PRIA, Government Policy, Made Personal

Summary

Defines the main words used in the chapter so everyone understands them the same way. Account: a bank deposit account. Bank: a person in a State doing banking; includes depository institutions, Federal Reserve banks, Federal Home Loan banks, and certain payors like the U.S. Treasury, the Postal Service, State governments, and local governments. Collecting bank: a bank that handles a check for collection (not the paying bank). Depositary bank: the first bank a check is sent to or the bank where it is deposited. Paying bank: the bank that must pay the check or the bank where it is presented for payment. Returning bank: a bank (not the paying or depositary bank) that handles a returned check; it can be treated like a collecting bank under UCC section 4–202(b). Board: the Board of Governors of the Federal Reserve System. Business day: same meaning as in section 4001(3). Check: a demand draft on a bank handled for collection or return; includes substitute checks and travelers checks, but not noncash items or checks in non‑U.S. dollars. Consumer: an individual who wrote a check on, or deposited/cashed a check into, a consumer account. Consumer account: same meaning as in section 4001(10). Customer: someone with an account at a bank. Forward collection: sending a check to a collecting or paying bank for settlement or payment. Indemnifying bank: a bank that gives an indemnity for a substitute check under section 5005. MICR line: the magnetic-ink numbers on the bottom of a check (routing number, account number, amount, etc.). Noncash item: same meaning as in section 4001(14). Person: a natural person or any organization, government unit, trust, or entity. Reconverting bank: the bank that creates a substitute check, or the first bank that transfers or presents it if someone else makes it. Substitute check: a paper copy of the original check that shows front and back images, includes the MICR data, meets industry standards, and can be processed by machines. State: same meaning as in section 1813(a). Truncate: remove the original paper check from processing and send a substitute check or related information instead. Uniform Commercial Code: the UCC as it applies in a State. Other terms: words not defined here mean the same as in the Uniform Commercial Code.

Title 12, §5002

Banks and Banking, Source: USLM XML via OLRC

For purposes of this chapter, the following definitions shall apply:

(1)Account

The term “account” means a deposit account at a bank.

(2)Bank

The term “bank” means any person that is located in a State and engaged in the business of banking and includes—

(A)any depository institution (as defined in section 461(b)(1)(A) of this title);

(B)any Federal reserve bank;

(C)any Federal home loan bank; or

(D)to the extent it acts as a payor—

(i)the Treasury of the United States;

(ii)the United States Postal Service;

(iii)a State government; or

(iv)a unit of general local government (as defined in section 4001(24) of this title).

(3)Banking terms

(A)Collecting bank

The term “collecting bank” means any bank handling a check for collection except the paying bank.

(B)Depositary bank

The term “depositary bank” means—

(i)the first bank to which a check is transferred, even if such bank is also the paying bank or the payee; or

(ii)a bank to which a check is transferred for deposit in an account at such bank, even if the check is physically received and indorsed first by another bank.

(C)Paying bank

The term “paying bank” means—

(i)the bank by which a check is payable, unless the check is payable at or through another bank and is sent to the other bank for payment or collection; or

(ii)the bank at or through which a check is payable and to which the check is sent for payment or collection.

(D)Returning bank

(i)In general

The term “returning bank” means a bank (other than the paying or depositary bank) handling a returned check or notice in lieu of return.

(ii)Treatment as collecting bank

No provision of this chapter shall be construed as affecting the treatment of a returning bank as a collecting bank for purposes of section 4–202(b) of the Uniform Commercial Code.

(4)Board

The term “Board” means the Board of Governors of the Federal Reserve System.

(5)Business day

The term “business day” has the same meaning as in section 4001(3) of this title.

(6)Check

The term “check”—

(A)means a draft, payable on demand and drawn on or payable through or at an office of a bank, whether or not negotiable, that is handled for forward collection or return, including a substitute check and a travelers check; and

(B)does not include a noncash item or an item payable in a medium other than United States dollars.

(7)Consumer

The term “consumer” means an individual who—

(A)with respect to a check handled for forward collection, draws the check on a consumer account; or

(B)with respect to a check handled for return, deposits the check into, or cashes the check against, a consumer account.

(8)Consumer account

The term “consumer account” has the same meaning as in section 4001(10) of this title.

(9)Customer

The term “customer” means a person having an account with a bank.

(10)Forward collection

The term “forward collection” means the transfer by a bank of a check to a collecting bank for settlement or the paying bank for payment.

(11)Indemnifying bank

The term “indemnifying bank” means a bank that is providing an indemnity under section 5005 of this title with respect to a substitute check.

(12)MICR line

The terms “MICR line” and “magnetic ink character recognition line” mean the numbers, which may include the bank routing number, account number, check number, check amount, and other information, that are printed near the bottom of a check in magnetic ink in accordance with generally applicable industry standards.

(13)Noncash item

The term “noncash item” has the same meaning as in section 4001(14) of this title.

(14)Person

The term “person” means a natural person, corporation, unincorporated company, partnership, government unit or instrumentality, trust, or any other entity or organization.

(15)Reconverting bank

The term “reconverting bank” means—

(A)the bank that creates a substitute check; or

(B)if a substitute check is created by a person other than a bank, the first bank that transfers or presents such substitute check.

(16)Substitute check

The term “substitute check” means a paper reproduction of the original check that—

(A)contains an image of the front and back of the original check;

(B)bears a MICR line containing all the information appearing on the MICR line of the original check, except as provided under generally applicable industry standards for substitute checks to facilitate the processing of substitute checks;

(C)conforms, in paper stock, dimension, and otherwise, with generally applicable industry standards for substitute checks; and

(D)is suitable for automated processing in the same manner as the original check.

(17)State

The term “State” has the same meaning as in section 1813(a) of this title.

(18)Truncate

The term “truncate” means to remove an original paper check from the check collection or return process and send to a recipient, in lieu of such original paper 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 subsequent delivery of the original paper check.

(19)Uniform Commercial Code

The term “Uniform Commercial Code” means the Uniform Commercial Code in effect in a State.

(20)Other terms

Unless the context requires otherwise, the terms not defined in this section shall have the same meanings as in the Uniform Commercial Code.

Notes & Related Subsidiaries

Editorial Notes

References in Text

This chapter, referred to in text, 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 under section 5001 of this title and Tables.

Statutory Notes and Related Subsidiaries

Effective Date

Section effective at the end of the 12-month period beginning on Oct. 28, 2003, see section 20 of Pub. L. 108–100, set out as a note under section 5001 of this title.

§5002 Definitions