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FEDERAL RESERVE BANK
OF NEW YORK
[
Circular No.
10332 "I
January 10, 1990
CHECK, NONCASH COLLECTION, AND WIRE TRANSFER
Operating Circular Changes in Timeframes and
Other Procedures, Effective January 1, 1990
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned,
Enclosed are supplements, effective January 1, 1990, to Operating Circular No. 4 (Collection of Cash Items
and Returned Checks), Operating Circular No. 6 (Collection of Noncash Items), and Operating Circular No. 8 (Wire
Transfers of Funds). The rules and procedures contained therein are uniform throughout the Federal Reserve System.
These changes reflect amendments to the Board of Governors’ Regulation J that establish a two-year time limit
on commencing actions against a Reserve Bank for negligence with respect to cash and noncash items and wire trans
fers. The supplement to Operating Circular No. 4 also reflects the one-year limitation on actions prescribed in Reg
ulation CC, reduces from 30 to 20 banking days the time within which depository institutions may submit photo
copies of cash items and returned checks after having been charged back for a lost item or asked for a photocopy,
and increases from 15 calendar days to 20 banking days the time within which paying banks may assert timely return
after having been charged on the basis of an allegation of late return on a cash item. Also enclosed are revised forms
(“Bank’s Claim of Late Return” and “Paying Bank’s Response to Claim of Late Return”) primarily reflecting the
increased time period for submitting an allegation of late return.
Appendix A (Government Checks) to Operating Circular No. 4 has been amended to conform to recent Treasury
Department regulations limiting (generally to one year after issuance) the time within which Government checks
may be paid. It also prescribes a time limit for most claims on paid Government checks.
Finally, paragraph 26 of Operating Circular No. 4 has been amended to clarify that this Bank may commingle
items to be presented to a single presentment point for different paying banks unless otherwise requested by one
of those banks.
Questions on these changes may be directed to Raleigh M. Tozer, Counsel (Tel. No. 212-720-5033).
E.
G e r a l d C o r r ig a n ,
President.
Federal Reserve Bank
of New York
Second Supplement to
Operating Circular No. 4
(Revised effective September 1, 1988)
Effective January 1, 1990
COLLECTION OF CASH ITEMS
AND RETURNED CHECKS
Tim efram es; Commingling
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
Effective January 1, 1990, this Bank’s Operating Circular No. 4 has
been amended as follows:
1. Paragraph 26 has been amended to read as follows:
26. We may commingle cash items delivered to or picked up by the paying bank’s
agent with other cash items delivered to or picked up by that agent, unless otherwise
requested by the paying bank. A cash item is considered presented when received
by the paying bank or its agent (other than a payable through bank).
2. Paragraph 31 has been amended (including the insertion of a par
agraph heading) to read as follows:
Claim s and actions
31. We provide a statement of account to each bank maintaining an account on
our books. An account holder must promptly advise us in writing of an objection
to an entry in our statement of its account. An account holder that fails to advise
us of its objection within one calendar year of the date of the entry (and any bank
that has used the account and has handled the cash item or returned check to which
the entry relates) is deemed to have approved the entry, and the statement of account
is deemed finally adjusted. Reserve Banks generally keep records for only one year.
This paragraph does not relieve an account holder from the duty of using due dil
igence in examining statements of account sent to it and of notifying us immediately
on discovery of an error. Further, this paragraph does not relieve a Reserve Bank
from liability for breach of warranty on an item to which an entry relates. Section
229.38(g) of Regulation CC requires that any action for a violation of Regulation
CC be brought within one year after the date of the occurrence of the violation.
Section 210.6(c) of Regulation J requires that action on a claim against a Reserve
Bank for failure to exercise ordinary care or act in good faith under Regulation J
be commenced within two years after the claim accrues.
3. The period of time for taking the specified action in paragraph
49(b) with regard to returned checks has been changed from fifteen (15)
calendar days to “twenty (20) banking days of the Reserve Bank.”
[Enc. Cir. No. 10332]
(OVER)
4. Paragraph 69 has been amended to read as follows:
69. We handle a correctly prepared photocopy as a cash item through our adjust
ment department if we or a prior collecting Reserve Bank receive the photocopy
and a copy of the advice of chargeback or request within twenty (20) banking days
(of the Reserve Bank) from the day we (or the prior Reserve Bank) charged back
the original item or requested the photocopy. The prior Reserve Bank should send
the photocopy and advice to us when received.
5. The second sentence of paragraph 76 has been amended to read as
follows:
76. . . . If we charged back the returned check to the paying or returning bank
under paragraph 75 or requested the photocopy, we (or a prior returning Reserve
Bank) must receive the photocopy or notice and a copy of the advice of chargeback
or request within twenty (20) banking days (of the Reserve Bank) from the day we
(or the prior Reserve Bank) charged back the returned check or requested a pho
tocopy. . . .
6. The following sentence has been added at the end of paragraph 3
of Appendix A (on Government Checks) to the operating circular:
3. . . . The expeditious return and notice of nonpayment requirements of Reg
ulation CC do not apply to a Government check, and the Government is not a paying
bank under Regulation CC.
7. Paragraph 4 of Appendix A to the operating circular has been de
leted, and the following two paragraphs have been added to Appendix
A:
4. The Treasury Department is generally not required to pay a Government
check (a) issued on or after October 1, 1989, unless it is negotiated to a financial
institution within one year after the date of issue, or (b) issued before October 1,
1989, unless it is negotiated to a financial institution no later than October 1,1990,
as provided in Treasury Department Circular No. 21.
5. If the Treasury determines that a Government check has been paid over a
forged or unauthorized indorsement, the Treasury may reclaim the amount of the
check from the presenting bank or prior indorser within one year after the date of
credit by this Bank, as provided in Treasury Department Circular No. 21. This pe
riod is extended by 180 days if a timely claim is made against the Government under
31 U.S.C. 3702. Under 31 U.S.C. 3702, a claim on a Government check must be
made to the issuing agency within one year after the date of issuance, or within
one year after October 1, 1989, whichever is later. Under 31 U.S.C. 3712, an action
by the Government to inforce liability on a forged or unauthorized signature or in
dorsement on, or a change in, a Government check generally must be commenced
within one year after presentment of the check. This period is extended by three
years if the Government gives written notice of a claim one year after presentment
of the check.
E . G e r a l d C o r r ig a n ,
President.
Federal Reserve Bank
of New York
Second Supplement to
Operating Circular No. 6
(Revised effective October 1, 1987)
Effective January 1, 1990
COLLECTION OF NONCASH ITEMS
I
Tim efram e For Action Against Reserve Banks
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
f
Effective January 1, 1990, the heading and text of paragraph 30 of
this Bank’s Operating Circular No. 6 has been amended to read as fol
lows:
C laim s and actions
30. We provide a statement of account to each bank maintaining an account on our
books. An account holder must promptly advise us in writing of an objection to an
entry in our statement of its account. An account holder that fails to advise us of its
objection within one calendar year from the date of the entry (and any sender, col
lecting bank, or paying bank that has used the account and has handled the item to
which the entry relates) is deemed to have approved the entry, and the statement of
account is deemed finally adjusted. Reserve Banks generally keep records for only
one year. This paragraph does not relieve an account holder from the duty of using
due diligence in examining statements of account sent to it and of notifying us im
mediately on discovery of an error. Further, this paragraph does not relieve a Reserve
Bank from liability for breach of warranty on an item to which an entry relates. Section
210.6(c) of Regulation J also requires that action on a claim against a Reserve Bank
for failure to exercise ordinary care or act in good faith be commenced within two
years after the claim accrues.
E . G e r a l d C o r r ig a n ,
President.
[Enc. Cir. No. 10332]
{
Federal Reserve Bank
of New York
First Supplement to
Operating Circular No. 8
(Revised June 29, 1988)
Effective January 1, 1990
WIRE TRANSFERS OF FUNDS
Tim efram e For Action Against Reserve Banks
To All Depository Institutions in the Second
Federal Reserve District, and Others Concerned:
Effective January 1, 1990, paragraph 17 of this Bank’s Operating
Circular No. 8 has been amended to read as follows:
17. We provide an advice of debit to a transferor maintaining or using an account
with us. The transferor should carefully examine the advice on receipt, and prompt
ly report any exception. The transferor is deemed to approve a debit if it fails to
send written objection within ten (10) calendar days after it receives the advice of
debit to the office of this Bank with which it maintains or uses an account. Section
210.38(b)(2) of Regulation J also requires that action on a claim against a Reserve
Bank for failure to exercise ordinary care or act in good faith be commenced within
two years after the claim accrues.
E. G e r a l d C o r r ig a n ,
President.
[Enc. Cir. No. 10332]
A
BANK’S CLAIM OF LATE RETURN*
Date:
TO: Federal Reserve Bank of New York
Check Processing Department
(Buffalo Branch) ( .....................................................................Office)
The returned check (“item”) described below and attached hereto is being delivered to you:
1.
2.
3.
4.
5.
6.
7.
8.
Amount $ .......................... * *
Dated.................................
Paying b a n k ................................................................................................................................................................
Paying bank R/T No..................................................................................................................................................
Paying bank lo catio n ................................................................................................................................................
Drawn by (drawer) .............. ...................................................................................................................................
Payable to (p ay ee).....................................................................................................................................................
Check No.......................................................................
We sent this item to ........................................................................................................................................... , in a
cash letter dated........................... .. totaling $ .............................., tape total $ ............................. , listed
between items for $ .......................... and $ .............................
This item was apparently returned by the paying bank o n ................................................................................
We received the item from ........................................................... on ..............................., in
a return item letter d a te d .......................... , totaling $ ............................, tape total $ ............................, listed
between items for $ .......................... and $ .............................
We claim that, according to our records and the data on the item, the paying bank did not take all action
necessary to recover its payment within the deadline in Regulations J and CC, and we certify that, as to notice
o f non-payment of the item, we received:
Check One)
0
□
Advice b y ........................................................................................................................ o n ...............................
' (
□
No advice other than the returned check.
Method)
This late return caused us to incur financial loss. Please provisionally credit our account and advise.
Bank
B y :...........................................................
O fficer’s Signature
*This form may be submitted only with respect to the first time the item was sent for collection and must be sent in duplicate within
two (2) months after the date you received the item as a returned check. In addition, the item must have been collected and/or returned
through the Federal Reserve check collection system.
Knowingly making afalse statement to influence the action of a Federal Reserve Bank may subject the signing party to criminal
penalties under federal and/or state law.
** $ 1 0 0 .0 0 or more.
[Enc. Cir. No. 10332]
B
PAYING BANK’S RESPONSE TO CLAIM OF LATE RETURN*
D a te :............................................
TO: Federal Reserve Bank of New York
Check Processing Department
(Buffalo Branch) ( ...................................................................Office)
With your advice of debit dated................ , you forwarded to us a claim of late return with
respect to a returned check (“item”) in the amount of $ ..........................................................................
We certify that our records indicate that this item was received by us or our processor
from ......................................................................................................................................................................... :
as a cash item on (banking day)
...................................................................................... ,
in a cash letter dated
...................................................................................... ...
in the amount of
$ .................................................................................... ,
tape total
$ .................................................................................... ,
listed between items for
$ ..................................... and $ .............................. ..
and that the item was returned to ................................................................................. in our return item
letter dated.........................
in the amount of
$ ......................................................................................
tape total
$ ......................................................................................
listed between items for
$ ..................................... and $.
Notice of non-payment of this item was given t o ..........................................,
b y ...................................................................................................................................... on
(Enter “none” if no notice was given. If notice was given, enter method and date.)
If the number of banking days between the banking day of receipt and the date of return exceeds
one banking day, the explanation for the delay is as follows:
We took all action necessary to entitle us to recover our payment within the deadline in
Regulations J and CC. Please credit our account and advise.
Paying Bank
B y :......................................................
Officer’s Signature
* Prepare and submit in duplicate. If you fail to return the check and this completed form to us within twenty (20) banking days
after the date we send the check and the Bank’s Claim of Late Return form to you, the provisional credit given the claimant and our
debit to your account will become final. In that case, you may be able to recover the amount of the item from the claimant if your return
of the item was in fact timely, but you must deal directly with the claimant.
Knowingly making a false statement to influence the action o f a Federal Reserve Bank may subject the signing party to crim inal
penalties under federal and/or state law.
[Enc. Cir. No. 10332]
@FedFRASER