NAFCU Generally Backs Treasury Interim Rule on Check 21 Application
ARLINGTON. Va.-NAFCU basically supported the Treasury Department's interim final rule regarding the application of Check 21 to Treasury checks despite redundant safekeeping measures. In a comment letter from President and CEO Fred Becker, NAFCU stated its support for permitting financial institutions to present substituted checks instead of paper originals. Treasury's regulation would also allow financial institutions to present electronic images rather than original or substitute checks, of which NAFCU approved. NAFCU's letter noted, "The interim rule establishes legal equivalence of electronic checks only as between Treasury and the financial institution that presents the electronic image to Treasury for payment and does not create the right to transfer, return or present an electronic image of a Treasury check to any other person." Additionally, the rule clarifies that financial institutions need not ensure watermarks on substitute checks or electronic images of Treasury checks. However, NAFCU felt that safekeeping requirements in the interim final rule for document storage after a substitute check or electronic image is made but prior to being destroyed were redundant and unnecessary. The scenarios are already covered under other portions of Check 21 and the Fair and Accurate Credit Transactions Act, NAFCU contended. Finally, Treasury asked whether additional steps should be taken to prohibit financial institutions from making truncated checks available to third parties for commercial or business purposes. Becker responded, "NAFCU is not aware of any such abuse of information contained on Treasury checks either currently or in the past. Further, NAFCU does not believe that the ability of financial institutions to truncate and retain original checks under the Check 21 Act will increase such a risk.NAFCU believes that the current regulatory requirements and practices should provide Treasury sufficient assurances that information contained on Treasury checks will not be inappropriately shared."