As used in this part, and unless
the context requires otherwise, the following terms have the meanings
set forth in this section, and the terms not defined in this section
have the meanings set forth in the Uniform Commercial Code:
(a) Account.
(1) Except as provided in paragraphs (a)(2)
and (a)(3) of this section, account means a deposit as defined
in 12 CFR 204.2(a)(1)(i) that is a transaction account as described
in 12 CFR 204.2(e). As defined in these sections, account generally
includes accounts at a bank from which the account holder is permitted
to make transfers or withdrawals by negotiable or transferable instrument,
payment order of withdrawal, telephone transfer, electronic payment,
or other similar means for the purpose of making payments or transfers
to third persons or others. Account also includes accounts
at a bank from which the account holder may make third-party payments
at an ATM, remote service unit, or other electronic device, including
by debit card, but the term does not include savings deposits or accounts
described in 12 CFR 204.2(d)(2) even though such accounts permit third-party
transfers. An account may be in the form of—
i. a demand
deposit account,
ii. a negotiable order of withdrawal account,
iii. a share draft account,
iv. an automatic transfer
account, or
v. any
other transaction account described in 12 CFR 204.2(e).
(2) For purposes of subpart
B of this part and, in connection therewith, this subpart A, account does not include an account where the account holder is a bank,
where the account holder is an office of an institution described
in paragraphs (e)(1) through (e)(6) of this section or an office of
a foreign bank as defined in section 1(b) of the International
Banking Act (12 U.S.C. 3101) that is located outside the United States,
or where the direct or indirect account holder is the Treasury of
the United States.
(3) For purposes of subpart D of this part and, in connection therewith,
this subpart A, account means any deposit, as defined in 12
CFR 204.2(a)(1)(i), at a bank, including a demand deposit or other
transaction account and a savings deposit or other time deposit, as
those terms are defined in 12 CFR 204.2.
9-006
(b) Automated clearinghouse or ACH means a facility
that processes debit and credit transfers under rules established
by a Federal Reserve Bank operating circular on automated clearinghouse
items or under rules of an automated clearinghouse association.
(c) Automated teller machine or ATM means
an electronic device located in the United States at which a natural
person may make deposits to an account by cash or check and perform
other account transactions.
9-007
(d) Available
for withdrawal with respect to funds deposited means available
for all uses generally permitted to the customer for actually and
finally collected funds under the bank’s account agreement or policies,
such as for payment of checks drawn on the account, certification
of checks drawn on the account, electronic payments, withdrawals by
cash, and transfers between accounts.
9-008
(e) Bank means—
(1) an insured bank as defined in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813) or a bank that is eligible to apply to become an insured
bank under section 5 of that act (12 U.S.C. 1815);
(2) a mutual savings bank as defined
in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813);
(3) a savings bank as defined in section 3 of the Federal Deposit Insurance Act (12
U.S.C. 1813);
(4) an insured credit union as defined in section 101 of the Federal
Credit Union Act (12 U.S.C. 1752) or a credit union that is eligible to
make application to become an insured credit union under section 201
of that act (12 U.S.C. 1781);
(5) a member as defined in section
2 of the Federal Home Loan Bank Act (12 U.S.C. 1422);
(6) a savings association as defined
in section 3 of the Federal Deposit Insurance Act (12 U.S.C. 1813)
that is an insured depository institution as defined in section 3
of that act (12 U.S.C. 1813(c)(2)) or that is eligible to apply to
become an insured depository institution under section 5 of that act
(12 U.S.C. 1815); or
(7) an agency or branch of a foreign bank as
defined in section 1(b) of the International Banking Act (12 U.S.C.
3101).
For purposes of subparts C and
D and, in connection therewith, this subpart A, the term bank also includes any person engaged in the business of banking, as
well as a Federal Reserve Bank, a Federal Home Loan Bank, and a state
or unit of general local government to the extent that the state or
unit of general local government acts as a paying bank. Unless otherwise
specified, the term bank includes all of a bank’s offices in
the United States, but not offices located outside the United States.
Note: For purposes of subpart D of this part and, in connection
therewith, this subpart A, paying bank also includes the Treasury
of the United States or the United States Postal Service for a check
that is payable by that entity and that is sent to that entity for
payment or collection.
9-009
(f) Banking day means that
part of any business day on which an office of a bank is open to the
public for carrying on substantially all of its banking functions.
(g) Business day means a calendar day other
than a Saturday or a Sunday, January 1, the third Monday in January,
the third Monday in February, the last Monday in May, July 4, the
first Monday in September, the second Monday in October, November
11, the fourth Thursday in November, or December 25. If January 1,
July 4, November 11, or December 25 fall on a Sunday, the next Monday
is not a business day.
9-010
(h) Cash means United States
coins and currency.
(i) Cashier’s check means
a check that is—
(1) drawn on a bank;
(2) signed by an officer or employee of
the bank on behalf of the bank as drawer;
(3) a direct obligation of the bank; and
(4) provided to a customer
of the bank or acquired from the bank for remittance purposes.
9-011
(j) Certified check means a check with respect
to which the drawee bank certifies by signature on the check of an
officer or other authorized employee of the bank that—
(1) (i) the signature
of the drawer on the check is genuine; and
(ii) the bank has set aside funds that—
(A) are equal to the amount of the check, and
(B) will be used to pay the check; or
(2) the bank
will pay the check upon presentment.
9-012
(k) Check means—
(1) a negotiable demand draft drawn on
or payable through or at an office of a bank;
(2) a negotiable demand draft drawn on
a Federal Reserve Bank or a Federal Home Loan Bank;
(3) a negotiable demand draft drawn on
the Treasury of the United States;
(4) a demand draft drawn on a state government
or unit of general local government that is not payable through or
at a bank;
(5) a United
States Postal Service money order; or
(6) a traveler’s check drawn on or payable
through or at a bank.
(7) The term includes an original check or a substitute check.
Note: The term check does not include
a noncash item or an item payable in a medium other than United States
money. A draft may be a check even though it is described on its face by another
term, such as money order. For purposes of subparts C and D,
and in connection therewith, subpart A, of this part, the term check also includes a demand draft of the type described above
that is nonnegotiable.
9-013
(l) [Reserved]
(m) Check-processing region means the geographical area served
by an office of a Federal Reserve Bank for purposes of its check-processing
activities.
9-014
(n) Consumer account means any account used
primarily for personal, family, or household purposes.
(o) Depositary bank means the first bank to which
a check is transferred even though it is also the paying bank or the
payee. A check deposited in an account is deemed to be transferred
to the bank holding the account into which the check is deposited,
even though the check is physically received and indorsed first by
another bank.
(p) Electronic payment means
a wire transfer or an ACH credit transfer.
(q) Forward collection means the process by which a bank sends a
check on a cash basis to a collecting bank for settlement or to the
paying bank for payment.
9-015
(r) Local check means a check payable by or at a local paying bank, or a check payable
by a nonbank payor and payable through a local paying bank.
(s) Local paying bank means a paying bank that
is located in the same check-processing region as the physical location
of the branch, contractual branch, or proprietary ATM of the depositary
bank in which that check was deposited.
9-016
(t) Merger
transaction means—
(1) a merger or consolidation of two or
more banks; or
(2) the
transfer of substantially all of the assets of one or more banks or
branches to another bank in consideration of the assumption by the
acquiring bank of substantially all of the liabilities of the transferring
banks, including the deposit liabilities.
(u) Noncash item means an item that would otherwise be a check,
except that—
(1) a passbook, certificate,
or other document is attached;
(2) it is accompanied by special instructions,
such as a request for special advice of payment or dishonor;
(3) it consists of more than
a single thickness of paper, except a check that qualifies for handling
by automated check-processing equipment; or
(4) it has not been preprinted or post-encoded
in magnetic ink with the routing number of the paying bank.
9-017
(v) Nonlocal check means a check payable by, through,
or at a nonlocal paying bank.
(w) Nonlocal paying
bank means a paying bank that is not a local paying bank with
respect to the depositary bank.
(x) Nonproprietary
ATM means an ATM that is not a proprietary ATM.
(y) [Reserved]
9-018
(z) Paying bank means—
(1) the bank by which a check is payable,
unless the check is payable at another bank and is sent to the other
bank for payment or collection;
(2) the bank at which a check is payable
and to which it is sent for payment or collection;
(3) the Federal Reserve Bank or Federal
Home Loan Bank by which a check is payable;
(4) the bank through which a check is payable
and to which it is sent for payment or collection, if the check is
not payable by a bank; or
(5) the state or unit of general local government on which a check
is drawn and to which it is sent for payment or collection.
For purposes of subparts C and D, and in connection therewith,
subpart A, paying bank includes the bank through which a check
is payable and to which the check is sent for payment or collection,
regardless of whether the check is payable by another bank, and the
bank whose routing number appears on a check in fractional or magnetic
form and to which the check is sent for payment or collection.
Note: For purposes of subpart D of this part and, in connection
therewith, this subpart A, paying bank also includes the Treasury
of the United States or the United States Postal Service for a check
that is payable by that entity and that is sent to that entity for
payment or collection.
9-019
(aa) Proprietary ATM means
an ATM that is—
(1) owned or operated by, or operated exclusively
for, the depositary bank;
(2) located on the premises (including the outside wall) of the depositary
bank; or
(3) located
within 50 feet of the premises of the depositary bank, and not identified
as being owned or operated by another entity.
If more than one bank meets the owned-or-operated criterion
of paragraph (1) of this definition, the ATM is considered proprietary
to the bank that operates it.
9-020
(bb) Qualified
returned check means a returned check that is prepared for automated
return to the depositary bank by placing the check in a carrier envelope
or placing a strip on the check and encoding the strip or envelope
in magnetic ink. A qualified returned check need not contain other
elements of a check drawn on the depositary bank, such as the name
of the depositary bank.
(cc) Returning bank means a bank (other than the paying or depositary bank) handling
a returned check or notice in lieu of return. A returning bank is
also a collecting bank for purposes of UCC 4-202(b).
9-021
(dd) Routing number means—
(1) the number printed on the face of a
check in fractional form on in nine-digit form;
(2) the number in a bank’s indorsement
in fractional or nine-digit form; or
(3) for purposes of subpart C and subpart
D, the bank-identification number contained in an electronic check
or electronic returned check.
(ee) Similarly situated bank means a bank of similar size, located
in the same community, and with similar check-handling activities
as the paying bank or returning bank.
9-022
(ff) State means a state, the District of Columbia, Puerto Rico, American Samoa,
the Commonwealth of the Northern Mariana Islands, Guam, or the U.S.
Virgin Islands. For purposes of subpart D of this part and, in connection
therewith, this subpart A, state also means the Trust Territory
of the Pacific Islands and any other territory of the United States.
(gg) Teller’s check means a check provided
to a customer of a bank or acquired from a bank for remittance purposes,
that is drawn by the bank, and drawn on another bank or payable through
or at a bank.
9-023
(hh) Traveler’s check means an instrument
for the payment of money that—
(1) is drawn on or payable through or at
a bank;
(2) is designated
on its face by the term traveler’s check or by any substantially
similar term or is commonly known and marketed as a traveler’s check
by a corporation or bank that is an issuer of traveler’s checks;
(3) provides for a specimen
signature of the purchaser to be completed at the time of purchase;
and
(4) provides for
a countersignature of the purchaser to be completed at the time of
negotiation.
9-024
(ii) Uniform Commercial Code, Code, or UCC means the Uniform Commercial Code as adopted in a state.
(jj) United States means the states, including the District of Columbia,
the U.S. Virgin Islands, American Samoa, the Commonwealth of the Northern
Mariana Islands, Guam, and Puerto Rico.
(kk) Unit of general
local government means any city, county, parish, town, township,
village, or other general-purpose political subdivision of a state.
The term does not include special-purpose units of government, such
as school districts or water districts.
9-025
(ll) Wire transfer means an unconditional order to
a bank to pay a fixed or determinable amount of money to a beneficiary
upon receipt or on a day stated in the order, that is transmitted
by electronic or other means through Fedwire, the Clearing House Interbank
Payments System, other similar network, between banks, or on the books
of a bank. Wire transfer does not include an electronic fund
transfer as defined in section 903(6) of the Electronic Fund Transfer
Act (15 U.S.C. 1693a(6)).
(mm) Fedwire has
the same meaning as that set forth in section 210.26(e) of this chapter.
(nn) Good faith means honesty in fact and
the observance of reasonable commercial standards of fair dealing.
(oo) Interest compensation means an amount
of money calculated at the average of the federal funds rates published
by the Federal Reserve Bank of New York for each of the days for which
interest compensation is payable, divided by 360. The federal funds
rate for any day on which a published rate is not available is the
same as the published rate for the last preceding day for which there
is a published rate.
(pp) Contractual branch, with respect to a bank, means a branch of another bank that accepts
a deposit on behalf of the first branch.
9-025.1
(qq) Claimant
bank means a bank that submits a claim for a recredit for a substitute
check to an indemnifying bank under section 229.55.
(rr) Collecting bank means any bank handling a check for forward
collection, except the paying bank.
(ss) Consumer means a natural person who—
(1) with respect to a check handled for
forward collection, draws the check on a consumer account; or
(2) with respect to a check
handled for return, deposits the check into or cashes the check against
a consumer account.
(tt) Customer means a person having an account with a bank.
9-025.2
(uu) Indemnifying bank. Indemnifying bank means—
(1) for the purposes of section
229.34, a bank that provides an indemnity under section 229.34 with
respect to remote deposit capture or an electronically-created item,
or
(2) for the purposes
of section 229.53, a bank that provides an indemnity under section
229.53 with respect to a substitute check.
(vv) Magnetic ink character recognition line and MICR line mean the numbers, which may include the routing number, account
number, check number, check amount, and other information, that are
(unless the Board by rule or order determines that different standards
apply)—
(1) printed near the bottom
of a check in magnetic ink in accordance with American National Standard
Specifications for Placement and Location of MICR Printing, X9.13
(hereinafter ANS X9.13) for an original check and American National
Standard Specifications for an Image Replacement Document—IRD, X9.100-140
(hereinafter ANS X9.100-140) for a substitute check, or
(2) for purposes of subpart
C and subpart D, contained in a record specified for MICR line data
in an electronic check or electronic returned check in accordance
with American National Standard Specifications for Electronic Exchange
of Check Image Data—Domestic, X9.100-187 (hereinafter ANS X9.100-187).
(ww) Original check means the first
paper check issued with respect to a particular payment transaction.
9-025.3
(xx) Paper or electronic representation of a substitute check means any copy of or information related to a substitute check that
a bank handles for forward collection or return, charges to a customer’s
account, or provides to a person as a record of a check payment made
by the person.
(yy) Person means a natural
person, corporation, unincorporated company, partnership, government
unit or instrumentality, trust, or any other entity or organization.
(zz) Reconverting bank means—
(1) the bank that creates a substitute
check; or
(2) with respect
to a substitute check that was created by a person that is not a bank,
the first bank that transfers, presents, or returns that substitute
check or, in lieu thereof, the first paper or electronic representation
of that substitute check.
9-025.4
(aaa) Substitute
check means a paper reproduction of an original check that—
(1) contains an image of the
front and back of the original check;
(2) bears a MICR line that, except as provided
under ANS X9.100-140 (unless the Board by rule or order determines
that a different standard applies), contains all the information appearing
on the MICR line of the original check at the time that the original
check was issued and any additional information that was encoded on
the original check’s MICR line before an image of the original check
was captured;
(3) conforms
in paper stock, dimension, and otherwise with ANS X9.100-140 (unless
the Board by rule or order determines that a different standard applies);
and
(4) is suitable
for automated processing in the same manner as the original check.
(bbb) Copy and
sufficient copy.
(1) A copy of an original check means—
(i) any paper reproduction of an original check, including a paper
printout of an electronic image of the check, a photocopy of the original
check, or a substitute check; or
(ii) any electronic reproduction of
a check that a recipient has agreed to receive from the sender instead
of a paper reproduction.
(2) A sufficient copy is a copy
of an original check that accurately represents all of the information
on the front and back of the original check as of the time the original
check was truncated or is otherwise sufficient to determine whether
or not a claim is valid.
9-025.5
(ccc) Transfer and consideration. The terms transfer and consideration have the meanings set forth
in the Uniform Commercial Code and in addition, for purposes of subpart
D—
(1) the term transfer with respect to a substitute check or a paper or electronic representation
of a substitute check means delivery of the substitute check or other
representation of the substitute check by a bank to a person other
than a bank; and
(2)
a bank that transfers a substitute check or a paper or electronic
representation of a substitute check directly to a person other than
a bank has received consideration for the substitute check
or other paper or electronic representation of the substitute check
if it has charged, or has the right to charge, the person’s account
or otherwise has received value for the original check, a substitute
check, or a representation of the original check or substitute check.
(ddd) Truncate means to remove an
original check from the forward collection or return process and send
to a recipient, in lieu of such original check, a substitute check
or, by agreement, information relating to the original check (including
data taken from the MICR line of the original check or an electronic
image of the original check), whether with or without the subsequent
delivery of the original check.
(eee) Truncating
bank means—
(1) the bank that truncates the original
check; or
(2) if a
person other than a bank truncates the original check, the first bank
that transfers, presents, or returns, in lieu of such original check,
a substitute check or, by agreement with the recipient, information
relating to the original check (including data taken from the MICR
line of the original check or an electronic image of the original
check), whether with or without the subsequent delivery of the original
check.
9-025.6
(fff) Remotely created check means a check that is not created by the paying bank and that does
not bear a signature applied, or purported to be applied, by the person
on whose account the check is drawn. For purposes of this definition, account means an account as defined in paragraph (a) of this
section as well as a credit or other arrangement that allows a person
to draw checks that are payable by, through, or at a bank.
(ggg) Electronic check and electronic returned check mean an electronic image of, and electronic information derived
from, a paper check or paper returned check, respectively, that—
(1) is sent to a receiving bank pursuant
to an agreement between the sender and the receiving bank; and
(2) conforms with ANS
X9.100-187, unless the Board by rule or order determines that a different
standard applies or the parties otherwise agree.
(hhh) Electronically-created item means an electronic
image that has all the attributes of an electronic check or electronic
returned check but was created electronically and not derived from
a paper check.
