Final Amendment to Regulation J: Collection of Checks and Other Items
October 25, 2004
Circular No. 11653

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

The Federal Reserve Board announced final amendments to Regulation J, which governs Reserve Banks’ collection of checks and other cash items. The final amendments ensure that Regulation J covers the entire range of check processing services that the Reserve Banks will offer after the Check Clearing for the 21st Century Act takes effect on October 28, 2004.

The Check 21 Act permits banks to use substitute checks in place of original checks in the check collection or return process. The Act does not require any bank to accept checks electronically, although it facilitates the use of electronic transmission between banks that choose to do so. In light of the Check 21 Act, the Reserve Banks plan to offer a wider range of electronic check processing services, including accepting items in electronic form for collection and return. The final amendments therefore bring electronic items within the coverage of Regulation J. The final amendments also establish new warranties and indemnities that apply to electronic items handled by a Reserve Bank and that are not subject to warranties and indemnities under other law.

The final amendments take effect on October 28, 2004, to coincide with the effective date of the Check 21 Act.

Press release OFFSITE
Board’s notice OFFSITE PDF

Stephanie Heller
Counsel and Vice President
Legal Department