
tary, Board of Governors of the Federal Reserve System, Washington, D.C.
20551 to be received not later than March 19, 1976.
Such material will be
made available for inspection and copying upon request except as provided
in § 261.6(a) of the Board's Rules Regarding Availability of Information.
To implement its proposal, the Board is considering amending
Regulation J (12 CFR Part 210) as set forth below.
1.
The title of Part 210 would be changed to read:
"COLLECTION
OF CHECKS AND OTHER ITEMS AND TRANSFERS OF FUNDS."
2.
The Table of Contents of Part 210 would be changed to read
as follows:
SUBPART A — COLLECTION OF CHECKS AND OTHER ITEMS
Sec. 210.1
Authority and scope
210.2
Definitions
210.3
General provisions
210.4
Sending of items to Federal Reserve Banks
210.5
Sender's agreement
210.6
Status and warranties of Federal Reserve Bank
210.7
Presentment for payment
210.8
Presentment of noncash items for acceptance
210.9
Remittance and payment
210.10
Time schedule and availability of credits with respect to
cash items
- 10 -
S ec.
210.11
Availability of proceeds of noncash items
210.12
Return of cash items
210.13
Chargeback of unpaid cash
210.14
Timeliness of action
210.15
Effect of direct presentment of certain warrants
210.16
Operating letters
items and noncash items
SUBPART B— TRANSFERS OF FUNDS— CREDIT ITEMS
S ec.
210.50
Authority and scope
210.51
General provisions
210.52
Definitions
210.53
Approved media for issuance, transmission or recording of
credit items
210.54
Request for credit items
210.55
Originator's agreement
210.56
Recipient's agreement
210.57
Issuance of credit items and requests for
credit items
210.58
Handling of credit items and requests for
credit items
210.59
Time schedules
210.60
Advices of credit and debit
210.61
Handling of requests for revocation of credit items and
requests for return of funds
210.62
Final payment, right to withdraw or use funds
210.63
Timeliness of action
210.64
Liability of a Federal Reserve Bank
210.65
Operating circulars
- 11 -
SUBPART C— TRANSFERS OF FUNDS— DEBIT
Sec. 210.70
ITEMS
Authority and scope
210.71
General provisions
210.72
Definitions
210.73
Originator's agreement
210.74
Recipient's agreement
210.75
Issuance o£ debit items
210.76
Handling of debit items
210.77
Payment
210.78
Time schedule
210.79
Handling of requests for revocation of debit items
210.80
Return
210.81
Chargeback
210.82
Timeliness of action
210.83
Liability of a Federal Reserve Bank
210.84
Operating circulars
3.
Part 210 would be amended by inserting immediately before
§ 210.1 a heading reading:
'‘SUBPART A — COLLECTION OF CHECKS AND OTHER
ITEMS.”
4.
Paragraph (a) of § 210.2 would be amended, but without
change in footnotes, to read as follows:
- 12 (a)
The term
"item" means any instrument for the payment
bf money, whether negotiable or not, which is payable in a
1/
Federal Reserve district j
is sent by a sender or a nonbank
depositor to a Federal Reserve Bank for handling under this
P a r t ; and is collectible in funds acceptable to the Federal
Reserve Bank of the district in which the instrument is
payable; except that the term does not include any check
2/
which cannot be collected at par,
item as defined in § 210.51(a) of
5.
nor does it include any
this Part.
Part 210 would be amended to change the words
'this Part"
wherever they occur in §§ 210.1-210.16 to read ' this Subpart.*'
6.
Part 210 would be amended by adding after § 210.16 the
following:
SUBPART B— TRANSFER OF FUNDS— CREDIT ITEMS
5 210.50— Authority and Scope
Pursuant to the provisions of paragraph 1 of section 13 of the
Federal Reserve Act, as amended (12 U.S.C. § 342), paragraph (f) of
section 19 of the Federal Reserve Act, as amended (12 U.S.C. § 464),
paragraph 14 of section 16 of the Federal Reserve Act, as amended (12
U.S.C.
§ 248(o)), paragraphs (i) and (j) of section 11 of the Federal
Reserve Act, as amended (12 U.S.C. § 248(i)and (j)), and
other provisions
of law, the Board of Governors of the Federal Reserve System has promul
gated this Subpart governing the handling by Federal Reserve Banks of
credit items and requests for credit items.
- 13 -
5 210.51~ General Provisions
In order to afford a direct, expeditious, and economical system
for the transfer of funds, each Federal Reserve Bank, in accordance with
the terms and conditions set forth in this Subpart, shall receive, process
and act upon credit items and requests for credit items and, where
appropriate, shall itself issue credit items.
The provisions of this
Subpart and the operating circulars of the Federal Reserve Banks shall
be binding upon depositors, originators, and recipients.
§ 210.52— Definitions
As used in this Subpart, unless the context otherwise requires:
(a)
The term ''item" means any instrument for the payment of
money issued, transmitted, or received in accordance with this Subpart.
(b)
The term "credit item" means either
(1) an item issued
by an originator (other than a Federal Reserve Bank) to a Federal Reserve
Bank for debit to an account of a depositor in such Federal Reserve Bank
and for credit, directly or indirectly, to a recipient named in such
item,
(2)
an item issued by a Federal Reserve Bank to another Federal
Reserve Bank for credit to such other Federal Reserve Bank or, directly or
indirectly, to any other recipient, or
(3)
an item issued by a Federal
Reserve Bank at the request of an originator for credit, directly or
Indirectly, to a recipient.
(c)
The term "instrument for the payment of money1' means any
writing contained in or on any medium approved by § 210.53 of this Subpart
for the issuance, transmission, or recording of credit items, addressed
by one person to another and evidencing a right to the payment of money.
- 14 -
(d)
The term "depositor" means a member bank, a corporation
tlvit maintains an account with a Federal Reserve Bank in conformity with
the requirements of § 211.7 of Part 211 of this Chapter (Regulation K ) ,
a Federal Reserve Bank, an international organization, a foreign correspon
dent, or other institution maintaining an account with a Federal Reserve
Bank.
(e)
The term "originator" means a depositor authorized by a
Federal Reserve Bank, or any institution authorized by a Federal Reserve
Bank in an operating circular issued pursuant to this Subpart, to issue
and send a credit item to that Federal Reserve Bank or to request that
Federal Reserve Bank to issue a credit item an<3 that has agreed that
the amount of any such credit item or request shall be debited to the
account maintained or used by such depositor or institution on the books
of that Federal Reserve Bank.
(f)
The term "recipient" means a depositor or any institution
authorized by a Federal Reserve Bank in an operating circular issued pur
suant to this Subpart to receive, directly or indirectly, credit items
from that Federal Reserve Bank
that has agreed that the amount of
any such credit item shall be credited to the account maintained or used
by the recipient on the books of that Federal Reserve Bank.
(g)
The term "beneficiary" means a person (other than the
recipient) designated in a credit item to receive the amount thereof
by credit to an account maintained with tbe recipient or otherwise from
the recipient.
- 15 -
(h)
The term "international organization" means an international
organization for which the Federal Reserve Banks are empowered to act as
depositaries or fiscal agents subject to regulation by the Board of
Governors of the Federal Reserve System and for which a Federal Reserve
Bank has opened and is maintaining an account.
(i)
The term "foreign correspondent" means any of the following
for which a Federal Reserve Bank has opened and is maintaining an account:
a foreign bank or bankers ;
a foreign state as defined in section 25(b)
of the Federal Reserve Act, as amended (12 U.S.C. § 632) ; or a foreign
correspondent or agency referred to in section 14(e) of that Act (12 U.S.C.
§ 358).
(j)
The terms "Federal Government originator" and "Federal
Government recipient," respectively, mean any department, agency, instru
mentality, independent establishment, or office of the United States
that maintains or uses an account with a Federal Reserve Bank.
The
term "Federal Government depositor" means any department, agency, instru
mentality, independent establishment, or office of the United States
tha-t maintains an account with a Federal Reserve Bank.
Except as may
otherwise be provided by any applicable statutes of the United States or
regulations issued or arrangements made thereunder, the provisions of this
Subpart and of the operating circulars of the Federal Reserve Banks
applicable to an originator, a recipient, or a depositor, as the case may
be, are applicable, respectively, to a Federal Government originator, a
Federal Government recipient, and a Federal Government depositor.
- 16 -
(k)
The term "business day1' means any day during which an
Institution is open to the public for carrying on substantially all its
business functions.
(1)
The term "Federal Reserve Bank” includes any Head Office,
Branch Office, or any other office of a Federal Reserve Bank.
§ 210.53— Approved Iledia for Issuance, Transmission
or Recording of Credit Items
An originator may issue and send a credit item in any one of
the following media:
(a)
a letter, memorandum, or other similar writing;
(b)
a telegram (including TWX, TELEX, and any similar form
of communications); and
(c)
any form of communication, other than voice,
that is
registered upon, or is in form suitable for being registered upon mag
netic tape, disc, or any other medium designed to capture and contain
in durable form conventional signals used for the electronic communication
of messages.
§ 210.54— Request for Credit Items
An originator that is a depositor may, under special arrangement
and in accordance with the provisions of the operating circular of the
Federal Reserve Bank with which it maintains an account, request its
Federal Reserve Bank by telephone to issue a credit item and transfer
funds to a recipient or to issue and send a credit item to another Federal
Reserve Bank.
Reserve Bank.
Such telephone messages may be recorded by such Federal
- 17 -
§ 210.35— Originator^ Agreement
(a)
An originator other than a Federal Reserve Bank by
its actions of issuing and sending to the Federal Reserve Bank with
which it maintains or uses an account any credit item contained in
any of the media specified in § 210.53, or requesting by telephone
the issuance of a credit item as provided in § 210.54, shall be deemed
(1) to warrant to the recipient designated in the item that such originator
is authorized to issue and send or request such credit item and (2)
to authorize >(i) said Federal Reserve Bank to handle and act upon
such credit item or request, and (ii) the Federal Reserve Bank at which
the recipient maintains or uses an account to handle and act upon a credit
item, in accordance with the provisions of this Subpart and the operating
circulars of such Federal Reserve Banks.
Such originator shall be deemed
to agree that the provisions of this Subpart and the Federal Reserve Bank
operating circulars shall, Insofar as they are made applicable thereto,
govern the relationships between such originator and such Federal Reserve
Banks and shall also be deemed to agree to maintain reasonable procedures
designed to protect the confidentiality of information related to such
credit item or request.
(b)
The originator shall be deemed to agree to indemnify each
Federal Reserve Bank handling a credit item for any loss or expense sus
tained (including but not limited to attorneys' fees and expenses of
litigation) resulting from any action taken by the Federal Reserve Bank
within the scope of its authority in handling the credit item.
- 18 -
(c)
Whenever any action or proceeding is brought in any court
against a Federal Reserve Bank, based upon any act done by the Federal
Reserve Bank within the scope of its authority in handling such a credit
item, the Federal Reserve Bank may, upon the entry of a final judgment
or decree in such action or proceeding, recover from the originator the
amount of attorneys' fees and other expenses of litigation actually
incurred, and, in addition, any amount required to be paid by the Federal
Reserve Bank under such Judgment or decree, together with interest thereon,
by charging the amount thereof to any account maintained or used by the
originator on the books of the Federal Reserve Bank (or if the originator
is another Federal Reserve Bank, by entering a charge therefor against
such other Federal Reserve Bank), provided only (1) that the Federal
Reserve Bank shall have made seasonable demand on the originator in
writing to assume the defense of the action or proceeding, and (2) that
the originator shall not have made any other provision acceptable
to the Federal Reserve Bank for the payment of such amount.
A Federal
Reserve Bank against which any such charge has been entered may recover
the amount thereof by debiting the account maintained or used by such
originator, in any case herein provided, even though the action or
proceeding had been brought against another Federal Reserve Bank.
The
failure of any Federal Reserve Bank to avail itself of the remedy
provided by this paragraph shall not prejudice the enforcement by it
in any other manner of the indemnity agreement referred to in paragraph (b)
of this section.
- 19 -
S 1210.56-- Recipient's Agreeaent
(a)
A recipient, other than a Federal Reserve Bank, designated
In a credit Item to receive the amount thereof, by Its action In main
taining or using an account at a Federal Reserve Bank, shall be deemed
to authorize that Federal Reserve Bank to credit the amount of such item
to such account.
(b)
A recipient, other than a Federal Reserve Bank, receiving
directly or indirectly from a Federal Reserve Bank the amount of a credit
item designated for a beneficiary, shall be deemed to agree that it
will credit said beneficiary's account or otherwise make the amount of
the credit item available to the beneficiary for withdrawal or other use
on the business day the credit item is finally paid, or return the amount
of such item to the originator in accordance with the provisions of this
Subpart and the operating circulars issued hereunder.
Such a recipient
shall be deemed to agree to maintain reasonable procedures designed to
protect the confidentiality of information related to such credit item.
§ 210.57— Issuance of Credit Items and Requests for Credit Items
(a)
Any originator, other than a Federal Reserve Bank, may, in
accordance with the provisions of this Subpart and the operating circulars
of the Federal Reserve Bank with which it maintains or uses an account,
issue and send credit items to that Federal Reserve Bank or request that
Federal Reserve Bank by telephone to issue credit items for the transfer
of funds to recipients for their own use or the use of beneficiaries, or
where the originator and recipient do not maintain or use accounts at the
same office of a Federal Reserve Bank, and where permitted or required by
- 20 the Federal Reserve Bank with which the originator maintains or uses an
account, issue and send any credit item direct to the Federal Reserve
office at which the recipient maintains or uses an account:
Provided,
That, at the end of a Federal Reserve Bank's business day, an originator
shall maintain or cause to be maintained a balance of actually and finally
collected funds sufficient to cover the amounts of credit items debited
to such account at the Federal Reserve Bank during that day and, if
such balance is not sufficient to cover the amounts debited to such
account during that day, that Federal Reserve Bank shall have a security
interest in any or all assets of the depositor maintaining such account
in the possession or held for the account of the Federal Reserve Bank:
And further provided. That, if at any time during that Federal
Reserve Bank's business day such depositor suspends payment or is closed
and does not have a balance sufficient to cover the amounts so debited
to its account, such Federal Reserve Bank shall have a security interest
in any or all assets of such depositor in the possession or held for
the account of such Federal Reserve Bank.
Notwithstanding the fore
going, a Federal Reserve Bank may, in its discretion, refuse to act
upon a credit item at any time when such Federal Reserve Bank has reason
to believe that the balance maintained or used by such originator is
not sufficient to cover such item.
(b)
With respect to any credit item sent direct by an originato
(other than a Federal Reserve Bank)maintaining or using an account at
one Federal Reserve office to another Federal Reserve office at which
the recipient maintains or uses an account, in accordance with paragraph (a)
- 21 of this section, the relationships and the rights and liabilities existing
between the originator, the Federal Reserve office with which it maintains
or uses an account and the Federal Reserve office to which the item is
sent will be the same, and the provisions of this Subpart will apply,
as though the originator had sent such item to the Federal Reserve office
with which it maintains or uses an account and such Federal Reserve office
had issued a credit item to the other Federal Reserve office.
(c)
provisions of
Any Federal Reserve Bank may, in accordance with the
this Subpart, issue and send credit items to another Federal
Reserve Bank or request that Federal Reserve Bank by telephone to issue
credit items for its own use or the use of any other recipient or any
beneficiary.
(d)
The Federal Reserve Banks may, from time to time, establish
in theiroperating
both, of items
circulars the minimum or maximum dollar amounts, or
that will be transferred, may impose service charges for
the handling of credit items, and may impose specific format require
ments for the receipt and handling of credit items.
(e)
No Federal Reserve Bank shall be responsible to the origi
nator of any credit item for any delay resulting from the action taken
by the Federal Reserve Bank in handling the item on the basis of (a) any
routing number of the recipient appearing thereon or (b) any other form
of designation of a recipient appearing thereon, whether or not consis
tent with the routing number.
- 22 *
§ 210.58— Handling of Credit Items and Requests for Credit Items
(a)
Where the originator and the recipient maintain or use
accounts at the same office of a Federal Reserve Bank, such office
receiving a credit item shall execute a transfer of funds, or receiving
a request for a credit item shall issue a credit item and execute a transfer
of funds, by making corresponding debit and credit entries to those
accounts.
(b)
Where the originator and the recipient do not maintain
or use accounts at the same office of a Federal Reserve Bank, the office
first receiving the credit item or request for a credit item shall
debit the account maintained or used by the originator in the amount to
be transferred in accordance with the terms of the item and shall, as
an originator, issue a credit item to the Federal Reserve office at
which the recipient maintains or uses an account; and the latter office
shall execute a transfer of funds to the recipient by making corresponding
debit and credit entries, respectively, to the account of such Federal
Reserve Bank and to the account maintained or used by the recipient.
(c)
After receiving a credit item or request for a credit
item, the Federal Reserve Bank with which the recipient maintains or
uses an account shall send or make available to the recipient the credit
item in any of the media specified in § 210.53.
(d)
With the concurrence of the office of the Federal Reserve
Bank with which the recipient maintains or uses an account, another
Federal Reserve office at which the originator maintains or uses an
account may send a credit item or make it available to such recipient;
- 23 -
the provisions of this Subpart will apply as though such other Federal
Reserve office had issued a credit item to the Federal Reserve office
with which the recipient maintains or uses an account and that Federal
Reserve office had sent a credit item or made it available to such
recipient.
(e)
When a Federal Reserve Bank has received a credit item,
or request for a credit item, and subsequently obtains knowledge that,
for whatever reason, it will be unable to effectuate a transfer of funds
to the recipient in accordance with the originator's instructions, said
Federal Reserve Bank shall, within a reasonable time thereafter, notify
the originator of the delay.
§ 210.59— Time Schedules
(a)
Each Federal Reserve Bank shall Include in its operating
circulars a schedule of the time limits showing, with respect to inter
district, interoffice, and intraoffice transfer of funds, the hours of
each business day during which it will receive and handle credit items
and requests for credit items.
(b)
Unless otherwise agreed, each Federal Reserve Bank taking
proper action on the day of receipt of a credit item or request for a
credit item acts seasonably; taking proper action within a reasonably
longer time may be seasonable but the Federal Reserve Bank has the burden
of so establishing.
In order for action to be taken on the day of
receipt, such item or request must reach the Federal Reserve Bank not
later than the time shown in its schedule of time limits.
No representation
shall be made by a Federal Reserve Bank to the effect that transfers of
funds will be consummated on the day requested.
- 24 -
(c)
In emergency or other
Reserve Bank may, in its discretion,
unusual circumstances,
receive credit itemsand
a
Federal
requests
for credit items after the hours shown in its schedule of time limits.
The transfer of funds in the case of an interoffice or interdistrict
transfer shall be discretionary with the office at which the recipient
maintains or uses an account.
§ 210.60— Advices of Credit and Debit
(a)
The Federal Reserve Bank with which the recipient maintains
or uses an account shall, when the originator or recipient has so
requested and when such Federal Reserve Bank deems such action appropriate,
give to the recipient advice of credit by telegraph, telephone, or any
other means deemed appropriate by such Federal Reserve Bank.
(b)
After receiving a credit item or request for a credit
item, the Federal Reserve Bank with which the originator maintains or
uses an account shall send an advice of debit to the originator or to
the depositor whose account is used by the originator in any of the
media specified in § 210.53.
Such advice may be given for each credit
item or, if so provided in its operating circulars, for several credit
items.
If, within 45 calendar days after the originator or depositor
receives an advice of debit, the originator or depositor fails to send to
said Federal Reserve Bank written objection to such debit, the originator
or depositor shall be deemed to have approved the debit.
- 25 -
§ 210.61— Handling of Requests for Revocation of Credit Items
and Requests for Return of Funds
(a)
A Federal Reserve Bank, upon receipt from the originator
of a request for the revocation of an item, may cancel such item pro
vided that the request for revocation is received at such time and in
such manner as to afford that Federal Reserve Bank a reasonable oppor
tunity to act.
If the item is not so cancelled, a Federal Reserve Bank
may, in its sole
discretion, upon request from the originator
(D where
the originator and recipient maintain or use accounts at the same Federal
Reserve Bank, send a request to the recipient to return the funds pre
viously transferred or
(2) where the originator and recipient do not
maintain or use accounts at the same Federal Reserve Bank, send a request
to the Federal Reserve Bank with which the recipient maintains or uses
an account to request the recipient to return funds previously transferred.
(b)
In the case of an erroneous or otherwise irregular transfer
of funds, a Federal Reserve Bank may, upon its own initiative or at the
request of another Federal Reserve Bank, request the recipient to return
funds previously transferred.
§ 210.62— Final Payment. Right to Withdraw or Use Funds
A credit item is finally paid by a Federal Reserve Bank and
funds
transferred to the account maintained or used by the recipient become avail
able for withdrawal at the time the Federal Reserve sends the credit item
or telephones the advice of credit to the recipient, whichever occurs first:
Provided, That, a Federal Reserve Bank may, with respect to items in a
particular format, provide in its operating circular that a credit item is
finally paid, funds become available for withdrawal, and corresponding debits
and credits to the accounts will be made on the date specified in
- 26 the credit item, in accordance with the time specified in the Federal
Reserve Bank's operating circular.
§ 210.63— Timeliness of Action
If, because of circumstances beyond its control, a Federal
Reserve Bank shall be delayed beyond applicable time limits provided
in this Subpart or In the operating circulars of the Federal Reserve
Banks or by law in taking any action with respect to a credit item
or request for a credit item, the time within which such action shall
be completed shall be extended for such time after the cause of the
delay ceases to operate as shall be necessary to take or complete
the action, provided the Bank exercises such diligence as the circumstances
require.
§ 210.64— Liability of a Federal Reserve Bank
(a)
A Federal Reserve Bank, in connection with matters
specified in this Subpart or its operating circulars, shall not have,
nor shall it assume, any responsibility to a recipient, a beneficiary,
or any other person interested in the credit item, except its immediate
originator, nor shall a Federal Reserve Bank have or assume any liability
except for its own or another Federal Reserve Bank's lack of good faith
or failure to exercise ordinary care, and, except as herein provided, a
Federal Reserve Bank shall not be liable for the insolvency, neglect,
misconduct, mistake, or default of another person, including an
originator.
No Federal Reserve Bank shall make or be deemed to make
any warranty with respect to any credit item handled under this Subpart.
- 27 -
(b)
Subject to the limitations on liability
stated above,
where a Federal Reserve Bank’s conduct, notwithstanding its exercise
of good faith and ordinary care, results in a failure to credit the
amount of a credit item to the account maintained or used by a recipient
in accordance with the originator's instructions, unless otherwise
instructed at the time notice is given pursuant to § 210.58(e), the
Federal Reserve Bank shall complete the transfer on the next business
day with debits and credits posted to the appropriate accounts as of
the day the transfer was to have been consummated.
(c)
above,
Subject to the limitations on liability
stated
if the failure to credit the amount of the credit item to the
account maintained or used by the recipient resulted from a failure on
the part of any Federal Reserve Bank to exercise ordinary care or to
act in good faith, the originator shall have the right to recover from
the Federal Reserve Bank with which It maintains or uses an account
any damages proximately caused by such failure:
Provided,
However,
That whether any consequential damanges are proximately caused by the
Federal Reserve Bank's failure to exercise ordinary care or lack of good
faith is a question of fact to be determined in each case.
(d)
The Federal Reserve Bank at which the recipient maintains
or uses an account shall be deemed to agree to indemnify the Federal
Reserve Bank at which the originator maintains or uses an account for
any loss or expense sustained (including but not limited to attorneys'
fees and expenses of litigation) as a result of the failure of the
- 28 -
recipient's Federal Reserve Bank to exercise ordinary care or to act
in good faith with respect to a credit item issued to it by the origi
nator's Federal Reserve Bank at the request of the originator.
§ 210.65— Operating Circulars
Each Federal Reserve Bank shall issue operating circulars
(sometimes referred to as operating letters or bulletins), not inconsis
tent with this Subpart, governing the details of its funds transfer
operations and containing such provisions as are required or permitted
by this Subpart.
SUBPART C— TRANSFERS OF FUNDS— DEBIT ITEMS
§ 210.70— Authority and Scope
Pursuant to the provisions of section 13 of the Federal Reserve
Act, as amended (12 U.S.C. § 342), paragraph (f) of section 19 of the
Federal Reserve Act, as amended (12 U.S.C. § 464), section 16 of
the
Federal Reserve Act, as amended (12 U.S.C. § 248(o)), paragraphs
(1) and
(j) of section 11 of the Federal Reserve Act, as amended (12 U.S.C.
§ 248(i) and (j)), and other provisions of law, the Board of Governors
of the Federal Reserve System has promulgated this Subpart governing
the handling by Federal Reserve Banks of debit items.
§ 210.71— General Provisions
In order to provide for the efficient and economical transfer
of bank balances on the books of the Federal Reserve Banks and as a means
of improving the nation's payments mechanism, the Board of Governors of
the Federal Reserve System has promulgated this Subpart.
Each Federal
- 29 -
Reserve Bank, In accordance with the terms and conditions set forth
in this Subpart, shall receive, process and act upon debit items and the
provisions of this Subpart and applicable operating circulars of the
Federal Reserve Banks shall be binding upon depositors, originators
and recipients.
§ 210.72— Definitions
As used in this Subpart, unless the context otherwise requires:
(a)
The term "item" means any instrument for the payment of
money issued, transmitted, or received in accordance with this Subpart.
(b)
The term "debit item" means any
item issued by
an
originator inaccordance with this Subpart for payment by the recipient.
(c)
The term "instrument for the payment of money" means any
writing contained in or
on any medium approved by § 210.53 of Subpart B
of this Part for the issuance, transmission or recording of debit items
and
that requests or orders the payment of money.
(d)
The term "depositor" means a member bank, a corporation
that maintains an account with a Federal Reserve Bank in conformity
with the requirements of § 211.7 of Part 211 of this Chapter (Regulation K ) ,
a Federal Reserve Bank, an international organization, a foreign corre
spondent, or other institution maintaining an account with a Federal
Reserve Bank.
(e)
The term "originator" means a depositor authorized by a
Federal Reserve Bank, or any institution authorized by a Federal Reserve
Bank in an operating circular Issued pursuant to this Subpart, to issue
and send a debit item to that Federal Reserve Bank and which has agreed
- 30 that the amount of any such debit item shall be credited to the account
maintained or used by the originator on the books of that Federal Reserve
Bank.
(f)
The term "recipient" means a depositor authorized by a
Federal Reserve Bank, or any institution authorized by a Federal Reserve
Bank in an operating circular issued pursuant to this Subpart, to receive,
directly or indidectly, debit items from that Federal Reserve Bank and
that
has agreed that the amount of any such debit item shall be debited
to the account maintained or used by the recipient on the books of that
Federal Reserve Bank.
(g)
The term "Federal Reserve Bank" includes any Head Office,
Branch Office, or any other office of a Federal Reserve Bank.
(h)
The term "business day" means any day during which an
institution is open to the public for carrying on substantially all its
business functions.
(i)
The term "foreign correspondent" means any of the following
for which a Federal Reserve Bank has opened and is maintaining an account:
a foreign bank or bankers;
a foreign state as defined in section 25(b)
of the Federal Reerve Act, as amended (12 U.S.C. § 632) ; or a foreign
correspondent or agency referred to in section 14(e) of that Act
(12 U.S.C. § 358).
(j)
The term "international organization" means an international
organization for which the Federal Reserve Banks are empowered to act as
depositaries or fiscal agents subject to regulation by the Board of
Governors of the Federal Reserve System and for which a Federal Reserve
Bank has opened and is maintaining an account.
- 31 -
(k) The terms "Federal Government originator" and "Federal
Government recipient," respectively, mean any department, agency, instru
mentality, independent establishment, or office of the United States
that
maintains or uses an account with a Federal Reserve Bank.
The term "Federal Government depositor" means any department, agency,
instrumentality, independent establishment, or office of the United
States that
maintains an account with a Federal Reserve Bank.
Except
as may otherwise be provided by any applicable statutes of the United
States or regulations issued or arrangements made thereunder, the pro
visions of this Subpart and of the operating circulars of the Federal
Reserve Banks applicable to anoriginator, a
recipient, or a depositor,
as the case may be, are applicable, respectively, to a Federal Government
originator, a Federal Government recipient, and a Federal Government
depositor.
§ 210.73— Originators Agreement
(a) An originator by its action of issuing and sending to the
Federal Reserve Bank with which it maintains or uses an account any debit
item shall be deemed (1) to warrant to the recipient
in the item that such
designated
originator is authorized to issue or send such
debit item and (2) to authorize (i) said Federal Reserve
handle and act upon such debit itarr>f and (ii)
Bank to
the Federal Reserve
Bank at which the recipient maintains or uses an account to handle and
act upon a debit item, in accordance with the provisions of this Subpart
and the operating circulars of such Federal Reserve Bank.
Such originator
shall be deemed to agree that the provisions of this Subpart and the
- 32 Federal Reserve Bank operating circulars shall, insofar as they are made
applicable thereto, govern the relationships between such originator and
such Federal Reserve Banks and shall also be deemed to maintain reasonable
procedures designed to protect the confidentiality of information related
to such debit item.
(b)
The originator shall be deemed to agree to indemnify each
Federal Reserve Bank handling a debit item for any loss or expense sus
tained (including but not limited to attorneys' fees and expenses of
litigation) resulting from any action taken by the Federal Reserve Bank
within the scope of its authority in handling the debit item.
(c)
Whenever any action or proceeding is brought in any court
against a Federal Reserve Bank, based upon any act done by the Federal
Reserve Bank within the scope of its authority in handling such a debit
item, the Federal Reserve Bank may, upon the entry of a final judgment
or decree in such action or proceeding, recover from the originator the
amount of attorneys' fees and other expenses of litigation actually
incurred, and, in addition, any amount required to be paid by the Federal
Reserve Bank under such judgment or decree, together with interest thereon,
by charging the amount thereof to any account maintained or used by the
originator on the books of the Federal Reserve Bank (or if the originator
is another Federal Reserve Bank, by entering a charge therefor against
such other Federal Reserve Bank), provided only (1) that the Federal Reserve
Bank shall have made seasonable demand on the originator in writing to
assume the defense of the action or proceeding, and (2) that the originator
shall not have made any other provision acceptable to the Federal Reserve
- 33 Bank for the payment of such amount.
A Federal Reserve Bank against which
any such charge has been entered may recover the amount thereof by debit
int the account maintained or used by the originator, in any case herein
provided, even though the action or proceeding had been brought or
entered against another Federal Reserve Bank.
The failure of any Federal
Reserve Bank to avail itself of the remedy provided by this paragraph
shall not prejudice the enforcement by it in any other manner of the
indemnity agreement referred to in paragraph (b) of this section.
$ 210.74— Recipient's Agreement
A recipient, designated in a debit item, by its action in
receiving any item from a Federal Reserve Bank, shall be deemed to
agree to maintain reasonable procedures designed to protect the confi
dentiality of information related to such debit item,
210.75— Issuance of Debit Items
(a)
An originator may, in accordance with the provisions of
this Subpart and the applicable operating circulars of the Federal Reserve
Bank with which it maintains er uses an account, issue and send debit
items to that Federal Reserve Bank, or, where the originator and recipient
do not maintain or use accounts at the same office of a Federal Reserve
Bank, and where permitted or required by the Federal Reserve Bank with
which the originator maintains or uses an account, issue and send any
debit item direct to the Federal Reserve office at which the recipient
maintains or uses an account.
- 34 -
(b)
With respect to any debit item sent direct by an originator
(other than a Federal Reserve Bank) maintaining or using an account at
one Federal Reserve office to another Federal Reserve office at which
the recipient maintains or uses an account, in accordance with paragraph (a)
of this section, the relationships and the rights and liabilities
existing between the originator, the Federal Reserve office with which
it maintains or uses an account and the Federal Reserve office to which
the item is sent will be the same, and the provisions of this Subpart
will apply, as though the originator had sent such item to the Federal
Reserve office with which it maintains or uses an account and such Federal
Reserve office had transferred the debit item to the other Federal Reserve
office.
(c)
A debit item may be contained in any of the media approved
by § 210.53 of Subpart B of this Part that is acceptable to the Federal
Reserve Bank handling the debit item and shall be deemed to be the
same debit item notwithstanding that the medium in which it is contained
may change during its handling or return under this Subpart.
(d)
The Federal Reserve Banks may, from time to time, establish
in their operating circulars the minimum or maximum dollar amounts, or
both, of items which will be transferred, may impose service charges
for debit items, and may impose specific format requirements for the
receipt of debit items.
(e)
No Federal Reserve Bank shall be responsible to the
originator of any debit item for any delay resulting from the action
taken by the Federal Reserve Bank in handling the item on the basis of
- 35 -
(1) any routing number of the recipient appearing thereon or
(2) any
other form of designation of a recipient appearing thereon, whether or
not consistent with the routing number.
§ 210.76— Handling of Debit Items
(a)
Where the originator and recipient maintain or use accounts
at the same office of a Federal Reserve Bank, the
office receiving the
debit item will send it or make it available to the recipient.
(b)
Where the originator and recipient do not maintain or use
accounts at the same office of a Federal Reserve Bank, the office first
receiving
the debit item will transfer it to the office at which
recipient
maintains
or uses an account and
the
that office will sendthe
debit item or make it available to the recipient.
(c)
Bank with
With the concurrence of the office of the Federal Reserve
which the recipient maintains or uses an account, another
Federal Reserve office at which the originator maintains or uses an
account may send a debit item or make it available to such recipient;
the provisions of this Subpart will apply as though such other Federal
Reserve office had transferred the debit item to the Federal Reserve
office with which the recipient maintains or uses an account and that
Federal Reserve office had sent the debit item or made it available
to such recipient.
(d)
When a Federal Reserve Bank has received a debit item,
and subsequently obtains knowledge that, for whatever reason, it will
- 36 -
be unable to effectuate a transfer of funds to the originator in accordance
with the instructions in the item, the Federal Reserve Bank shall,
within a reasonable time thereafter, notify the originator of the delay.
5 210.77— Payment
A recipient becomes accountable for the amount of each debit
item received by it from a Federal Reserve Bank at the close of such
recipient's business day on which the debit item was so received—^ if
it retains such item after the close of such business day, unless
prior to such time, it otherwise pays for the item:
Provided, That,
a Federal Reserve Bank may, with respect to items in a particular format,
provide in its operating circulars that a recipient receiving such a
debit item from a Federal Reserve Bank becomes accountable for the amount
of such debit item if the recipient retains such item after the close of
its business on the date specified for payment in the debit item and the
Federal Reserve Bank's operating circular, unless prior to such close
of business such recipient pays for the item.
§ 210.78— Time Schedule
(a)
Each Federal Reserve Bank shall include in its operating
circulars a schedule of time limits showing, with respect to interdistrict,
interoffice, and intraoffice transfers of funds, the hours on each business
day during which it will receive and handle debit items.
Such schedule
1/ A debit item received by a recipient shall be deemed to have been
received by it on its next business day if the item is received under one of
the following circumstances:
(1) on a day other than a business day for it,
or (2) on a business day for it, but after a "cut-off hour" established by
the Federal Reserve Bank of the district in which the recipient is located.
- 37 shall also show when the
amount of any debit item received
Reserve Bank may be counted as reserve
this Chapter (Regulation D) and
use by a depositor.
for the purposes of
by a Federal
Part 204 of
become available for withdrawal or other
Either immediate or deferred credit will be given
in the account maintained or used by the originator according to such
time schedule.
Notwithstanding the provisions of its time schedule, a
Federal Reserve Bank may, in its discretion, refuse at any time to permit
the withdrawal or other use of credit given for any debit item for which
the Federal Reserve Bank has not yet received payment in actually and
finally collected funds.
(b)
Unless otherwise agreed, each Federal Reserve Bank taking
proper action on the day of receipt of a debit item acts seasonably;
taking proper action within a reasonably
longer time may be seasonable
but the Federal Reserve Bank has the burden of so establishing.
In
order for action to be taken on the day of receipt, such item must
reach the Federal Reserve Bank not later than the time shown in its
schedule of time limits.
No representation shall be made by a Federal
Reserve Bank to the effect that transfers of funds will be consummated
on the day designated in the debit item.
(c)
In emergency or other unusual circumstances, a Federal
Reserve Bank may, in its discretion, receive debit items after the
hours shown in its schedule of time limits.
In the case of an inter
office or interdistrict transfer, the transfer of funds shall be dis
cretionary with the office at which the recipient maintains or uses an
account.
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§ 210.79—
Handling of Requests for Revocation of Debit Items
(a)
A Federal Reserve Bank, upon receipt from the originator
of a request for the revocation of an item, may cancel such item pro
vided that the request for revocation is received at such time and
in such manner as to afford that Federal Reserve Bank a reasonable
opportunity to act.
Where the originator and recipient do not maintain
or use accounts at the
same Federal Reserve Bank and the originator
requests revocation, and the item is not so cancelled, a Federal Reserve
Bank may, in its sole discretion, send a request for revocation to the
Federal Reserve Bank with which the recipient maintains or uses an account.
(b)
In the case of an erroneous or otherwise irregular debit
item, a Federal Reserve Bank may, upon its own initiative, request
another Federal Reserve Bank to revoke the item.
§ 210.80— Return
(a)
A recipient that receives a debit item from a Federal
Reserve Bank and that pays for such debit item as provided in this
Subpart shall have the right to recover any payment so made if, before
it has finally paid the debit item, it returns the debit item before
midnight of the business day nnxt following the business day of receipt.
In accordance with the provisions of this Subpart and the applicable
operating circulars of the Federal Reserve Banks, debit items shall
be returned to the Federal Reseve Bank from which they were received in
a form acceptable to such Federal Reserve Bank, and in the same medium in
which they were received by the recipient unless the recipient obtains the
written authority of such Federal Reserve Bank to return debit items in
another medium specified in § 210.53 of Subpart B.
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(b)
Any recipient that
refund for the amount of any payment made by
receives a credit or obtains a
it in respect of a
item received by it from a Federal Reserve Bank
debit
shall be deemed
(1) to
warrant to such Federal Reserve Bank, to any other Federal Reserve Bank
handling the item and to the originator that
it took all action
necessary
to entitle it to recover such payment withinthe time ortimes limited
therefor by the provisions of this Subpart, in the operating circulars of
the Federal Reserve Banks, and in any agreement between the recipient
and the originator, and (2) to agree to indemnify any such Federal
Reserve Bank for any loss or expense sustained (including but not limited
to attorneys' fees and expenses of litigation) resulting from its action
in giving such credit or making such refund, or in making any charge to,
or obtaining any refund from, the originator.
No Federal Reserve Bank
shall have any responsibility for determining whether the action herein
above referred to was timely.
§ 210.81— Chargeback
If a Federal Reserve Bank does not receive payment in actually
and finally collected funds for any debit item for which it gave credit,
the amount of such item shall be charged back to the account maintained
or used by the originator.
If such a chargeback is made to the account
maintained or used by the originator, such originator shall not have
any right of recourse upon, interest in, or right of payment from,
any reserve account or other funds or property of the recipient in the
possession of a Federal Reserve Bank.
No authorization to charge any
reserve account or other funds or property in the possession of a Federal
Reserve Bank, issued for the purpose of paying for any debit item
~ 40 -
handled under the terms of this Subpart, will be acted upon after
receipt by such Federal Reserve Bank of notice of suspension or closing
of the recipient or the member bank the account of which is used by
the recipient for the payment of such item.
§ 210.82— Timeliness of Action
If, because of circumstances beyond its control, a Federal
Reserve Bank shall be delayed beyond the applicable time limits provided
in this Subpart, or in the operating circulars of the Federal Reserve
Banks or by law in taking any action with respect to a debit item,
the time within which such action shall be completed shall be extended
for such time after the cause of the delay ceases to operate as shall
be necessary to take or complete the action, provided that the Federal
Reserve Bank exercises such diligence as the circumstances require.
§ 210.83— Liability of a Federal Reserve Bank
(a)
A Federal Reserve Bank, in connection with matters
specified in this Subpart or its operating circulars, shall not have,
nor shall it assume, any responsibility to any person interested in a
debit item, except an originator, nor shall a Federal Reserve Bank have or
assume any liability except for its own lack of good faith or failure to
exercise ordinary care, and, except as herein provided, a Federal Reserve
Bank shall not be liable for the insolvency, neglect, misconduct, mistake,
or default of another person, including an originator.
No Federal
Reserve Bank shall make or be deemed to make any warranty under this
Subpart.
- 41 -
(b)
A Federal Reserve Bank will act onlyas agent of its
originator, or of a Federal Reserve Bank transmitting debit items
to it, with respect to the handling of debit items under this Subpart.
A Federal Reserve Bank will not act as the agent or subagent of any
other person.
(c)
above,
Subject to the limitations on liability stated
if the failure to credit the amount of the debit item to the
account of the originator resulted from a failure on the part of any
Federal Reserve Bank to exercise ordinary care tor to act in good faith,
the originator shall have the right to recover from the Federal Reserve
Bank with which it maintains or uses an account any damages proximately
caused by such failure:
Provided, however, That whether any consequential
damages are proximately caused by the Federal Reserve Bank's failure
to exercise ordinary care or lack of good faith is a question of fact
to be determined in each case.
(d)
The Federal Reserve Bank at which the recipient maintains
or uses an account shall be deemed to agree to indemnify the Federal
Reserve Bank at which the originator maintains or uses an account
for any loss or expense sustained (including but not limited to attorneys'
fees and expenses of litigation) as a result of the failure of the
recipient's Federal Reserve Bank to exercise ordinary care or to act
in good faith with respect to a debit item issued to it by the originator's
Federal Reserve Bank.
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§ 210.84— Operating Circulars
Each Federal Reserve Bank shall Issue operating circulars
(sometimes referred to as operating letters or bulletins), not incon
sistent with this Subpart, governing the details of its debit item
operation and containing such provisions as are required or permitted
by this Subpart.
*
*
*
*
*
By order of the Board of Governors, January 12, 197S.
(Signed) Theodore E. Allison
Theodore E. Allison
Secretary of the Board
[SEAL]
@FedFRASER