Regulation J
Subpart B--Funds Transfers Through Fedwire
Sec. 210.28 Agreement of sender.
(a) Payment of sender's obligation to a Federal Reserve Bank. A
sender (other than a Federal Reserve Bank), by maintaining or using an
account with a Federal Reserve Bank, authorizes the sender's Federal
Reserve Bank to obtain payment for the sender's payment orders by
debiting the amount of the payment order from the sender's account.
(b) Overdrafts. (1) A sender does not have the right to an overdraft
in the sender's account. In the event an overdraft is created, the
overdraft shall be due and payable immediately without the need for a
demand by the Federal Reserve Bank, at the earliest of the following
times:
(i) At the end of the funds-transfer business day;
(ii) At the time the Federal Reserve Bank, in its sole discretion,
deems itself insecure and gives notice thereof to the sender; or
(iii) At the time the sender suspends payments or is closed.
(2) The sender shall have in its account, at the time the overdraft
is due and payable, a balance of actually and finally collected funds
sufficient to cover the aggregate amount of all its obligations to the
Federal Reserve Bank, whether the obligations result from the execution
of a payment order or otherwise.
(3) To secure any overdraft, as well as any other obligation due or
to become due to its Federal Reserve Bank, each sender, by sending a
payment order to a Federal Reserve Bank that is accepted by the Federal
Reserve Bank, grants to the Federal Reserve Bank a security interest in
all of the sender's assets in the possession of, or held for the account
of, the Federal Reserve Bank. The security interest attaches when an
overdraft, or any other obligation to the Federal Reserve Bank, becomes
due and payable.
(4) A Federal Reserve Bank may take any action authorized by law to
recover the amount of an overdraft that is due and payable, including,
but not limited to, the exercise of rights of set off, the realization
on any available collateral, and any other rights it may have as a
creditor under applicable law.
(5) If a sender, other than a government sender described in
Sec. 210.25(d), incurs an overdraft in its account as a result of a
debit to the account by a Federal Reserve Bank under paragraph (a) of
this section, the account will be subject to any applicable overdraft
charges, regardless of whether the overdraft has become due and payable.
A Federal Reserve Bank may debit a sender's account under paragraph (a)
of this section immediately on acceptance of the payment order.
(c) Review of payment orders. A sender, by sending a payment order
to a Federal Reserve Bank, agrees that for the purposes of sections 4A-
204(a) and 4A-304 of Article 4A, a reasonable time to notify a Federal
Reserve Bank of the relevant facts concerning an unauthorized or
erroneously executed payment order is within 30 calendar days after the
sender receives notice that the payment order was accepted or executed,
or that the sender's account was debited with respect to the payment
order.
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