Question

The Check Clearing for the 21st Century Act (Check 21) allows recipients of paper checks to create a digital image of the original check, eliminating the need for further handling of the actual check. The Federal Reserve Board has created a consumer guide . Locate the guide and answer the following:

• What is a substitute check? Does it constitute a legal copy of the check?
• How does Check 21 affect the payment of a company’s checks?
• Do banks have to return the actual cancelled checks? Is this an audit issue?

Answer 1

Answer ;-

Only the following holds true

The collection of check in process it is not required that the image be converted to a substitute check: the electronic image itself may suffice.

(a) A substitute check is a paper reproduction of an original check, rather than electronic reproduction...

(b) Banks can provide substitute checks...  

(c) TRUE

(d) The Check 21 Act does not replace the existing state laws, however, it super cedes them.

(e) Substitute checks transactions are subject to UCC