|
COPYRIGHT 2004 National Association of Credit Management
Introduction
The Check Clearing for the 21st Century Act (Check 21 Act) facilitates significant change in the way checks are processed in the United States. All banks will be affected by this law even if they do nothing to change their current check processing operations. All customers (consumers and businesses) are affected by the Check 21 Act in that they have the potential to receive a substitute check.
To help educate customers, and to help train bank staff, the financial services industry associations have come together and developed this Resource Document that contains an overview of Check 21: common terms with definitions, examples of substitute checks, where substitute checks will be found and a list of industry resources. Using common material such as the information in this document will help reduce customer confusion.
The contributing organizations strongly urge anyone developing material for training or education on Check 21 to use this document as a resource for the correct terms, examples of substitute checks and other key points. This will promote consistency in the industry.
Overview of the Check Clearing for the 21st Century Act (Check 21)
Based on Final Enacted Bill
Background
In 2000 the Federal Reserve Board staff began investigating a concept to promote check truncation and electronic check presentment. That concept evolved into the Check Clearing for the 21st Century Act (Check 21).
* The idea was to enable a bank to substitute a machine-readable copy of a check (a "substitute check") for the original check for forward collection or return.
* Substitute checks that meet the requirements of the Act would be the legal and practical equivalent of the original check.
Federal Reserve Board staff worked with industry and other stakeholders through numerous versions of the Act.
* On December 21, 2001, Chairman Greenspan sent the Federal Reserve Board's legislative proposal to the Chairs and Ranking Members of the Senate and House Banking Committees.
* Both the House and Senate introduced bills in the 107th Congress (2002).
* In the 108th Congress (2003), the following bills were introduced:
House: H.R. 1474
Senate: S. 1334
* Many banking organizations monitored the legislative process and provided input.
All sectors of the banking industry (small banks, large hanks, credit unions, processors, technology companies, Federal Reserve Board, etc.) strongly supported the Act and worked together to achieve passage.
The Accredited Standards Committee X9B (www.x9.org) focused on the development of industry standards for the financial services industry and developed the technical specification for substitute checks (DSTU X9.90-2003) in support of Check 21. (DSTU is an acronym for Draft Standard for Trial Use.)
Highlights of the Check 21 Act
The purposes of the Check 21 Act are:
* To facilitate check truncation;
* To foster innovation in the check payment system...
Read the full article for free courtesy of your local library.
|
Bookmark this article
Print this article
Link to this article
Email this article
Digg It!
Add to del.icio.us
RSS
