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FEDERAL RESERVE BAS\SK
OF NEW YORK
[
Circular No. 10265
November 2, 1988
"J
J
CASH-ITEM HANDLING
OF REDEEMED SAYINGS BONDS
To A ll Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
Enclosed is a copy of Appendix I, on the cash-item handling of redeemed sav
ings bonds, to our Operating Circular No. 4. The new procedures, effective Oc
tober 1, 1988, implement the provisions of Treasury Department Circular No. 750
(31 CFR 321), a copy of which is also enclosed.
Questions on the new procedures may be directed to John F. Sobala, Vice
President, Check Processing Function (Tel. No. 212-720-6334).
E.
G
erald
C o r r ig a n ,
President.
Federal Reserve B ank
of fMew Y ork
Appendix I to
Operating Circular No. 4
Effective October 1, 1988
COLLECTION OF CASH ITEMS
AND RETURNED CHECKS
Redeemed Savings Bonds
To A ll Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
1. We handle redeemed Series A, B, C, D, E, and EE Savings Bonds and
Savings Notes (“Savings Bonds”) as cash items under Treasury Department
Circular No. 750 (31 Code of Federal Regulations, Part 321). Copies of that
Circular will be furnished on request. As to matters that Circular does not cov
er, Regulation J, this Appendix, and our time schedules apply.
2. Savings Bonds sent to us as cash items may be sent in mixed cash let
ters containing checks and other cash items, or in separately sorted cash letters
containing only redeemed Savings Bonds. Each cash letter must show the
name, address, and the nine-digit ABA number of the sender, the date of de
livery to the Reserve Bank, the total number of pieces transmitted, the value
of each of the bundles in the cash letter, and the total value of the cash letter.
The cash letter should be accompanied by a detailed listing of all items.
3. Each Savings Bond sent to us must have the redemption value MICRencoded in the “Amount” field on the face of the Savings Bond. If Savings
Bonds are sent to us in a mixed cash letter, the routing/transit number
000090007 must be MICR-encoded in the “R/T” field on all pre-1985 Savings
Bonds which do not contain a preprinted MICR-encoded routing/transit num
ber. If a document carrier or MICR strip is used, the redemption value of the
Savings Bond must be MICR-encoded in the “Amount” field and 000090007
must be MICR-encoded in the “R/T” field. A Savings Bond must not be MICRencoded with any other data in any field other than the auxiliary “On-Us” field,
and must not be MICR-encoded in the “On-Us” field for any reason.
4. We give immediate credit, subject to payment and adjustment upon
audit by Treasury, for Savings Bonds as provided in our time schedules. After
we handle Savings Bonds, as fiscal agent of the United States, the Savings
[Enc. Cir. No. 10265]
Bonds are subject to audit by the Treasury Department. We make an adjustment
required by the Treasury Department by notifying the sender and charging back
or crediting the amount of the adjustment to the sender. Section 210.12 of Reg
ulation J, relating to the return of cash items by paying banks, does not apply
to Savings Bonds.
5. Savings Bonds submitted in separately sorted cash letters are not sub
ject to cash item deposit/processing charges. We forward paying agent fees re
ceived from the Treasury Department to the sender on a monthly basis for Sav
ings Bonds that are submitted in separately sorted cash letters. Payment of these
fees is made only by the automated clearing house method under 31 Code of
Federal Regulations, Part 210. Inquiries regarding Savings Bonds submitted
in separately sorted cash letters should be directed to Pittsburgh Branch, Fed
eral Reserve Bank of Cleveland, P.O. Box 867, Pittsburgh, Pennsylvania
15230-0867.
6. Savings Bonds submitted in mixed cash letters are subject to cash item
deposit/processing charges. No paying agent fees will be paid for Savings
Bonds submitted in mixed cash letters. Inquiries concerning Savings Bonds
submitted in mixed cash letters should be directed to the sender’s local Reserve
Bank office.
7. A record of the serial number and amount paid for each Savings Bond
must be retained by the sender. Film records of the front and back of a Savings
Bond must be kept confidential, and prints therefrom may be made only with
the permission of the Bureau of the Public Debt or a Federal Reserve Bank.
E.
G erald C o r r ig a n ,
P resid en t.
2
Department ©f the
Treasury
Fiscal S@r¥8©@
31 CFR Part 321
U.S. Savings Bonds and Notes; Final
RyS@s and M@tsc®
Cir. No. 10265]
3751©
Federal Register / V ol. 53, N o. 186 / M o n d a y , S e p te m b e r 26, 1988 / R u le s a n d R e g u la tio n s
DEPARTMENT OF TRE TREASURY
Fiseafl Servio©
31 CFR Part 321
[D epartm ent of th e Treasury Circular No.
750, Fourth Revision]
Payments by Banks and Other
Finaneial Institutions @f United States
Savings Bonds and United States
Savings Notes; Freedom Shares
ASEWOYs Bureau of the Public Debt,
Fiscal Service, Treasury.
ACTION Final rule.
Department of the Treasury
Circular No. 750, as revised (31 CFR Part
321), contains the regulations governing
financial institutions qualified to redeem
United States Savings Bonds and United
States Savings Notes (Freedom Shares).
The Fourth Revision of the Circular
provides authority for financial
institutions to transmit and receive
settlement for redeemed securities
through, a new procedure, the EZ
CLEAR system in the same manner as
commercial checks, as well as to redeem
securities upon the request of a
surviving beneficiary. The revisions are
necessary to permit paying agents
greater flexibility in the redemption and
processing of savings bonds and notes.
EFFECTIVE BATE: October 1,1988.
SUMMARY:
F©K FURTHER !NFORMAT8@K! CONTACT:
Dean A. Adams, Assistant Chief
Counsel, Bureau of the Public Debt,
Savings Bond Operations Office,
Parkersburg, WV, 26106-1328, (304) 4206505.
SUPPLEMENTARY INFORMATION: The
Third Revision of this Circular
implemented changes brought about by
the introduction of Series EE and HH
savings bonds in January 1980, by
extending the payment authority of
paying agents to include eligible Series
EE bonds, as well as Series A-E bonds
and saving notes. Additionally, paying
agents were authorized to redeem
eligible securities in exchange for Series
HH bonds.
The Fourth Revision adds new
provisions that will enable paying
agents to transmit and receive
settlement for redeemed securities
through a new procedure, named the EZ
CLEAR System, under which paid bonds
and notes will be processed in the same
manner as checks. Where it is used, the
securities will be sent by agents to the
Check Department of the Federal
Reserve Bank, Branch, or Regional
Check Processing Center, for their own
account, or through designated
correspondent institutions.
Service fees for redeemed securities
presented through EZ CLEAR, in
separately sorted cash letters, will be
paid monthly by the Automated
Clearing House method (ACH) to the
institution presenting the securities to a
Federal Reserve Bank. Agents may also
continue to submit redeemed securities
to the Fiscal Agency Department of a
Federal Reserve Bank and receive
service fees quarterly by check or ACH.
The EZ CLEAR System has been the
subject of an extended pilot program,
the success of which has resulted in its
adoption nationwide. The pilot program
has been continuing, and the Fourth
Revision, upon adoption, will
immediately apply to that program, as
well as to paying agents that will
thereafter utilize the system.
The Fourth Revision, in addition,
authorizes paying agents to redeem
eligible savings bonds and notes for
cash or in exchange for Series HH bonds
at the request of a surviving beneficiary,
upon submission of the owner’s death
certificate. The Fourth Revision also
includes the requirement that paying
agents report interest paid as part of the
redemption value of securities, which
was enacted by the Tax Equity and
Fiscal Responsibility Act of 1982 and the
Interest and Dividend Tax Compliance
Act of 1983. Further, the revision will
now specify the collection of amounts
owed Treasury by paying agents,
resulting from erroneous payments, will
be made in accordance with the Federal
Claims Collection Standards (4 CFR
Parts 101-105).
All paying agents currently qualified
are automatically requalified to redeem
securities in accordance with the
provisions of the Fourth Revision.
Apart from the changes already
mentioned, the Fourth Revision of
Circular No. 750 does not differ
substantially from the Third Revision.
Where appropriate, there has been
rewording foT clarity and consistency.
Differences between the two revisions
are discussed below.
Subpart C=Scop© ©f Authority
Sections 321.7 and 321.8 have been
modified to authorize an agent to
redeem securities, for cash or in
exchange for Series HH bonds, at the
request of a surviving beneficiary upon
presentation of the owner’s death
certificate. Provisions concerning the
requirement to report, for Federal
income tax purposes, interest included
in the redemption value of securities
redeemed for cash and on redemptionexchange have also been included in
| § 321.7 and 321.8. The limitation
excluding payments to beneficiaries has
been removed from Section 321.9.
Information about annotating evidence
presented by beneficiaries has been
added to § 321.11. Section 321.11 has
also been amended to stipulate that
although an agent is not required to
complete the certification to the requests
for payment on securities it redeems, it
will, nevertheless, be deemed to certify
that the transaction was conducted, in
accordance with the provisions of
Circular No. 750, by transmitting the
securities for settlement to a Federal
Reserve Bank.
Subpart 0—Payment and Transmittal
o f Securities
Section 321.14 has been modified to
accommodate the EZ CLEAR system for
transmittal and settlement of redeemed
securities.
Subpart E=L©ss©s Resulting fr@m
Erroneous Payments
Section 321.17 has been modified to
accommodate changes in the procedures
for investigating erroneous payments.
Section 321.18 has been modified to
reflect that reimbursement from a
paying agent for a loss resulting from an
erroneous payment will be sought in
accordance with the Federal Claims
Collection Standards (4 CFR Parts 101 105).
Subpart A—Ctensrafl Inform aton
Subpart F—Forwarding Ot@m®
The definitions in § 321.1 have been
expanded.
No substantive changes have been
made.
Subpart B=Pr®e©dur©s for.
Qualification
Subpart Q—Mise©18an©@us Provisions
Section 321.2 has been modified to
stipulate that a paying agent that desires
to transmit and receive settlement for
redeemed securities through EZ CLEAR
must either MICR-encode data on the
securities and receive fee payments by
ACH, or it must arrange to obtain these
services from another financial
institution.
Section 321.23 has been modified to
reflect the fact that fees for redeemed
securities transmitted via EZ CLEAR, in
separately sorted cash letters, will be
paid via ACH. No fees will be paid for
redeemed securities submitted via EZ
CLEAR in mixed cash letters. Section
321.24 has been revised to reflect current
handling of claims on account of lost
redeemed securities.
F e d e r a l R e g is te r / V ol. 53, N o. 186 / M o n d a y , S e p te m b e r 26, 1988 / R u le s a n d R e g u la tio n s
Appendix
The Appendix has been modified to
accommodate payments to surviving
beneficiaries, tax reporting
requirements, and guidelines for the
transmittal of redeemed securities via
EZ CLEAR and to streamline the
existing provisions by eliminating
unnecessary instructions.
Estimated total annual reporting and
recordkeeping burden: 74,226 hours.
Estimated average annual burden
hours per respondent and recordkaeper:
1.53 hours.
Estimated number of respondents and
recordkeepers: 48,517.
Estimated annual frequency of
responses: 1,278 per respondent.
Procedural Requirements
List of Subjects in 31 CFR Pari 321
This rule is not considered a “major
rule" for purposes of Executive Order
12291. A regulatory impact analysis,
therefore, is not required.
The notice and comment provisions of
the Administrative Procedure Act are
inapplicable, pursuant to 5 U.S.C.
553(a)(2). As no notice of proposed
rulemaking is required, the provisions of
the Regulatory Flexibility Act (5 U.S.C.
601, etseq.) do not apply.
Because this regulation is being
issued, without prior notice and public
comment, the collections of information
contained in this regulation have been
reviewed and, pending receipt and
evaluation of public comments,
approved by the Office of Management
and Budget (OMB) under control number
1535-0087.
Comments concerning the collections
of information and the accuracy of
estimated average annual burden, and
suggestions for reducing burden should
be directed to the Office of Information
and Regulatory Affairs, Office of
Management and Budget, Washington,
DC 20503, attention: Desk Officer for
Bureau of the Public Debt, with copies to
Rita DeNagy, Management Analyst,
Bureau of the Public Debt, Washington,
DC 20239-0001.
The collections of information in this
regulation are in 31 CFR 321.7(c) and
321.11(b), and in the appendix, items
7(b), 14(a), 17(a), 18, 19, and 23(e). This
information is required by the Bureau of
the Public Debt pursuant to regulations
promulgated under the authority of 31
U.S.C. 3105 and 3126. These regulations
govern the manner in which qualified
banks and financial institutions may
redeem eligible savings bonds and
savings notes, and transmit and receive
settlement for redeemed securities
through EZ CLEAR, under which paid
securities will be processed through the
Federal Reserve Bank Check Collection
System, or through the Fiscal Agency
Department of a Federal Reserve Bank.
This information will be used to ensure
regulatory compliance and for audit
purposes. The likely respondents and
recordkeepers are business or other forprofit institutions and non-profit
institutions.
Banks and banking, Federal Reserve
System, Government Securities.
Dated: September 22,1988.
Gerald Murphy,
Fiscal Assistant Secretary.
In 32 CFR Chapter II, Part 321,
Department of the Treasury Circular No.
750, Third Revision, dated July 1,1980, is
hereby revised and reissued as
Department of the Treasury Circular No.
750, Fourth Revision, to read as follows:
PART 321—PAYMENTS BY BANKS
AND OTHER FINANCIAL
INSTITUTIONS OF UNITED STATES
SAYINGS BONDS AND UNITED
STATES SAVINGS NOTES (FREEDOM
SHARES)
Subpart A— Genera! Information
Sec.
321.0 Purpose.
321.1 Definitions.
Subpart B— Proeedures for Qualification
321.2 Eligible organizations.
321.3 Procedure for qualifying and serving
as paying agent.
321.4 Paying agents previously qualified.
321.5 Termination of qualification.
Subpart C— Scope of Authority
321.6 General.
321.7 A uthorized cash paym ents.
321.8 Redemption-exchange of Series E and
EE savings bonds and savings notes.
321.9 Sp ecific lim itations on p aym ent
authority.
321.10 Responsibilities of paying agents.
Subpart D— Payment and Transmittal of
Securities
321.11 Payment.
321.12 Redemption value of securities.
321.13 C an cellation o f red eem ed securities.
321.14 Transmittal to and settlement by a
Federal Reserve Bank.
Subpart E— Losses Resulting From
Erroneous Payments
321.15 Liability for losses.
321.16 Report o f erroneous paym ent.
321.17 In vestigation o f p otential lo ss.
321.18 D eterm ination o f lo ss.
321.19 Certification of signatures.
321.20 Applicability of provisions.
321.21 R eplacem ent and recovery o f lo sse s.
Subpart F— Forwarding Items
321.22 Forwarding securities not payable by
an agent.
37511
Subpart G — Miscellaneous Provisions
321.23 Paying agent fees and charges.
321.24 C laim s bn accou n t o f lo st securities.
321.25 R ole o f F ederal R eserve Banks.
321.26 P reservation of rights.
321.27 Supplem ents, am endm ents, or
revision s.
Appendix to Department off the Treasury
Circular No. 750, Fourth Revision
Authority: 31 U.S.C. 3105, 3126.
Subpart A—General Information
§ 321.0
Purpose.
These regulations govern the manner
in which financial institutions may
qualify and act as paying agents for the
redemption of:
(a) United States Savings Bonds of
Series A, B, C, D, E, and EE, and United
States Savings Notes (Freedom Shares),
presented for cash payment, and (b)
eligible Series E and EE savings bonds
and savings notes presented for
redemption in exchange for Series HH
savings bonds under the provisions of
Department of the Treasury Circular,
Public Debt Series No. 2-80 (31 CFR Part
352).
§ 321.1
Definitions.
(a) “ACH payment” or “ACH” means
an Automated Clearing House method
of transferring funds under the
provisions of 31 CFR Part 210.
(b) “Beneficiary” means an individual
whose name is inscribed on a security
as the person to whom it is payable in
his or her right upon the prior death of
the other individual designated thereon
as owner, shown commonly in the form:
“A P.O.D. [payable on death to] B.”
(c) “Cash payment” means payment in
currency, by check or by credit to a
checking, savings or share account.
(d) “EZ CLEAR” refers to the system
by which financial institutions present
redeemed securities to a Federal
Reserve Bank through the commercial
check collection system in the same
manner as other cash items.
(e) “Federal Reserve Bank” or “Bank”
refers to the Federal Reserve Bank of the
District (1 ) in which the paying agent or
applicant-organization is located, or (2 )
to which the agent is instructed to
transmit redeemed securities and
securities forwarded for payment, and
includes parent Banks, Branches, and
Regional Check Processing Centers, as
appropriate.
(f) “Fiscal agency system” refers to
the system by which paying agents
transmit redeemed securities to the
Fiscal Agency Department of the
Federal Reserve Bank and receive
settlement thereof.
37512
F e d e r a l R e g is te r / V ol. 53, N o. 186 / M o n d a y , S e p te m b e r 26, 1988 / R u le s a n d R e g u la tio n s
(g) “Mixed cash letter” refers to a
bundle coirtainng nonsegregated
redeemed securities, cash items, and
other items submitted to a Federal
Reserve Bank via the commercial check
collection system.
(h) “Paying agent(s)’ or “agent(s)”
means: (1 ) a financial institution that is
qualified under the provisions of this
Part as originally issued, or any
subsequent revision, to make payment
of securities, and includes branches
located within the United States, its
territories and possessions, and the
Commonwealth of Puerto Rico; and (2 )
any banking facilities of such
institutions established at military
installations overseas, provided the
offering of such redemption services has
been authorized by the Department of
the Treasury.
(i) “Presenter” means the individual
requesting the redemption or
redemption-exchange of securities.
(j) “Presenting institution” means the
organization from which the Federal
Reserve Bank receives redeemed
securities to be processed via EZ
CLEAR. If a paying agent submits
separately sorted or mixed cash letters
directly to the Bank using its own ABA
code, it is the Presenting institution. If a
correspondent financial institution
submits cash letters on behalf of another
institution using the correspondent’s
ABA code, the correspondent is the
presenting instititution.
(k) “Redemption” and ‘^payment” are
used interchangeably for payment of a
security in accordance with the terms of
its offering and governing regulations,
including redemption-exhange.
(l) “Redemption-exchange” means the
authorized redemption of eligible
securities for the purpose of applying the
proceeds in payment for other securities
offered in exchange by the Treasury.
(m) “Registrant” means a person
whose name is inscribed on a security
as owner, coowner, or beneficiary.
(n) “Security” or “securities” means a
United States Savings Bond of Series A,
B, C, D, E, or EE and/or a United States
Savings Note (Freedom Share).
(o) "Separately sorted cash letter”
refers to a bundle of redeemed securities
that have been segregated from all other
items prior to transmittal to a Federal
Reseve Bank via EZ CLEAR.
associations (including cooperative
banks), credit unions, cash depositories,
industrial banks, or similar financial
institutions which:
(1 )
Are incorporated under Federal
law or the laws of a State, territory or
possession of the United States, the
District of Columbia, or the
Commonwealth of Puerto Rico; (2 ) in the
usual course of business accept, subject
to withdrawal, funds for desposit or the
purchase of shares; (3) are under the
supervision of the banking department
or equivalent authority of the
jurisdiction in which they are
incorporated; and (4) maintain regular
offices for the transaction of business.
(b) An organization that desires to
transmit and obtain settlement for
securities via EZ CLEAR must either
MICR-encode data on securities
accepted for payment and receive
payment of fees by ACH or must
arrange to obtain these services from
another financial institution.
§ 321.3 [Procedure for qualifying and
serving as paying agent
(a) Execution o f applicationagreement. An eligible organization
wishing to act as a paying agent shall
obtain from, execute and file with, a
Federal Reserve Bank an applicationagreement form. The terms of each
application-agreement shall include the
provisions prescribed by section 202 of
Executive Order 11246, entitled “Equal
Employment Opportunity” (3 CFR
Subchapter B, 42 U.S.C. 20 OOe note). For
the purpose of these regulations, eligible
institutions in Puerto Rico and the Virgin
Islands shall make application to the
Federal Reserve Bank of New York, and
eligible institutions in Guam shall make
application to the Federal Reserve Bank
of San Francisco.
(b) Qualification. Each Federal
Reserve Bank, as fiscal agent of the
United States, is authorized to qualify
any eligible organization, located in its
district, which possesses adequate
authority under its charter to act as
paying agent. Upon approval of an
application-agreement, the Bank will
issue a certificate of qualification to the
organization. Such a certificate
automatically qualifies the branches of
the organization to redeem securities as
provided in this Part.
(c) Announcement o f authority. Upon
receipt of a certificate of qualification
Subpart B=P?©(g@i5lHr©s fo r
from a Federal Reserve Bank, a financial
Qualification
institution may announce or advertise
§ 321.2 Sigsfete organizations.
its authority to redeem eligible securities
(a)
Organizations eligible to apply for for cash and to process exchanges for
qualification and to serve as paying
Series HH bonds.
agents are commercial banks, trust
(d) Adverse action. An organization
companies, savings banks, savings and
will be notified by the Federal Reserve
loan associations, building and loan
Bank in writing if its application-
agreement to act as paying agent is not
approved.
§ 321.4 Paying agents previously qualified.
Institutions qualified as paying agents
under previous revisions of this Part are
authorized to continue to act in that
capacity without requalification. By so
acting, they shall be subject to the terms
and conditions of their previously
executed application-agreements and
these regulations in the same manner
and to the same extent as though they
had requalified hereunder.
§321.5 Termination of qualification.
(a) By the Treasury. The Secretary of
the Treasury, or a designee, may
authorize a Federal Reserve Bank to
terminate the qualification of any paying
agent at any time, following prior
written notice of such action to the
agent.
(b) A t request of paying agent. A
Federal Reserve Bank will terminate the
qualification of a paying agent upon its
written request, provided the agent
renders a final accounting for all
redeemed securities and is found to
have fully complied with the terms of its
agreement and the applicable
regulations and instructions.
(c) Reservation. Termination of the
qualification as paying agent of any
institution shall not prejudice the right
of the Treasury to recover the amounts
of any erroneous payment(s) made by
the institution.
Subpart C=Se©pe ©tf Authority
§ 321.S General.
Securities are issued only in registered
form, are not transferable, may not be
hypothecated or used as collateral for a
loan, and, except as otherwise
specifically provided in the governing
regulations and this Part, are payable to
the owner or coowner named on the
security. The regulations governing
Series EE and HH bonds are contained
in Department of the Treasury Circular,
Public Debt Series No. 3-80, current
revision (31 CFR Part 353); those
governing all other series of sercurities
are contained in Department of the
Treasury Circular No. 530, current
revision (31 CFR Part 315).
§ 321.? Authorized eash payments.
(a)
General. Subject to the terms and
conditions appearing on the securities,
the governing regulations, and the
provisions of this Part, and any
instructions issued in connection
therewith, an agent may make payment
of savings bonds of Series A, B, C, D, E,
and EE, and savings notes, presented for
cash redemption. Except as provided in
F e d e r a l R e g is te r / V ol. 53, N o. 188 / M o n d a y , S e p te m b e r 26, 1988 / R u le s a n d R e g u la tio n s
paragraph (b) through (d) of this section,
the securities must be presented by an
individual whose name is inscribed on
the securities as owner or coowner, and
who is known to the agent, or who can
establish his or her identity in
accordance with Treasury instructions
and guidelines. (See §321.11{b)}.
(b)
Change o f name by marriage. If
the name of the presenter has been
changed by marriage from that shown
on the security, and the agent knows or
establishes that the presenter and the
person whose name appears on the
security are one and the same
individual, the agent may pay the
security in accordance with paragraph
(a) of this section. The signature to the
request for payment should show both
names, e.g., “Mary J. Smith, changed by
marriage from Mary T. Jones,”
(cj Parent o f a minor. Payment of a
security bearing the name of a minor
child, who is not of sufficient
competency and understanding to sign
the request for payment and
comprehend the nature of the act, may
be made to either parent with whom the
minor resides or to whom custody has
been granted, provided the form of
registration does not indicate that a
guardian or similar representative of the
estate of the minor has been appointed
or is otherwise legally qualified.
Payment under this subsection may not
be made to any person other than a
parent. The parent requesting payment
must sign the request for payment in the
form, e.g., “John A. Jones, on behalf of
John C. Jones.” The following
endorsement must be typed or imprinted
on the back of the security:
“I certify that I am the (father or
mother) of John C. Jones and the person
(with whom he resides) (to whom
custody has been granted). He is —
years of age and is not of sufficient
competency and understanding to sign
the request.”
(d) Payment to beneficiary. An agent
may redeem a security registered “A
P.O.D. [payable on death to] B” for cash
at the request of the surviving
beneficiary following the owner’s death.
A copy of the owner’s death certificate,
certified under seal of the State or local
registrar, must be furnished to support
the request for payment.
(e) Interest reporting. A paying agent
is required to report interest in the
amount of $10 or more, paid as part of
the redemption value of securities, to the
payee and to the Internal Revenue
Service, in accordance with 28 CFR
1.6049-4.
§ 321.® Redsmpion=©KChaing@ of Series E
and EE savings bonds and savings notes.
(a) General. Subject to the provisions
of Circular No. 2-80 (31 CFR Part 352),
the governing regulations, and the
provisions of this Part and its Appendix,
an agent may make payment of eligible
securities presented for redemption in
exchange for Series HH bonds.
Securities eligible for exchange are:
(1 ) Series EE bonds presented no
earlier than six months from their issue
dates; and
(2 ) Series E bonds and savings notes
presented no later than one year from
the month in which they reached final
maturity. The total redemption value of
the securities presented for exchange
must be at least $500.
(b) Requirements for redemptionexchange. An agent shall not accept and
redeem eligible securities on exchange
unless:
(1 ) The securities are accompanied by
a completed exchange subscription
signed by the presenter;
(2 ) The presenter is the owner,
surviving coowner or beneficiary, or
principal coowner (as defined in
§ 352.7(e)(2) of Circular No. 2-80) of the
securities presented for exchange and is
to be named as owner or first-named
coowner on the Series HH bonds; and
(3) The request for payment on each
security is signed by the presenter. If the
name of the presenter has been changed
by marriage, or if the presenter is named
as beneficiary on the securities, the
agent may process the transaction in
accordance with the provisions of
§ 321.7 (b) or (d) of this Part. If the agent
is authorized and elects to use the
special endorsement procedure set out
in Department of the Treasury Circular
No. 888 , current revision (31 CFR Part
330), th e r e q u e s t s fo r p a y m e n t do not
need to be signed; however, this special
endorsement may not be used in lieu of
the presenter’s signature on the
exchange subscription.
(c) Interest reporting. To the extent
that it represents interest of $10 or more,
a paying agent is required to report
cash, refunded in an exchange
transaction, to the presenter and to the
Internal Revenue Service under the
provisions of 26 CFR 1.6049-4.
(d) Completion o f transaction. An
agent shall separately transmit for
settlement securities redeemed on
exchange to a Federal Reserve Bank at
the same time the exchange subscription
and any additional cash needed to
complete the transaction arc forwarded
to the Fiscal Agency Department of a
Federal Reserve Bank.
37513
§ 321.9 Specific limitations ©» payment
authority.
An agent is not authorized to redeem
a security for cash or on redemptionexchange:
(a) If it is a Series EE bond presented
for payment prior to six months from its
issue date.
(b) If it is a savings bond of Series F,
G, H, J, K, or H R
(c) If the presenter is acting under a
power of attorney.
(d) If the agent does not know or
cannot establish the identity of the
presenter as a person entitled to request
payment as provided in § 321.7.
(e) If the presenter does not sign his or
her name in ink as it is inscribed on the
security, and show a home or business
address. (See, also, § 321.7 (b) and (c).)
(f) If the presenter’s social security
number is not shown in the inscription,
and he or she refuses to furnish the
number.
(g) If the security bears a material
irregularity, such as an illegible,
incomplete or unauthorized inscription,
issue date, or issuing agent’s validating
data, or if any essential part of the
security appears to have been altered or
is mutilated or defaced in such a manner
as to create doubt or arouse suspicion.
(h) If the security is registered in the
name of a corporation, association,
partnership, or other organization, or a
guardian, administrator, trustee, or other
fiduciary.
(i) If Treasury regulations require the
submission of documentary evidence to
support the redemption, as in the case of
deceased registrants (except as
provided in | 321.7(d) of this Part),
incompetents, minors under legal
guardianship, or the change of a
registrant’s name other than by
marriage.
(j) If the presenter is a m in o r who, in
the opinion of the agent, is not of
sufficient competency and
understanding to sign the request for
payment and comprehend the nature of
the act.
(k) If it is known to the agent that the
presenter has been legally declared
incompetent to manage his or her
affairs.
(l) If partial redemption is requested.
§321.10 Responsibilities ©f paying a§®nte.
(a)
Payment o f securities. A paying
agent is required to redeem eligible
securities during its regular business
hours for any presenter, whether or not
a customer, who can establish his or her
identity as the owner or coowner named
on the securities, in accordance with the
provisions of this Part, and the
Appendix thereto, and the Treasury
37514
F e d e r a l R e g is te r / V ol. 53, N o. 186 / M o n d a y , S e p te m b e r 26, 1988 / R u le s a n d R e g u la tio n s
Identification Guide for Cashing United
States Savings Bonds. An agent is
encouraged, but is not required, to
redeem eligible securities during its
regular business hours for a surviving
beneficiary who can provide acceptable
evidence of the owner’s death and
establish his or her identity.
(b)
Restrictions. A paying agent shall
not advance money, make loans on, or discount the redemption value of
securities, nor in any manner assist
others to do so. An agent shall not pay a
presenter the current value of a security
and then defer presentation to the
Treasury for the purpose of obtaining for
its own profit an increased value.
Subpart D = P s iy m ( S in it and Transmittal'
of Securities
§321.11
Paym ent.
(a) Examination. Before making a
payment of a security, a paying agent
shall examine the security to determine
that it is eligible for redemption and is
one the agent is authorized to pay under
the provisions of this Part.
(b) Identification and evidence of
entitlement. The agent shall determine
that the presenter of the security is
entitled to request payment, as provided
in § 321.7 of this Part. Unless the
presenter is a person whose identity is
well-known to the agent or is an
established customer, he or she should
be asked to furnish satisfactory
identification in accordance with the
Treasury instructions and guidelines. At
the time of payment, the agent should
make a notation on the back of the
security, or in its own records,
specifying precisely what was relied on
to establish the presenter’s identity.
(c) Evidence—Payment to a
beneficiary. The agent shall determine
that the presenter of the security as
beneficiary is entitled to request
payment, as provided in § 321.7(d). In
addition to establishing the presenter’s
identification, as required by paragraph
(b) of this section, the agent shall require
presentation of the owner’s death
certificate in accordance with this Part
and the Appendix.
(d) Execution of request. (1 ) The agent
shall require (i) that the request for
payment on the back of each security be
signed by the presenter in the presence
of one of its officers or authorized
employees, and (ii) that the presenter’s
■address be furnished.
(2 )'If the agent is qualified under
Circular No. 888 , current revision, and
elects to use the special endorsement
procedure, the request for payment need
not be signed. If the request has already
been signed when the security is
presented, it should be signed again.
(e)
Certification of request. An agent
is not required to complete the
certification to the requests for payment
on securities it redeems. An agent that
transmits redeemed securities for
settlement to a Federal Reserve Bank
shall be understood by such submission
to have represented and certified that
the identity of the presenter, and his or
her entitlement to request payment,
have been established in accordance
with this Part and the Appendix.
§ 321.12
R edem ption value of seeuritie®.
The redemption value of each security
is determined by the terms of its offering
and the length of time it has been
outstanding. The Bureau of the Public
Debt issues tables of redemption values
for Series A-E bonds, eligible Series EE
bonds, and savings notes that should be
used in redeeming securities.
§ 321.13 Cancellation of redeem ed
securities.
An agent shall cancel each redeemed
security by imprinting the word “PAID”
on its face and entering the amount and
date of the actual payment and the
agent’s name, location, and four-digit
code number assigned by the Federal
Reserve Bank. The recordation of this
data shall constitute a certification by
the agent that the security was
redeemed in accordance with the
provisions of this Part, that the
presenter’s identity and entitlement to
request payment were duly established,
and that the proceeds were paid to the
presenter or remitted to a Federal
Reserve Bank in payment for Series HH
bonds.
§ 321.14 Transm ittal to and settlem en t &y
Federal R eserve Hank.
A paying agent shall forward
securities, redeemed for cash and on
redemption-exchange with the
appropriate covering transmittal
document, to the Federal Reserve Bank
in accordance with the Bank’s
instructions. Upon receipt of the
securities, the Bank will make
immediate settlement with the
presenting institution for the total
amount paid, as reflected on the
transmittal document. Settlement shall
be subject to adjustment if discrepancies
are subsequently discovered. The Bank
will forward redeemed security data to
the Bureau of the Public Debt for audit.
Subpart E— Losses Resulting from
Erroneous Payments
§321.15 Liability for losses.
Under the governing statute, as
amended (31 U.S.G. 3126(a)), an agent
cannot be relieved of liability for a loss
resulting from an erroneous payment
unless the Secretary of the Treasury can
make a determination that the loss
resulted from no fault or negligence on
the agent’s part.
§ 321.16
R eport of erroneous p ay m en t
If an agent discovers an erroneous
payment of securities, it should
immediately advise the Bureau of the
Public Debt, Parkersburg, West Virginia
26106-1328, (304) 420-6402. If the
circumstances of the payment warrant
such action, the agent should also notify
the nearest office of the United States
Secret Service.
§ 321.17
Investigation of potential loss.
(a) Notice to an agent. When it
determines that a loss has occurred,
because of the erroneous payment of
securities, the Bureau of the Public Debt
will notify the agent in writing and
identify the securities.
(b) Investigative procedure. The
Bureau of the Public Debt may request
the United States Secret Service to
investigate potential losses. Upon
request, the agent shall make available
to the Bureau of the Public Debt, or its
investigative agent, all records and
information pertaining to the transaction
in question, including the disposition of
the redemption proceeds. If the proceeds
were deposited in an account
maintained by the agent, the information
made available shall include the
ultimate disposition of the redemption
proceeds from the account.
§ 321.1® D eterm ination ©f toss.
Upon completion of the investigation,
and after consideration of the results,
the B u r e a u of the Public Debt shall
advise the agent through which the
payment occurred:
(a) That no final loss to the United
States has occurred, and, accordingly,
that the agent is relieved from liability
for the payment, or that no claim for
reimbursement shall be made unless
and until a loss has been sustained; or
(b) That while a final loss to the
United States has occurred, the agent is
not required to make reimbursement
therefor, as the Secretary of the
Treasury, or his designee, has
determined that such loss resulted from
no fault or negligence on the part of such
agent; or
(c) That a final loss to the United
States has occurred, and that, the
Secretary of the Treasury, or his
designee, has been unable to make an
affirmative finding that such loss
resulted from no fault or negligence on
the part of such agent, reimbursement
must be made promptly, except where
F©sl©iffil R e g is te r / ¥ o l. 53, N o . 186 / M o n d a y , September 26, 1988 / R u le s a n d R e g u la tio n s
credit for the payment had not
previously been extended.
§ 321.11) C@rtS1ii®©6te)8l &a g&g}ss©flw@s„
The regulations in this subpart shall,
to the extent appropriate, apply to
losses resulting from payments made in
reliance on certifications of signatures
by an officer or designated employee of
any financial institution authorized to
certify requests for payment.
§321.20 Applicability @2 provisions.
The provisions of this subpart shall
apply to securities redeemed by any
Federal Reserve Bank, as fiscal agent, or
any Treasury office authorized to
redeem securities, as well as to paying
agents.
§ 321.21 Replacement and recovery
Bosses,
.
If a final loss has resulted from the
redemption of a security, and no
reimbursement has been or will be
made, the loss shall be subject to
replacement out of the fund established
by the Government Losses in Shipment
Act, as amended.
Sybpart P=F@ranrdiSng Stems
§ @2122
8©e»Kfes not
peysM© by sin! sfs w t Any securities an agent is not
authorized to pay under the provisions
of this Part should be forwarded for
redemption to the Fiscal Agency
Department of a Federal Reserve Bank.
The requests for payment on the
securities should be properly certified.
Any documentary evidence required to
support the redemption should
accompany the securities. If the
securities are presented for redemptionexchange, they must also be
accompanied by a completed and signed
exchange subscription and any
additional cash needed to complete the
transaction. Unpaid securities so
forwarded must not be commingled with
redeemed securities transmitted for
settlement.
Subpart G— Miscettaneous Provisions
§ 3212@ Peyfef
tee© and ©togee.
(a) Fees. Fees shall be paid as
outlined in this section. A schedule
setting out the fees, and the basis on
which they are computed and paid, is
separately published in the Federal
Register. Current information is
available from a Federal Reserve Bank.
{1 ) Securities transmitted via fiscal
agency system. An agent will receive a
fee for each security redeemed during a
calendar quarter and transmitted to the
Fiscal Agency Department of a .Federal
R e se rv e B ank. P a y m e n t w ill b e m a d e to
th e a g e n t b y c h e ck o r A CH .
(2)
Securities transmitted via EZ
CLEAR. A fee w ill b e p a id for e a c h
se c u rity re d e e m e d d u rin g a c a le n d a r
m o n th a n d tra n sm itte d v ia E Z CLEAR to
a F e d e ra l R e serv e B an k in se p a ra te ly
so rte d c a s h le tte rs. P a y m e n t w ill b e
. m a d e to th e p re se n tin g in stitu tio n b y
A C H . N o fe e s w ill b e p a id for re d e e m e d
se c u ritie s re c e iv e d b y a B ank in m ix ed
c a s h le tte rs.
(b) Charges to presenters. A p ay in g
a g e n t sh a ll n o t m a k e a n y ch arg e
w h a te v e r to p e rso n s en title to re q u e s t
p a y m e n t o f se c u ritie s, fo r red e em in g
th em u n d e r th e p ro v isio n s o f th is P art.
§ @21.24 Claims ©si account
securities.
test
If a se c u rity re d e e m e d b y a n a g e n t is
lost, sto le n or d e s tro y e d w h ile in its
cu sto d y o r in tra n s it p rio r to se ttle m e n t,
the a g e n t’s claim fo r re im b u rse m e n t o f
the m issin g se c u rity ’s re d e m p tio n v a lu e
on th e o rig in al p a y m e n t d a te w ill b e
co n sid ered , p ro v id e d th e se c u rity c a n b e
id e n tifie d b y se ria l n u m b e r.
§ 321.25 Bate @ff F®dl©ra8 itessrv® Banks,
T h e F e d e ra l R e serv e B anks, a s fisca l
ag e n ts o f th e U n ite d S ta te s, sh a ll
p e rfo rm su ch se rv ic e s in co n n e c tio n
w ith th is P a rt a s m a y b e re q u e s te d b y
th e S e c re ta ry o f th e T re a s u ry , o r h is
d esig n ee. T h e B a n k s a re a u th o riz e d a n d
d ire c te d to p erfo rm su c h d u tie s,
including the iss u a n c e o f in stru c tio n s
a n d form s, a s m a y b e n e c e s s a ry to fulfill
th e p u rp o se s a n d re q u ire m e n ts of th e se
reg u la tio n s.
§ 321.2® Pr©s©rvatS@iri! ©ff rigMa,
N othing c o n ta in e d in th is P a rt sh a ll
lim it o r re stric t a n y e x istin g rig h ts w h ich
h o ld e rs o f se c u ritie s m a y h a v e a c q u ire d
u n d e r th e offering c irc u la rs a n d th e
a p p lic a b le reg u la tio n s.
§ @21.2? Supplements,
revisions.
m
T he S e c re ta ry o f th e T re a s u ry m ay , a t
a n y tim e or from tim e to tim e, re v ise ,
su p p le m e n t, a m e n d o r w ith d ra w , in
w h o le o r in p a rt, th e p ro v isio n s o f th is
P art
Appendix to Department of the Treasury
Circular No. 75®, Fourth Revision
Fiscal Service, Bureau off f e Pubic Beibt S u b p a rt A—General Information
1. Purpose. This Appendix is issued for the
guidance-off banks and other financial
institutions qualified as paying agents of
United States Savings Bonds and United
States Savings Notes (Freedom Shares) under
the provisions of 31 CFR Part 321
[Department of the Treasury Circular No. 750,
Fourth Revision). Its purpose is to provide
information to supplement the regulations
37515
contained in the Part snd specific instructions
for processing redemption and redemptionexchange transactions. The information and
instructions are indexed to the sections and
subsections of Part 321 which they explain or
expand.
2. Other pertinent publications. In addition
to Part 321, agents should be familiar with the
provisions of the following publications:
(a) Offering circulars. Department of the
Treasury Circulars, Public Debt Series Nos.
1-80 (Series EE bonds), 2-80 (Series HH
bonds), and 3-67 (savings notes), and
Department of the Treasury Ciruclar No. 653
(Series E bonds).
(b) Regulations. Department of the
Treasury Circular, Public Debt Series No. 380 (Series EE and HH bonds); Department of
the Treasury Circulars Nos. 530 (all other
series of securities) and 888 (special
endorsements); Federal Tax Regulations (28
CFR 1.6049); Federal Claims Collection
Standards (4 CFR Parts 101-105); Regulation
J, Collection of Checks and Other Items and
Wire Transfers of Funds (12 CFR Part 210);
and operating circulars issued by Federal
Reserve Banks relating to the collection of
cash items and Federal payments by ACH.
Subpart B—Procedures for Qualification
3. Qualification of branches. [Sec. 321.3(b)]
Qualification of an institution as a paying
agent automatically qualifies only its
domestic branches. A foreign branch of a
qualified paying agent may redeem securities
provided settlement is made through a
qualified facility located in the Unied States.
4. Paying agent code numbers. [Secs.
321.3(b) and 321.13] The Federal Reserve
Bank will assign a four-digit code number to
each agent it qualifies. A separate number
will be assigned to each branch authorized to
remit redeemed securities directly to the
Bank for its own account. At the paying
agent’s request, only one four-digit code
number will be assigned for use by all of its
branches. This four-digit number is used to
identify the paying agent in the audit of
redeemed securities transmitted through the
fiscal agency system, in the adjustment of
discrepancies, and in the computation and
payment of fees for such securities. For
redeemed securities transmitted via EZ
CLEAR, the presenting institution’s ABA
number will be used in the adjustment of
discrepancies and in the computation and
payment of fees for securities transmitted in
separately sorted cash letters.
5. Requalification. [Sec. 321.3(b)] If there
has been a change in the corporate name off
an agent, w hether through merger,
consolidation, sale of assets, or in any other
manner, the agent may be asked by the
Federl Reserve Bank to requalify to reflect
the change. Ordinarily, requalification is not
required unless (a) the change results ha ®
corporation that, under State law, cannot
retain the rights of the corporation that
ceased to exist, or (b) in the case of a .
purchase of assets and assumption off
liability, the purchaser corporation is.sot a
qualified paying a g e n t
6 . Announcement of authority.
[Sec.
321.3(c)) O n and after the effective date of its
qualification, a paying agent may
3751©
Federal Register / Vol. 53, N o . 186 / M o n d a y , S e p t e m b e r 26, 1988 / R u le s a n d R e g u la tio n s
—— — — ■ mm— —■— ——— ■ •■mwwbimmm—i—— — —— — — — i — ■ —
appropriately announce or advertise its
authority to redeem eligible securities for
cash and in exchange for Series HH bonds.
Such statem ents and notices should not,
directly or indirectly, encourage the
encashment of the securities, Two examples
of acceptable statem ents for use in
advertisements or displays are:
(a) “We are an authorized agent for
payment of U.S. Savings Bonds and U.S.
Savings Notes (Freedom Shares).”
(b) “This (bank/savings and loan
association/credit union, etc.) is authorized
to pay U.S. Savings Bonds and U.S. Savings
Notes (Freedom Shares) and process eligible
Series E and EE bonds and savings notes in
exchange for Series HH bonds."
Subpart C—Scope o f A u th ority
7. A u th orized cash paym ents. [Sec. 321.7]
(a) General. [Sec. 321.7(a)] The general
authority of paying agents to redeem
securities for cash extends to Series A, B, C,
D, E, and EE bonds and savings notes
presented by the owner, coowner, surviving
beneficiary, or parent on behalf of a minor.
The presenter must sign the requests for
payment and establish his or her identity
and, in the case of a beneficiary or parent,
entitlement to request payment.
(b) Securities su bm itted b y mail. [Sec.
321.7(a)] An agent may accept eligible
securities Submitted, for redemption by mail,
from known customers. The agent should be
satisfied that the customer is entitled to
request payment and that he or she has
signed the requests for payment. The agent
should obtain w ritten instructions to credit
the redemption proceeds to the customer’s
account or to make some other disposition.
For its protection, the agent should retain
such instructions for as long as ten years in
the event the transaction is later questioned.
(c) Interest reporting. [Sec. 321.7(e)]
Pursuant to 26 CFR 1.6049-4, an agent is
required to report interest income in the
amount of $10 or more paid as part of the
redemption value of securities. Reports to
payees should be made on Form 1G99-INT or
an IRS-approved substitute; reports to the
Internal Revenue Service should be made in
accordance with that agency’s instructions. A
separate report may be made for each
transaction in which interest in the amount of
$10 or more is paid, or all interest payments,
made during a calendar year, may be
aggregated and reported annually should the
total amount be $10 or more.
8. R edem ption-exchange o f Series E and
EE savings bonds an d savings notes. [Sec.
321.8]
(a) General. [Sec. 321.8 (a) and (b)] The
general authority of paying agents to redeem
securities in exchange for Series HH bonds
extends only to, eligible Series E and EE
savings bonds and savings notes presented
with a completed Form PD. 3253, "Exchange
Subscription for United States Savings Bonds
of Series HH.” Securities eligible for
exchange are: (1) Series EE bonds presented
no earlier than six months from their issue
dates; and (2) Series E bonds and savings
notes presented no later than one year from
the month in which they reached final
maturity. The current redemption value of
securities presented in one transaction must
be at least $500. The presenter must establish
his dr her identity and entitlement to request
the exchange and sign the exchange
subcription and the requests for payment on
the securities.
(b) Securities in the nam e o f a minor. [Sec.
321,8(b)] If an exchange subscription is
submitted on behalf of a minor who is too
young to comprehend the nature of the
transaction, the form must be completed to
request that the Series HH bonds be
registered either in the minor’s name alone or
in exactly the same form as the securities
presented for exchange. Agents are
instructed to discourage exchange
transactions involving minors who are too
young to conduct them on their own.
(c) Interest reporting. [Sec. 321.8(c)]
Pursuant to 26 CFR 1.6049-4, an agent is
required to report interest income in the
amount of $10 or more included in any cash
refunded in a redemption-exchange
transaction. Reports to payees should be
made on Form 1099-INT or an IRS-approved
substitute; reports to the Internal Revenue
Service should be made in accordance with
that agency’s instructions. A separate report
may be made for each redemption-exchange
transaction in which interest in the amount of
$10 or more is refunded, or all interest paid in
both cash transactions and redemptionexchanges during a calendar year may be
aggregated and reported annually should the
total amount be $10 or more.
9. S pecific lim itations on paym en t
authority. [Sec. 321.9];
(a) A llow able exceptions. [Sec. 321.9]
Securities which an agent may not redeem
because of the limitations in § 321.9 should
be forwarded to the Fiscal Agency
Department of a Federal Reserve Bank for
handling. However, if an agent is willing to
assume full responsibility, it may make
payment of an eligible security which bears a
minor irregularity, such as a misspelled name,
a transposition of letters, etc., because of its
knowledge of the facts, or because it wishes
to rely on the integrity of the presenter.
(b) T axpayer identifying num ber o f
presenter. [Sec. 321.9(f)] An agent shall refuse
payment of any security if the social security
number of the presenter does not appear in
the inscription and he or she is unwilling to
furnish the number. A parent who requests
payment on behalf of a minor in accordance
with | 321.7(c) of this Part must provide the
minor's social security number.
(c) P aym ents to minors. [Sec. 321.9(j)] A
minor may ndt request payment of securities
if he or she is not of sufficient competency
and understanding to comprehend the nature
of the a c t Because of individual differences
in comprehension, the Treasury has not
established any rule as to the exact age at
which a minor should be able to redeem
securities. An agent may interview a minor to
ascertain his or her ability to understand the
transaction.
10. R espon sibilities o f payin g agents. [Sec,
321.10]
(a) Requirem ents fo r redeem ing securities.
[Sec. 321.10(a)] A paying agent shall redeem
eligible securities during its regular business
hours for a presenter who establishes his or
her identity as the owner or coowner of the
securities, in accordance with this Part.
While a paying agent is not required to
redeem securities in exchange for Series HH
bonds for any presenter, or for cash upon the
request of a surviving beneficiary, it is
encouraged to do so, provided the presenter
can establish his or her identity and provide
acceptable proof of the owner’s death, in
accordance with this Circular. An agent is
not required to redeem securities during
Saturday and evening hours if it is open
during such periods primarily as a service for
its depositors.
(b) Restrictions. [Sec. 321.10(b)] Violation
of the regulatory prohibitions on making
charges for redeeming securities; on
advancing money on, making loans on, or
discounting the redemption value of
securities; and on deferring presentation of
redeemed securities to obtain a larger credit,
will be cause for disqualification and
recovery of the redemption proceeds and
profits realized therefrom.
Subpart D—P aym ent a n d Transm ittal o f
Securities
11. Identification o f presenter. [Sec.
321.11(b)]
(a) Identification guide. [Sec. 321.11(b)] The
Treasury Department has issued an
identification guide, Form PD 3900, to assist
paying agents in redeeming securities.
Careful compliance with the instructions
contained therein will enable agents to
accommodate reasonable redemption
requests and protect themselves from losses.
Reliance on newly opened customer accounts
as identification, or paying more than $1,000
in a single transaction based on documentary
evidence alone, should be particularly
avoided.
(b) R ecord o f identification p ra ctice and
eviden ce presented. [Sec. 321.11 (b) and .(c)]
At the time of payment, the agent should
make a notation on the back of the security
or in its own records specifying precisely
what w as relied on to establish the
presenter’s identity. The identification should
be adequate to identify the payee under the
circumstances of the transaction. If an agent
redeems a security upon the request of a
surviving beneficiary, it is recommended that,
for the agent’s protection,, a notation be made
of the evidence presented to establish the
payee’s entitlement; this might include the
document or case number on the owner’s
death certificate, the date of death, and the
name and location of the issuing authority.
The notations should be sufficient to permit
an evaluation of the evidence of identity and
entitlement at a later date. Otherwise, the
agent runs the risk that no evidence can be
developed to show that it acted without fault
o r negligence; in which case it could not be
relieved of liability should a loss occur.
12. R equest fo r p a ym en t . [Sec. 321.11(d)J
(a) Signature. [Sec. 32i.ll(d)] Except where
an agent qualified under P art 330 (Circular
No. 888) elects to use the special
endorsement procedure, each security
redeemed by the agent must bear the
signature of the presenter. The name must be
signed exactly as it is inscribed on the
security, unless the provisions of Part 330 and
this Appendix provide for an exception, such
as in cases involving a change of name by
F e d e r a l R e g is te r / V ol. 53, N o. 186 / M o n d a y , S e p te m b e r 26, 1988 / R u le s a n d R e g u la tio n s
marriage or a request by a parent on behalf
of a minor. An agent may incur a liability if
the request for payment is not properly
signed.
•
(b) Address. [Sec. 321.11(d)] The presenter
must enter a current home or business
address in the space provided on the back of
the security. If a single transaction includes a
group of securities, the address must be
shown on at least one security of each of the
following types: (1) Paper securities issued
prior to October 1957; (2) punch card or
machine readable paper securities issued
prior to January 1989; and (3) machine
readable paper securities issued subsequent
to December 1988.
13. Redemption value of securities. [Sec.
321.12]
(a) Redemption value tables. [Sec. 321.12]
The Bureau of the Public Debt distributes
tables of redemption values for:
(1) Series E bonds, (2) Series EE bonds, and
(3) savings notes. Additional tables may be
requested from the Federal Reserve Bank.
The public may purchase redemption tables
from the Superintendent of Documents,
Government Printing Office, Washington, DC
20402.
(b) Use of tables. [Sec. 321.12] A separate
monthly table is provided for each of the
three types of securities (E bonds, EE bonds,
and notes). Care should be exercised to use
the correct table for the security presented
and for the month in which it is redeemed.
Incorrect payments can lead to costly and
time-consuming adjustments for the agent,
Department of the Treasury, and the Federal
Reserve Bank.
(c) Cash redemption. [Sec. 321.12] The
correct redemption value of securities
redeemed by an agent should be paid to the
presenter in currency or, upon request, by
check payable to the presenter or by credit to
his or her account.
(d) Redemption-exchange. [Sec. 321.12] The
redemption values of securities presented for
exchange for Series HH bonds shall be those
payable in the month the agent accepts a
correctly completed and signed exchange
subscription, Form PD 3253. The total
redemption value of securities presented for
exchange in any one transaction must be at
least $500. If the redemption value is $500 or
an even multiple thereof, Series HH bonds
must be requested in that exact am ount If the
redemption value exceeds $500, but is not an
even multiple of that amount, the presenter
may (1) add cash to increase the amount of
the subscription to the next higher $500
multiple, or (2) reduce the amount of the
subscription to the next lower $500 multiple.
The maximum amount which may be added
to or refunded in an exchange transaction is
$499.99. For example, if the total redemption
value o f the securities is $4,253.33, the
presenter may request no less than $4,000 and
no more than $4,500 in Series HH bonds. In
the first instance, the agent will pay the
presenter $253.33; in the second, it will collect
$246.67 when it accepts the exchange
subscription.
14. Cancellation of redeemed securities.
[Sec. 321.13]
[a ] Paying agent stamp. [Sec. 321.13] Each
redeemed security must be cancelled by the
imprint of a payment stamp. The stamp may
not e x c e e d l'/s in ch es in any dim ension and
m ust in clu d e the follow in g inform ation in the
arrangem ent show n:
Paid $---------(for recording amount paid).
Name, location, and four-digit paying agent
code number assigned by the Federal
Reserve Bank (subject to abbreviation
and arrangement by the Bank).
D ate-------- (for recording actual date of
paym ent).
B y ----------[for u se by agent in recording
initials, or signature, codes, symbols, etc.,
of the officer or employee who approved
or made the payment).
(b) Procurement of stamps. [See. 321.12] A
paying agent m ay req uisition stam p s from the
F iscal A gen cy D epartm ent o f a F ederal
R eserve Bank or pu rchase its o w n stam ps.
Stam ps n ot p rovided b y the Federal R eserve
Bank m ust conform ex a ctly in siz e and design
to that prescribed or approved b y the Bank.
To insure legib le im p ression s, stam p s should
b e rep laced w h en worn.
(c) Imprinting paym ent stamp and
recording paym ent date. [Sec. 321.13] After
determining that a security is eligible for
payment, the agent should carefully imprint
the payment stamp on its face in the open
space immediately to the left of, and as close
as possible to, the issue date and issuing
agent validating data. It is important not to
overprint any data on the security,
particularly the serial number, since the
security will subsequently be microfilmed. No
other stamps shall be placed on the face of
the security. Care should be taken to record
legibly the correct amount, the exact date of
redemption, and the signature, initials, or
other identification of the agent’s employee
who approved or made the payment. A darkcolored ink must be used, and care should be
taken not to smear the stamp impression or
the writing.
(d) Redemption-exchange. [Sec. 321.13]
Securities presented for redemption-exchange
shall be stamped “PAID” in the same manner
as securities redeemed for cash, but only
when all elements of the transaction have
been completed, including receipt of any
additional cash. The exact date of
redemption shall also be recorded on the
exchange subscription to enable the Federal
Reserve Bank to establish the proper issue
date for the Series HH bonds. An officer or
other authorized employee of the agent shall
also sign the exchange subscription, in his or
her official capacity, and furnish other
requested information that identifies the
paying agent.
(e) M ICR-encoding of payment
information. [Sec. 321.13] An agent that
transmits and obtains settlement for
redeemed securities via EZ CLEAR shall
MICR-encode the redemption value in the
“Amount” field on the face of each security
or arrange to have this service performed by
another financial institution. If the agent
transmits securities in mixed cash letters, it
must also MICR-encode the routing/transit
number assigned to the Bureau of Public
Debt’s savings bonds activity in the "R/T.”
field on the face of all pre-October 1957 paper
securities and those punch card securities on
which it does not already appear. The
Bureau’s routing/transit number is 000090007.
An agent must not MICR-encode data in the
37517
"On-Us” field for any reason. Care should be
taken in repairing MICR-encoded items so as
not to obliterate any data in surrounding
MICR fields or elsewhere on the face of the
security.
15. Transmittal o f securities to Federal
Reserve RonA. [Sec. 321.14] An agent may
transmit and receive settlement for redeemed
securities (a) through the Fiscal Agency
Department of a Federal Reserve Bank or
Branch or (b) via EZ CLEAR to the Check
Department of a Federal Reserve Bank,
Branch or Regional Check Processing Center.
Securities to be processed via EZ CLEAR
may be transmitted in separately sorted or
mixed cash letters to. a Federal Reserve Bank
either directly or via a parent office or
correspondent institution. An agent shall
transmit redeemed securities under cover of
the appropriate transmittal document.
Securities redeemd in exchange forgeries
HH bonds must be transmitted for settlement
at the same time that the exchange
subscription is separately forwarded to the
Bank’s Fiscal Agency Department.
16. Transmittal of securities to Federal
Reserve Bank via fiscal agency system. [Sec.
321.14]
(a) Form to be used. [Sec. 321.14] A
standard transmittal letter, Form PD 2639,
must be used to submit redeemed securities
to the Fiscal Agency Department of a Federal
Reserve Bank. The Bank will supply the
forms to each agent authorized to remit
directly for its own account. The forms will
be preprinted to show the agent’s name,
location and four-digit code number, and, if
so prearranged, the name and address of a
correspondent member bank through which
settlement is to be made. To insure proper
settlement and correct fee payments, it is
essential that each agent use only the forms
that contain its name and agent code.
(b) Batching redeemed securities. [Sec.
321.14] A separate Form PD 2639 must be
prepared to cover each of the following:
(1) Any combination of Series A, B, C, and
D bonds and Series E bonds issued prior to
October 1957 on paper stock redeemed in the
same month for cash;
(2) Any combination of Series E and EE
bonds and savings notes issued on punch
card or machine readable papenstock
redeemed in the same month for cash;
(3) Series E bonds issued prior to October
1957 on paper stock redeemed jn the same
month in exchange for Series HH bonds; and
(4) Any combination of Series E and EE
bonds and savings notes issued on punch
card or machine readable paper stock
redeemed in the same month in exchange for
Series-HH bonds. Even if pre-October 1957
bonds issued am paper stock and punch card/
machine readable paper bonds are received
together in a single redemption o r
redemption-exchange transaction, they must
be batched separately. Failure to separate
and batch the securities in the above manner
or to properly identify the transaction as a
"Redemption” or "Exchange” on Form PD
2039 may result in an incorrect calculation of
fees due the agent.
(c) Transmittal o f securities. [Sec. 321.14]
Each Form PD 2639 shall be completed and
transmitted with the related securities to the
37S18
F e d e r a l R e g is te r / V ol. 53, N o. 186 / M o n d a y , S e p te m b e r 26, 1988 / R u le s a n d R e g u la tio n s
Fiscal Agency Department of a Federal
Reserve Bank in accordance with the Bank’s
instructions.
(d) Tim ing of transmittals. [Sec. 321.14]
Redeemed securities and related Forms PD
2639 may be sent to the Federal Reserve Bank
each day or less Frequently. However, all
redeemed securities on hand on the last
business day of a month must be forwarded
no later than the next business day.
Securities redeemed in-different months
should never be combined in the same batch.
(e) Settlement fo r and audit o f p a id
securities. [Sec. 321.14]
[1] Settlement. [Sec. 321.14] The Federal
Reserve Bank will make immediate
settlement for the total redemption value of
the redeemed securities in each batch, as
recorded on Form PD 2639. The batch will
then be sent to the Bureau of the Public Debt
for audit. Settlement may be made by check
or by credit to the reserve or clearing account
of the agent or a designated correspondent
financial institution. The amount will be
subject to adjustment if discrepancies are
discovered after settlement has been made
with the agent.
(2) A u d it and adjustment. [Sec. 321.14] The
Bureau of the Public Debt will audit all
redeem ed securities and related Forms PD
2639 as promptly as. possible. It will, in due
course, notify each agent, through the Federal
Reserve Bank, of any adjustments required.
The Bank will adjust any amounts previously
credited to thefagent. If an agent discovers an
error before the audit is completed, it should
notify the Bank immediately.
17.
Transmittal o f securities to Federal
Reserve Bank via E Z C L E A R . [Sec. 321.14]
(a) Form to be used. [Sec. 321.14] The
presenting institution shall transmit all
redeemed securities to the Check Department
of a Federal Reserve Bank or Branch or
Regional Check Processing Center in
accordance w ith the Bank’s instructions.
Except as otherwise provided in the Bank’s
instructions and operating circulars, cash
letters may be comprised of one or more
bundles of separately sorted redeemed
securities (separately sorted cash letter) or
one or more bundles of mixed items (mixed
cash letter). H ie cash letter shall show the
name, address, and ABA number of the
presenting institution, the date of
presentation, the total number of pieces
transmitted, the value o f each of the bundles
in the cash letter, and the total value of the
cash letter.
(b) Composition o f cash letters. [S ee..
321.14] Series A, 1, C, D, E, and EE bonds and
savings notes redeem ed for cash or o a
exchange may be comipingled in (1) mixed
cash letters containing commercial checks
and other items or (2) separately sorted cash
letters containing only redeem ed securities.
Each cash letter shall also contain a listing
prepared in accordance with the Federal
Reserve Bank’s instructions.
(c) Transm ittal o f securities. [Sec. 321.14]
Cash letters containing redeemed securities
shall-be transm itted to a Federal Reserve
Bank in accordance w ith the Bank’s circulars
and instructions.
(d) Tim ing o f transmittals. [Sec. 321.14]
Cash letters containing redeemed securities
should be transm itted according to the same
schedule used for other commercial check .
collection system items.
(e)
Settlement fo r the audit of p a id
securities.
(1) Settlement. [Sec. 321.14] The Federal
of the Federal Claims Collection Standards (4
CFR Parts 101-105). Reconsideration of a
determination of liability will be made in any
case where an agent so requests and presents
additional evidence and information
regarding the transaction. '
22. R elief fo r lack of tim ely notice. [Sec
321.18] A paying agent will be relieved of
liability to the United States.for any toss
resulting from the erroneous payment of
securities where the Secretary of the
Treasury, or his designee, determines that
w ritten notice of either liability or potential
liability has not been given to the agent
within ten years of the date of the erroneous
payment,
Reserve Bank will make immediate
settlement for the total value of redeemed
securities as shown on each cash letter.
Settlement will be made by a credit to the
reserve or clearing account of the agent o r
designated correspondent institution. D ata
concerning redeemed security transm ittals will be sent to the Bureau of the Public Debt
for audit. The amount will be subject to
adjustment if discrepancies are discovered
after settlement has been made.
[2] A u d it and adjustment. [Sec. 321.14] The
Bureau of the Public Debt will audit all
Subpart F — Forw arding Items
redemption data received from the Federal
23. Securities forwarded to Federal
Reserve Bank as promptly as possible. Each
Reserve Bank fo r paym e n t [Sec 321.22]
presenting institution will, in due course, be
(a) General. [Sec 321.22] Securities
notified by the Bank of any adjustments
presented for cash payment or redemptionrequired. The Bank will adjust any amounts
previously credited to the agent or designated exchange, that an agent is not authorized to
redeem, shall be forwarded to the Fiscal
correspondent institution. If a presenting
Agency Department of a Federal Reserve
institution discovers an error before the audit
Bank, with all required supporting
is completed, it should notify the Bank
documentation and any necessary payment
immediately.
instructions.
18. Record o f securities paid. [Secs. 321.14
(b) Signature to and certification o f request
and 321.24] A record of the serial number of
fo r paym ent [Sec 321.22] An agent qualified
an amount paid for each security must be
under Part 330 (Circular No. 888) may elect to
retained by the agent so that settlement can
specially endorse securities for presenters in
be made if the security is lost in transit. For
lieu of requiring completion of the requests
that purpose, agents are authorized to
microfilm the face and back of each security .. for payment. Unless this procedure is used, they redeem. Such film records shall be kept
the presenter must sign the request on each
confidential and prints therefrom may be
security and the signature must be certified.
made only with the permission of the Bureau ,* Before completing the certification, the agent
of the Public Debt or a Federal Reserve Bank.
should establish the identity of the presenter.
The Treasury’s identification guidelines
Subpart E — Losses Resulting from Erroneous
should be followed in view of the potential
Payments
liability that attaches to such certification.
19. Report o f erroneous payment. [Sec.
(c) Address and Taxp ayer identifying
321.16] Any erroneous payment that comes to
number. [Sec 321,22] In every case, a current
the attention of an agent should be reported
address shall be furnished. The presenter’s
immediately to the Bureau of the Public Debt,
taxpayer identifying number (social security
Parkersburg, West Virginia 26106-1328. The
number or employer identification number)
nearest office of the Secret Service should
shall be provided if it is not included in the
also be notified if the agent believes that a
inscription.
security presented for redemption may be
(d) Redemption-exchange. [Sec 321.22] For
counterfeit or stolen, oe if the circumstances
redemption-exchange transactions submitted
of the presentation are suspicious in any
as forwarding items, the issue date of the
other respect
Series HH bonds will be the first day of the
20. Notice to agent. [Sec 321.17(a)] The
month in which a correctly completed and
paying agent will be notified if an erroneous
signed exchange subscription and full
payment has occurred. The notice will
payment are received by the Federal Reserve
generally be in writing from the Bureau of the
Bank.
Public D eb t If an investigation is to be made,
(e) Partial redemption. [Sec 321.9(1) and
the notice will enable the agent to notify its
321.22] partial redemption of a security other
bonding company, assemble pertinent
than a $25 Series E bond or savings note, a
information concerning the transaction for
$50 Series EE bond, or a $500 Series H or HH
presentation during the investigation, and
bond may be made by a Federal Reserve
take any other action it deems appropriate to
Bank. The amount paid must be equal to the
protect its interest.
redemption value of one or more authorized
21. Determination of liability. [Sec 321.18] ;
denominations on the date of the transaction.
Upon completion of the investigation, the
If a security is received by an agent for
Bureau of the Public Debt will examine the
partial redemption, the words “to the extent
information it has developed for the purpose
of $
(face amount) and reissue of the
of determining w hether or not an agent may
rem ainder” should be added to the first
be relieved of liability for any loss that may
sentence of the request for paym ent The
have resulted. If it cannot b e relieved of
request should then be completed in the
liability, the agent will be asked to reimburse,
regular manner and the signature of the
the Treasury promptly. Any amount not paid
presenter certified. The security shall be
within 30 days will be subject to the
forwarded to the Fiscal Agency Department
assessm ent of late charges and other
of a Federal Reserve Bank.
administrative actions under the provisions
Federal Rcegisteir / VoL 53, No. 186 / Monday, September 26„ 1988 / Rules and Regulations
Subpart G — Miscellaneous Provisions
24.
Fees and charges. [Sec 321.23] Service
fees are not intended to compensate paying
agents for the reporting of interest paid as
part of the redemption value of securities as
required by Federal Tax Regulations (26 CFR
1.0849-4).
(a) Fiscal agency system transmittals. [Sec
321.23] Fee will be paid by Treasury for
securities an agent redeems for cash or on
exchange during each calender quarter. Such
fees will be paid to the agent by check or
ACH. Inquiries should be directed to the
Bureau of the Public Debt, Parkersburg, W est
Virginia 26108-1328.
(b) E Z C L E A R transmittals. [Sec 321.23]
Fees will be paid by the Federal Reserve
Bank to the presenting institution for
securities redeemed during each calendar
month that are submitted in separately sorted
cash letters; such fee payments will be made
only by ACH. No fees will be paid for
securities received by the Bank in mixed cash
letters. The Bank will charge the presenting
institution for processing redeemed securities
received in mixed cash letters. Inquiries
regarding separately sorted cash letters
should be directed to the Pittsburgh Branch,
Federal Reserve Bank of Cleveland, P.O. Box
867, Pittsburgh, Pennsylvania 15238-0867.
Inquiries regarding mixed cash letters should
be directed to the Federal Reserve Bank or
Branch or Regional Check Processing Center
where the cash letters were directed.
25.
Claims on account of lost securities.
[Sec 321.24] If a security redeemed by an
agent is lost, stolen, or destroyed while in the
custody of the agent, or in transit prior to
settlement or audit, relief will be considered,
provided the security can be identified by
serial number. (See paragraph 18 of this
Appendix regarding the maintenance of
records of redeemed securities). Claims for
37319
securities submitted through the fiscal agency
system should be submitted to the Fiscal
Agency Department of a Federal Reserve
Bank on. Form PD 2517 with a photocopy of.
the security, if available. The agent will b®
advised when the claim has been
adjudicated. If a redeemed security presented
via EZ CLEAR is lost prior to settlement, the
presenting institution should resubmit a
photocopy of the security to obtain
settlement ha accordance with the Bank’s
instructions.
26.
Additional information. [Sec 321.25]
Requests for additional advice, clarification
of the payment regulations or this Appendix,
and other matters relating to the actions of a
financial institution as paying agent should
generally be made to the Federal Reserve
Bank.
[FR Doc. 88-21984 Filed 9-22-88; 12:43 pm]
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