Developments of Note
FRB Proposes Legislation to Facilitate Electronic Check Truncation
Last week, the FRB forwarded to Congress a legislative proposal to facilitate check truncation and enhance the overall efficiencies of the payments system. The proposed Check Truncation Act (the "proposed Act") is intended to allow banks to collect and return checks more quickly and reduce the banking industry's reliance on the physical transportation of checks. Under current law (Articles 3 and 4 of the Uniform Commercial Code and Regulation CC), banks are generally required to physically present and return checks unless they have obtained agreements to do so electronically. Although the Electronic Signatures in Global and National Commerce Act and the Uniform Electronic Transactions Act provide for the retention of checks electronically, neither law creates electronic or substitute payment instruments, and both exclude from their coverage transactions governed by Articles 3 and 4 of the Uniform
