Final rule changes to simplify rules for check collections and have them better conform with requirements of a funds availability rule were approved Thursday by the Federal Reserve Board, the agency announced the same day.
The revisions, approved for the Fed’s Regulation J (Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire), better conform the check collections rule with Regulation CC (Availability of Funds and Collection of Checks). The final rule takes effect Jan. 1.
The Regulation J amendments align the rights and obligations of parties, including the Federal Reserve Banks, with the Fed Board’s 2017 amendments to Regulation CC, which reflected the evolution of the nation’s check collection system from one that is largely paper-based to one that is virtually all electronic. They also clarify and simplify provisions of Regulation J, remove obsolete provisions, and improve consistency between Regulation J and Regulation CC, the Fed said.
As proposed in March, the final amendments clarify that electronically created items (check-like items created in electronic form that never existed in paper form) are not “items” that the Reserve Banks are authorized to handle under Regulation J.
Also as proposed, the revisions clarify that financial messaging standards for Fedwire funds transfers, such as the international common format standard ISO 20022, do not confer or connote legal status or responsibilities with respect to Fedwire funds transfers.
The Fed Board, in its notice prepared for the Federal Register on this final rule, says it received 25 comment letters on its proposal, including one from a group of trade associations. Referencing comments in the group letter, the Fed says it has revised proposed § 210.6(b)(3) and § 210.12(e) of Regulation J to extend the warranties with respect to electronic checks and electronic returned checks provided by Reserve Banks to the same scope of recipients as in Regulation CC.
Federal Register notice (Nov. 29, 2018)