Time Limit for FRB to Return an Unauthorized Item

The time frames relevant to return items are imposed on the drawee bank, not the clearing system. If a drawee bank wanted to return an item as unauthorized, that return should have started its trip back to the depositary bank before midnight of the banking day following the banking day of presentment. The drawee bank would have to choose a method of return that would be "expeditious" under Reg CC. However, once the check is re-introduced into the clearing system, there is no rule set that mandates the item actually be returned to the depositary bank in a specific time frame. Sometimes, things get lost and clearing agents are generally immune from liability either by statutory or contractual language.

First published on BankersOnline.com 5/15/06