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Discussion Boards > Remote Deposit Capture Discussions > Holding Original Checks View modes: 
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rdc1 - 4/26/2006 8:39:44 AM
   
Holding Original Checks
Originally Posted: Fri Jan 13, 2006 by "msharp"

I’m getting inconsistent information on how long companies need to hold original checks after making deposits remotely. I’ve always heard to hold on to original checks for up to 60 days after a deposit in case of unreadable images. I am now hearing a Payor Bank can return and request the original check if they find they consider the IRD quality unacceptable for up to 6 months after the deposit is made. Six months is a long time to hold on to original checks for high volume accounts.

Can checks really be returned for image quality this long after a deposit is made? This doesn't seem right, but am not sure where to look for the correct information. What seems to be the “normal” length of time original checks are held on to?

Reply by RDC1.....
Posted: Sat Jan 14, 2006 1:15 pm    Post subject: Retaining Checks

Thanks for your post.

There is no clear-cut timeframe in terms of a law, etc specifying how long you should hold onto your checks for. The retention period should probably depend upon a few factors for your specific scenario. I'll discuss them in a bit more detail below.

As for the 6-month time-period, there is no law which (to our knowledge) states that either. For more specific regulation information, please go to the following link: http://www.remotedepositcapture.com/News/nov__25_2005.htm where you can find links to the Federal Reserve Reg page, and look closely at Reg CC and Reg E.

What we've generally heard is a 70-day retention period would be very prudent. Why 70 days? Most banks require account holders to report errors to their account within 30 days after they receive their statement. Add another 30 days to assume the check posts to the account on the 1st day of the cycle, then add 10 days as a buffer and you're at 70.

To make matters more confusing, RDC can clear items either as a "Check 21" item, or convert the item (as appropriate) to an ACH (ARC) - depending upon the capabilities of the RDC system you use. I believe Reg E requires checks converted to an ACH to be destroyed no later than 14 days later. So- you'll have to separate the converted items and destroy those within 14 days!

So far, we've heard everything from "since an IRD is a legal replacement of the original, you can destroy the originals almost immediately" to "Since a check may be returned due to fraud for up to a year, you should retain the originals for at least a year". Neither is 100% correct. Many banks are increasingly recommending a 60-day retention period on "Check-21" cleared items.

I hope this helps, and hopefully others will comment with their opinions.
_________________
-RDC1

   
Originally posted by Seac Shane....
Posted: Thu Feb 23, 2006 4:15 pm   

I would recommend that you speak to your financial institution regarding their requirements for check retention. Since you are making those deposits with them they are the ones who will ultimately establish the policy that they want their account holders to adhere to - at least until there is a real established guideline or law that makes the specifics that everyone will need to use.

Of course, I also believe that is why you should have the best image possible in order to produce an IRD. Just because the Fed wants a black and white image for transmission this does not prohibit an image in grayscale or color on an IRD. In fact X9.90 specifically states that "the image shall be representative of the original document (check or IRD) and shall accurately and legibly represent all of the information on the front of the doucment(check or IRD)"

That is why I always recommend either scanning in full color or grayscale and keeping those images so an accurate IRD can be produced if an image presentment is not acepted by the bank in the feds preferred black and white TIFF Group IV format.

Since an IRD is a legal representation and if you have IRD production capability then you should have no problem destroying the paper after capture provided you make sure your images are good and backed up!

Shane Kirk
Seac Banche USA, Inc.
_________________
Shane Kirk
Seac Banche USA, Inc.
(404) 460-5544

"Technology for Check Process Automation"

Originally Posted: Sun Mar 05, 2006 9:37 pm by cpdowdell...   

In the post-Check21 world an institution is enabled to image and shred the original check and produce a “substitute check” from the image upon request. However, the bank must warrant that the substitute check accurately represents the information from the front and back of the original check. Further, Check 21 does not address nor endorse imaging standards, outside of the nebulous “industry standards”, reducing the publication of a substitute check to an exercise in risk management.
As an FI accountholder - you should address your question(s) with the bank - and ensure that your staff follows procedures dictated by the FI.

Also, since Check 21 puts no destruction requirements on the truncating bank, a bank truncating the original paper check should evaluate its business considerations including but not limited to risk, cost, etc. in determining how long, if any, the original paper check should be retained. This may be construed as a "shared liability/cost" between you (the accountholder/depositor) and the FI.

In an image exchange where agreements are required, the agreement may provide for check retention requirements that a bank must fulfill. It is important to note that your FI may well have different requirements based upon different image exchange, i.e., clearing mechanisms/arrangements. Considerations for these agreements could also include various federal and state laws that may specify retention requirements.

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jimyritz - 11/14/2007 9:13:06 PM
   
Re: Holding Original Checks
Hi,

Does anyone know if there have been any updates that have further defined the holding period or is it still up th each institution?

Thanks
Mike

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ed.mclaughlin - 11/21/2007 3:13:52 AM
   
Re: Holding Original Checks
Mike,

Not that I am aware of.

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ed.mclaughlin - 8/19/2008 9:05:28 PM
   
Re: Holding Original Checks
Does anyone know or think this will be addressed in the new FFIEC guidelines?

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Ed - 3/16/2010 3:56:17 PM
   
RE:Re: Holding Original Checks

The FFIEC guidance has been out for over a year now. How long are you recommending your customers hold their checks? Any suggestions on how to be sure they have destroyed the checks after the recommended length of time?


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