Question & Answer

Question: We have a draft, drawn through a New York bank on a customer's account in a bank in Puerto Rico. We've been treating these drafts as checks, but now the Puerto Rico bank is calling and telling us that drafts get an "extra day." Is this so?

Answer: Not any more. Drafts used to get an extra day, back before the days of the Expedited Funds Availability Act (EFAA) and Regulation CC. But under Reg CC 229.2(k) a draft is a check. Let me quote directly from my "blue book" of comment-"CHECK is defined in section 602(7) of the Act as a negotiable demand draft drawn on or payable through an office of a depository institution located in the United States, excluding noncash items. The regulation includes six categories of instruments within the definition of a check.

"The first category is negotiable demand drafts drawn on or payable through or at an office of a bank? The EFAA treats drafts payable through a bank as checks, even though under the U.C.C. the payable through bank is a collecting bank to make presentment and is generally not authorized to make payment.?This regulation treats both payable through and payable at demand drafts as checks."

Copyright © 1997 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 7, No. 4, 3/97