| Q: |
|
What is Check 21? |
| A: |
|
 New
federal law that took effect 10/28/2004
- Designed to increase the efficiency of the check
processing system, reduce costs and make it less susceptible
to delays. Example of delays- 9/11/01 since all planes
were grounded during 9/11 period, check transportation
was delayed. Ground transportation had to be used.
This caused major delays.
- Check fact- $8 billion per year spent on check
processing and transportation
- The Check 21 act will affect all financial institutions
and their customers, as well as fraud investigators
and prosecutors.
- Check 21 allows (but does not require) any financial
institution in the check clearing chain to truncate
any check (business or commercial) and convert it
to an image. ("Truncate" means to remove
an original paper check from the check collection
or return process and replace it with an electronic
image.)
- Check 21 provided the initial framework regarding
check truncation. Many of the details of the act are
still being formulated by multiple committees.
|
| Q: |
|
Will this reduce the need for checks? |
| A |
|
No. Check 21 will not affect the need for an original check
to be presented. It legislates what can happen to that check
once it is presented for payment. |
|
| Q: |
|
What does it mean your client asks if their checks
are "Check 21 Compliant"? |
| A |
|
The main standard that is referred to in the Check 21 Legislation
is the ANSI X9.7 standard for Image Readiness.(Image Readiness-
means the ability of a check to be scanned and converted into
a electronic format) While the ANSI X9.7 standard is voluntary(
not mandatory) some financial institutions are gearing up
for conformance to Check 21/Image Ready Standards. |
|
| Q: |
|
Who is ANSI? |
| A |
|
ANSI is the American National Standards Institute. The
ANSI X9 Board determines approval for voluntary American National
Standards for Financial Services.
The American National Standards Institute (ANSI) is a private,
non-profit organization that administers and coordinates the
U.S. voluntary standardization and conformity assessment system. |
|
| Q: |
|
What will happen in October 28th 2004? |
| A |
|
It all depends on the banks/financial institutions.
- If the next bank in the check clearing chain agrees that
they will accept an image, an image can be sent.
- If the next party doesn't agree to accept an image, a
"substitute check" is created and transmitted.(See
below for information on Substitute Checks)
On checks that customers write the payor bank:
- May get the original check back
- May get a copy of an image
- May get a substitute check
|
|
| Q: |
|
What is a Substitute Check? |
| A |
|
A Substitute check is a paper reproduction of the original
check that:
- Contains an image of the front and back of the original
check
- Bears a MICR line containing all the information appearing
on the MICR line of the original check. A substitute check
shows the routing number of the truncating bank and the number
of the bank creating the substitute check.
- A substitute check that meets all the criteria in the
law is the legal equivalent of the original for all purposes
under state and federal law.
- In any given case, a substitute check may be all that's
available for investigation and prosecution of fraud.
- Under Check 21 a party must accept a substitute check.
When some other party in the chain truncates a check a customer
has written - (This can be any bank in the chain) - a substitute
check will be the only paper form of the check anyone can
insist upon receiving Examples of Substitute Check created
by scanning an original document:
 |
Front
Back |
|
|
| Q: |
|
What will be the net result to bank customers? |
| A |
|
- Whether customers can get all their original checks back
is out of the paying bank's control (the party that truncates
keeps the original and can destroy it after a period of
time).
- The length of time the original must be kept is not set
by law. It will be set by clearinghouse rules and other
agreements.
|
|
| Q: |
|
What is Cooley Group, Inc. doing to prepare for Check 21/Image
Ready standard? |
| A |
|
Cooley is ready and able to comply with the ANSI X9.7 Image
Ready standards put into place on January 1st, 2001 and referenced
in the new Check 21 Legislation. We can design any check or convert
any check to Check 21 Standards/Image Ready Standards. |
|
| Q: |
|
Can we change a repeat custom check order to Check
21/Image Ready Standards? |
| A |
|
Yes. We can make the design changes to any repeat check
job to comply with Check 21 standards. You should be aware
that there may be a slight change to the aesthetic look of
the document. |
|
| Q: |
|
What are banks doing to enforce Check21? |
| A |
|
Since Check 21/ANSI X9.7 is a voluntary standard, most banks
are not enforcing Check21/Image Ready standards at this time.
Some large Banks may begin to suggest to their customers that
they redesign their checks to image ready standards. At this
time we have not seen banks request Check 21/Image Ready compliance
for the short run check products that Printegra produces. |
|
| Q: |
|
If you would like to make a document Check 21
Compliant/Image Ready, what changes (if necessary) will be
needed to comply? |
| A |
|
For the document to be image ready. The requirements are:
- The Check background must drop out when scanned. It may
be an issue if a customer is using Cross/Hatched colored
safety paper or is using a custom step and repeat or ghost/reversed
pantograph.
- No solid boxes or reverses in the Area's of interest
(AOI) on a check. Use plain text in place of the reversed
out boxes.(See example below)
- 5/8" Clear Band in the MICR area.
|
|
| Q: |
|
What are the Area's of interest (AOI) on a check? |
| A |
|
Areas of interest (AOI) are the areas on a check that contain
the critical data needed for imaging. These areas include the
Date, Payee, Legal Amount, Signature Lines and the MICR Line
Area.
- Numerical Amount
- Date
- Payee
- Legal Amount (Amount Spelled out)
- Signature
- MICR Line Area (5/8" Clear Band)
 (Example
of Area's of Interest)
|
|
| Q: |
|
How can you quickly verify if a repeat job is
Image Ready? |
| A |
|
You can visually check to see if it complies with Check
21/Image Ready standards but short of testing every negotiable
document, there is no conclusive way to determine if a
negotiable document is "Image Ready".
 |
Example of Image Ready Check |
|
|
| Q: |
|
Can Cooley Group check and verify that it is Check 21
Compliant? |
| A |
|
Yes. Cooley has RDM Image Ready Testing Equipment. This
is the same equipment used by banks. We can test any new
or repeat check at no-charge.
If you would like to have a check tested for Check 21/Image
Ready Compliance:
- Send the check sample to your sales
representative, or give him or her a call.
- Include your email address so that we can forward you
the test results.
|
At this time we do not feel that mass testing is necessary.
It would only become necessary if banks begin converting checks
to images and begin enforcing Image Ready Standards on a large
scale.
The main thing we want to convey is that there is
no need to worry. If and when banks begin to require
checks become Image Ready/Check 21 compliant you are ready.
