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Title 12, Banks and BankingRelease 119-110

§5001 Findings; Purposes

Title 12 › CHAPTER 50 — CHECK TRUNCATION › § 5001

Last updated Sep 22, 2026|Official source

Summary

Allows banks to use "substitute checks" so they can truncate checks and speed up handling and funds availability. On August 10, 1987, Congress told the Federal Reserve Board to study rules for check truncation and gave the Board full power to regulate how checks are received, paid, collected, and cleared. That federal power overrides state law, including the Uniform Commercial Code. In 2003, Congress said truncation was still useful to cut costs and speed service. The chapter has three goals: allow substitute checks to support truncation, encourage new ways to collect checks without forcing electronic-only checks, and make the nation’s payments system more efficient.

Full Legal Text

Title 12, §5001

Banks and Banking, Source: USLM XML via OLRC

(a)Findings
The Congress finds as follows:
(1)In the Expedited Funds Availability Act [12 U.S.C. 4001 et seq.], enacted on August 10, 1987, the Congress directed the Board of Governors of the Federal Reserve System to consider establishing regulations requiring Federal reserve banks and depository institutions to provide for check truncation, in order to improve the check processing system.
(2)In that same Act, the Congress—
(A)provided the Board of Governors of the Federal Reserve System with full authority to regulate all aspects of the payment system, including the receipt, payment, collection, and clearing of checks, and related functions of the payment system pertaining to checks; and
(B)directed that the exercise of such authority by the Board superseded any State law, including the Uniform Commercial Code, as in effect in any State.
(3)Check truncation is no less desirable in 2003 for both financial service customers and the financial services industry, to reduce costs, improve efficiency in check collections, and expedite funds availability for customers than it was over 15 years ago when Congress first directed the Board to consider establishing such a process.
(b)Purposes
The purposes of this chapter are as follows:
(1)To facilitate check truncation by authorizing substitute checks.
(2)To foster innovation in the check collection system without mandating receipt of checks in electronic form.
(3)To improve the overall efficiency of the Nation’s payments system.

Legislative History

Notes & Related Subsidiaries

Editorial Notes

References in Text

The Expedited Funds Availability Act, referred to in subsec. (a)(1), (2), is title VI of Pub. L. 100–86, Aug. 10, 1987, 101 Stat. 635, which is classified principally to chapter 41 (§ 4001 et seq.) of this title. For complete classification of this Act to the Code, see

Short Title

note set out under section 4001 of this title and Tables. This chapter, referred to in subsec. (b), was in the original “this Act”, meaning Pub. L. 108–100, Oct. 28, 2003, 117 Stat. 1177, which is classified generally to this chapter. For complete classification of this Act to the Code, see

Short Title

note set out below and Tables.

Statutory Notes and Related Subsidiaries

Effective Date

Pub. L. 108–100, § 20, Oct. 28, 2003, 117 Stat. 1194, provided that: “This Act [enacting this chapter, amending section 412 of this title, and enacting provisions set out as notes under this section] shall take effect at the end of the 12-month period beginning on the date of the enactment of this Act [Oct. 28, 2003], except as otherwise specifically provided in this Act.”

Short Title

Pub. L. 108–100, § 1(a), Oct. 28, 2003, 117 Stat. 1177, provided that: “This Act [enacting this chapter, amending section 412 of this title, and enacting provisions set out as notes under this section] may be cited as the ‘Check Clearing for the 21st Century Act’ or the ‘Check 21 Act’.”

Reference

Citations & Metadata

Citation

12 U.S.C. § 5001

Title 12, Banks and Banking

Last Updated

Sep 22, 2026

Release point: 119-110