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#1745347 - 09/28/12 07:29 PM Remotely Created Checks
ravbnk Offline
New Poster
Joined: Feb 2010
Posts: 10
Can a Cashier's Check or Official Check be converted into a Remotely Created Check?

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#1760222 - 11/21/12 09:36 PM Re: Remotely Created Checks ravbnk
John Burnett Offline
10K Club
John Burnett
Joined: Oct 2000
Posts: 39,408
Cape Cod
No, but....

A Remotely Created Check (RCC) is one that's issued by someone other that the party on whose account it is drawn (usually issued by the payee), and it's not signed by the party on whose account it's presented against. Theoretically, the issuing party has obtained an authorization from the party to be charged. RCCs are often used by telephone sales promoters to obtain payment. There's no place in that description into which a cashier's or similar check would fit.

Now for the "but..."

Sometimes a cashier's check gets into the hands of a commercial party who attempts to convert the check into an ACH debit entry, perhaps in a back-office conversion (BOC) or accounts receivable conversion (ARC) mode. There's a problem with that: Cashier's checks or any other checks with a business check layout and encoding (usually the check serial number) in the MICR line to the left of the FRABA number are not eligible for ACH conversions. When the business figures out it can't use the ACH, it may attempt to use a computer-generated RCC or an image of a computer-generated RCC.

A bank to whom an RCC is presented for payment against its official check account should not pay it. Why? Because the bank didn't authorize the issuance of the RCC and because the cashier's check is still "out there" with potential for being presented. So the RCC should be returned unpaid as unauthorized. If it's past the bank's midnight deadline for returns, the bank will have to issue an affidavit that the RCC was not authorized and get its funds back via a warranty claim.
John S. Burnett
Fighting for Compliance since 1976
Bankers' Threads User #8

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