Issued by FDIC
Sec. 229.43 - Checks payable in Guam, American Samoa, and the Northern Mariana Islands.*
Effective September 3, 2019, section 229.43 is removed and reserved.
(a) Definitions. The definitions in Sec. 229.2 apply to this section, unless otherwise noted. In addition, for the purposes of this section--
(1) Pacific island bank means an office of an institution that would be a bank as defined in Sec. 229.2(e) but for the fact that the office is located in Guam, American Samoa, or the Northern Mariana Islands;
(2) Pacific island check means—
(i) A demand draft drawn on or payable through or at a Pacific island bank, which is not a check as defined in § 229.2(k); and
(ii) An electronic image of, and electronic information derived from, a demand draft or returned demand draft drawn on or payable through or at a Pacific island bank that–
(A) Is sent to a receiving bank pursuant to an agreement between the sender and the receiving bank; and
(B) Conforms with ANS X9.100-187, unless the Board by rule or order determines that a different standard applies or the parties otherwise agree.
XXIX. Section 229.43 Checks Payable in Guam, American Samoa, and the Northern Mariana Islands
A. 229.43(a) Definitions
1. For purposes of subparts B and C of this part, bank offices in Guam, American Samoa, and the Northern Mariana Islands (which Regulation CC defines as Pacific island banks) do not meet the definition of bank in §229.2(e) because they are not located in the United States. Some checks drawn on Pacific island banks (defined as Pacific island checks) bear U.S. routing numbers and are collected and returned by banks in the same manner as checks payable in the U.S.
(b) Rules applicable to Pacific island checks. To the extent a bank handles a Pacific island check as if it were a check defined in § 229.2(k) or an electronic check defined in § 229.2(ggg), the bank is subject to the following sections of this part (and the word “check” in each such section is construed to include a Pacific island check)—
(1) § 229.30(a) (Checks under this subpart), and (b) (Writings);
(2) § 229.32 (Returning bank’s responsibilities for return of checks) except that the returning bank is not subject to the requirement to return a Pacific Island check in an expeditious manner;
(3) § 229.33(b) (Acceptance of electronic returned checks and electronic notices of nonpayment), (c) (Acceptance of paper returned checks and paper notices of nonpayment), § 229.33 (d) (Acceptances of oral notices of nonpayment), § 229.33 (e) (Payment), § 229.33 (f) (Misrouted returned checks and written notices of nonpayment), § 229.33 (g) (Charges);
(4) § 229.34(a) (Warranties with respect to electronic checks and electronic returned checks), § 229.34 (b) (Transfer and presentment warranties with respect to a remotely-created check), § 229.34 (c)(2) (Cash letter total warranty), § 229.34 (c)(3) (Encoding warranty), § 229.34 (f) (Remote deposit capture warranty), § 229.34 (g) (Indemnities with respect to electronically-created items), § 229.34 (h) (Damages), § 229.34 (i) (Indemnity amounts), and § 229.34 (j) (Tender of defense);
(5) § 229.35 (Indorsements); for purposes of § 229.35(c) (Indorsement by a bank), the Pacific island bank is deemed to be a bank;
(6) § 229.36(c) (Liability of bank during forward collection);
(7) § 229.37 (Variation by agreement);
(8) § 229.38 (Liability), except for § 229.38(b) (Paying bank’s failure to make timely return);
(9) § 229.39 (Insolvency of bank), except for § 229.39(c) (Preferred claim against presenting bank for breach of warranty); and
(10) § 229.40 (Effect of merger transaction), § 229.41 (Relation to state law) and § 229.42 (Exclusions).
B. 229.43(b) Rules Applicable to Pacific Island Checks
1. When a bank handles a Pacific island check as if it were a check as defined in §229.2(k), or an electronic image and electronic information derived from a demand draft as defined in §229.43(a)(2), the bank is subject to certain provisions of subpart C of this part, as provided in this section. Because a Pacific island bank is not a bank as defined in §229.2(e) for purposes of subpart C, it is not a paying bank as defined in §229.2(z) for purposes of subpart C (unless otherwise noted in this section). Pacific island banks are not subject to the provisions of subparts B and C, but may be subject to the provisions of subpart D of this part to the extent they create substitute checks. (See §229.2(ff) defining “State”).
2. A bank may agree to handle a Pacific island check as a returned check under §229.32 and may convert the returned Pacific island check to a qualified returned check. The returning bank may receive the Pacific island check directly from a Pacific island bank or from another returning bank. As a Pacific island bank is not a paying bank for purposes of subpart C of this part, §229.32(e) does not apply to a returning bank settling with the Pacific island bank.
3. A depositary bank that handles a Pacific island check is not subject to the provisions of subpart B of Regulation CC, including the availability, notice, and interest accrual requirements, with respect to that check. If, however, a bank accepts a Pacific island check for deposit (or otherwise accepts the check as transferee) and collects the Pacific island check in the same manner as other checks, the bank generally is subject to the provisions of §229.33, except for §229.33(c) with respect to its application to paper notices of nonpayment, §229.33(d) (acceptance of oral notices of nonpayment), and §229.33(h) (notification to customer of returned check). If the depositary bank receives the returned Pacific island check directly from the Pacific island bank, the provisions of §229.33(e) (regarding time and manner of settlement for returned checks) do not apply, because the Pacific island bank is not a paying bank for purposes of subpart C of this part. In the event the Pacific island check is returned by a returning bank, however, the provisions of §229.33(e) apply. The depositary bank is not subject to the provisions in §229.33(c) with respect to paper notices of nonpayment for Pacific island checks, but is subject to §229.33(c) with respect to paper returned checks that are Pacific island checks.
4. Banks that handle Pacific island checks in the same manner as other checks are subject to the indorsement provisions of §229.35. Section 229.35(c) eliminates the need for the restrictive indorsement “pay any bank.” For purposes of §229.35(c), the Pacific island bank is deemed to be a bank.
5. Pacific island checks will often be intermingled with other checks in a single cash letter. Therefore, a bank that handles Pacific island checks in the same manner as other checks is subject to the transfer warranty provision in §229.34(c)(2) regarding accurate cash letter totals and the encoding warranty in §229.34(c)(3). A bank that acts as a returning bank for a Pacific island check is not subject to the returned check warranties in §229.34(d). Similarly, because the Pacific island bank is not a “bank” or a “paying bank” for purposes of subpart C of this part, the notice of nonpayment warranties in §229.34(e), and the presentment warranties in §229.34(c)(1) and (c)(4) do not apply. For the same reason, the provisions of §229.36 governing paying bank responsibilities such as place of receipt and same-day settlement do not apply to checks presented to a Pacific island bank, and the liability provisions applicable to paying banks in §229.38 do not apply to Pacific island banks. Section 229.36(c), regarding finality of settlement between banks during forward collection, applies to banks that handle Pacific island checks in the same manner as other checks, as do the liability provisions of §229.38, to the extent the banks are subject to the requirements of Regulation CC as provided in this section, and §§229.37 and 229.39 through 229.42.