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FEDERAL RESERVE BANK
OF NEW YORK
Circular No. 8712
December 20, 1979
REGULATION J
Comment Invited on Modifications to Subparts A and B of the Regulation
To All Member Banks, and Others Concerned,
in the Second Federal Reserve District:
T h e B oa rd o f G o v e rn o rs o f the F e d e r a l R e se rv e S y stem has in vited co m m e n t, b y F e b r u a r y 15,
1980, on a p rop osa l to c la r ify and s im p lify ce rta in p ortion s o f its R e g u la tio n J (S u b p a r ts A an d B)
d e a lin g w ith c h e c k c o lle c tio n and w ire tra n sfe rs. T h e fo llo w in g is q u oted fr o m the te x t o f the B o a r d ’s
a n n ou n cem en t:
The Board asked for comment by February 15, 1980.
There were no substantive changes. The modification of the Regulation is being undertaken by the
Board as part of a program for review of all of its regulations and rules to determine if they are in whole
or in part required by law, their costs and benefits, whether the underlying statutes need revision,
whether there are non-regulatory alternatives, whether any regulations can be cancelled and to what
extent the Board’s regulations can be simplified, put in better format or better related to current policy
goals.
The Board recently published for comment a new section of Regulation J (Subpart C) that deals with
the electronic transfer of funds through automated clearing houses operated by the Federal Reserve.
E n c lo s e d — fo r b a n k in g in stitu tion s in this D is tr ic t— is the te x t o f the B o a r d ’s p ro p o sa l. It w ill be
p u b lish e d in the
Federal Register,
and co p ie s w ill b e m a d e a v a ila b le u pon re q u e st d ir e c te d to o u r
C ir cu la r s D ivision . C om m en ts on the p ro p o sa l m a y be sent to ou r C h eck P r o c e s s in g D e p a rtm e n t.
M. T i m l e n ,
First Vice President.
T homas
T ITLE 1 2 -B A N K S A N D B A N K IN G
C H A P T E R II— F E D E R A L R E SE R V E SYSTEM
S U B C H A P T E R A - B O A R D O F G O V E R N O R S O F TH E F E D E R A L R E SE R V E SYSTEM
P A R T 2 1 0 -C O L L E C T I O N O F C H E C K S A N D O T H E R ITEMS
A N D T R A N S F E R O F FU N D S
R E G U L A T IO N J
[ D o c k e t N o. R -0 2 6 6 ]
AGENCY:
B oard o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y ste m .
A C T IO N :
P ro p o s e d ru le s.
SU M M ARY:
By this a c tio n th e B oard p r o p o s e s to c l a r if y and s im p lify S u bparts
A and B o f R e g u la tio n J. It is n o t in te n d e d th a t any su b s ta n tiv e c h a n g e s b e m a d e in
th e d u tie s and r e s p o n s ib ilitie s th a t a re s e t fo r th in th e s e r e g u la to r y p ro v is io n s .
DATE:
C o m m e n ts m u st b e r e c e iv e d on or b e f o r e F e b ru a ry 15, 1980.
A D D R E S S : C o m m e n ts , w h ich sh ou ld r e fe r to D o c k e t N o. R -0 2 6 6 , m ay b e m a ile d to
T h e o d o r e E. A llis o n , S e c r e t a r y , B oard o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y ste m ,
20 th S tr e e t and C o n s titu tio n A v e n u e , N .W ., W a sh in gton , D .C . 2 0 5 5 1 , o r d e liv e r e d to
R o o m B -2 2 2 3 b e t w e e n 8:45 a .m . and 5:15 p .m .
C o m m e n ts r e c e iv e d m a y a lso b e
in s p e c t e d a t R o o m B -1 1 2 2 b e t w e e n 8:45 a .m . and 5:15 p .m ., e x c e p t as p r o v id e d in
s e c t io n 2 6 1 .6 (a ) o f th e B oa rd 's R u le s R e g a r d in g A v a ila b ility o f In fo r m a tio n (12
C F R § 2 6 1 .6 (a )).
F O R F U R T H E R IN F O R M A T IO N C O N T A C T : L e e S. A d a m s, Sen ior A tto r n e y
(2 0 2 /4 5 2 -3 5 9 4 ), L e g a l D iv is io n , B oard o f G o v e r n o rs o f th e F e d e r a l R e s e r v e S y ste m ,
W a sh in gton , D .C . 205 5 1 .
S U P P L E M E N T A R Y IN F O R M A T IO N : A s p a rt o f its R e g u la to r y Im p r o v e m e n t P ro
j e c t , th e B oard has r e v ie w e d th e r e g u la to r y fr a m e w o r k f o r th e c o l le c t i o n o f c h e c k s
and o th e r ite m s and fo r w ire tr a n s fe r s o f fu n d s th a t a re se t fo r th in Su bparts A and
B o f R e g u la tio n J. T he B oard has d e te r m in e d th a t, w h ile su b s ta n tiv e c h a n g e s in th e
r e g u la tio n w e re n o t r e q u ir e d , it w as d e s ira b le t o r e d r a ft th e r e g u la tio n t o c la r if y
and s im p lify th e la n g u a g e . In r e d r a ftin g R e g u a ltio n J, th e B oard w as a w a re th a t
m u ch o f th e t e r m in o lo g y o f th e r e g u la tio n is c o m m o n and le g a lly r e c o g n iz e d th rou gh
its c o n s is t e n c y w ith th e U n ifo rm C o m m e r c ia l C o d e . A lth o u g h la n g u a g e im p r o v e
m en ts w e re m a d e to a c h ie v e b r e v it y and c la r it y , c a r e w as ta k en n o t t o a lte r le g a l
c o n c e p t s th rou g h s t y lis t ic c h a n g e .
The B oard n o te s th a t th e re v is e d m a te r ia l w as d r a fte d to c o n fo r m
g e n e r a lly w ith th e n ew p a rt o f R e g u la tio n J, Subpart C (A u to m a te d C le a r in g H ou se
Item s) w h ich th e B oard r e c e n t ly a p p ro v e d fo r p u b lic c o m m e n t (44 F R 6 7 9 9 5 ). O n ly
m in or e d it o r ia l ch a n g e s w ill b e re q u ir e d to c o n fo r m a fin a l v e rsio n o f Subpart C w ith
th e r e v is e d Su bparts A and B.
[Ref. Cir. No. 8712]
-2T his n o t ic e is p u b lish e d p u rsuan t t o § 5 5 3 (b ) o f T itle 5, U n ite d S ta te s
C o d e s , and § 2 6 2 .2 (a ) o f th e R u le s o f P r o c e d u r e o f th e B oard o f G o v e r n o r s .
The
p r o p o s a l is m a d e under th e a u th o r ity o f s e c t io n s 11 and 16 o f th e F e d e r a l R e s e r v e
A c t (12 U .5 .C . 2 4 8 (j), (o )), w h ich a u th o r iz e th e B oard t o p r o m u lg a te ru les g o v e r n in g
th e tr a n s fe r s o f fu n d s th rou g h F e d e r a l R e s e r v e B anks. T o aid in th e c o n s id e r a tio n o f
this m a te r ia l b y th e B oa rd , in t e r e s t e d p e rso n s a re in v ite d t o su b m it r e le v a n t d a ta ,
v ie w s , c o m m e n t s , or a r g u m e n ts.
T o im p le m e n t its p r o p o s a l, th e B oard is c o n s id e r in g a m e n d in g R e g u la tio n
3 (12
C F R 210) as s e t fo r t h b e lo w :
R E G U L A T IO N J
(12 C F R 210)
C o l le c t i o n o f C h e c k s and O th e r Ite m s and W ire T ra n s fe rs o f Funds
S U B P A R T A — C o l le c t i o n o f C h e c k s and O th e r Ite m s
SE C TIO N 2 1 0 .1 — A u th o r ity , P u rp o s e , A nd S c o p e
T h e B oard o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y stem ("B o a rd ") has
issu ed this su b p a rt p u rsu a n t t o th e F e d e r a l R e s e r v e A c t , s e c t io n 13, a s a m e n d e d (1
U .S .C . §342), s e c t io n 16 (12 U .S .C .
» 2 4 8 (c ), 3 6 0 ), s e c t io n l l ( i ) (1 2 U .S .C . § 2 4 S (i)),
and o th e r la w s. This su b p a rt g o v e r n s th e c o l l e c t i o n o f c h e c k s and o th e r ca sn and
n o n ca sh it e m s b y F e d e r a l R e s e r v e Banks ( " R e s e r v e B an k s").
Its p u rp o se is t o
p r o v id e ru les f o r c o l le c t i n g ite m s and s e ttlin g b a la n c e s .
SE C TIO N 2 1 0 .2 —D e fin itio n s
A s u sed in th is su b p a rt, u n less th e c o n t e x t o th e r w is e re q u ire s :
(a)
" A c t u a lly and fin a lly c o l l e c t e d fu n d s" m ea n s c a s h or any o th e r fo r m o f
p a y m e n t th a t is, or has b e c o m e , fin a l and ir r e v o c a b le .
(b)
"B ank d r a ft " m ea n s a c h e c k draw n b y o n e bank on a n o th e r bank.
(c )
"B a n k in g d a y " m ea n s a day during w h ich a bank is o p en to th e p u b lic fo r
c a r r y in g on s u b s ta n tia lly a ll its ba n k in g fu n c tio n s .
(d)
"C a s h it e m " m ea n s:
(1)
a c h e c k o th e r than o n e c la s s ifie d as a n o n ca sh ite m under this
s e c t io n ; or
(2)
any o th e r ite m p a y a b le on d em a n d and c o l l e c t i b l e at par th a t the
R e s e r v e Bank o f th e D is t r ic t in w h ich th e ite m is p a y a b le is
w illin g to a c c e p t as a ca sh ite m .
(e)
" C h e c k " m ean s a d r a ft , as d e fin e d in the U n ifo rm C o m m e r c ia l C o d e ,
th a t is draw n on a bank and p a y a b le on d em a n d .
wmammmmm
mm
-3 -
(f)
'’ Ite m " m ean s an in stru m e n t
n e g o tia b le or n o t, th a t is:
fo r
th e
paym ent
of
m oney,
w h e th e r
(1)
p a y a b le in a F e d e r a l R e s e r v e D is t r ic t -^ ( " D is t r ic t " ) ;
(2)
sen t b y a sen d er to a R e s e r v e Bank fo r h an dlin g under th is sub
p a rt; and
(3)
c o l l e c t i b l e in fu n d s a c c e p t a b le to th e R e s e r v e
D is t r ic t in w h ich th e in s tru m e n t is p a y a b le .
Bank
of
th e
U n less o th e r w is e in d ic a te d , " it e m " in c lu d e s b o th ca sh and n o n ca sh
item Sf "I t e m " d o e s n o t in c lu d e a c h e c k th a t c a n n o t b e c o l l e c t e d a t
p a r , - or an " it e m " as d e fin e d in s e c t io n 2 1 0 .2 6 th a t is h a n d led in
a c c o r d a n c e w ith su b p a rt B.
(g)
"N on b a n k p a y o r " m ean s a p a y o r o f an it e m , o th e r than a ban k .
(h)
"N o n c a s h ite m " m ean s an ite m th a t a r e c e iv in g R e s e r v e
in its o p e r a tin g c ir c u la r s as re q u irin g s p e c ia l h an dlin g.
m ean s an ite m n o r m a lly r e c e iv e d as a ca sh ite m if a
d e c id e s th a t s p e c ia l c o n d itio n s re q u ire th a t it h an dle
n o n ca sh ite m .
(i)
"P a y in g ban k " m ea n s:
(j)
Bank c la s s ifie s
T he te rm a lso
R e s e r v e Bank
th e ite m as a
(1)
the bank by w h ich an ite m is p a y a b le , u n less th e ite m is p a y a b le
or c o l l e c t i b l e th rou g h a n o th e r ban k and is se n t to th e o th e r bank
fo r p a y m e n t or c o l l e c t i o n ; or
(2)
th e bank th rou gh w h ich an ite m is p a y a b le or c o l l e c t i b l e and to
w h ich it is sen t f o r p a y m e n t or c o l le c t i o n .
"S e n d e r " m ean s a m e m b e r ba n k , a n o n m e m b e r c le a r in g ban k , a R e s e r v e
Bank, an in te r n a tio n a l o r g a n iz a tio n , or a fo r e ig n c o r r e s p o n d e n t th a t
sen d s an ite m .
(1)
"N o n m e m b e r c le a r in g ba n k " m e a n s:
(i)
a bank th a t is n ot a m e m b e r o f th e F e d e r a l R e s e r v e S y ste m ,
but m a in ta in s w ith a R e s e r v e Bank th e b a la n c e r e fe r r e d to
in th e fir s t pa ra gra p h o f s e c t io n 13 o f th e F e d e r a l R e s e r v e
A c t ; or
(ii)
a c o r p o r a tio n th a t m a in ta in s an a c c o u n t w ith a R e s e r v e
Bank in c o n f o r m it y w ith s e c t io n 2 1 1 .4 o f th is c h a p te r
(R e g u la tio n K ).
17 F or p u rp oses o f this su b p a rt, th e V irgin Islands and P u e rto R i c o a re d e e m e d to
b e in th e S e co n d D is t r ic t , and G uam and A m e r ic a n S a m oa in th e T w e lfth D is t r ic t .
2 / The B oard p u b lish es a "M e m o ra n d u m on E x ch a n g e C h a r g e s ," lis tin g th e banks
th a t w ou ld im p o se e x c h a n g e c h a r g e s on ca sh ite m s and o th e r c h e c k s fo r w a r d e d by
R e s e r v e Banks and t h e r e fo r e w ou ld n o t pay a t par.
(k)
(2)
’’ In te rn a tio n a l o r g a n iz a t io n ” m ea n s an in te r n a tio n a l o r g a n iz a tio n
f o r w h ich th e R e s e r v e Banks a re e m p o w e r e d t o a c t as d e p o s ita r ie s
or f i s c a l a g e n ts and fo r w h ich a R e s e r v e Bank m a in ta in s an
a ccou n t.
(3)
"F o r e ig n c o r r e s p o n d e n t ” m ean s any o f th e fo llo w in g f o r w h ich a
R e s e r v e Bank m a in ta in s an a c c o u n t : a fo r e ig n bank or b a n k e r, a
fo r e ig n s t a t e as d e fin e d in s e c t io n 25(b) o f th e F e d e r a l R e s e r v e
A c t (12 U .S .C . § 6 3 2 ), or a fo r e ig n c o r r e s p o n d e n t or a g e n c y
r e fe r r e d t o in s e c t io n 14(e) o f th a t A c t (12 U .S .C 3 358).
" S t a t e " m ea n s a S ta te o f th e U n ite d S ta te s , th e D is t r ic t o f C o lu m b ia ,
P u e r to R i c o , or a t e r r it o r y , p o s s e s s io n , or d e p e n d e n c y o f th e U n ite d
S ta te s .
SE C TIO N 2 1 0 .3 — G e n e r a l P ro v is io n s
(a) G e n e r a l.
E ach R e s e r v e Bank sh all r e c e iv e and h an dle ite m s in a c c o r
d a n c e w ith this su b p a rt, and sh all issu e o p e r a tin g c ir c u la r s g o v e rn in g th e d e ta ils o f
its han dlin g o f ite m s and o th e r m a tte r s d e e m e d a p p r o p r ia te by th e R e s e r v e Bank.
T he c ir c u la r s m a y , a m o n g o th e r th in gs, c la s s ify ca sh ite m s and n on ca sh ite m s ,
re q u ir e s e p a r a te so rts and l e t t e r s , and p r o v id e d if f e r e n t c lo s in g tim e s fo r th e
r e c e ip t o f d if f e r e n t c la s s e s or ty p e s o f ite m s .
(b) B inding e f f e c t . This su b p a rt and th e o p e r a tin g c ir c u la r s o f th e R e s e r v e
Banks a r e b in d in g on th e sen d er o f an ite m and on e a c h c o l le c t i n g ban k, p a y in g
ba n k , and n on ban k p a y o r , t o w h ich a R e s e r v e Bank (o r a su b se q u e n t c o l le c t i n g bank)
p r e s e n ts or sen d s an ite m .
(c ) G o v e r n m e n t Ite m s . A s d e p o s ita r ie s and f is c a l a g e n ts o f th e U n ite d S ta te s,
R e s e r v e Banks h an dle c e r t a in ite m s as ca sh or n o n ca sh ite m s .
T o th e e x te n t
p r o v id e d by r e g u la tio n s issu ed b y , and a r r a n g e m e n ts m a d e w ith , th e U n ite d S ta te s
T re a su ry D e p a r tm e n t and o th e r G o v e r n m e n t d e p a r tm e n ts and a g e n c ie s , th e
h a n d lin g o f su ch ite m s b y th e R e s e r v e Banks is g o v e r n e d by th is su b p a rt.
T he
R e s e r v e Banks sh all in c lu d e in th e ir o p e r a tin g c ir c u la r s su ch in fo r m a tio n re g a rd in g
th e s e r e g u la tio n s and a r r a n g e m e n ts as th e R e s e r v e Banks d e e m a p p r o p r ia te .
(d) G o v e r n m e n t S en d ers. E x c e p t as o th e r w is e p r o v id e d by s ta tu te s o f th e
U n ite d S ta te s , or r e g u la tio n s issu ed or a r r a n g e m e n ts m a d e th e re u n d e r, this su bp art
and th e o p e r a tin g c ir c u la r s o f th e R e s e r v e Banks a p p ly to th e fo llo w in g w hen
a c t in g as a s e n d e r : a d e p a r tm e n t, a g e n c y , in s tr u m e n ta lity , in d e p e n d e n t e s ta b lis h
m e n t, or o f f i c e o f th e U n ite d S ta te s , or a w h o lly o w n e d or c o n t r o lle d G o v e r n m e n t
c o r p o r a t io n , th a t m a in ta in s or u ses an a c c o u n t w ith a R e s e r v e Bank.
SE C T IO N 2 1 0 .4 — Sen din g Ite m s t o R e s e r v e Banks
(a) A sen d er m a y send any ite m t o th e R e s e r v e Bank w ith w h ich it m a in ta in s
or u ses an a c c o u n t , bu t th a t R e s e r v e Bank m a y p e r m it or re q u ire th e sen d er to send
d ir e c t to a n o th e r R e s e r v e Bank an ite m p a y a b le w ith in th e o th e r R e s e r v e Bank s
D is t r ic t .
(b) W ith r e s p e c t to an ite m se n t d ir e c t , th e r e la tio n s h ip s and th e rig h ts and
lia b ilitie s b e t w e e n th e se n d e r, th e R e s e r v e Bank o f its D is t r ic t , and th e R e s e r v e
Bank t o w h ich th e ite m is sen t a re th e sa m e as if th e sen d er had sen t the ite m to
th e R e s e r v e Bank o f its D is t r ic t and th a t R e s e r v e Bank had sen t th e ite m to ihe
o th e r R e s e r v e Bank.
-5(c )
T h e R e s e r v e Banks sn ail r e c e iv e ca sh ite m s and o th e r c h e c k s a t par.
SE C TIO N 210.5— S en d er's A g r e e m e n t ; R e c o v e r y By R e s e r v e Bank
(a)
S en d er's a g r e e m e n t . By sen d in g an ite m t o a R e s e r v e Bank, th e s e n d e r :
(1)
a u th o r iz e s th e r e c e iv in g R e s e r v e Bank (and an y o th e r R e s e r v e Bank or
c o l le c t i n g bank to w h ich th e ite m is se n t) t o h an dle th e ite m s u b je c t to
th is su b p a rt and to th e R e s e r v e B anks' o p e r a tin g c ir c u la r s , and w a rra n ts
its a u th o rity t o g iv e th is a u th o r iz a tio n ;
(2 )
w a rra n ts t o e a c h R e s e r v e Bank h an dlin g th e ite m th a t: (i) th e se n d e r
has g o o d t it le to th e ite m o r is a u th o r iz e d t o o b ta in p a y m e n t on b e h a lf
o f o n e w h o has g o o d t i t le (w h e th e r or n o t th is w a rra n ty is e v id e n c e d b y
th e se n d e r's e x p r e s s g u a ra n ty o f p r io r in d o r s e m e n ts on th e it e m ); and
(ii) t o th e e x t e n t p r e s c r ib e d b y S ta te law a p p lic a b le to a R e s e r v e Bank
or su b seq u en t c o l le c t i n g bank h an dlin g th e it e m , th e ite m has n o t b e e n
m a te r ia lly a lt e r e d ; b u t th is su b p a ra gra p h (2) d o e s n o t lim it any
w a rra n ty b y a sen d er arisin g under S ta te la w ; and
(3)
a g r e e s t o in d e m n ify e a c h R e s e r v e Bank fo r any loss or e x p e n s e
su sta in ed (in clu d in g a tto r n e y s ' f e e s and e x p e n s e s o f litig a tio n ) r e su ltin g
fr o m (i) th e se n d e r's la ck
o f a u th o r ity to m a k e th e w a rra n ty in
p a ra g ra p h (a)(1) o f th is s e c t io n ; (ii) any a c t io n ta k en by th e R e s e r v e
Bank w ith in th e s c o p e o f its a u th o r ity in han dlin g th e it e m ; or (iii) any
w a rra n ty m a d e b y th e R e s e r v e Bank under s e c t io n 2 1 0 .6 (b ) o f th is
su b p a rt.
(b) R e c o v e r y by R e s e r v e B ank. If an a c t io n or p r o c e e d in g is b ro u g h t a g a in st
a R e s e r v e Bank th a t has h an d led an ite m , b a s e d on :
(1)
th e a lle g e d fa ilu r e o f th e se n d e r t o h a ve th e a u th o r ity t o m a k e th e
w a rra n ty and a g r e e m e n t in su b p a ra gra p h (a )(1 ) o f th is s e c t io n ;
(2)
any a c t io n by th e R e s e r v e Bank w ith in th e s c o p e o f its a u th o r ity in
h andling th e ite m ; or
(3)
any w a rra n ty m ad e by th e R e s e r v e Bank under s e c t io n 2 1 0 .6 (b ) o f this
su b p a rt,
th e R e s e r v e Bank m a y , upon th e e n tr y o f a fin a l ju d g m e n t or d e c r e e , r e c o v e r fr o m
th e sen d er th e a m ou n t o f a tto r n e y s ' f e e s and o th e r e x p e n s e s o f litig a tio n in c u r r e d ,
as w e ll as any a m ou n t th e R e s e r v e Bank is re q u ir e d to pay under th e ju d g m e n t or
d e c r e e , to g e t h e r w ith in te r e s t th e r e o n .
(c ) M eth od s o f r e c o v e r y . The R e s e r v e Bank m a y r e c o v e r th e a m o u n t s ta t e d
in p a ra g ra p h (b) o f this s e c t io n by c h a r g in g any a c c o u n t on its b o o k s th a t is
m a in ta in e d or u sed b y th e sen d er (o r if th e se n d e r is a n o th e r R e s e r v e Bank, by
e n te r in g a c h a r g e a g a in st th e o th e r R e s e r v e Bank th rou gh th e In te r d is tr ic t S e t
tle m e n t Fund), if:
(1)
th e R e s e r v e Bank m a d e s e a s o n a b le w r itte n d em a n d on th e sen d er to
a ssu m e d e fe n s e o f th e a c tio n or p r o c e e d in g ; and
(2)
th e sen d er has n ot m ad e any o th e r a r r a n g e m e n t fo r p a y m e n t th a t is
a c c e p t a b le to th e R e s e r v e Bank.
-6-
A R e s e r v e Bank th a t has b e e n c h a r g e d th rou g h th e I n te r d is tr ic t S e t t le m e n t Fund
m a y r e c o v e r fr o m its se n d er in th e m an n er and under th e c ir c u m s t a n c e s s e t fo r th
in th is p a ra g ra p h . A R e s e r v e B ank's fa ilu r e t o a v a il i t s e l f o f th e r e m e d y p r o v id e d
in th is p a ra g ra p h d o e s n o t p r e ju d ic e its e n fo r c e m e n t in any o th e r m an n er o f th e
in d e m n ity a g r e e m e n t r e f e r r e d to in su b p a ra g ra p h (a )(3 ) o f th is s e c t io n .
SE C TIO N 2 1 0 .6 — S ta tu s, W a rra n tie s ,
and L ia b ility o f R e s e r v e Bank
(a)
(1 ) S ta tu s and lia b ilit y .
A R e s e r v e Bank sh all a c t o n ly as th e se n d e r's
a g e n t in r e s p e c t o f an ite m . This a g e n c y t e r m in a te s n o t la te r than th e tim e th e
R e s e r v e Bank r e c e iv e s p a y m e n t fo r th e ite m in a c t u a lly and fin a lly c o l l e c t e d fu n d s
and m a k es th e p r o c e e d s a v a ila b le f o r u se b y th e s e n d e r. A R e s e r v e Bank sh all n o t
a c t as a g e n t or su b a g e n t o f an o w n e r o r h o ld e r o f an ite m o th e r than th e s e n d e r. A
R e s e r v e Bank sh all n o t h a v e or a ssu m e any lia b ilit y t o th e se n d e r in r e s p e c t o f an
it e m or its p r o c e e d s e x c e p t fo r th e R e s e r v e B ank's ow n la ck o f g o o d fa ith or fa ilu r e
to e x e r c i s e ord in a ry c a r e .
(2) R e lia n c e on rou tin g d e s ig n a tio n a p p e a rin g on it e m . A R e s e r v e Bank
m a y p r e s e n t or sen d an ite m b a s e d on th e ro u tin g n u m ber or o th e r d e s ig n a tio n o f a
p a y in g bank or n on ban k p a y or a p p e a rin g in any fo r m on th e ite m w hen th e R e s e r v e
Bank r e c e iv e s it. A R e s e r v e Bank sh all n o t b e r e s p o n s ib le f o r any d e la y re su ltin g
fr o m its a c tin g on any d e s ig n a tio n , w h e th e r in s c r ib e d b y m a g n e tic ink or b y o th e r
m e a n s, and w h e th e r or n o t th e d e s ig n a tio n a c t e d on is c o n s is te n t w ith any o th e r
d e s ig n a tio n a p p e a rin g on th e ite m .
(b)
W a rra n ties and lia b ilit y . By p re s e n tin g or sen d in g an it e m , a R e s e r v e
Bank w a rra n ts t o a s u b s e q u e n t c o l le c t i n g bank and to th e p a y in g bank and any o th e r
payor:
(1)
th a t th e R e s e r v e Bank has g o o d t i t le to th e ite m (o r is a u th o r iz e d to
o b ta in p a y m e n t on b e h a lf o f o n e w ho e it h e r (i) has g o o d t it le or (ii) is
a u th o r iz e d to o b ta in p a y m e n t on b e h a lf o f on e w h o has g o o d t it le ),
w h e th e r or n o t th is w a rra n ty is e v id e n c e d b y th e R e s e r v e Bank's e x p re s s
g u a ra n ty o f p rio r in d o r s e m e n ts on th e ite m ; and
(2)
th a t th e ite m has n o t b e e n m a te r ia lly a lte r e d t o th e e x t e n t p r e s c r ib e d
by S ta te la w a p p lic a b le to a R e s e r v e Bank or su b s e q u e n t c o l le c t i n g bank
h old in g th e ite m .
The R e s e r v e Bank sh all n o t h a v e o r a ssu m e any o th e r lia b ility to th e p a yin g bank or
o th e r p a y o r , e x c e p t f o r th e R e s e r v e B ank's ow n la c k o f g o o d fa ith or fa ilu r e to
e x e r c i s e o rd in a ry c a r e .
SE C TIO N 2 1 0 .7 — P re se n tin g Ite m s f o r P a y m e n t
(a) P re se n tin g or sen d in g .
A s p r o v id e d under S ta te law or as o th e r w is e
p e r m it t e d by th is s e c t io n : (1) a R e s e r v e Bank or a su b se q u e n t c o l le c t i n g bank m ay
p r e s e n t an ite m f o r p a y m e n t or send th e ite m f o r p r e s e n tm e n t and p a y m e n t; and
(2) a R e s e r v e Bank m ay sen d an ite m to a su b se q u e n t c o l le c t i n g bank w ith
a u th o r ity t o p r e s e n t it f o r p a y m e n t or to sen d it f o r p r e s e n tm e n t and p a y m e n t.
(b)
P la c e o f p r e s e n tm e n t.
m a y p r e s e n t an ite m :
A R e s e r v e Bank or su b se q u e n t c o l le c t i n g bank
-7-
(1)
a t a p la c e r e q u e s te d b y th e p a y in g ban k ;
(2)
a t a p la c e r e q u e s te d b y th e n on ban k p a y o r , if th e ite m is p a y a b le b y a
nonbank p a y o r o th e r than th rou gh a p a y in g ban k ;
(3)
under a s p e c ia l c o l le c t i o n a g r e e m e n t c o n s is t e n t w ith th is su b p a rt; or
(4)
th rou gh a c le a r in g h ou se and s u b je c t to its ru les and p r a c t ic e s .
(c ) P re se n tin g or sen d in g d i r e c t . A R e s e r v e Bank or su b se q u e n t c o l le c t i n g
ban k m a y , w ith r e s p e c t t o an ite m p a y a b le in th e R e s e r v e Bank’s D is t r ic t :
(1)
p r e s e n t or sen d th e ite m d ir e c t
r e q u e s te d by th e p a yin g ban k ; or
to
th e p a y in g ban k , o r to a p la c e
(2)
if th e ite m is p a y a b le b y a non ban k p a y o r o th e r than th rou g h a p a yin g
ban k , p r e s e n t it d ir e c t t o th e n onbank p a y o r . D o c u m e n ts , s e c u r it ie s , or
o th e r p a p ers a c c o m p a n y in g a n o n ca sh ite m sh all n o t b e d e liv e r e d t o th e
nonbank p a y o r b e f o r e th e ite m is p a id u n less th e se n d e r s p e c if i c a l ly
a u th o r iz e s d e liv e r y .
(d) Item p a y a b le in a n o th e r d i s t r i c t .
A R e s e r v e Bank r e c e iv in g an ite m
p a y a b le in a n o th e r D is t r ic t o rd in a rily sen ds th e ite m t o th e R e s e r v e Bank o f th e
o th e r D is t r ic t , b u t w ith th e a g r e e m e n t o f th e o th e r R e s e r v e Bank, m ay p r e s e n t or
sen d th e ite m as if it w e re p a y a b le in its ow n D is t r ic t .
SE C TIO N 2 1 0 .S — P re se n tin g N o n ca sh Ite m s f o r A c c e p t a n c e
A R e s e r v e Bank or a su b seq u e n t c o l le c t i n g bank m a y , if in s tr u c te d b y th e
s e n d e r , p re s e n t a n on ca sh ite m fo r a c c e p t a n c e in any m anner a u th o r iz e d b y law if :
(1) th e ite m p r o v id e s th a t it m u st b e p r e s e n te d f o r a c c e p t a n c e ; (2) th e ite m
is
p a y a b le e ls e w h e r e than at th e r e s id e n c e o r p la c e o f bu sin ess o f th e p a y o r ; or (3) th e
d a te o f p a y m e n t o f th e ite m d ep en d s on p r e s e n tm e n t f o r a c c e p t a n c e . D o c u m e n ts
a c c o m p a n y in g a n on ca sh ite m shall n o t b e d e liv e r e d t o th e p a y o r upon a c c e p t a n c e
o f th e ite m un less th e sen d er s p e c if i c a l ly a u th o r iz e s d e liv e r y .
A R e s e r v e Bank
sh all n ot h a v e or a ssu m e any o th e r o b lig a tio n to p r e s e n t or t o sen d fo r p r e s e n tm e n t
f o r a c c e p t a n c e any n on ca sh ite m .
SE C TIO N 2 1 0 .9 - P a y m e n t
(a)
C a sh it e m s . A p a yin g bank b e c o m e s a c c o u n t a b le fo r th e a m o u n t o f a
c a s h ite m r e c e iv e d d ir e c t ly or in d ir e c t ly fr o m a. R e s e r v e Bank, a t th e c l o s e o f th e
p a y in g ban k 's ban k in g day on w h ich it r e c e iv e s —' th e ite m if it r e ta in s th e ite m
a f t e r th e c lo s e o f th a t ban k in g d a y , u n less, p rio r t o th a t t im e , it p a ys f o r th e ite m
by:
3 / A p a yin g bank is d e e m e d to r e c e iv e a ca sh ite m on its n e x t ban k in g day if it
r e c e iv e s th e ite m :
(1)
on a day o th e r than a ban k in g day fo r it ; or
(2)
on a ban k in g d a y fo r it, bu t
(i)
a f t e r its reg u la r ban k in g hou rs;
(ii) a f t e r a " c u t - o f f h ou r" e s ta b lis h e d by it in a c c o r d a n c e w ith S ta te
la w ; or
(iii) during a ft e r n o o n or e v e n in g p e r io d s w hen it is o p en fo r lim ite d
fu n c tio n s on ly .
-8-
(1)
d e b it t o an a c c o u n t on th e R e s e r v e B ank's b o o k s ;
(2)
c a s h ; or
(3)
in th e d is c r e t io n o f th e R e s e r v e Bank, any o th e r fo r m o f p a y m e n t.
T h e p r o c e e d s o f any p a y m e n t sh a ll b e a v a ila b le to th e R e s e r v e Bank b y
th e R e s e r v e B ank's ban k in g day on th e ban k in g day o f r e c e ip t o f th e
p a y in g ban k . If th e ban k in g d a y o f r e c e ip t is n o t a ban k in g day f o r
Bank, p a y m e n t sh all b e m a d e on th e n e x t d a y th a t is a ban k in g day
R e s e r v e Bank and th e p a y in g ban k .
th e c l o s e o f
ite m b y th e
th e R e s e r v e
f o r b o th the
(b) N o n ca sh it e m s . A R e s e r v e Bank m a y r e q u ir e th e p a y in g o r c o l le c t i n g
ban k t o w h ich it has p r e s e n te d o r se n t a n o n ca sh ite m t o p a y fo r th e ite m in c a sh ,
b u t th e R e s e r v e Bank m ay p e r m it p a y m e n t b y a d e b it t o an a c c o u n t on th e R e s e r v e
B ank's b o o k s o r b y any o f th e fo llo w in g th a t is in a fo r m a c c e p t a b le to th e R e s e r v e
B ank: ban k d r a ft , tr a n s fe r o f fu n d s or bank c r e d it , or an y o th e r fo r m o f p a y m e n t
a u th o r iz e d b y S ta te la w .
(c ) N on ban k p a y o r . A R e s e r v e Bank m ay re q u ir e a n onbank p a y o r t o w h ich it
has p r e s e n te d an ite m t o p a y f o r it in c a s h , but th e R e s e r v e Bank m a y p e r m it
p a y m e n t in any o f th e fo llo w in g th a t is in a fo r m a c c e p t a b le t o th e R e s e r v e
Bank: c a s h ie r 's c h e c k , c e r t i f i e d c h e c k , or o th e r bank d r a ft or o b lig a tio n .
(d) H an dlin g o f p a y m e n t. A R e s e r v e Bank m a y h a n d le a bank d r a ft or o th e r
fo r m o f p a y m e n t it r e c e iv e s in p a y m e n t o f a ca sh ite m as a ca sh ite m . A R e s e r v e
Bank m a y h a n d le a bank d r a ft or o th e r fo r m o f p a y m e n t it r e c e iv e s in p a y m e n t o f a
n on ca sh ite m as e it h e r a ca sh ite m or a n on ca sh ite m .
(e) L ia b ility o f R e s e r v e Bank. A R e s e r v e Bank sh all n o t b e lia b le fo r th e
fa ilu r e o f a c o l le c t i n g ban k , p a y in g ban k , or n onbank p a y o r t o pay f o r an ite m , or
fo r any loss re s u ltin g fr o m th e R e s e r v e B ank's a c c e p t a n c e o f any fo r m o f p a y m e n t
o th e r th an ca sh a u th o r iz e d in p a ra g ra p h s (a ), (b ), and (c )
o f this s e c t io n .
A
R e s e r v e Bank th a t a c t s in g o o d fa ith and e x e r c is e s o rd in a ry c a r e sh all n o t b e lia b le
f o r th e n o n p a y m e n t o f , or fa ilu r e to r e a liz e upon, a bank d r a ft or o th e r fo r m o f
p a y m e n t th a t it a c c e p t s under p a ra g ra p h s (a ), (b ), and (c ).
SE C TIO N 210.10— T im e S ch e d u le and
A v a ila b ilit y o f C r e d its fo r C ash Ite m s
(a) E ach R e s e r v e Bank sh all in c lu d e in its o p e r a tin g c ir c u la r s a tim e s c h e d u le
f o r e a c h o f its o f f i c e s in d ic a tin g w hen th e a m o u n t o f an y ca sh ite m r e c e iv e d b y it
(o r se n t d i r e c t t o a n o th e r R e s e r v e o f f i c e f o r th e a c c o u n t o f th a t R e s e r v e Bank) is
c o u n t e d as r e s e r v e f o r p u rp o se s o f P art 204 o f th is c h a p te r (R e g u la tio n D) and
b e c o m e s a v a ila b le f o r u se b y th e se n d e r.
T h e R e s e r v e Bank shall g iv e e ith e r
im m e d ia te or d e fe r r e d c r e d it in a c c o r d a n c e w ith its tim e s c h e d u le t o a sen d er
o th e r than a f o r e ig n c o r r e s p o n d e n t . A R e s e r v e Bank o r d in a r ily g iv e s c r e d it t o a
fo r e ig n c o r r e s p o n d e n t o n ly w hen th e R e s e r v e Bank r e c e iv e s p a y m e n t fo r th e ite m
in a c t u a lly and fin a lly c o l l e c t e d fu n d s, b u t, in its d is c r e t io n , a R e s e r v e Bank m ay
g iv e im m e d ia te or d e fe r r e d c r e d i t in a c c o r d a n c e w ith its t im e s c h e d u le .
(b)
N o tw ith s ta n d in g its t im e s c h e d u le , a R e s e r v e Bank m a y r e fu s e a t any
t im e t o p e r m it th e use o f c r e d it g iv e n fo r any ca sh ite m fo r w h ich th e R e s e r v e
Bank has n ot y e t r e c e iv e d p a y m e n t in a c tu a lly and fin a lly c o l l e c t e d fu n ds.
-9-
SE C TIO N 2 1 0 . 1 1 - A v a ila b ilit y o f
P r o c e e d s o f N on ca sh Ite m s ; T im e S ch e d u le
(a) A v a ila b ilit y o f c r e d i t . A R e s e r v e Bank sh all g iv e c r e d it to th e se n d e r fo r
th e p r o c e e d s o f a n on ca sh ite m w hen it r e c e iv e s p a y m e n t in a c t u a lly and fin a lly
c o l l e c t e d fu n d s (o r a d v ic e fr o m a n o th e r R e s e r v e Bank o f su ch p a y m e n t t o it). The
a m ou n t o f th e ite m is c o u n te d as r e s e r v e f o r p u rp o se s o f P art 204 o f th is c h a p te r
(R e g u la tio n D) and b e c o m e s a v a ila b le f o r u se b y th e se n d e r w hen th e R e s e r v e Bank
r e c e iv e s th e p a y m e n t or a d v ic e , e x c e p t as p r o v id e d in p a ra g ra p h (b) o f th is s e c t io n .
(b) T im e s c h e d u le . A R e s e r v e Bank m a y g iv e c r e d it f o r th e p r o c e e d s o f a
n o n ca sh ite m s u b je c t to p a y m en t, in a c t u a lly and fin a lly c o l l e c t e d fu n d s in
a c c o r d a n c e w ith a tim e s c h e d u le in c lu d e d in its o p e r a tin g c ir c u la r s .
T h e tim e
s c h e d u le sh all in d ic a te w hen th e p r o c e e d s o f th e n o n ca sh ite m w ill b e c o u n te d as
r e s e r v e f o r p u rp oses o f P a rt 204 o f this c h a p te r (R e g u la tio n D) and b e c o m e
a v a ila b le f o r use by th e s e n d e r . A R e s e r v e Bank m a y , h o w e v e r , r e fu s e a t any tim e
t o p e r m it th e use o f c r e d it g iv e n f o r a n o n ca sh ite m f o r w h ich th e R e s e r v e Bank
has n o t y e t r e c e iv e d p a y m e n t in a c tu a lly and fin a lly c o l l e c t e d fu n d s.
(c ) H an dlin g o f p a y m e n t.
If a R e s e r v e Bank r e c e iv e s , in p a y m e n t f o r a
n o n ca sh it e m , a bank d r a ft or o th e r fo r m o f p a y m e n t th a t it e l e c t s t o h a n d le as a
n on ca sh it e m , th e R e s e r v e Bank sh all n e ith e r c o u n t th e p r o c e e d s as r e s e r v e fo r
p u rp oses o f P art 204 o f this c h a p te r (R e g u la tio n D) n or m a k e th e p r o c e e d s
a v a ila b le f o r u se until it r e c e iv e s p a y m e n t in a c t u a lly and fin a lly c o l l e c t e d fu n d s.
SE C TIO N 2 1 0 .1 2 — R e tu rn o f C a sh Ite m s
(a) R e c o v e r y o f p a y m e n t. A p a yin g bank th a t r e c e iv e s a ca sh ite m d ir e c t ly
or in d ir e c t ly fr o m a R e s e r v e Bank, o th e r than fo r im m e d ia te p a y m e n t o v e r th e
c o u n te r , and th a t p a y s f o r th e ite m as p r o v id e d in
s e c t io n 2 1 0 .9 (a ) o f th is
su b p a rt, m a y r e c o v e r th e p a y m e n t i f , b e f o r e it has fin a lly p aid th e ite m , it:
(1)
retu rn s th e ite m b e f o r e m id n igh t o f its n e x t ban k in g day fo llo w in g the
ban k in g day o f r e c e ip t ; or
(2)
ta k e s any o th e r a c t io n to r e c o v e r th e p a y m e n t w ith in th e tim e s and by
th e m ea n s p r o v id e d b y S ta te la w .
T h ese retu rn tim e s m ay n ot b e e x te n d e d . If th e ru les or p r a c t ic e s o f a c le a r in g
h ou se th rou gh w h ich th e ite m w as p r e s e n te d , or a s p e c ia l c o l le c t i o n a g r e e m e n t
under w h ich th e ite m w as p r e s e n te d , p r o v id e s f o r a s h o r te r re tu rn t im e , th e s h o r te r
tim e g o v e r n s .
(b) P ayin g ban k 's w a rra n tie s and a g r e e m e n t. A p a y in g bank th a t o b ta in s a
c r e d it or re fu n d fo r th e a m o u n t o f a p a y m e n t it has m a d e f o r a ca sh ite m :
(1)
w a rra n ts to th e R e s e r v e Bank (and t o a su b se q u e n t c o l le c t i n g ban k , and
to th e sen d er and all p rio r p a rtie s ) th a t it to o k ail a c t io n n e c e s s a r y to
e n t it le it t o r e c o v e r its p a y m e n t w ith in th e t im e lim its o f : (i) this
su b p a rt; (ii) S ta te la w , u nless a lo n g e r tim e is a f f o r d e d by this su b p a rt;
(iii) th e ru les or p r a c t ic e s o f any c le a r in g h ou se th rou gh w h ich th e ite m
w as p r e s e n te d ; and (iv) any s p e c ia l c o l l e c t i o n a g r e e m e n t under w h ich
th e ite m w as p r e s e n te d ; and
-1 0 -
(2)
a g r e e s t o in d e m n ify th e R e s e r v e Bank fo r any lo ss or e x p e n s e su sta in ed
(in clu d in g a t to r n e y s ' f e e s and e x p e n s e s o f litig a tio n ) re su ltin g fr o m th e
R e s e r v e B ank's g iv in g th e c r e d it or re fu n d to th e p a y in g bank, or
c h a r g in g , o r o b ta in in g a re fu n d f r o m , th e se n d e r.
A R e s e r v e Bank sh all n o t h a v e or a ssu m e an y r e s p o n s ib ility
w h e th e r th e a c t io n ta k en b y a p a y in g bank w as tim e ly .
fo r
d e te r m in in g
SE C TIO N 2 1 0 .1 3 — C h a r g e b a c k o f U n paid Item s
(a) R ig h t o f c h a r g e b a c k . If a R e s e r v e Bank d o e s n o t r e c e iv e p a y m e n t in
a c t u a lly and fin a lly c o l l e c t e d fu n d s fo r an ite m fo r w h ich th e R e s e r v e Bank g a v e
c r e d i t s u b je c t to p a y m e n t in a c t u a lly and fin a lly c o l l e c t e d fu n d s, th e R e s e r v e Bank
sh a ll c h a r g e b a c k th e a m o u n t o f th e ite m t o th e s e n d e r , w h e th e r or n o t th e ite m
i t s e l f ca n b e r e tu r n e d . In th e e v e n t o f c h a r g e b a c k , n e ith e r th e o w n e r or h o ld e r o f
th e ite m n or th e sen d er sh all h a v e any in te r e s t in any r e s e r v e b a la n c e or o th e r
fu n d s o f th e p ayin g bank or a c o l le c t i n g ban k in th e R e s e r v e Bank's p o s se ss io n .
(b) Su spen sion or c lo s in g o f b a n k . A R e s e r v e Bank sh all n o t pay or a c t on a
d r a ft , a u th o r iz a tio n to c h a r g e , or o th e r o rd e r on a r e s e r v e b a la n c e or o th e r fu n d s in
its p o s s e s s io n a f t e r it r e c e iv e s n o t ic e o f su sp en sion or c lo s in g o f th e bank m ak ing
th e p a y m e n t f o r th a t ban k 's ow n or a n o th e r's a c c o u n t .
SE C TIO N 2 1 0 .1 4 — E x te n sio n o f T im e L im its
If, b e c a u s e o f in te r ru p tio n o f c o m m u n ic a t io n f a c i li t i e s , su sp en sion o f p a y
m e n ts by a bank or n on ban k p a y o r , w ar, e m e r g e n c y c o n d itio n s or o th e r c ir c u m
s ta n c e s b e y o n d its c o n t r o l, a bank (in clu d in g a R e s e r v e Bank) or n onbank p a y o r is
d e la y e d in a c tin g on an ite m b e y o n d a p p lic a b le t im e lim its , its t im e fo r a c tin g is
e x te n d e d f o r th e t im e n e c e s s a r y to c o m p le t e th e a c t io n , if it e x e r c is e s su ch
d ilig e n c e as th e c ir c u m s t a n c e s r e q u ir e .
SE C TIO N 2 1 0 .1 5 — D ir e c t P r e s e n tm e n t o f
C e r ta in W arran ts
If a R e s e r v e Bank e l e c t s t o p re s e n t d ir e c t t o th e p a y o r a b ill, n o te , or w a r
ran t th a t is issu ed and p a y a b le by a S ta te or a p o lit ic a l su b d iv isio n and th a t is a
ca sh ite m n ot p a y a b le or c o l l e c t i b l e th rou gh a ban k : (a)
s e c t io n s 2 1 0 .9 , 2 1 0 .1 2 ,
and 2 1 0 .1 3 and th e o p e r a tin g c ir c u la r s o f th e R e s e r v e Banks a p p ly to th e p a y o r as
if it w e r e a p a y in g ban k ; (b)
s e c t io n 2 1 0 .1 4 a p p lie s t o th e p a y o r as if it w e re a
ban k ; and (c ) under s e c t io n 2 1 0 .9 e a c h day on w h ich th e p a y o r is o p en fo r th e
re g u la r c o n d u c t o f its a ffa ir s o r th e a c c o m m o d a t io n o f th e p u b lic is c o n s id e r e d a
b a n k in g day.
S U B P A R T B— W ire T ra n sfe rs o f Funds
SE C TIO N 2 1 0 .2 5 — A u th o r ity , P u rp o se , and S c o p e
The B oard o f G o v e r n o rs
th is su b p a rt pu rsuan t to th e
U .S .C . i 3 42), p a ra g ra p h (f) o f
14 o f s e c t io n 16 (12 U .S .C .
o f th e F e d e r a l R e s e r v e S y ste m ("B o a r d ") has issu ed
F e d e r a l R e s e r v e A c t , s e c t io n 13, as a m e n d e d (12
s e c t io n 19, as a m e n d e d (12 U .S .C .
§ 4 6 4 ), p a ra g ra p h
§ 2 4 8 (o )), p a ra g ra p h s (i) and (j) o f s e c t io n 11 (12
-11U .S .C .
2 ^ 8 (i) and (j)), and o th e r la w s. This su b p a rt g o v e rn s th e h a n d lin g by
F e d e r a l R e s e r v e Banks (" R e s e r v e B anks") o f tr a n s fe r ite m s and tr a n s fe r r e q u e s ts .
Its p u rp o se is to p r o v id e ru les f o r th e w ir e tr a n s fe r o f fu n d s.
SE C TIO N 2 1 0 .2 6 — D e fin itio n s
A s u sed in th is su b p a rt, u n less th e c o n t e x t o th e r w is e re q u ire s :
(a)
" B e n e fic ia r y " m ean s a p e rs o n or o r g a n iz a t io n , o th e r than th e tra n s
f e r e e , d e s ig n a te d in a tr a n s fe r ite m or r e q u e s t t o r e c e iv e th e a m o u n t o f th e ite m
or r e q u e s t fr o m th e t r a n s fe r e e .
(b)
" I n t e r o f f i c e tr a n s a c tio n " m ea n s a tr a n s fe r b e tw e e n a tr a n s fe r o r and
t r a n s fe r e e th a t d o n o t m a in ta in or u se a c c o u n t s a t th e sa m e o f f i c e o f a R e s e r v e
Bank.
(c )
" I te m " m ean s a w ritin g e v id e n c in g a rig h t to th e p a y m e n t o f m o n e y ,
th a t is h an d led in a c c o r d a n c e w ith th is su b p a rt.
(d)
"T r a n s fe r it e m " m ean s an ite m in a f o r m a t p r o v id e d fo r in a R e s e r v e
Bank o p e r a tin g c ir c u la r : (1) sen t by a t r a n s fe r o r (o th e r than a R e s e r v e Bank) t o a
R e s e r v e Bank fo r d e b it to th e t r a n s fe r o r 's a c c o u n t at th e R e s e r v e Bank and fo r
c r e d it to a t r a n s fe r e e n a m ed in th e ite m ; o r (2) se n t b y a R e s e r v e Bank to a n o th e r
R e s e r v e Bank fo r c r e d it t o th e la tte r o r t o an y o th e r t r a n s fe r e e ; or (3) issu ed b y a
R e s e r v e Bank a t th e r e q u e s t o f a t r a n s fe r o r f o r c r e d i t t o a tr a n s fe r e e .
(e)
"T r a n s fe r r e q u e s t" or " r e q u e s t " m ean s a r e q u e s t by t e le p h o n e th a t a
R e s e r v e Bank issu e a tr a n s fe r ite m .
(f)
" T r a n s fe r e e " m ean s a m e m b e r ba n k , a R e s e r v e Bank, or o th e r
in
s titu tio n th a t m a in ta in s or u ses
an a c c o u n t a t a R e s e r v e Bank and
th a t is
d e s ig n a te d in a tr a n s fe r ite m or r e q u e s t to r e c e iv e th e a m ou n t o f the
ite m or
re q u e s t.
(g)
"T r a n s fe r o r " m ean s a m e m b e r ban k , a R e s e r v e Bank, or o th e r
in
s titu tio n th a t m a in ta in s or u ses
an a c c o u n t at a R e s e r v e Bank and
th a t is
a u th o r iz e d b y th a t R e s e r v e Bank to sen d a tr a n s fe r ite m or r e q u e s t t o it.
(h)
" T r a n s fe r o r 's a c c o u n t " o r " t r a n s fe r e e 's a c c o u n t " m ean s th e a c c o u n t at
its R e s e r v e Bank m a in ta in e d or u sed b y th e tr a n s fe r o r or t r a n s fe r e e , r e s p e c t iv e ly .
(i)
" T r a n s fe r o r 's R e s e r v e Bank" o r " t r a n s fe r e e 's R e s e r v e B ank" m ean s th e
R e s e r v e o f f i c e a t w h ich th e t r a n s fe r o r or t r a n s fe r e e , r e s p e c t iv e ly , m a in ta in s or
u ses an a c c o u n t .
SECTION
2 1 0 .2 7 —G e n e r a l P ro v is io n s
(a)
G e n e r a l. E ach R e s e r v e Bank shall r e c e iv e and h an dle tr a n s fe r ite m s ,
and sh all it s e lf issu e tr a n s fe r ite m s , in a c c o r d a n c e w ith th is su b p a rt. E ach R e s e r v e
Bank shall issue an o p e r a tin g c ir c u la r g o v e rn in g th e d e ta ils o f its fu n d s tr a n s fe r
o p e r a tio n s and o th e r m a tte r s d e e m e d a p p r o p r ia te b y th e R e s e r v e Bank.
The
c ir c u la r s m a y , a m on g o th e r th in gs: s e t m in im u m and m a x im u m d o lla r a m o u n ts;
s p e c if y fo r m a t r e q u ir e m e n ts f o r tr a n s fe r ite m s and re q u e s ts ; and im p o s e r e a s o n
a b le fu n ds tr a n s fe r c h a r g e s .
-1 2 -
(b)
B in din g e f f e c t .
T his su b p a rt and th e o p e r a t in g c ir c u la r s o f th e R e s e r v e
B anks a r e b in d in g on t r a n s fe r o r s and t r a n s ie r e e s .
(c )
r .n v p r n m e n t t r a n s fe r o r s and t r a n s f e r e e s . E x c e p t as o t h e r w is e p r o v id e d
b y s t a t u t e s o f th e U n ite d S ta te s , o r r e g u la t io n ^ issu e d o r a r r a n g e m e n ts m a c e
th e r e u n d e r , th is su b p a rt and th e o p e r a t in g c ir c u la r s o f th e R e s e r v e Banks a p p ly to
th e f o llo w in g w h en a c t in g as a t r a n s fe r o r or t r a n s f e r e e : a d e p a r t m e n t , a g e n c y ,
in s t r u m e n t a lit y , in d e p e n d e n t e s t a b lis h m e n t , o r o f f i c e o f th e U n ite d S ta te s , or
w h o lly o w n e d o r c o n t r o ll e d G o v e r n m e n t c o r p o r a t i o n , th a t m a in ta in s o r u ses an
a c c o u n t w ith a R e s e r v e B ank.
SE C T IO N 2 1 0 .2 8 — M e d ia f o r T r a n s fe r Ite m s and
R e q u e s ts
(a )
T r a n s fe r it e m s . A t r a n s fe r o r m a y issu e and se n d a t r a n s fe r it e m In any
o f th e f o l lo w i n g m e d ia , if s p e c i f i e d in th e o p e r a t in g c ir c u la r o f th e t r a n s f e r o r s
R e s e r v e B ank:
(1)
a l e t t e r , m e m o r a n d u m , or s im ila r w r itin g ;
(2 )
a te le g r a m (in c lu d in g T W X , T E L E X , o r s im ila r fo r m o f c o m m u n ic a t io n );
and
(3)
an y fo r m o f c o m m u n ic a t io n , o th e r th an v o i c e , r e g is t e r e d on (o r m fo r m
s u ita b le f o r b e in g r e g is t e r e d on ) m a g n e t ic t a p e , d is c , o r o th e r m e d iu m
d e s ig n e d t o c o n t a in in d u r a b le fo r m c o n v e n t io n a l sig n a ls u sed .o r
e l e c t r o n i c c o m m u n ic a t io n o f m e s s a g e s .
(b)
T r a n s fe r r e q u e s t s . A t r a n s fe r o r m a y m a k e tr a n s fe r r e q u e s ts o n ly u n der
s p e c ia l a r r a n g e m e n ts w ith its R e s e r v e B ank. T h e R e s e r v e Bank m a y r e c o r d th e s e
t e le p h o n e m e s s a g e s .
SECTION
2 1 0 .2 9 — T r a n s fe r o r 's A g r e e m e n t
A t r a n s fe r o r , b y sen d in g a t r a n s fe r it e m or m a k in g a tr a n s fe r r e q u e s t to its
R e s e r v e Bank a u t h o r iz e s :
(a)
its R e s e r v e Bank t o d e b it th e a m o u n t t o th e t r a n s fe r o r 's a c c o u n t , and t o
h a n d le th e t r a n s fe r it e m or r e q u e s t in a c c o r d a n c e w ith th is su b p a rt and th e
o p e r a t in g c ir c u la r s o f th e R e s e r v e B anks; and
(b)
th e t r a n s fe r e e 's R e s e r v e Bank t o h a n d le a m a tc h in g tr a n s fe r it®™
(m a t c h in g as t o a m o u n t, t r a n s f e r e e , and b e n e f i c ia r y , if an y) in a c c o r d a n c e w it t is
su b p a rt and th e o p e r a t in g c ir c u la r s o f th e t r a n s f e r e e 's R e s e r v e Bank.
SE C T IO N 2 1 0 . 3 0 — T r a n s fe r e e 's A g r e e m e n t
(a)
A t r a n s f e r e e (o t h e r th an a R e s e r v e B ank), b y m a in ta in in g or u sin g an
a c c o u n t a t a R e s e r v e B ank, a u t h o r iz e s its R e s e r v e Bank to c r e d it th e a m o u n t o f
th e tr a n s fe r ite m t o its a c c o u n t .
(b)
A t r a n s fe r e e (o t h e r th an a R e s e r v e Bank) th a t r e c e iv e s th e a m o u n t o f a
tr a n s fe r ite m d e s ig n a tin g a b e n e f i c ia r y , a g r e e s :
-13(1)
t o c r e d i t p r o m p t ly th e b e n e f i c i a r y ’ s a c c o u n t or o t h e r w is e m a k e
th e a m o u n t a v a ila b le to th e b e n e f i c ia r y ; or
(2)
to n o t i f y p r o m p t ly its R e s e r v e Bank if it
b e c a u s e o f c ir c u m s t a n c e s b e y o n d its c o n t r o l.
is u n a b le
to
do
so
SE C T IO N 2 1 0 .3 1 — S en d in g T r a n s fe r Ite m s and R e q u e s ts
(a)
A t r a n s fe r o r (o th e r th an a R e s e r v e Bank) m a y sen d a tr a n s fe r it e m t o ,
or m a k e a tr a n s fe r r e q u e s t o f , its R e s e r v e Bank o n ly if it a rra n g e s t o h a v e in its
a c c o u n t , a t th e en d o f its R e s e r v e B ank's b a n k in g d a y , a b a la n c e o f a c t u a lly and
fin a lly c o l l e c t e d fu n d s s u f f i c ie n t t o c o v e r th e a m o u n ts o f t r a n s fe r it e m s d e b it e d t o
th e a c c o u n t d u rin g th a t d a y .
T h e R e s e r v e Bank has a s e c u r it y in t e r e s t in th e
t r a n s fe r o r 's a s s e ts in th e p o s s e s s io n o f , o r h e ld f o r th e a c c o u n t o f , th e R e s e r v e
Bank i f :
(1)
th e b a la n c e in th e t r a n s fe r o r 's a c c o u n t a t th e e n d o f th e R e s e r v e B ank's
b a n k in g d a y is n o t s u f f i c i e n t to c o v e r th e a m o u n ts d e b it e d t o th e
a c c o u n t d u rin g th a t d a y ; or
(2)
th e t r a n s fe r o r su sp en d s p a y m e n t o r is c l o s e d a t an y t im e d u rin g th e
R e s e r v e B ank's b a n k in g d a y , and d o e s n o t h a v e a b a la n c e s u f f i c i e n t to
c o v e r th e a m o u n ts d e b it e d to its a c c o u n t .
A R e s e r v e Bank m a y , in its d is c r e t io n , r e fu s e t o a c t on a tr a n s fe r ite m o r r e q u e s t
i f it has re a s o n t o b e lie v e th a t th e b a la n c e in th e t r a n s fe r o r 's a c c o u n t is n o t
s u f f i c i e n t t o c o v e r th e ite m o r r e q u e s t .
(b)
A R e s e r v e Bank m a y sen d a tr a n s fe r
r e q u e s t o f , a n o th e r R e s e r v e Bank.
ite m
to,
o r m a k e a tr a n s fe r
-SE C TIO N 2 1 0 .3 2 — H an dlin g T r a n s fe r Ite m s and R e q u e s ts
(a)
I n t r a o f f i c e t r a n s a c t io n s .
If th e t r a n s fe r o r and t r a n s fe r e e m a in ta in or
u se a c c o u n t s a t th e s a m e R e s e r v e o f f i c e , th a t o f f i c e sh a ll a c t on a t r a n s fe r ite m by
d e b it in g and c r e d it in g th e ir a c c o u n t s . T h e R e s e r v e o f f i c e sh all a c t on a tr a n s fe r
r e q u e s t b y issu in g a t r a n s fe r it e m , and d e b itin g and c r e d it in g th e a c c o u n t s .
(b)
I n t e r o f f i c e tr a n s a c t io n s . T h e t r a n s fe r o r 's R e s e r v e Bank sh a ll h a n d le an
i n t e r o f f i c e t r a n s a c tio n b y d e b itin g th e t r a n s fe r o r 's a c c o u n t and, a c t in g as a
t r a n s fe r o r , issu in g and
sen d in g t o th e t r a n s fe r e e 's R e s e r v e Bank a m a tc h in g
tr a n s fe r ite m (m a tc h in g as to a m o u n t, t r a n s f e r e e , and b e n e f i c ia r y , if a n y ).
The
t r a n s fe r e e 's R e s e r v e Bank sh a ll t r a n s fe r fu n d s t o th e t r a n s fe r e e b y d e b itin g th e
a c c o u n t o f th e t r a n s fe r o r 's R e s e r v e B ank, and c r e d it in g th e t r a n s fe r e e 's a c c o u n t .
(c )
N o t ic e o f d e la y . If a R e s e r v e Bank le a rn s th a t it is u n a b le to e f f e c t u
a te a t r a n s fe r o f fu n d s on a t im e ly b a s is f o r an y r e a s o n , it sh all n o t if y th e tra n s
f e r o r o f th e d e la y w ith in a r e a s o n a b le t im e .
S E C T IO N 2 1 0 . 3 3 - T i m e L im its
(a)
T im e s c h e d u le .
E ach R e s e r v e Bank sh a ll in c lu d e in its o p e r a tin g
c ir c u la r a s c h e d u le sh ow in g th e h ou rs d u rin g w h ich it h a n d les tr a n s fe r ite m s and
req u ests.
-u-
(b)
A c t in g s e a s o n a b ly . A R e s e r v e Bank a c t s s e a s o n a b ly if it ta k e s p r o p e r
a c t io n on th e d a y it r e c e iv e s a t r a n s fe r it e m o r r e q u e s t .
T a k in g p r o p e r a c t io n
w ith in a r e a s o n a b ly lo n g e r t im e m a y b e s e a s o n a b le b u t th e R e s e r v e Bank has th e
bu rd en o f so e s ta b lis h in g . N o R e s e r v e Bank sh a ll r e p r e s e n t th a t it w ill c o m p l e t e a
t r a n s fe r o f fu n d s on th e d a y r e q u e s t e d .
(c )
T r a n s fe r s a f t e r c lo s in g h o u r . A R e s e r v e Bank is n o t r e q u ir e d t o a c t on
th e d a y it r e c e iv e s an it e m o r r e q u e s t if it r e c e iv e s th e it e m o r r e q u e s t a f t e r th e
t im e sh ow n in its s c h e d u le .
In e m e r g e n c y o r o th e r unusual c ir c u m s t a n c e s , a
R e s e r v e Bank m a y h a n d le a t r a n s fe r it e m o r r e q u e s t a f t e r th e t im e sh o w n in its
s c h e d u le . T h e c o m p le t io n o f an i n t e r o f f i c e t r a n s a c t io n in th e s e c ir c u m s t a n c e s is
a ls o d is c r e t io n a r y w ith th e t r a n s f e r e e 's R e s e r v e Bank.
(d)
A s o f a d ju s t m e n t s . If a R e s e r v e Bank f a ils t o
t r a n s fe r ite m o r r e q u e s t t o th e t r a n s fe r e e 's a c c o u n t on
R e s e r v e Bank s h a ll, u n less o t h e r w is e in s t r u c t e d , c o m p l e t e
b a n k in g d a y and m a k e a d ju s tm e n ts f o r r e s e r v e a c c o u n t in g
th e t r a n s fe r w as t o h a v e b e e n m a d e .
c r e d i t th e a m o u n t o f a
th e d a y r e q u e s t e d , th e
th e tr a n s fe r on its n e x t
p u rp o s e s as o f th e d a y
SE C T IO N 2 1 0 .3 4 — A d v ic e s o f C r e d it and D e b it
(a)
A d v ic e o f c r e d i t . T h e t r a n s fe r e e 's R e s e r v e Bank sh a ll g iv e a d v ic e o f
c r e d i t t o th e t r a n s fe r e e f o r an e x e c u t e d tr a n s fe r o f fu n d s.
(b)
A d v ic e o f d e b it .
A f t e r r e c e iv in g a t r a n s fe r ite m o r r e q u e s t , th e
t r a n s fe r o r 's R e s e r v e Bank sh a ll sen d an a d v ic e o f d e b it t o th e t r a n s fe r o r .
A
t r a n s fe r o r is d e e m e d t o a p p r o v e th e a c c u r a c y o f an a d v ic e o f d e b it u n le ss it sen d s
t o its R e s e r v e Bank w r it t e n o b je c t i o n w ith in 10 c a le n d a r d a y s o f r e c e iv in g th e
a d v ic e o f d e b it .
SE C T IO N 2 1 0 .3 5 — R e v o c a t io n o f T r a n s fe r Ite m s and R e q u e s ts
(a)
R e q u e s t f o r r e v o c a t io n .
A R e s e r v e Bank m a y c e a s e a c t in g on a
tr a n s fe r ite m o r r e q u e s t if it r e c e iv e s fr o m th e t r a n s fe r o r a r e q u e s t f o r r e v o c a t io n
in t im e t o g iv e th e R e s e r v e Bank a r e a s o n a b le o p p o r t u n it y t o c o m p ly . If fu n d s h a v e
b e e n tr a n s fe r r e d , th e R e s e r v e Bank m a y , on r e q u e s t fr o m th e t r a n s fe r o r , ask th e
t r a n s fe r e e t o re tu rn th e fu n d s .
In an i n t e r o f f i c e t r a n s a c t io n , th e R e s e r v e Bank
m a y ask th e t r a n s f e r e e 's R e s e r v e Bank to ask th e t r a n s f e r e e to re tu rn th e fu n d s.
(b)
E rro n e o u s t r a n s fe r .
In an e r r o n e o u s or ir r e g u la r tr a n s fe r o f fu n d s , a
R e s e r v e Bank m a y , on its ow n in it ia t iv e or a t th e r e q u e s t o f a n o th e r R e s e r v e B ank,
ask th e t r a n s fe r e e t o r e tu rn fu n d s p r e v io u s ly t r a n s fe r r e d .
SE C T IO N 2 1 0 .3 6 — F in a l P a y m e n t; U se o f Funds
(a)
F in a l p a y m e n t.
A t r a n s fe r ite m is fin a lly p a id w h en th e t r a n s fe r e e 's
Bank sen d s th e tr a n s fe r ite m or sen d s o r t e le p h o n e s th e a d v ic e o f c r e d i t f o r th e
it e m t o th e t r a n s f e r e e , w h ic h e v e r o c c u r s f i r s t .
(b)
R ig h t t o u se fu n d s . C r e d it g iv e n b y a R e s e r v e Bank f o r a tr a n s fe r o f
fu n d s b e c o m e s a v a ila b le f o r u se w h en th e tr a n s fe r ite m is fin a lly p a id , s u b je c t to
th e R e s e r v e B ank's rig h t t o a p p ly th e t r a n s fe r r e d fu n d s to an o b lig a t io n o w e d t o it
by th e t r a n s fe r e e .
SE C T IO N 2 1 0 .3 7 — T im e lin e s s o f A c t io n
If, b e c a u s e o f c ir c u m s t a n c e s b e y o n d its c o n t r o l, a R e s e r v e Bank is d e la y e d
b e y o n d th e t im e lim its p r o v id e d in th is s u b p a r t, in its o p e r a t in g c ir c u la r , o r b y la w
in a c t in g on a t r a n s fe r ite m or r e q u e s t , th e t im e f o r a c t in g is e x t e n d e d f o r th e t im e
n e c e s s a r y t o c o m p l e t e th e a c t io n , if th e R e s e r v e Bank e x e r c i s e s su ch d ilig e n c e as
th e c ir c u m s t a n c e s r e q u ir e .
S E C T IO N 2 1 0 .3 8 — R e s e r v e Bank L ia b ilit y
(a)
L im it a tio n s on lia b ilit y . A R e s e r v e Bank sh a ll n o t h a v e or a ss u m e any
r e s p o n s ib ilit y to a t r a n s fe r e e , b e n e f i c ia r y , or o t h e r p a r ty , e x c e p t its im m e d ia t e
t r a n s fe r o r .
A R e s e r v e Bank sh a ll n o t b e lia b le f o r th e in s o lv e n c y , n e g le c t ,
m is c o n d u c t , m is ta k e , o r d e fa u lt o f a n o th e r b an k o r p e r s o n , in c lu d in g a t r a n s fe r o r ,
e x c e p t as p r o v id e d in th is s e c t i o n . A R e s e r v e Bank sh a ll n o t h a v e or a s s u m e an y
lia b ilit y e x c e p t f o r its ow n or a n o th e r R e s e r v e B an k 's la c k o f g o o d fa it h or fa ilu r e
t o e x e r c i s e o r d in a r y c a r e .
(b)
D a m a g e s . A R e s e r v e Bank is lia b le f o r d a m a g e s p r o x im a t e ly c a u s e d by
a fa ilu r e t o c r e d i t th e a m o u n t o f a t r a n s fe r ite m o r r e q u e s t t o th e t r a n s fe r e e 's
a c c o u n t c a u s e d b y a R e s e r v e B ank's fa ilu r e to e x e r c i s e o r d in a r y c a r e o r t o a c t in
g o o d fa it h . W h e th e r d a m a g e s a re p r o x im a t e ly c a u s e d b y a R e s e r v e B ank's fa ilu r e
t o e x e r c i s e o r d in a r y c a r e o r t o a c t in g o o d fa it h is a q u e s tio n o f f a c t t o b e
d e te r m in e d in e a c h c a s e .
(c )
R ig h t to in d e m n ity . T h e t r a n s f e r e e 's R e s e r v e Bank sh all in d e m n ify th e
tr a n s fe r o r 's R e s e r v e Bank f o r an y lo s s o r e x p e n s e s u s ta in e d (in clu d in g a t t o r n e y s '
f e e s and e x p e n s e s o f lit ig a t io n ) as a r e s u lt o f th e fa ilu r e o f th e t r a n s fe r e e 's
R e s e r v e Bank t o e x e r c i s e o r d in a r y c a r e or t o a c t in g o o d fa it h in an i n t e r o f f i c e
t r a n s a c t io n .
*
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B oa rd o f G o v e r n o r s o f th e F e d e r a l R e s e r v e S y s te m , D e c e m b e r 13, 1979.
T h e o d o r e E. A llis o n
S e c r e t a r y o f th e B oard
@FedFRASER