Can a person writing a Canadian check turn it into US funds simply by writing "US Funds" on the face of the check? Never seen this before!

I would guess that it cannot be done.

You probably know this, but be very careful with Canadian checks. There is a high fraud rate with these and it may take a month to get the notice that the check is being returned.

Your best bet is send it for collection.

Actually, they can. We have a customer who ships materials to Canada all the time and the checks all come with a hand written notation, "U.S. Dollars" and the only time we've had a problem was when the sender forgot the notation.

While it is true that there is a great deal of fraud involving Canadian checks, if your customer knows the issuer, I would not hesitate to send it through the normal payment system. However, if there's any doubt, send it for collection.

The answer we received from the Fed regarding the hand written message was that it cannot be done. We had a check like this and they told us to process as Canadian funds through proper channels. We were told that unless the check is preprinted with this message it was not valid. Hand written messages were not acceptable.

I thought accounts were set up in advance as US or Canadian $ accounts. How else can the processing center at the Canadian bank know if a check should be US or Canadian $$? Look at each check individually to see if someone changed it from Canadian to US or vice versa? Not in this lifetime.

We process several canadian items a month that are written on Canadian banks and the person writing the check writes US dollars or US funds. It is generally written in two places, behind the numeric amount, and on the written line as well. FRB has no jurusdiction in this, why would you ask them? You can clear one of 3 ways, via the FRB Canadian clearing at FRB Helena, as a collection item directly to the bank, or via a 3rd party collector (Travelex, AMerican Express, etc.).

We didn't ask the Fed. That was their answer when we had sent the check through with our regular deposit. They gave us this reasoning when they rejected it.

It can't be cleared via normal FRB channels if it is on a canadian bank with a canadian R/T#. If it is a canadian bank with a branch in the US and a US R/T#, not a problem. For items with canadian R/T#s, you must use the FRB Canadian Item Clearing cash letter vioa FRB Helena, or use a 3rd party agregator.

Yes, I know, I didn't say what I meant to say. We sent it through the regular way we send our Canadian checks (I don't process it, I'm in a branch so I'm not part of the procedures) I related the response the Accounting department received about the check. Handwriting the legend does not work, it's supposed to be preprinted according to what we were told.

LS, just curious, but how long was it before you had the item returned from the Fed?

our experience is you get it back next day, i.e. I deposit tonight and it is back tomorrow

We received it back the next day as well. Notifying the customer that the check would not be paid in US funds was real fun, let me tell you...

Well, lo and behold the Canadian check we accidentally sent through our regular cash letter went on to the bank in Canada and was paid in US funds. We confirmed it with the bank in Toronto yesterday. Whew! Our correspondent bank informed us that sometimes the Fed will clear these items and sometimes it won't. I think we just got lucky!

A question came up today about placing a hold on an official check from Canada. The bank didn't want to send it for collection, so even though we understand it is not covered under Reg CC, is there a problem with the bank placing an exception hold on this item? Thank you.

If you place a standard exception on this item, it will fall off well before the check is returned. Sending it for collection is the only way to be sure. Don't release the funds to the customer until you have received good funds. We had one returned after a month for fraud.

Be very careful with these items.

However, if it's deposited to a savings account, you can place a hold for as long as you want.

Sending it for collection is the ONLY way to both 1)protect yourself from harm and 2)keep the customer happy. If you hold the funds for an indeterminate amount of time, I can't imagine the customer being very happy about it, especially if the funds are good in the end. If you go out on a limb after taking the item for deposit and release the funds hold assuming the risk has past, that limb just may break. Even then, your customer will not be happy as they are ultimately liable for the loss.

Collection is the ONLY way to go on ANY Canadian check.