General Information Flashcards
When was ECCHO formed?
ECCHO was formed in 1990
Pre-1970, how were checks processed?
Checks were collected as paper payment instruments.
When did Remote Deposit Capture (RDC) first appear?
between 2005 and 2011 as banks began offering services that allowed customers to deposit images of checks via transmission from remote locations and later from personal mobile devices
What is an Image Cash Letter?
(ICL) An electronic representation of a paper cash letter, the image cash letter is used to transport check transaction data, including check images, between organizations and systems for the purposes of clearing the check payments.
What are the different sections of an image cash letter?
File header and control
Cash letter header and control
Bundle header and control
Detail records representing physical checks that include check information (i.e., MICR data), indorsement information and the image of the paper check (front and back)
ICL’s provided as a product are ideal for who?
Corporate and correspondent bank customers for delivery of check deposits to their banks. Ideal for companies with centralized in=-house receipt processing.
Example: An in-house lockbox at a utility company or a correspondent bank with in-house check processing operations
What benefits do ICL’s offer as a product to a corporate customer?
Reduced transportation costs
Reduce or eliminate trips to the bank to deposit checks
More efficient back-office processing
Later deposit cutoff time allowing more checks deposited on the same day as receipt
Faster return processing and notification due to faster initial deposits and clearing
Secure, private and safe electronic connections with the banks
What defines a cashier’s check?
Drawn on a bank - Check that a bank draws on itself
Bank is both the drawer and drawee
Signed by officer/employee of bank on behalf of the bank as drawer
A direct obligation of the bank
What happens if a Cashier Check is lost or stolen?
Must file a declaration of loss:
Declarer is remitter or payee of check that lost possession of check
Loss not a result of transfer or lawful seizure
Filed claim is enforceable at the later of:
Time the claim is asserted; or 90th day following the issue date of the check (or as required by state law – timeframe might change by state e.g., Wisconsin is 30 days)
Claim has no legal effect until enforceable
When can a stop payment on a cashier check be enforced?
Earliest date enforceable = 90th day after issue date (with a declaration of loss filed)
The benefit of waiting the 90 days is to protect the financial institution who holds the liability to pay the check. Once a cashier’s check is issued the obligation to pay lies with the institution not the claimant (payee). If the cashier check comes in within the first 90 days and is returned unpaid, the claimant could have HIDC rights, and that claim would be made against the institution.
What’s the timeframe for a claimant to make a claim to the amount of a cashier check?
three-year timeframe (UCC statute of limitations
What are the conditions to make a claim on the amount of a cashier check?
The person making the claim must be the payee or the remitter of the cashier’s check
The claim must include a declaration of loss. Now “Declaration of loss” means a statement, made under penalty of perjury, to the effect that the cashier’s check was lost—not transferred or lawfully seized; the declarer is the remitter or payee of the cashier’s check; and the claimant cannot reasonably obtain possession of the check because the check was perhaps destroyed or its whereabouts unknown, or it is in the wrongful possession of an unknown person or a person that cannot be found or is not ready to play nice.
Finally, this claim must be received in time for the paying bank, which is the issuer of the cashier’s check, to act on the claim before actually paying the cashier’s check.
Can an alteration claim be made on a cashier’s check?
Under the UCC, an alteration claim cannot be made on a cashier’s check.
The basic reason is that the transfer warranties (UCC §3-416, §4-207) do not flow to the paying bank (because paying bank is not a collecting bank) and the presentment warranties (UCC §3-417, §4-208), which do not cover cashier’s checks because cashier’s checks are accepted drafts.
Are there any exceptions to being able to return a cashiers check?
Generally, cannot stop payment on a cashier’s check but may be able to refuse payment under certain circumstances, such as the check having been altered.
Financial Institution must be certain of the facts since UCC §3-411 allows for penalties for wrongful refusal to pay a cashier’s check that can include consequential damages
