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Cool Stuff Article

Faster Processing with CHECK 21

Check 21 has arrived at Langley FCU and cashing a check has never been quicker.

Checks you write or cash now clear faster than ever before. And, with Check 21, LFCU has eliminated some courier cost and decreased float time, resulting in reduced processing costs and overall savings to the Credit Union.

Here is a little background on Check 21:

Following the terrorist attacks of September 11, 2001, all non-military air traffic was grounded for several days. This disruption of the country's air transportation system brought to the forefront a fundamental weakness of our check collection system — a reliance on the physical transportation of checks from their point of deposit to the paying banks.

So, on December 17, 2001, Alan Greenspan proposed to Congress the Check Truncation Act, which "would enable banks to achieve many of the benefits of electronic check processing." President Bush signed the bill and the law went into effect on October 28, 2004. The law creates a new instrument — the "substitute check" or "Image Replacement Document" (IRD) — that will be the legal equivalent of the original check. This allows any financial institution in the check collection stream to truncate checks and to transmit the electronic images and MICR information of the originals or create substitute checks and forward them for collection.

What this means for you?

It means Langley will no longer transport the physical checks that are deposited by our members to the Federal Reserve Bank. Instead, we will scan all checks deposited and send those images to our new document management system. Those images will then be transmitted to the Federal Reserve Bank electronically. This new process brings improved efficiency to LFCU and the entire Federal Reserve Bank system.