RE:Whitewash check endorsement
There are two questions that I answer in reverse order.
Who is indemnified? As a clarification, the Indemnifying bank, the bank that provides the indemnification, is the first bank that accepts the deposit of an electronic image or electronic information derived from the original check and does not receive the original check. Here are two answers to the question.
First, the anwser according to Reg CC: the Indmenifying bank indemnifes the second Depositary bank that accepts the original check for deposit without a restrictive indorsement inconsistent with the means of deposit.
Second, the answer according to the scenario provided in the post: both Bank A and Bank B took the deposit through mobile RDC (mRDC). Therefore, of the two banks identified, no bank gets the indemnification because neither bank accepted the original check in paper form.
The other question is "Who takes the loss?" We cannot know from which bank the Paying bank will revoke settlement.
Both Bank A and Bank B make the warranty that they will not ask the Paying bank to make a payment based on an item already paid. That is one of the electronic check warranties. Both Bank A and Bank B breached the warranty to the Paying bank.
The Paying bank must pay one of the items, but it can return or adjust the other item, depending on timing. It is entirely up to the Paying bank and their Drawer customer to choose which item to pay and which to return or adjust.
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