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federal r eserve bank of

DALLAS, TEXAS

Dallas

75222
Circular No. 81-203
October 26, 1981

REGULATION J
Collection of Checks and Other Items
and Wire Transfer of Funds
TO ALL DEPOSITORY INSTITUTIONS
AND OTHERS CONCERNED IN THE
ELEVENTH FEDERAL RESERVE DISTRICT:
The Board of Governors of the Federal Reserve System has
published Regulation J, as amended effective August 12, 1981.
Enclosed is a copy of the Regulation J pamphlet. It should be filed
in Volume II of your Regulations Binders.
Please destroy the previous
Regulation J and all amendments currently filed in your Regulations Binder.
Questions regarding Subpart A of Regulation J should be directed
to Larry J. Reck at the Head Office, (214) 651-6337; Robert W. Schultz, El
Paso Branch, (915) 544-4730; Vernon L. Bartee, Houston Branch, (713) 659­
4433; and John A.Bullock, San Antonio Branch, (512) 224-2141.
Subpart B questions should be directed to Richard D. Ingram at the
Head Office, (214) 651-6333; William L. Wilson, El Paso Branch, (915) 544­
4730; C. O. Holt, Jr., Houston Branch, (713) 659-4433; and Tony G. Valencia,
San Antonio Branch, (512) 224-2141.
Additional copies of Regulation J will be furnished upon request to
the Department of Communications, Financial and Community Affairs of this
Bank, Ext. 6289.
Sincerely yours,

William H. Wallace
First Vice President
Enclosure

Banks and others are encouraged to use the following incoming W ATS numbers in contacting this Bank:
1-800-442-7140 (intrastate) and 1-800-527-9200 (interstate). For calls placed locally, please use 651 plus the
extension referred to above.

This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org)

Board of Governors of the Federal Reserve System

Regulation J
Collection of Checks and Other Items
and Wire Transfers of Funds
12 GFR 210; as amended effective August 12, 1981

Contents

Page
Subpart A—Collection of Checks
and Other Ite m s..............................
Section 210.1—Authority, purpose,
and scope ....................................
Section 210.2—D efinitions............
Section 210.3—General provisions
(a) General ..............................
(b) Binding effect ....................
(c) Government items ............
(d) Government sen ders..........
Section 210.4— Sending items to
Reserve Banks ............................
Section 210.5—Sender’s agreement;
recovery by Reserve B a n k ..........
(a) Sender’s agreem ent............
(b) Recovery by Reserve Bank .
(c) Methods of recovery..........
Section 210.6—Status, warranties,
and liability of Reserve Bank . . .
(a) Status and liability ............
(b) Warranties and liability . . .
Section 210.7—Presenting items for
payment ......................................
(a) Presenting or sending ........
(b) Place of presentm ent..........
(c) Presenting or sending direct
(d) Item payable in another
D istric t................................
Section 210.8—Presenting noncash
items for acceptance ..................
Section 210.9—P ay m en t................
(a) Cash ite m s ..........................
(b) Noncash ite m s ...................
(c) Nonbank p a y o r .................
(d) Handling of payment .......
(e) Liability of Reserve Bank ..
Section 210.10—Time schedule and
availability of credits for cash
items..............................................
Section 210.11—Availability of
proceeds of noncash items; time
schedule ......................................
(a) Availability of c re d it..........
(b) Time schedule ....................
(c) Handling of payment .......

Section 210.12—Return of cash
1
ite m s ............................................
(a) Recovery of payment ........
(b) Paying bank’s warranties
1
and agreem ent....................
1 Section 210.13—Chargeback of
2
unpaid items ..............................
2
(a) Rights of chargeback ........
2
(b) Suspension or closing of
2
b a n k ....................................
2 Section 210.14— Extension of time
lim its............................................
2 Section 210.15—Direct presentment
of certain warrants ......................
3
3 Subpart B—Wire Transfers of
3 F u n d s ..............................................
3
Section 210.25—Authority,
3
purpose, scope ............................
3 Section 210.26—D efinitions..........
4 Section 210.27—General provisions
(a) General ..............................
4
(b) Binding effect ....................
4
(c) Government transferors and
4
transferees ...............
4 Section 210.28—Media for transfer
items and req u ests......................
4
(a) Transfer items ...............
(b) Transfer requests...........
4 Section 210.29—Transferor’s
4
agreem ent....................................
4 Section 210.30—Transferee’s
5
agreem ent....................................
5 Section 210.31—Sending transfer
5
items and req u ests......................
5 Section 210.32—Handling transfer
items and req u ests......................
(a) Intraoffice transactions . . . .
5
(b) Interoffice transactions . . . .
(c) Notice of delay .............
Section 210.33—T im elim its......
5
(a) Time schedule ...............
5
(b) Acting seasonably.........
6
(c) Transfers after closing hour
6
(d) As-of adjustm ents.........

Page
6
6
6
6
6
6
7
7

7

7
7
8
8
8
8
8
8
8
8
8
9
9
9
9
9
9
9
9
9

Contents
Page
Section 210.34— Advices of credit
and debit ....................................
(a) Advice of c re d it..................
(b) Advice of debit .................
Section 210.35—Revocation of
transfer items and re q u e sts........
(a) Request for revocation . . . .
(b) Erroneous transfer ............
Section 210.36—Final payment; use
of funds ......................................
(a) Final p a y m e n t....................
(b) Right to use fu n d s ..............

9
9
9
10
10
10
10
10
10

Page
Section 210.37—Timeliness of
action ..........................................

10

Section 210.38—Reserve Bank
liability ........................................

10

(a) Limitations on liability . . . .

10

(b) Damages ............................
(c) Right to indemnity ............

10
10

REGULATION J STATUTORY
PR O V ISIO N S................................

11

Regulation J
Collection of Checks and Other Items
and Wire Transfers of Funds
12 C FR 210*; as amended effective August 12, 1981

SUBPART A—COLLECTION OF
CHECKS AND OTHER ITEMS
SECTION 210.1—Authority, Purpose,
and Scope
The Board of Governors of the Federal Re­
serve System (“Board”) has issued this sub­
part pursuant to the Federal Reserve Act, sec­
tion 13 (12 USC 342), section 16 (12 USC
248(o), 360), section l l ( i) (12 USC 248(i)),
and other laws. This subpart governs the col­
lection of checks and other cash and noncash
items by Federal Reserve Banks ( “Reserve
Banks” ). Its purpose is to provide rules for
collecting items and settling balances.

(g) “Item” means an instrument for the pay­
ment of money, whether negotiable or not,
that is—
(1) payable in a Federal Reserve District1
(“District” );
(2) sent by a sender to a Reserve Bank for
handling under this subpart; and
(3) collectible in funds acceptable to the
Reserve Bank of the District in which the
instrument is payable.
Unless otherwise indicated, “item” includes
both cash and noncash items. “Item” does not
include a check that cannot be collected at
par,2 or an “item” as defined in section 210.26
that is handled under subpart B.
(h) “Nonbank payor” means a payor of an
item, other than a bank.

SECTION 210.2—Definitions
As used in this subpart, unless the context
otherwise requires:
(a) “Actually and finally collected funds”
means cash or any other form of payment that
is, or has become, final and irrevocable.
(b) “Bank” includes a depository institution
as defined in section 19 of the Federal Reserve
Act (12 USC 461(b)).
(c) “Bank draft” means a check drawn by
one bank on another bank.
(d) “Banking day” means a day during
which a bank is open to the public for carry­
ing on substantially all its banking functions.
(e) “Cash item” means:
(1) a check other than one classified as a
noncash item under this section; or
(2) any other item payable on demand and
collectible at par that the Reserve Bank of
the District in which the item is payable is
'
willing to accept as a cash item.
(f) “Check” means a draft, as defined in the
Uniform Commercial Code, that is drawn on
a bank and payable on demand.
* C o de o f F ed era l R egulations, title 12, c h a p te r II, p a rt
210 .

(i) “Noncash item” means an item that a re­
ceiving Reserve Bank classifies in its operating
circulars as requiring special handling. The
term also means an item normally received as
a cash item if a Reserve Bank decides that
special conditions require that it handle the
item as a noncash item.
(j) “Paying bank” means:
(1) the bank by which an item is payable,
unless the item is payable or collectible
through another bank and is sent to the
other bank for payment or collection; or
(2) the bank through which an item is
payable or collectible and to which it is sent
for payment or collection.
(k) “Sender” means any of the following that
sends an item to a Reserve Bank: a depository
institution, a clearing institution, another Re­
serve Bank, an international organization, a
foreign correspondent, or a branch or agency
of a foreign bank maintaining reserves under
1 F o r purposes o f th is su b part, th e Virgin Island s and
P u erto Rico are deem ed to be in the Second D istric t, and
G u a m an d A m erican S am oa in the Tw elfth D istrict.
2 T h e B oard publishes a “ M e m o ra n d u m on E xchange
Ch arg es,” listing the banks th a t w ould im pose exchange
charges on cash items and o th e r checks fo rw arded b y R e­
serve B anks an d therefore w ould no t p ay a t p ar.

1

§ 210.2
section 7 of the International Banking Act of
1978 (12 USC 347d, 3105).
(1) “Depository institution” means a de­
pository institution as defined in section
19(b) of the Federal Reserve Act (12 USC
461(b)).
(2) “clearing institution” means:
(i) an institution that is not a depository
institution, but maintains with a Reserve
Bank the balance referred to in the first
paragraph of section 13 of the Federal
Reserve Act (12 USC 342); or
(ii) a corporation that maintains an ac­
count with a Reserve Bank in conformity
with section 211.4 of this chapter (Regu­
lation K ).
(3) “International organization” means an
international organization for which a Re­
serve Bank is empowered to act as deposi­
tary or fiscal agent and maintains an
account.
(4) “Foreign correspondent” means any of
the following for which a Reserve Bank
maintains an account: a foreign bank or
banker, a foreign state as defined in section
25(b) of the Federal Reserve Act (12 USC
632), or a foreign correspondent or agency
referred to in section 14(e) of that act (12
USC 358).
(/) “State” means a state of the United
States, the District of Columbia, Puerto Rico,
or a territory, possession, or dependency of
the United States.

SECTION 210.3—General Provisions
(a) General. Each Reserve Bank shall receive
and handle items in accordance with this sub­
part, and shall issue operating circulars gov­
erning the details of its handling of items and
other matters deemed appropriate by the Re­
serve Bank. The circulars may, among other
things, classify cash items and noncash items,
require separate sorts and letters, and provide
different closing times for the receipt of differ­
ent classes or types of items.

Regulation J
lecting bank) presents or sends an item, and
on other parties interested in the item, includ­
ing the owner.
(c) Government items. As depositaries and
fiscal agents of the United States, Reserve
Banks handle certain items payable by the
United States or certain federal agencies as
cash or noncash items. To the extent provided
by regulations issued by, and arrangements
made with, the United States Treasury De­
partment and other government departments
and agencies, the handling of such items is
governed by this subpart. The Reserve Banks
shall include in their operating circulars such
information regarding these regulations and
arrangements as the Reserve Banks deem
appropriate.
(d) Government senders. Except as otherwise
provided by statutes of the United States, or
regulations issued or arrangements made
thereunder, this subpart and the operating cir­
culars of the Reserve Banks apply to the fol­
lowing when acting as a sender: a department,
agency, instrumentality, independent estab­
lishment, or office of the United States, or a
wholly owned or controlled government cor­
poration, that maintains or uses an account
with a Reserve Bank.

SECTION 210.4— Sending Items to
Reserve Banks
(a) A sender may send any item to the Re­
serve Bank with which it maintains or uses an
account, but that Reserve Bank may permit or
require the sender to send direct to another
Reserve Bank an item payable within the oth­
er Reserve Bank’s District.
(b) With respect to an item sent direct, the
relationships and the rights and liabilities be­
tween the sender, the Reserve Bank of its Dis­
trict, and the Reserve Bank to which the item
is sent are the same as if the sender had sent
the item to the Reserve Bank of its District
and that Reserve Bank had sent the item to
the other Reserve Bank.

(b) Binding effect. This subpart and the oper­
ating circulars of the Reserve Banks are bind­
ing on the sender of an item, on each collect­
ing bank, paying bank, and nonbank payor, to (c) The Reserve Banks shall receive cash
•• »
which a Reserve Bank (or a subsequent coP^ items and other checks at par.
2

Regulation J

SECTION 210.5—Sender’s Agreement;
Recovery by Reserve Bank
(a) Sender’s agreement. By sending an item
to a Reserve Bank, the sender:
(1) authorizes the receiving Reserve Bank
(and any other Reserve Bank or collecting
bank to which the item is sent) to handle
the item subject to this subpart and to the
Reserve Banks’ operating circulars, and
warrants its authority to give this
authorization;
(2) warrants to each Reserve Bank han­
dling the item that: (i) the sender has good
title to the item or is authorized to obtain
payment on behalf of one who has good ti­
tle (whether or not this warranty is evi­
denced by the sender’s express guaranty of
prior indorsements on the item); and (ii) to
the extent prescribed by state law applicable
to a Reserve Bank or subsequent collecting
bank handling the item, the item has not
been materially altered; but this subpara­
graph (2) does not limit any warranty by a
sender arising under state law; and
(3) agrees to indemnify each Reserve Bank
for any loss or expense sustained (including
attorneys’ fees and expenses of litigation)
resulting from (i) the sender’s lack of au­
thority to make the warranty in paragraph
(a)(1 ) of this section; (ii) any action taken
by the Reserve Bank within the scope of its
authority in handling the item; or (iii) any
warranty made by the Reserve Bank under
section 210.6(b) of this subpart.
(b) Recovery by Reserve Bank. If an action or
proceeding is brought against a Reserve Bank
that has handled an item, based on:
(1) the alleged failure of the sender to have
the authority to make the warranty and
agreement in subparagraph (a)(1 ) of this
section;
(2) any action by the Reserve Bank within
the scope of its authority in handling the
item; or
(3) any warranty made by the Reserve
Bank under section 210.6(b) of this sub­
part,
the Reserve Bank may, upon the entry of a
final judgment or decree, recover from the
sender the amount of attorneys’ fees and other
expenses of litigation incurred, as well as any

§ 210.6
amount the Reserve Bank is required to pay
under the judgment or decree, together with
interest thereon.
(c) Methods o f recovery. The Reserve Bank
may recover the amount stated in paragraph
(b) of this section by charging any account on
its books that is maintained or used by the
sender (or if the sender is another Reserve
Bank, by entering a charge against the other
Reserve Bank through the Interdistrict Settle­
ment Fund), if:
(1) the Reserve Bank made seasonable
written demand on the sender to assume de­
fense of the action or proceeding; and
(2) the sender has not made any other ar­
rangement for payment that is acceptable to
the Reserve Bank.
A Reserve Bank that has been charged
through the Interdistrict Settlement Fund
may recover from its sender in the manner
and under the circumstances set forth in this
paragraph. A Reserve Bank’s failure to avail
itself of the remedy provided in this paragraph
does not prejudice its enforcement in any oth­
er manner of the indemnity agreement re­
ferred to in subparagraph (a)(3 ) of this
section.

SECTION 210.6—Status, Warranties,
and Liability of Reserve Bank
(a )(1 ) Status and liability. A Reserve Bank
shall act only as the sender’s agent in re­
spect of an item. This agency terminates not
later than the time the Reserve Bank re­
ceives payment for the item in actually and
finally collected funds and makes the pro­
ceeds available for use by the sender. A Re­
serve Bank shall not act as agent or sub­
agent of an owner or holder of an item
other than the sender. A Reserve Bank shall
not have or assume any liability to the send­
er in respect of an item or its proceeds ex­
cept for the Reserve Bank’s own lack of
good faith or failure to exercise ordinary
care.
(2) Reliance on routing designation appear­
ing on item. A Reserve Bank may present
or send an item based on the routing num­
ber or other designation of a paying bank or
nonbank payor appearing in any form on
the item when the Reserve Bank receives it.
3

§ 210.6
A Reserve Bank shall not be responsible for
any delay resulting from its acting on any
designation, whether inscribed by magnetic
ink or by other means, and whether or not
the designation acted on is consistent with
any other designation appearing on the
item.
(b) Warranties and liability. By presenting or
sending an item, a Reserve Bank warrants to a
subsequent collecting bank and to the paying
bank and any other payor:
(1) that the Reserve Bank has good title to
the item (or is authorized to obtain pay­
ment on behalf of one who either (i) has
good title or (ii) is authorized to obtain
payment on behalf of one who has good ti­
tle), whether or not this warranty is evi­
denced by the Reserve Bank’s express guar­
anty of prior indorsements on the item; and
(2) that the item has not been materially
altered to the extent prescribed by state law
applicable to a Reserve Bank or subsequent
collecting bank holding the item.
The Reserve Bank shall not have or assume
any other liability to the paying bank or other
payor, except for the Reserve Bank’s own lack
of good faith or failure to exercise ordinary
care.

SECTION 210.7—Presenting Items for
Payment
(a) Presenting or sending. As provided under
state law or as otherwise permitted by this
section: (1) a Reserve Bank or a subsequent
collecting bank may present an item for pay­
ment or send the item for presentment and
payment; and (2) a Reserve Bank may send
an item to a subsequent collecting bank with
authority to present it for payment or to send
it for presentment and payment.
(b) Place o f presentment. A Reserve Bank or
subsequent collecting bank may present an
item:
(1) at a place requested by the paying
bank;
(2) at a place requested by the nonbank
payor, if the item is payable by a nonbank
payor other than through a paying bank;
(3) under a special collection agreement
consistent with this subpart; or
4

Regulation J
(4) through a clearinghouse and subject to
its rules and practices.
(c) Presenting or sending direct. A Reserve
Bank or subsequent collecting bank may, with
respect to an item payable in the Reserve
Bank’s District:
(1) present or send the item direct to the
paying bank, or to a place requested by the
paying bank; or
(2) if the item is payable by a nonbank
payor other than through a paying bank,
present it direct to the nonbank payor. Doc­
uments, securities, or other papers accom­
panying a noncash item shall not be deliv­
ered to the nonbank payor before the item
is paid unless the sender specifically autho­
rizes delivery.
(d) Item payable in another District. A Re­
serve Bank receiving an item payable in an­
other District ordinarily sends the item to the
Reserve Bank of the other District, but with
the agreement of the other Reserve Bank, may
present or send the item as if it were payable
in its own District.

SECTION 210.8—Presenting Noncash
Items for Acceptance
A Reserve Bank or a subsequent collecting
bank may, if instructed by the sender, present
a noncash item for acceptance in any manner
authorized by law if: (1) the item provides
that it must be presented for acceptance; (2)
the item is payable elsewhere than at the resi­
dence or place of business of the payor; or (3)
the date of payment of the item depends on
presentment for acceptance. Documents ac­
companying a noncash item shall not be deliv­
ered to the payor upon acceptance of the item
unless the sender specifically authorizes deliv­
ery. A Reserve Bank shall not have or assume
any other obligation to present or to send for
presentment for acceptance any noncash item.

SECTION 210.9—Payment
(a) Cash items. A paying bank becomes ac­
countable for the amount of a cash item re­
ceived directly or indirectly from a Reserve
Bank, at the close of the paying bank’s bank­

Regulation J
ing day on which it receives3 the item if it
retains the item after the close of that banking
day, unless, prior to that time, it pays for the
item by:
(1) debit to an account on the Reserve
Bank's books;
(2) cash; or
(3) in the discretion of the Reserve Bank,
any other form of payment.
The proceeds of any payment shall be avail­
able to the Reserve Bank by the close of the
Reserve Bank’s banking day on the banking
day of receipt of the item by the paying bank.
If the banking day of receipt is not a banking
day for the Reserve Bank, payment shall be
made on the next day that is a banking day for
both the Reserve Bank and the paying bank.
(b) Noncash items. A Reserve Bank may re­
quire the paying or collecting bank to which it
has presented or sent a noncash item to pay
for the item in cash, but the Reserve Bank
may permit payment by a debit to an account
on the Reserve Bank’s books or by any of the
following that is in a form acceptable to the
Reserve Bank: bank draft, transfer of funds or
bank credit, or any other form of payment au­
thorized by state law.
(c) Nonbank payor. A Reserve Bank may re­
quire a nonbank payor to which it has pre­
sented an item to pay for it in cash, but the
Reserve Bank may permit payment in any of
the following that is in a form acceptable to
the Reserve Bank: cashier’s check, certified
check, or other bank draft or obligation.
(d) Handling o f payment. A Reserve Bank
may handle a bank draft or other form of pay­
ment it receives in payment of a cash item as a
cash item. A Reserve Bank may handle a
bank draft or other form of payment it re­
ceives in payment of a noncash item as either
a cash item or a noncash item.
(e) Liability o f Reserve Bank. A Reserve
Bank shall not be liable for the failure of a
3
A pay in g ban k is d eem ed to receive a ca sh item on its
next b a nk in g d ay if it receives th e item:
(1 ) on a day o th e r th a n a b anking d ay for it; or
(2 ) on a banking day for it, b u t
( i) after its regular banking hours;
(ii) after a “ cut-off h o u r ” established b y it in a c co rd ­
ance w ith state law; o r
(iii) d urin g afternoon or evening p eriod s w hen it is
open for lim ited functions only.

§210.11
collecting bank, paying bank, or nonbank pay­
or to pay for an item, or for any loss resulting
from the Reserve Bank’s acceptance of any
form of payment other than cash authorized
in paragraphs (a), (b), and (c) of this sec­
tion. A Reserve Bank that acts in good faith
and exercises ordinary care shall not be liable
for the nonpayment of, or failure to realize
upon, a bank draft or other form of payment
that it accepts under paragraphs (a), (b), and
(c).

SECTION 210.10—Time Schedule and
Availability of Credits for Cash Items
(a) Each Reserve Bank shall include in its
operating circulars a time schedule for each of
its offices indicating when the amount of any
cash item received by it (or sent direct to an­
other Reserve office for the account of that
Reserve Bank) is counted as reserve for pur­
poses of part 204 of this chapter (Regulation
D) and becomes available for use by the send­
er. The Reserve Bank shall give either imme­
diate or deferred credit in accordance with its
time schedule to a sender other than a foreign
correspondent. A Reserve Bank ordinarily
gives credit to a foreign correspondent only
when the Reserve Bank receives payment for
the item in actually and finally collected
funds, but, in its discretion, a Reserve Bank
may give immediate or deferred credit in ac­
cordance with its time schedule.
(b) Notwithstanding its time schedule, a
Reserve Bank may refuse at any time to per­
mit the use of credit given for any cash item
for which the Reserve Bank has not yet re­
ceived payment in actually and finally collect­
ed funds.

SECTION 210.11—Availability of
Proceeds of Noncash Items; Time
Schedule
(a) Availability o f credit. A Reserve Bank
shall give credit to the sender for the proceeds
of a noncash item when it receives payment in
actually and finally collected funds (or advice
from another Reserve Bank of such payment
to it). The amount of the item is counted as
5

§210.11
reserve for purposes of part 204 of this chap­
ter (Regulation D) and becomes available for
use by the sender when the Reserve Bank re­
ceives the payment or advice, except as pro­
vided in paragraph (b) of this section.
(b) Time schedule. A Reserve Bank may give
credit for the proceeds of a noncash item sub­
ject to payment in actually and finally collect­
ed funds in accordance with a time schedule
included in its operating circulars. The time
schedule shall indicate when the proceeds of
the noncash item will be counted as reserve
for purposes of part 204 of this chapter (Reg­
ulation D) and become available for use by
the sender. A Reserve Bank may, however,
refuse at any time to permit the use of credit
given for a noncash item for which the Re­
serve Bank has not yet received payment in
actually and finally collected funds.
(c) Handling o f payment. If a Reserve Bank
receives, in payment for a noncash item, a
bank draft or other form of payment that it
elects to handle as a noncash item, the Re­
serve Bank shall neither count the proceeds as
reserve for purposes of part 204 of this chap­
ter (Regulation D ) nor make the proceeds
available for use until it receives payment in
actually and finally collected funds.

SECTION 210.12—Return of Cash
Items
(a) Recovery o f payment. A paying bank that
receives a cash item directly or indirectly from
a Reserve Bank, other than for immediate
payment over the counter, and that pays for
the item as provided in section 210.9(a) of
this subpart, may recover the payment if, be­
fore it has finally paid the item, it:
(1) returns the item before midnight of its
next banking day following the banking day
of receipt; or
(2) takes any other action to recover the
payment within the times and by the means
provided by state law.
The rules or practices of a clearinghouse
through which the item was presented, or a
special collection agreement under which the
item was presented, may not extend these re­
turn times, but may provide for a shorter re­
turn time.
6

Regulation J
(b) Paying bank's warranties and agreement.
A paying bank that obtains a credit or refund
for the amount of a payment it has made for a
cash item:
(1) warrants to the Reserve Bank (and to
a subsequent collecting bank, and to the
sender and all prior parties) that it took all
action necessary to entitle it to recover its
payment within the time limits of: (i) this
subpart; (ii) state law, unless a longer time
is afforded by this subpart; (iii) the rules or
practices of any clearinghouse through
which the item was presented; and (iv) any
special collection agreement under which
the item was presented; and
(2) agrees to indemnify the Reserve Bank
for any loss or expense sustained (including
attorneys’ fees and expenses of litigation)
resulting from the Reserve Bank’s giving
the credit or refund to the paying bank, or
charging, or obtaining a refund from, the
sender.
A Reserve Bank shall not have or assume any
responsibility for determining whether the ac­
tion taken by a paying bank was timely.

SECTION 210.13—Chargeback of
Unpaid Items
(a) Right o f chargeback. If a Reserve Bank
does not receive payment in actually and final­
ly collected funds for an item for which the
Reserve Bank gave credit subject to payment
in actually and finally collected funds, the Re­
serve Bank shall charge back the amount of
the item to the sender, whether or not the
item itself can be returned. In the event of
chargeback, neither the owner or holder of the
item nor the sender shall have any interest in
any reserve balance or other funds of the pay­
ing bank or a collecting bank in the Reserve
Bank’s possession.
(b) Suspension or closing o f bank. A Reserve
Bank shall not pay or act on a draft, authori­
zation to charge, or other order on a reserve
balance or other funds in its possession after it
receives notice of suspension or closing of the
bank making the payment for that bank’s own
or another’s account.

§ 210.26

Regulation J

SECTION 210.14— Extension of Time
Limits
If, because of interruption of communication
facilities, suspension of payments by a bank or
nonbank payor, war, emergency conditions or
other circumstances beyond its control, a
bank (including a Reserve Bank) or nonbank
payor is delayed in acting on an item beyond
applicable time limits, its time for acting is
extended for the time necessary to complete
the action, if it exercises such diligence as the
circumstances require.

SECTION 210.15—Direct Presentment
of Certain Warrants
If a Reserve Bank elects to present direct to
the payor a bill, note, or warrant that is issued
and payable by a state or a political subdivi­
sion and that is a cash item not payable or
collectible through a bank: (a) sections 210.9,
210.12, and 210.13 and the operating circulars
of the Reserve Banks apply to the payor as if
it were a paying bank; (b) section 210.14 ap­
plies to the payor as if it were a bank; and (c)
under section 210.9 each day on which the
payor is open for the regular conduct of its
affairs or the accommodation of the public is
considered a banking day.

SUBPART B—WIRE TRANSFERS
OF FUNDS

SECTION 210.25—Authority, Purpose,
and Scope
The Board of Governors of the Federal Re­
serve System (“Board” ) has issued this sub­
part pursuant to the Federal Reserve Act,
section 13 (12 USC 342), paragraph (f) of
section 19 (12 USC 464), paragraph 14 of
section 16 (12 USC 248(o)), paragraphs (i)
and (j) of section 11 (12 USC 248 (i) and
(j)), and other laws. This subpart governs the
handling by Federal Reserve Banks (“Reserve
Banks” ) of transfer items and transfer
requests. Its purpose is to provide rules for the
wire transfer of funds.

SECTION 210.26—Definitions
As used in this subpart, unless the context
otherwise requires:
(a) “Beneficiary” means a person or organi­
zation, other than the transferee, designated
in a transfer item or request to receive the
amount of the item or request from the
transferee.
(b) “Interoffice transaction” means a trans­
fer between a transferor and transferee that do
not maintain or use accounts at the same of­
fice of a Reserve Bank.
(c) “Item” means a writing evidencing a re­
quest for the payment of money, that is han­
dled under this subpart. “Item” does not in­
clude a “item” as defined in section 210.2 that
is handled under subpart A.
(d) “Transfer item” means an item: (1) sent
by a transferor (other than a Reserve Bank)
to a Reserve Bank for debit to the transferor’s
account at the Reserve Bank and for credit to
a transferee; (2) sent by a Reserve Bank to
another Reserve Bank for credit to the latter
or to any other transferee; or (3) issued by a
Reserve Bank at the request of a transferor for
credit to a transferee.
(e) “Transfer request” or “request” means a
request by telephone that a Reserve Bank is­
sue a transfer item.
(f) “Transferee” means a member bank, a
Reserve Bank, or other institution that (1)
maintains or, if authorized by the Reserve
Bank, uses an account at a Reserve Bank and
(2) is designated in a transfer item or request
to receive the amount of the item or request.
(g) “Transferor” means a member bank, a
Reserve Bank, or other institution that main­
tains or uses an account at a Reserve Bank
and that is authorized by that Reserve Bank
to send a transfer item or request to it.
(h) “Transferor’s account” or “transferee’s
account” means the account at its Reserve
Bank maintained or used by the transferor or
transferee, respectively.
(i) “Transferor’s Reserve Bank” or “trans­
feree’s Reserve Bank” means the Reserve of­
fice at which the transferor or transferee, re­
spectively, maintains or uses an account.
7

§ 210.27

SECTION 210.27—General Provisions
(a) General. Each Reserve Bank shall receive
and handle transfer items, and shall itself is­
sue transfer items, in accordance with this
subpart. Each Reserve Bank shall issue an op­
erating circular governing the details of its
funds transfer operations and other matters
deemed appropriate by the Reserve Bank. The
circulars may, among other things: set mini­
mum and maximum dollar amounts; specify
format and authentication requirements for
transfer items and requests; and impose rea­
sonable funds transfer charges.
(b) Binding effect. This subpart and the oper­
ating circulars of the Reserve Banks are bind­
ing on transferors, transferees, beneficiaries,
and other parties interested in an item.
(c) Government transferors and transferees.
Except as otherwise provided by statutes of
the United States, or regulations issued or ar­
rangements made thereunder, this subpart
and the operating circulars of the Reserve
Banks apply to the following when acting as a
transferor or transferee: a department, agency,
instrumentality, independent establishment,
or office of the United States, or a wholly
owned or controlled government corporation,
that maintains or uses an account with a Re­
serve Bank.

SECTION 210.28—Media for Transfer
Items and Requests
(a) Transfer items. A transferor may issue
and send a transfer item in any of the follow­
ing media, if specified in the operating circular
of the transferor’s Reserve Bank:
(1) a letter, memorandum, or similar
writing;
(2) a telegram (including TWX, TELEX,
or similar form of communication); and
(3) any form of communication, other
than voice, registered on (or in form suit­
able for being registered on) magnetic tape,
disc, or other medium designed to contain
in durable form conventional signals used
for electronic communication of messages.
(b) Transfer requests. A transferor may make
transfer requests only under special arrange8

Regulation J
ments with its Reserve Bank. The Reserve
Bank may record these telephone messages.

SECTION 210.29—Transferor’s
Agreement
A transferor, by sending a transfer item or
making a transfer request to its Reserve Bank,
authorizes:
(a) its Reserve Bank to debit the amount to
the transferor’s account, and to handle the
transfer item or request in accordance with
this subpart and the operating circulars of the
Reserve Banks; and
(b) the transferee’s Reserve Bank to handle a
matching transfer item (matching as to
amount, transferee, and beneficiary, if any) in
accordance with this subpart and the operat­
ing circulars of the transferee’s Reserve Bank.

SECTION 210.30—Transferee’s
Agreement
(a) A transferee (other than a Reserve
Bank), by maintaining or using an account at
a Reserve Bank, authorizes its Reserve Bank
to credit the amount of the transfer item to its
account.
(b) A transferee (other than a Reserve
Bank) that receives a transfer item, or advice
of credit of a transfer item, designating a bene­
ficiary, agrees:
(1) to credit promptly the beneficiary’s ac­
count or otherwise make the amount avail­
able to the beneficiary; or
(2) to notify promptly its Reserve Bank if
it is unable to do so because of circum­
stances beyond its control.

SECTION 210.31—Sending Transfer
Items and Requests
(a) A transferor (other than a Reserve
Bank) may send a transfer item to, or make a
transfer request of, its Reserve Bank. A Re­
serve Bank may refuse to act on, or may im­
pose conditions to its acting on, a transfer
item or request if it has reason to believe that
the balance in the transferor’s account is not
sufficient to cover the item or request. The

§ 210.34

Regulation J
transferor shall arrange to have in its account,
at the end of its Reserve Bank’s banking day,
a balance of actually and finally collected
funds sufficient to cover the amounts of trans­
fer items debited to the account during that
day. In addition to other remedies, the Re­
serve Bank has a security interest in the trans­
feror’s assets in the possession of, or held for
the account of, the Reserve Bank if:
(1) the balance in the transferor’s account
at the end of the Reserve Bank’s banking
day is not sufficient to cover the amounts
debited to the account during that day; or
(2) the transferor suspends payment or is
closed at any time during the Reserve
Bank’s banking day, and does not have a
balance sufficient to cover the amounts deb­
ited to its account.
(b) A Reserve Bank may send a transfer item
to, or make a transfer request of, another Re­
serve Bank.

SECTION 210.32—Handling Transfer
Items and Requests
(a) Intraoffice transactions. If the transferor
and transferee maintain or use accounts at the
same Reserve office, that office shall act on a
transfer item by debiting and crediting their
accounts. The Reserve office shall act on a
transfer request by issuing a transfer item, and
debiting and crediting the accounts.
(b) Interoffice transactions. The transferor’s
Reserve Bank shall handle an interoffice
transaction by debiting the transferor’s ac­
count and, acting as a transferor, issuing and
sending to the transferee’s Reserve Bank a
matching transfer item (matching as to
amount, transferee, and beneficiary, if any).
The transferee’s Reserve Bank shall transfer
funds to the transferee by debiting the account
of the transferor’s Reserve Bank, and credit­
ing the transferee’s account.
(c) Notice o f delay. If a Reserve Bank learns
that it is unable to effectuate a transfer of
funds on a timely basis for any reason, it shall
notify the transferor of the delay within a rea­
sonable time.

SECTION 210.33—Time Limits
(a) Time schedule. Each Reserve Bank shall
include in its operating circular a schedule
showing the hours during which it handles
transfer items and requests.
(b) Acting seasonably. A Reserve Bank acts
seasonably if it takes proper action on the day
it receives a transfer item or request. Taking
proper action within a reasonably longer time
may be seasonable but the Reserve Bank has
the burden of so establishing. No Reserve
Bank shall represent that it will complete a
transfer of funds on the day requested.
(c) Transfers after closing hour. A Reserve
Bank is not required to act on the day it re­
ceives an item or request if it receives the item
or request after the time shown in its sched­
ule. In emergency or other unusual circum­
stances, a Reserve Bank may handle a transfer
item or request after the time shown in its
schedule. The completion of an interoffice
transaction in these circumstances is also dis­
cretionary with the transferee’s Reserve Bank.
(d) As-of adjustments. If a Reserve Bank fails
to credit to the transferee’s account on the day
requested the amount of a transfer item or re­
quest received by the Reserve Bank before the
time shown in its schedule, the Reserve Bank
shall, unless otherwise instructed, complete
the transfer on its next banking day and make
adjustments for reserve accounting purposes
as of the day the transfer was to have been
made.

SECTION 210.34— Advices of Credit
and Debit
(a) Advice o f credit. The transferee’s Reserve
Bank shall give advice of credit to the trans­
feree for an executed transfer of funds.
(b) Advice o f debit. After receiving a transfer
item or request, the transferor’s Reserve Bank
shall send an advice of debit to the transferor.
A transferor is deemed to approve the accura­
cy of an advice of debit unless it sends to its
Reserve Bank written objection within 10 cal­
endar days of receiving the advice of debit.
9

§210.35

SECTION 210.35—Revocation of
Transfer Items and Requests
(a) Request for revocation. A Reserve Bank
may cease acting on a transfer item or request
if it receives from the transferor a request for
revocation in time to give the Reserve Bank a
reasonable opportunity to comply. If the re­
quest is received too late, the Reserve Bank
may, on request from the transferor, ask the
transferee to return the funds. In an interoffice
transaction, the Reserve Bank may ask the
transferee’s Reserve Bank to ask the transfer­
ee to return the funds.
(b) Erroneous transfer. In an erroneous or ir­
regular transfer of funds, a Reserve Bank
may, on its own initiative or at the request of
another Reserve Bank, ask the transferee to
return funds previously transferred.

SECTION 210.36—Final Payment; Use
of Funds
(a) Final payment. A transfer item is Anally
paid when the transferee’s Reserve Bank
sends the transfer item or sends or telephones
the advice of credit for the item to the trans­
feree, whichever occurs first.
(b) Right to use funds. Credit given by a Re­
serve Bank for a transfer of funds becomes
available for use when the transfer item is fi­
nally paid, subject to the Reserve Bank’s right
to apply the transferred funds to an obligation
owed to it by the transferee.

SECTION 210.37—Timeliness of Action
If, because of circumstances beyond its con­
trol, a Reserve Bank is delayed beyond the

Regulation J
time limits provided in this subpart, in its op­
erating circular, or by law in acting on a
transfer item or request, the time for acting is
extended for the time necessary to complete
the action, if the Reserve Bank exercises such
diligence as the circumstances require.

SECTION 210.38—Reserve Bank
Liability
(a) Limitations on liability. A Reserve Bank
shall not have or assume any responsibility to
a transferee, beneficiary, or other party, ex­
cept its immediate transferor. A Reserve Bank
shall not be liable for the insolvency, neglect,
misconduct, mistake, or default of another
bank or person, including a transferor, except
as provided in this section. A Reserve Bank
shall not have or assume any liability except
for its own or another Reserve Bank’s lack of
good faith or failure to exercise ordinary care.
(b) Damages. A Reserve Bank is liable to its
immediate transferor for damages proximate­
ly caused by a failure to credit the amount of a
transfer item or request to the transferee’s ac­
count caused by a Reserve Bank’s failure to
exercise ordinary care or to act in good faith.
Whether damages are proximately caused by
a Reserve Bank’s failure to exercise ordinary
care or to act in good faith is a question of fact
to be determined in each case.
(c) Right to indemnity. The transferee’s Re­
serve Bank shall indemnify the transferor’s
Reserve Bank for any loss or expense sus­
tained (including attorneys’ fees and expenses
of litigation) as a result of the failure of the
transferee’s Reserve Bank to exercise ordinary
care or to act in good faith in an interoffice
transaction.

Regulation J
.Statutory Provisions

FEDERAL RESERVE ACT

SECTION 13—Powers of Federal
Reserve Banks
Any Federal reserve bank may receive from
any of its member banks or other depository
institutions, and from the United States, de­
posits of current funds in lawful money, national-bank notes, Federal reserve notes, or
checks, and drafts, payable upon presentation,
or other items and also, for collection, matur­
ing notes and bills; or solely for purposes of
exchange or of collection, may receive from
other Federal reserve banks deposits of cur­
rent funds in lawful money, national-bank
notes, or checks upon other Federal reserve
banks, and checks and drafts, payable upon
presentation within its district, or other items,
and maturing notes and bills payable within
its district; or, solely for the purposes of ex­
change or of collection, may receive from any
nonmember bank or trust company or other
depository institution deposits of current
funds in lawful money, national-bank notes,
Federal reserve notes, checks and drafts pay­
able upon presentation or other items, or
maturing notes and bills: Provided, Such non­
member bank or trust company or other de­
pository institution maintains with the Feder­
al reserve bank of its district a balance in such
amount as the Board determines talcing into
account items in transit, services provided by
the Federal Reserve Bank, and other factors
as the Board may deem appropriate; Provided
further. That nothing in this or any other sec­
tion of this Act shall be construed as prohibit­
ing a member or nonmember bank or other
depository institution from making reasonable
charges, to be determined and regulated by
the Board of Governors of the Federal Re­
serve System, but in no case to exceed 10 cents
per $100 or fraction thereof, based on the to­
tal of checks and drafts presented at any one
time, for collection or payment of checks and
drafts and remission therefor by exchange or

otherwise; but no such charges shall be made
against the Federal reserve banks.
[12 U S C 342.]
*

*

*

*

*

SECTION 16—Note Issues
*

*

*

*

*

Every Federal reserve bank shall receive on
deposit at par from depository institutions or
from Federal Reserve banks checks and other
items, including negotiable orders of with­
drawal and share drafts and drafts drawn
upon any of its depositors, and when remitted
by a Federal reserve bank, checks and other
items, including negotiable orders of with­
drawal and share drafts and drafts drawn by
any depositor in any other Federal reserve
bank or depository institution upon funds to
the credit of said depositor in said reserve
bank or depository institution. Nothing herein
contained shall be construed as prohibiting a
depository institution from charging its actual
expense incurred in collecting and remitting
funds, or for exchange sold to its patrons. The
Board of Governors of the Federal Reserve
System shall, by rule, fix the charges to be
collected by the member banks from its pa­
trons whose checks are cleared through the
Federal reserve bank and the charge which
may be imposed for the service of clearing or
collection rendered by the Federal reserve
bank.
[12 U S C 360 ]

The Board of Governors of the Federal Re­
serve System shall make and promulgate from
time to time regulations governing the trans­
fer of funds and charges therefor among Fed­
eral reserve banks and their branches, and
may at its discretion exercise the functions of
a clearing house for such Federal reserve
banks, or may designate a Federal reserve
bank to exercise such functions, and may also
require each such bank to exercise the func11

Regulation J

Statutory Provisions
tions of a clearing house for depository
institutions.
[12 U SC 2 4 8 ( o ) .]

SECTION 11—Powers of Board of
Governors of Federal Reserve System
*

*

*

*

*

The Board of Governors of the Federal Re­
serve System shall be authorized and
empowered:
*

*

*

*

*

(i) To require bonds of Federal reserve
agents, to make regulations for the safeguard­
ing of all collateral, bonds, Federal reserve
notes, money or property of any kind deposit­
ed in the hands of such agents, and said board
shall perform the duties, functions, or services
specified in this Act, and make all rules and
regulations necessary to enable said board ef­
fectively to perform the same.

[12 U S C 358.]

[12 U S C 2 4 8 ( i) .]

*

*

*

*

*

SECTION 14—Open Market Operations
*

*

with or without its indorsement, through such
correspondents or agencies, bills of exchange
(or acceptances) arising out of actual com­
mercial transactions which have not more
than ninety days to run, exclusive of days of
grace, and which bear the signature of two or
more responsible parties, and, with the con­
sent of the Board of Governors of the Federal
Reserve System, to open and maintain bank­
ing accounts for such foreign correspondents
or agencies, or for foreign banks or bankers,
or for foreign states as defined in section
25(b) of this Act. Whenever any such ac­
count has been opened or agency or corre­
spondent has been appointed by a Federal re­
serve bank, with the consent of or under the
order and direction of the Board of Governors
of the Federal Reserve System, any other Fed­
eral reserve bank may, with the consent and
approval of the Board of Governors of the
Federal Reserve System, be permitted to carry
on or conduct, through the Federal reserve
bank opening such account or appointing
such agency or correspondent, any transac­
tion authorized by this section under rules
and regulations to be prescribed by the board.

*

*

*

*

*

*

*

SECTION 25(b)—Jurisdiction of Suits

*
*

*

*

*

*

Every Federal reserve bank shall have power:
*

*

*

*

*

(e) To establish accounts with other Federal
reserve banks for exchange purposes and, with
the consent or upon the order and direction of
the Board of Governors of the Federal Re­
serve System and under regulations to be pre­
scribed by said board, to open and maintain
accounts in foreign countries, appoint corre­
spondents, and establish agencies in such
countries wheresoever it may be deemed best
for the purpose of purchasing, selling, and col­
lecting bills of exchange, and to buy and sell,
12

For the purposes of this section, * * * (2)
the term “foreign state” includes any foreign
government, or any department, district,
province, county, possession, or other similar
governmental organization or subdivision of a
foreign government, and any agency or instru­
mentality of any such foreign government or
of any such organization or subdivision; (3)
the term “central bank” includes any foreign
bank or banker authorized to perform any one
or more of the functions of a central bank;
*

*

*

[12 U SC 632.]

Statutory Provisions

Regulation J

BRETTON WOODS AGREEMENTS
ACT
SECTION 6—Federal Reserve Banks As
Depositories
Any Federal Reserve bank which is requested
to do so by the Fund or the Bank shall act as
its depository or as its fiscal agent, and the
Board of Governors of the Federal Reserve
System shall supervise and direct the carrying
out of these functions by the Federal Reserve
banks.
[22 U S C 286d. ]

INTER-AMERICAN
DEVELOPMENT BANK ACT
SECTION 6—Federal Reserve Banks As
Depositories
Any Federal Reserve bank which is requested
to do so by the Bank shall act as its depository
or as its fiscal agent and the Board of Gover­
nors of the Federal Reserve System shall su­
pervise and direct the carrying out of these
functions by the Federal Reserve banks.
[22 U S C 283d.]

INTERNATIONAL DEVELOPMENT
ASSOCIATION ACT
SECTION 6—Federal Reserve Banks As
Depositories
Any Federal Reserve bank which is requested

to do so by the Association shall act as its
depository or as its fiscal agent, and the Board
of Governors of the Federal Reserve System
shall supervise and direct the carrying out of
these functions by the Federal Reserve banks.

[22 U S C 284d.]

INTERNATIONAL FINANCE
CORPORATION ACT
SECTION 6—Federal Reserve Banks As
Depositories
Any Federal Reserve bank which is requested
to do so by the Corporation shall act as its
depository or as its fiscal agent, and the Board
of Governors of the Federal Reserve System
shall supervise and direct the carrying out of
these functions by the Federal Reserve banks.

[22 U SC 282d.]

ASIAN DEVELOPMENT BANK ACT
SECTION 6—Federal Reserve Banks As
Depositories
Any Federal Reserve bank which is requested
to do so by the Bank shall act as its depository
or as its fiscal agent, and the Board of Gover­
nors of the Federal Reserve System shall su­
pervise and direct the carrying out of these
functions by the Federal Reserve banks.

[22 U S C 285d.]