Earlier this week, the Federal Reserve Board approved final amendments to the liability provisions of Regulation CC, which governs availability of funds and collection of checks. These amendments continue the Board’s efforts to update Regulation CC to reflect the evolution of the nation’s check collection system from one that is largely paper-based to one that is virtually all electronic.

In today’s check collection environment, original paper checks may be unavailable for inspection in certain disputes between banks. When the original check is not available, the final amendments update Regulation CC to include a presumption that a substitute or electronic check was altered in certain cases of doubt. The presumption applies only to disputes between banks and only when one bank has transferred an electronic or substitute check to the other bank. As with existing rules under Regulation CC, the parties may, by mutual agreement, vary the effect of the amendments’ provisions.

In addition, the final amendments clarify that the presumption does not apply if it is contrary to another federal statute or regulation, such as the U.S. Department of the Treasury’s rules regarding U.S. Treasury checks.

The amendments become effective Jan. 1, 2019. Read the full InfoSight newsletter here.