(a) Payment of sender’s obligation to a Federal Reserve Bank. A
sender (other than a Federal Reserve Bank), by maintaining or using
a settlement account with a Federal Reserve Bank, authorizes the sender’s
Federal Reserve Bank to obtain payment for the sender’s payment orders
by debiting, or causing any other Federal Reserve Bank on whose books
the settlement account is maintained to debit, the amount of the payment
order from the settlement account. The sender remains responsible
for payment if the Federal Reserve Bank on whose books the settlement
account is maintained does not, for any reason, obtain payment by
debiting that account.
(b) Overdrafts.
(1) A sender does not have the right to
an overdraft in its settlement account. In the event an overdraft
is created, the overdraft shall be due and payable immediately, without
the need for a demand by the Federal Reserve Bank, at the earliest
of the following times:
(i) at the end of the FedNow funds-transfer
business day;
(ii)
at the time the Federal Reserve Bank, in its sole discretion, deems
itself insecure and gives notice thereof to the sender; or
(iii) at the time the sender
suspends payments or is closed.
(2) The sender shall have in its settlement
account, at the time the overdraft is due and payable, a balance of
actually and finally collected funds sufficient to cover the aggregate
amount of all its obligations to the Federal Reserve Bank, whether
the obligations result from the acceptance of a payment order or otherwise.
(3) To secure any overdraft,
as well as any other obligation due or to become due to its Federal
Reserve Bank, a sender, by sending a payment order to a Federal Reserve
Bank that is accepted by the Federal Reserve Bank, grants to the Federal
Reserve Bank a security interest in all of its assets in the possession
or control of, or held for the account of, the Federal Reserve Bank.
The security interest attaches when an overdraft, or any other obligation
to the Federal Reserve Bank, becomes due and payable.
(4) A Federal Reserve Bank may take any
action authorized by law to recover the amount of an overdraft that
is due and payable, including, but not limited to, the exercise of
rights of set off, the realization on any available collateral, and
any other rights it may have as a creditor under applicable law.
(5) If a sender, other
than a government sender described in section 210.40(d), incurs an
overdraft in its settlement account as a result of a debit to the
account by a Federal Reserve Bank under paragraph (a) of this section,
the settlement account will be subject to any applicable overdraft
charges, regardless of whether the overdraft has become due and payable.
A Federal Reserve Bank may debit the settlement account under paragraph
(a) of this section immediately on acceptance of the payment order.
(c) Review of
payment orders. A sender, by sending a payment order to a Federal
Reserve Bank, agrees that for the purposes of sections 4A-204(a) and
4A-304 of article 4A, a reasonable time to notify a Federal Reserve
Bank of the relevant facts concerning an unauthorized or erroneously
executed payment order is within 60 calendar days after the sender
receives notice that the payment order was accepted or that the sender’s
settlement account was debited with respect to the payment order.
