Check 21 Compliance InfoBase Released by Federal Financial Institution Regulators
October 13, 2004
Circular No. 11649

To All Depository Institutions and Others Concerned in the Second Federal Reserve District:

The Federal Financial Institutions Examination Council (FFIEC) announced the availability of an InfoBase for depository institutions that provides information on consumer compliance aspects of the Check Clearing Act for the 21st Century Act (Check 21).

The Check 21 InfoBase features a training presentation, examination procedures, frequently asked questions, and links to other resources that may be helpful in understanding Check 21. The InfoBase is accessible at the FFIEC website.

Check 21 was signed into law on October 28, 2003 and will take effect on October 28, 2004. It facilitates check truncation and electronic check exchange by authorizing a new negotiable instrument called a “substitute check.” Check 21 provides that a properly prepared substitute check is the legal equivalent of the original check. A depository institution can provide a legally equivalent substitute check when and where an original check is needed instead of providing the original check.

Although Check 21 does not require any depository institution to create substitute checks or accept checks electronically, certain provisions of Check 21 will affect all depository institutions, even those that do not create substitute checks. These provisions involve consumer awareness disclosures, and expedited recredit procedures to protect consumers who receive substitute checks. There are also new warranties and indemnities that protect all substitute check recipients.

The “FFIEC InfoBase,” developed by the Task Force on Examiner Education, provides field examiners in financial institution regulatory agencies a quick source of introductory training and basic information. The long-term goal of the InfoBase is to provide just-in-time training for new regulations and other topics of specific concern to examiners in FFIEC’s five member agencies.

Press release OFFSITE

Maryann Campbell
Supervising Examiner
Legal and Compliance Risk Department