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Fed er , . r e se r v e B ank OF DALLAS WILLIAM H. WALLACE August 9, 1985 FIRS T VICE PR ES ID EN T DALLAS. TEXAS 7 5 2 2 2 Circular 85-105 TO: The Chief Executive Officer of all depository institutions in the Eleventh Federal Reserve District SUBJECT S l i p Sheet to R egulation J — C o llectio n o f Checks and Other Items and Wire Transfer o f Funds DETAILS The Board of Governors of the Federal Reserve System has issued amendments in slip sheet form to its Regulation J. The new slip sheet should be inserted in Volume 2 of your Regulations Binders. ATTACHMENTS The slip sheet amendments are attached. MORE INFORMATION Questions pertaining to these amendments should be directed to Robert L. Whitman, (214) 698-4357 at the Head Office; Robert W. Schultz, (914) 544-4730 at the El Paso Branch; Vernon L. Bartee, (713) 659-4433 at the Houston Branch; or John A. Bullock, (512) 224-2141 at the San Antonio Branch. Sincerely yours, For additional copies of any circular please contact the Public Affairs Department at (214) 651-6289. Banks and others are encouraged to use the following incoming WATS numbers in contacting this Bank (800) 442-7140 (intrastate) and (800) 527-9200 (interstate). This publication was digitized and made available by the Federal Reserve Bank of Dallas' Historical Library (FedHistory@dal.frb.org) Board of Governors of the Federal Reserve System Amendment of Regulate-i J Collection of Checks and Other Items and Wire Transfers of Funds A p ril 1985 * 1. Effective April 2. 1984, section 210.9(a) is amended to read as follows: (a) Cash items. (1) A paying bank be comes accountable for the amount of a cash item received directly or indirectly from a Reserve Bank, at the close of the paying bank’s banking day on which it receives3 the item if it retains the item after the close of that banking day, un less, prior to that time, it pays for the item by— (i) debit to an account on the Reserve Bank’s books; (ii) cash; or (iii) in the discretion of the Reserve Bank, any other form of payment (2) The proceeds of any payment shall be available 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 Re serve Bank, payment shall be made on the next day that is a hanking day for the Reserve Bank by the close of the Reserve Bank’s banking day. A paying bank that closes regularly on a weekday which is a banking day for the Reserve Bank «hall either pay on that day by the close of the Reserve Bank’s banking day for «»»h items that the Reserve Bank avail able to the paying bank on that day, or compensate the Reserve Bank for the val ue of the float associated with the items in accordance with procedures provided in its Reserve Bank’s operating circular; in such circumstances, the paying bank is • A complete Refutation J, at amended effective October 1, 1983, consists of— * the pamphlet dated September I9S1 (see inside cover) and • this slip sheet. Item 1 was included in the February 1984 slip sheet Item 2 is new. not considered to receive the item until its next banking day. 3 • • • Z Effective October 1, 1985, section 210.12 is amended by designating the last sentence as paragraph (d) and adding a new paragraph (c) to read as follows: (c) Notification o f nonpayment (1) A paying bank that receives a cash item in the amount of $2,500 or more directly or indirectly from a Reserve Bank and de termines not to pay it shall provide notice to the first bank to which the item was transferred for collection (“depositary bank”) that the paying bank is returning the item unpaid. If the depositary bank is not located in a state, the paying bank shall provide the notice to the bank locat ed in a state that first handled the item for collection. (2) The paying bank shall provide the notice such that it is received as specified by the operating circular of the paying bank’s Reserve Bank by the depositary bank by midnight of the second banking day of the paying bank following the deadline for return of the item as speci fied in paragraph (a) of this section. If the day the paying bank is required to provide notice to the depositary bank is not a banking day for the depositary bank, receipt of notice on the depositary bank’s next banking day shall constitute timely notice under this paragraph. No tice may be provided through any means, including return of the cash item, so long as the cash item is received by the deposi tary bank within the time limits specified in this subparagraph. (3) The information contained in the notice shall include the name of the pay- 1 Regulation J ing bank, the name of the payee, the amount of the item, the reason for return, the date of the indorsement of the deposi tary bank, the account number of the de positor, the branch at which the item was first deposited, and the trace number on the item of the depositary bank, and should otherwise be in accordance with uniform standards and procedures speci fied by the operating circular of the pay ing bank’s Reserve Bank. A paying bank is not required to provide any informa tion in the notice that it, after exercising ordinary care and acting in good faith, is not able to determine with reasonable certainty from the item itself. (4) A paying bank is not required to, but may voluntarily, provide notice to the department of the depositary hank or other entity specified by the depositary bank to receive the notice. (5) If a paying bank provides a notice pursuant to subparagraph (1) of this paragraph and subsequently determines to pay the item, the paying bank shall provide to the depositary bank a second notice as soon as reasonably possible. This second notice should indicate that it is a second notice that is canceling a pre vious notice and should contain sufficient information to enable the depositary bank to match the second notice with the previous notice. (6) A paying bank that fails to exercise ordinary care in meeting the require ments of this paragraph «halj be liable to the depositary bank for losses incurred by the depositary bank, up to the amount of the item, reduced by the amount of the loss that the depositary bank would have incurred even if the paying hank had used ordinary care. A paying hank that fails to act in good faith in meeting the requirements of this paragraph may be liable for other damages, if any, suffered by the depositary bank as a proximate consequence. If the paying bank or the depositary bank prevails in litigation in volving the requirements of this para graph, it may recover its court costs and reasonable attorneys’ fees. A paying bank shall not be liable for mistake, neglect, negligence, misconduct, insolvency or de fault of any other bank or other person in connection with providing notice under this paragraph. (7) Notwithstanding the provisions of section 210.6 of this subpart, a Reserve Bank that fails to exercise ordinary care in undertaking to provide the notice re quired in this paragraph on a paying bank's behalf shall be liable to the deposi tary bank for losses incurred by the de positary bank, up to the amount of the item, reduced by the amount of the loss that the depositary bank would have in curred even if the Reserve Bank had used ordinary care. A Reserve Bank that fails to act in good faith in undertaking to provide the notice required in this para graph on a paying bank’s behalf may be liable for other damages, if any, suffered by the depositary bank as a proximate consequence. If the Reserve Bank or the depositary bank prevails in litigation in volving the requirements of this para graph, it may recover its court costs and reasonable attorneys’ fees. A Reserve Bank shall not be liable for mistake, ne glect, negligence, misconduct, insolvency or default of any other bank or other per son, including the paying bank, in con nection with providing notice under this paragraph. (8) Notwithstanding the provisions of section 210.6 of this subpart, a Reserve Bank that undertakes to provide the no tice required in this paragraph on a pay ing bank’s behalf shall indemnify the paying bank for any claim brought against it by the depositary bank that re sults from the Reserve Bank’s failure to exercise ordinary care or failure to act in good faith in providing the notice. The paying bank shall indemnify a Reserve Bank that undertakes to provide the no tice required in this paragraph on the paying bank’s behalf for any claim brought against the Reserve Bank by the .depositary bank that results from the paying bank’s failure to exercise ordinary care or failure to act in good faith in con nection with the provision of the notice. (9) This paragraph does not apply to an item drawn on the account of the U.S. Treasury or to an item indorsed by, or for credit to, the U.S. Treasury.
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